Results

Boston Scientific Corporation

11/02/2026 | Press release | Distributed by Public on 11/02/2026 16:27

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
Boston Scientific Corporation is a global developer, manufacturer and marketer of medical devices that are used in a broad range of interventional medical specialties. Our mission is to transform lives through innovative medical solutions that improve the health of patients around the world. As a medical technology leader for more than 45 years, we have advanced the practice of less-invasive medicine by helping physicians and other medical professionals diagnose and treat a wide range of diseases and medical conditions and improve patients' quality of life by providing alternatives to surgery and other medical procedures that are typically traumatic to the body. We advance science for life by providing a broad range of high-performance solutions to address unmet patient needs and reduce the cost of healthcare. When used in this report, the terms "we," "us," "our" and "the Company" mean Boston Scientific Corporation and its divisions and subsidiaries.
Executive Summary
The following section describes some of our financial highlights and trends on a consolidated basis. For additional information on our business units and product offerings, refer to Item 1. Business of our most recent Annual Report on Form 10-K.
(in millions, except percentages and per share data) Three Months Ended September 30, 2026 versus 2025 2026 versus 2025
2026 2025 $ %
Reported net sales $ 5,138 $ 5,065 $ 74 1.5 %
Reported net income (loss) attributable to Boston Scientific common stockholders 582 755 (173) (22.9) %
Adjusted net income (loss) attributable to Boston Scientific common stockholders (non-GAAP measure)
1,063 1,124 (62) (5.5) %
Net income (loss) per common share - diluted 0.40 0.51 (0.10) (20.6) %
Adjusted net income (loss) per common share - diluted (non-GAAP measure)
0.73 0.75 (0.02) (2.6) %
(in millions, except percentages and per share data) Nine Months Ended September 30, 2026 versus 2025 2026 versus 2025
2026 2025 $ %
Reported net sales $ 15,784 $ 14,788 $ 995 6.7 %
Reported net income (loss) attributable to Boston Scientific common stockholders 2,830 2,226 603 27.1 %
Adjusted net income (loss) attributable to Boston Scientific common stockholders (non-GAAP measure)
3,527 3,372 155 4.6 %
Net income (loss) per common share - diluted 1.92 1.49 0.43 28.8 %
Adjusted net income (loss) per common share - diluted (non-GAAP measure)
2.39 2.26 0.14 6.0 %
Three Months Ended September 30, Nine Months Ended September 30,
2026 versus 2025 2026 versus 2025
Net sales reported growth 1.5 % 6.7 %
Impact of foreign currency fluctuations 0.0 % (0.9) %
Net sales operational growth (non-GAAP measure) 1.5 % 5.8 %
Impact of certain acquisitions and divestitures - % - %
Net sales organic growth (non-GAAP measure) 1.5 % 5.8 %
In August 2026, we identified a cybersecurity incident that affected certain of our information technology systems and resulted in a global disruption to our operations, which impacted our ability to manufacture as well as process and ship customer orders (the cybersecurity incident). We worked diligently, with the assistance of third-party cybersecurity experts, to investigate, assess and contain the impact of the incident and to restore operations. The cybersecurity incident caused significant disruption to our business operations and materially impacted our third quarter financial results. For additional information on the risks related to the cybersecurity incident and its impact on our business, financial condition and results of operations, refer to Part II, Item 1A. of this Quarterly Report on Form 10-Q (this Quarterly Report).
During the third quarter of 2026, the increase in our reported net sales was primarily driven by innovation and strong commercial execution in our Interventional Cardiology and Vascular Therapies (ICVT) business unit, offset by disruptions to manufacturing and order fulfillment resulting from the cybersecurity incident and increased competition within our Electrophysiology business unit as well as a deceleration in the left atrial appendage closure (LAAC) market, impacting WATCHMAN™ procedures. During the first nine months of 2026, the increase in our reported net sales was primarily driven by our ICVT and Electrophysiology business units, offset by increased competition within our Electrophysiology business unit and a deceleration in the LAAC market, impacting WATCHMAN™ procedures. Refer to Results of Operations for a discussion of our net sales by business.
During the third quarter of 2026, the decrease in our reported net income attributable to Boston Scientific common stockholders was primarily driven by disruptions to manufacturing and order fulfillment as well as higher supply chain costs due to idle production time related to the cybersecurity incident and higher litigation-related net charges. During the first nine months of 2026, the increase in our reported net income attributable to Boston Scientific common stockholders was primarily driven by higher net sales and a discrete tax benefit recorded in the first quarter of 2026, offset by higher costs related to the cybersecurity incident. Refer to Tax Rate for additional details pertaining to the discrete tax benefit.
To supplement our unaudited consolidated financial statements prepared on a generally accepted accounting principles in the United States (GAAP) basis, we disclose certain non-GAAP measures, including operational and organic net sales growth, adjusted net income attributable to Boston Scientific common stockholders and adjusted net income per common share - diluted. Operational net sales growth excludes the impact of foreign currency fluctuations. Organic net sales growth excludes the impact of foreign currency fluctuations and net sales attributable to certain acquisitions and divestitures for which there are less than a full period of comparable net sales. There were no applicable acquisitions in the first nine months of 2026 or 2025. Our adjusted net income attributable to Boston Scientific common stockholders and adjusted net income per common share - diluted exclude certain charges and/or credits as reported in our net income attributable to Boston Scientific common stockholders and net income per common share - diluted for purposes of assessing operating performance.
Adjusted measures, including operational and organic net sales growth, adjusted net income attributable to Boston Scientific common stockholders and adjusted net income per common share - diluted, exclude certain items required by GAAP, are not prepared in accordance with GAAP and should not be considered in isolation from, or as a replacement for, the most directly comparable GAAP measure. Refer to Additional Information for a discussion of management's use of these non-GAAP financial measures.
Macroeconomic Environment
Our business is affected by global macroeconomic and geopolitical conditions. There continues to be significant uncertainty with respect to global trade policies, including changing tariff rates, tariff imposition delays, and the potential for reciprocal restrictive trade policies by the U.S. or other governments around the world, which could adversely impact our operations and results. We may also experience higher distribution costs and supply chain disruptions, including those arising from global conflicts and energy market volatility. While we seek to mitigate these impacts, their extent and duration remain uncertain and could negatively impact our business and results of operations. For additional information, refer to Item 1A. Risk Factors and Macroeconomic Environment contained in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our most recent Annual Report on Form 10-K.
Results of Operations
Net Sales
The following section describes our net sales by reportable segment and business. In the fourth quarter of 2025, an organizational change combined our legacy Cardiology and Peripheral Interventions businesses into a single Cardiovascular business. We have revised prior periods to conform to the current year presentation. The change had no impact on our
reportable segments. For additional information on our business units and product offerings, refer to Item 1. Business of our most recent Annual Report on Form 10-K.
Increase/(Decrease)
(in millions, except percentages)
Three Months Ended September 30, $ Reported Basis Impact of Foreign Currency Fluctuations Operational Basis
Impact of Certain Acquisitions / Divestitures(1)
Organic Basis
2026 2025
Endoscopy $ 741 $ 747 $ (6) (0.8) % 0.1 % (0.6) % - % (0.6) %
Urology 661 682 (22) (3.2) % 0.1 % (3.1) % - % (3.1) %
Neuromodulation 331 293 38 13.1 % (0.1) % 13.0 % - % 13.0 %
MedSurg 1,733 1,722 11 0.6 % 0.1 % 0.7 % - % 0.7 %
Cardiovascular 3,406 3,343 63 1.9 % (0.0) % 1.9 % - % 1.9 %
Net Sales $ 5,138 $ 5,065 $ 74 1.5 % 0.0 % 1.5 % - % 1.5 %
Increase/(Decrease)
(in millions, except percentages)
Nine Months Ended September 30, $ Reported Basis Impact of Foreign Currency Fluctuations Operational Basis
Impact of Certain Acquisitions / Divestitures(1)
Organic Basis
2026 2025
Endoscopy $ 2,270 $ 2,157 $ 114 5.3 % (1.0) % 4.3 % - % 4.3 %
Urology 1,991 1,992 (1) (0.1) % (0.6) % (0.6) % - % (0.6) %
Neuromodulation 990 866 124 14.3 % (0.8) % 13.5 % - % 13.5 %
MedSurg 5,252 5,015 237 4.7 % (0.8) % 3.9 % - % 3.9 %
Cardiovascular 10,532 9,773 759 7.8 % (0.9) % 6.8 % - % 6.8 %
Net Sales $ 15,784 $ 14,788 $ 995 6.7 % (0.9) % 5.8 % - % 5.8 %
(1) There were no applicable acquisitions in the third quarter and first nine months of 2026 or 2025.
MedSurg
Endoscopy
Our Endoscopy business develops and manufactures devices to diagnose and treat a broad range of gastrointestinal (GI) conditions with innovative, less-invasive technologies. In the third quarter of 2026, reported net sales declines were primarily driven by operational disruptions related to the cybersecurity incident, and volume-based procurement (VBP) in China. In the first nine months of 2026, reported net sales growth was primarily driven by our biliary franchise, led by our AXIOS™ Stent and Delivery System, offset by operational disruptions related to the cybersecurity incident.
Urology
Our Urology business develops and manufactures devices to treat various urological conditions for both male and female anatomies, including kidney stones, benign prostatic hyperplasia (BPH), prostate cancer, erectile dysfunction and incontinence. In the third quarter and first nine months of 2026, reported net sales declines were primarily driven by operational disruptions related to the cybersecurity incident, underperformance in the stone franchise due to VBP in China, as well as commercial disruption in our sacral neuromodulation franchise.
Neuromodulation
Our Neuromodulation business develops and manufactures devices to treat various neurological movement disorders and manage chronic pain. In the third quarter and first nine months of 2026, reported net sales growth was primarily driven by our comprehensive pain portfolio, led by our Nalu Peripheral Nerve Stimulation System and Intracept™ Intraosseous Nerve Ablation System, and our deep brain stimulation franchise.
Cardiovascular
Our Cardiovascular business develops and manufactures devices and medical technologies for diagnosing and treating a variety of diseases and abnormalities of the heart, as well as products to diagnose and treat peripheral arterial and venous diseases and various forms of cancer. In the third quarter of 2026, reported net sales growth was primarily driven by our coronary therapies (CT) franchise, led by our AGENT™ Drug-Coated Balloon, offset by operational disruptions related to the cybersecurity incident. In the first nine months of 2026, reported net sales growth was primarily driven by our CT franchise, led by our AGENT™ Drug-Coated Balloon, and our Electrophysiology business unit, led by our Farapulse™ Pulsed Field Ablation (PFA) System, offset by operational disruptions related to the cybersecurity incident. Net sales for the third quarter and first nine months of 2026 were also impacted by increased competition within our Electrophysiology business unit and a deceleration in the LAAC market, impacting WATCHMAN™ procedures.
Gross Profit
Our gross profit was $3.428 billion during the third quarter of 2026, $3.542 billion during the third quarter of 2025, $10.890 billion for the first nine months of 2026, and $10.175 billion for the first nine months of 2025. The following is a reconciliation of our gross profit margin and a description of the drivers of the changes from period to period:
Three Months Nine Months
Period ended September 30, 2025 69.9% 68.8%
Sales pricing, volume and mix (0.3)% 0.3%
Net impact of foreign currency fluctuations (0.2)% (0.5)%
Abnormal production variances from cybersecurity incident (1.7)% (0.5)%
All other, including inventory charges and other period expenses (1.1)% 0.8%
Period ended September 30, 2026 66.7% 69.0%
In the third quarter of 2026, the primary factors that impacted gross profit margin were higher manufacturing and supply chain costs due to idle production time related to the cybersecurity incident, as well as investments in our global supply chain and quality systems. These factors also impacted gross profit margin during the first nine months of 2026, along with an unfavorable impact from foreign currency, offset by the benefit recognized in connection with the recovery of previously incurred tariffs, a decrease in inventory charges, and a decrease in the impact of inventory step-up adjustments associated with acquisitions.
Operating Expenses
The following table provides a summary of our key operating expenses:
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
(in millions, except percentages)
$ % of Net Sales $ % of Net Sales $ % of Net Sales $ % of Net Sales
Selling, general and administrative expenses $ 1,683 32.7 % $ 1,741 34.4 % $ 5,266 33.4 % $ 5,053 34.2 %
Research and development expenses 520 10.1 % 514 10.1 % 1,589 10.1 % 1,483 10.0 %
Selling, General and Administrative (SG&A) Expenses
During the third quarter of 2026, SG&A expenses decreased $58 million, or 3 percent, compared to the prior year period and were 160 basis points lower as a percentage of net sales. This decrease was primarily driven by disciplined spend control, offset by incremental expenses incurred as a result of the cybersecurity incident. During the first nine months of 2026, SG&A expenses increased $213 million, or 4 percent, compared to the prior year period and were 80 basis points lower as a percentage of net sales. This increase was primarily driven by selling expenses associated with higher net sales and incremental expenses incurred as a result of the cybersecurity incident, partially offset by disciplined spend control.
Research and Development (R&D) Expenses
We remain committed to advancing medical technologies and investing in meaningful R&D projects across our businesses. During the third quarter of 2026, R&D expenses increased $6 million, or 1 percent, compared to the prior year period and were relatively flat as a percentage of net sales. During the first nine months of 2026, R&D expenses increased $106 million, or 7 percent, compared to the prior year period and were relatively flat as a percentage of net sales. The increase in R&D expenses in both periods was primarily driven by investments across our businesses in order to maintain a pipeline of products that we believe will contribute to future sales growth.
Other Operating Expenses
The following provides a summary of certain of our other operating expenses, which are excluded by management for purposes of evaluating operating performance; refer to Additional Information for a further description.
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 versus 2025 2026 versus 2025 2026 2025 2026 versus 2025 2026 versus 2025
(in millions, except percentages) $ % $ %
Amortization expense $ 234 $ 225 $ 9 4.0 % $ 699 $ 669 $ 30 4.5 %
Restructuring and Restructuring-related Net Charges (Credits)
On July 21, 2026, our Board of Directors approved, and we committed to, a new global restructuring program (the 2026 Restructuring Plan). The 2026 Restructuring Plan is intended to support our efforts to drive sustained cost efficiencies and enable continued growth by ensuring that we are structured and resourced to support our strategic priorities. The 2026 Restructuring Plan is expected to result in total pre-tax charges of approximately $700 million to $800 million, of which approximately $600 million to $700 million is expected to result in future cash outlays, and reduce gross annual pre-tax expenses by approximately $500 million as program benefits are realized. We expect a portion of the savings to be reinvested in strategic growth initiatives. We have recorded related costs of $102 million since the inception of the 2026 Restructuring Plan.
We previously undertook a global restructuring program that began in February 2023 and was expanded in July 2025 (the 2023 Restructuring Plan). The activities associated with the 2023 Restructuring Plan, including the expansion, were fully completed during the second quarter of 2026. We have recorded related costs of $748 million since the inception of the 2023 Restructuring Plan.
For additional information related to our restructuring plans, including associated net charges (credits) recorded for the three and nine months ended September 30, 2026 and the corresponding prior year periods, refer to Note M - Restructuring-Related Activities to our unaudited consolidated financial statements contained in Part I, Item 1 of this Quarterly Report.
Tax Rate
The following table provides a reconciliation of our reported tax rate to the rate from continuing operations:
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Reported tax rate 20.8 % 19.5 % 4.5 % 17.2 %
Impact of certain receipts/charges(1)
(3.3) % (1.4) % 13.0 % 0.9 %
Rate from continuing operations 17.6 % 18.1 % 17.4 % 18.1 %
(1) These receipts/charges are taxed at different rates than our rate from continuing operations.
Our reported tax rate is affected by recurring items such as the amount of our earnings subject to differing tax rates in foreign jurisdictions and the impact of certain receipts and charges that are taxed at rates that differ from our rate from continuing operations.
In the third quarter of 2026, the principal reason for the difference between our tax rate from continuing operations and our reported tax rate relates to discrete charges primarily related to return-to-provision adjustments.
In the first nine months of 2026, the principal reason for the difference between our tax rate from continuing operations and our reported tax rate relates to a discrete tax benefit of $383 million to reflect a change in the anticipated future tax rate at which we expect to recover certain capitalized expenses.
In the third quarter and first nine months of 2025, the principal reasons for the difference between our tax rate from continuing operations and our reported tax rate relates to certain acquisition-related net charges, and discrete tax benefits primarily related to stock-based compensation.
We have evaluated the Organization for Economic Cooperation and Development (OECD)'s Pillar Two framework including all issued guidance. Based on that evaluation, the Pillar Two global minimum tax has no impact to our rate from continuing operations in the third quarter of 2026. We continue to monitor legislative adoption by each member country of the OECD's January 5, 2026 administrative guidance that introduced new safe harbors for U.S.-based multinational companies. While adoption of these safe harbors is important to achieve certainty regarding the exemption of U.S.-based multinational companies and their subsidiaries from certain elements of the OECD global minimum tax framework, the legislative adoption of such guidance will not have a material impact on our tax rate from continuing operations.
See Note G - Income Taxes to our unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report for additional details on our tax rate.
Critical Accounting Policies and Estimates
Our financial results are affected by the selection and application of accounting policies and methods. During the third quarter and first nine months of 2026, there were no material changes to the application of critical accounting policies previously disclosed in our most recent Annual Report on Form 10-K.
Liquidity and Capital Resources
Based on our current business plan, we believe our existing balance of Cash and cash equivalents, future cash generated from operations, access to capital markets and existing credit facilities will be sufficient to fund our operations, invest in our infrastructure, pay our legal-related liabilities, pay taxes due, service and repay our existing debt and fund possible acquisitions for the next 12 months and for the foreseeable future. For additional information on our future payment obligations and commitments, refer to Contractual Obligations and Commitments below and contained in Item 7 of our most recent Annual Report on Form 10-K.
As of September 30, 2026, we had $609 million of unrestricted Cash and cash equivalents on hand. The balance is comprised of $181 million invested in money market funds and time deposits and $428 million in interest bearing and non-interest-bearing bank accounts. We invest excess cash on hand in short-term financial instruments that earn market interest rates while mitigating principal risk through instrument and counterparty diversification, as well as what we believe to be prudent instrument selection. We limit our direct exposure to securities in any one industry or issuer.
On February 26, 2026, we entered into a new $3.000 billion revolving credit agreement (the 2026 Revolving Credit Agreement) with a global syndicate of commercial banks and terminated our previous revolving credit agreement (the 2021 Revolving Credit Agreement). The 2026 Revolving Credit Agreement matures on February 26, 2031, with one-year extension options subject to certain conditions, including certain lender approvals. This credit agreement provides backing for our commercial paper program, and outstanding commercial paper directly reduces borrowing capacity under the 2026 Revolving Credit Agreement. As of September 30, 2026, there was $1.029 billion outstanding under our commercial paper program and no amounts outstanding under the 2026 Revolving Credit Agreement, resulting in an additional $1.971 billion of available liquidity.
On February 26, 2026, we entered into a $2.000 billion 364-day revolving credit agreement (the 364-Day Revolving Credit Agreement) with a global syndicate of commercial banks. The 364-Day Revolving Credit Agreement matures on the date that is 364 days from the earlier of (i) the date that any loans under the 364-Day Revolving Credit Agreement are available to be drawn on, or (ii) the closing of our pending acquisition of Penumbra, Inc. (Penumbra). In addition, on February 26, 2026, we entered into a $6.000 billion term loan credit agreement (the Term Loan Credit Agreement) with a global syndicate of commercial banks. The Term Loan Credit Agreement permits us to borrow (i) a 364-day delayed draw term loan in an aggregate principal amount of up to $1.000 billion (the Tranche A Loan), and (ii) a 364-day delayed draw term loan in an
aggregate amount of up to $5.000 billion (the Tranche B Loan). Each of the Tranche A Loan and the Tranche B Loan may only be drawn upon the closing of our pending acquisition of Penumbra and will mature 364 days thereafter. As of September 30, 2026, we had no amounts outstanding under the 364-Day Revolving Credit Agreement or Term Loan Credit Agreement. For additional details related to our debt obligations, including our financial covenant requirement, refer to Note E - Contractual Obligations and Commitments to our unaudited consolidated financial statements contained in Part I, Item 1 of this Quarterly Report.
The following provides a summary and description of our net cash inflows (outflows):
Nine Months Ended September 30,
(in millions) 2026 2025
Cash provided by (used for) operating activities $ 2,870 $ 3,170
Cash provided by (used for) investing activities (2,984) (2,128)
Cash provided by (used for) financing activities (1,239) (211)
Operating Activities
During the first nine months of 2026, cash provided by (used for) operating activities decreased $301 million compared to the prior year period primarily due to an increase in working capital-related payments, offset by comparatively higher sales and corresponding operating income.
Investing Activities
During the first nine months of 2026, cash provided by (used for) investing activities included net cash payments of $930 million for acquisitions of multiple businesses, primarily related to Nalu Medical, Inc. and Scivita Medical Technology Co., Ltd., net payments for investments and acquisitions of certain technologies of $1.545 billion, primarily related to the investment in MiRus LLC (MiRus), and purchases of property, plant and equipment and internal use software of $552 million. For more information on our acquisitions and the investment in MiRus, refer to Note B - Acquisitions and Strategic Investments to our unaudited consolidated financial statements contained in Part I, Item 1 of this Quarterly Report.
During the first nine months of 2025, cash provided by (used for) investing activities included net cash payments of $1.504 billion for acquisitions of multiple businesses, primarily related to Bolt Medical, Inc., SoniVie Ltd. and Cortex, Inc., and purchases of property, plant and equipment and internal use software of $525 million.
Financing Activities
During the first nine months of 2026, cash provided by (used for) financing activities included net proceeds from the issuance of commercial paper of $1.003 billion, a $2.000 billion payment to repurchase shares of our common stock, and a $255 million payment of the remaining balance of 3.750% Senior Notes due March 2026. For more information on our borrowings, refer to Note E - Contractual Obligations and Commitments to our unaudited consolidated financial statements contained in Part I, Item 1 of this Quarterly Report. For more information on our share repurchase, refer to Note I - Weighted Average Shares Outstanding to our unaudited consolidated financial statements contained in Part I, Item 1 of this Quarterly Report.
Cash provided by (used for) financing activities in the first nine months of 2025 included the registered public offering of €1.500 billion in aggregate principal amount of euro-denominated senior notes (the 2025 Eurobonds). The 2025 Eurobonds offering resulted in cash proceeds of $1.558 billion, net of investor discounts and issuance costs. We used the net proceeds from the 2025 Eurobonds offering to fund the repayment at maturity of AMS Europe's €1.000 billion 0.750% Senior Notes due March 2025 and to pay accrued and unpaid interest with respect to such notes. Additionally, we used the remaining net proceeds for general corporate purposes, including, among other things, short-term investments, reduction of short-term debt, funding of working capital and acquisitions. During the second quarter of 2025, we also repaid at maturity our $500 million 1.900% Senior Notes due June 2025 and accrued and unpaid interest with respect to such notes. During the first nine months of 2025, cash provided by (used for) financing activities also included proceeds from the issuances of common stock pursuant to employee stock compensation and purchase plans of $262 million, partially offset by repayments of commercial paper of $196 million.
Financial Covenant
As of September 30, 2026, we were in compliance with the financial covenant required by our credit agreements described above.
Covenant Requirement Actual
as of September 30, 2026 as of September 30, 2026
Maximum permitted leverage ratio(1)
3.75 times 1.95 times
(1) Ratio of total debt to deemed consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), as defined by each of the 2026 Revolving Credit Agreement, the 364-Day Revolving Credit Agreement and the Term Loan Credit Agreement.
Under each of the 2026 Revolving Credit Agreement, 364-Day Revolving Credit Agreement and Term Loan Credit Agreement, we are required to maintain a maximum permitted leverage ratio, as defined in the agreements, of 3.75 times. The credit agreements provide for higher leverage ratios, at our election, for the period following a qualified acquisition, as defined in the agreements, for which consideration exceeds $1.000 billion. In the event of such an acquisition, for the four succeeding quarters immediately following, including the quarter in which the acquisition occurs, the maximum permitted leverage ratio is 4.75 times. It steps down for the fifth, sixth and seventh succeeding quarters to 4.50 times, 4.25 times and 4.00 times, respectively. Thereafter, a maximum leverage ratio of 3.75 times is required through the remaining term of the applicable credit agreement. The financial covenant is substantially similar to the covenant that was required under the 2021 Revolving Credit Agreement, which we terminated on February 26, 2026. We believe that we have the ability to comply with the financial covenant for the next 12 months.
The financial covenant requirement provides for an exclusion from the calculation of consolidated EBITDA, through maturity, of certain charges and expenses. Permitted exclusions from the calculation of consolidated EBITDA include any non-cash charges and any cash litigation payments (net of any cash litigation receipts), as defined in the credit agreements, provided that the sum of any excluded net cash litigation payments since December 31, 2025 does not exceed $1.160 billion. As of September 30, 2026, we had $1.128 billion of the total permitted exclusion remaining.
Contractual Obligations and Commitments
On January 15, 2026, we announced our entry into a definitive agreement to acquire 100 percent of Penumbra, a publicly traded medical technology company primarily focused on thrombectomy products for use in peripheral vascular procedures in the removal of blood clots and blockages. At the time of announcement, the purchase price was valued at $374 per share, or approximately $14.500 billion. On March 16, 2026, we and Penumbra each received a request for additional information (Second Request) from the United States Federal Trade Commission (FTC) in connection with its review of the transaction. We and Penumbra are responding to the Second Request and continue to work cooperatively with the FTC in its review. On May 6, 2026, Penumbra stockholders voted to approve the acquisition. The transaction is expected to be completed in early 2027, subject to the satisfaction of other customary closing conditions, including regulatory clearances. We plan to fund the transaction consideration through a combination of cash on hand and newly issued debt in an aggregate amount equal to approximately $11.000 billion, and the remaining portion of the transaction consideration will be paid in shares of our common stock. The Penumbra business will be integrated into our Cardiovascular division.
On October 2, 2026, we entered into an agreement with funds managed by Blackstone Life Sciences Advisors L.L.C. (Blackstone) to co-fund development activities for our VITALYST™ Temporary Percutaneous Transvalvular Circulatory Support System for the treatment of patients with acute myocardial infarction with cardiogenic shock (the Product). Under the agreement, we are eligible to receive up to $455 million from contract inception through regulatory approval of the Product in the United States, unless otherwise terminated, based on qualifying development costs incurred. Subject to obtaining regulatory approval for the Product in the United States, Blackstone will be eligible to receive fixed regulatory and commercial milestone payments of up to 2.5 times Blackstone's actual funded amount, as well as royalties on net sales upon regulatory approval. Refer to Note B - Acquisitions and Strategic Investments to our unaudited consolidated financial statements contained in Part I, Item 1 of this Quarterly Report for further details.
Additionally, certain of our acquisitions involve the payment of contingent consideration. Refer to Note B - Acquisitions and Strategic Investments to our unaudited consolidated financial statements contained in Part I, Item 1 of this Quarterly Report for further details regarding the estimated potential amount of future contingent consideration we could be required to pay associated with our acquisitions. There have been no other material changes to our contractual obligations and commitments as of September 30, 2026.
Equity
On February 18, 2026, our Board of Directors approved a $4.000 billion increase to our existing authorization to repurchase up to $1.000 billion of our common stock, increasing the total repurchase authorization to $5.000 billion. On May 18, 2026, we entered into an accelerated share repurchase agreement (the ASR agreement) with JPMorgan Chase Bank, National Association (JPMorgan). On May 19, 2026, under the terms of the ASR agreement, we made an aggregate upfront payment of $2.000 billion to JPMorgan and received an initial delivery of approximately 30 million shares of our common stock, representing approximately 80 percent of the transaction value based on the closing price of our common stock on May 15, 2026. The final settlement occurred on June 12, 2026, and we received approximately 10 million additional shares of our common stock. As of September 30, 2026, we had $3.000 billion remaining available under the share repurchase authorization. We did not repurchase any shares of our common stock in the first nine months of 2025.
Shares of our common stock may be repurchased under the stock repurchase program from time to time through open market purchases, block trades, private transactions or accelerated or other structured share repurchase programs. The extent to which we repurchase shares of our common stock, and the timing of such purchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other considerations, as determined by the Company. The stock repurchase program may be suspended or discontinued at any time.
Legal Matters
For a discussion of our material legal proceedings refer to Note H - Commitments and Contingencies to our unaudited consolidated financial statements contained in Part I, Item 1 of this Quarterly Report and Note I - Commitments and Contingencies to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K.
Recent Accounting Pronouncements
Information regarding new accounting pronouncements implemented since December 31, 2025, and relevant accounting pronouncements to be implemented in the future are included in Note N - New Accounting Pronouncements to our unaudited consolidated financial statements contained in Part I, Item 1 of this Quarterly Report.
Additional Information
Use of Non-GAAP Financial Measures
To supplement our unaudited consolidated financial statements presented on a GAAP basis, we disclose certain non-GAAP financial measures, including adjusted net income (loss), adjusted net income (loss) attributable to Boston Scientific common stockholders and adjusted net income (loss) per share (EPS) that exclude certain charges (credits); operational net sales, which exclude the impact of foreign currency fluctuations; and organic net sales, which exclude the impact of foreign currency fluctuations as well as the impact of certain acquisitions and divestitures with less than a full period of comparable net sales. These non-GAAP financial measures are not in accordance with U.S. GAAP and should not be considered in isolation from or as a replacement for the most directly comparable GAAP financial measures. Further, other companies may calculate these non-GAAP financial measures differently than we do, which may limit the usefulness of those measures for comparative purposes.
To calculate adjusted net income (loss), adjusted net income (loss) attributable to Boston Scientific common stockholders and adjusted net income (loss) per share, we exclude certain charges (credits) from GAAP net income and GAAP net income attributable to Boston Scientific common stockholders, which include amortization expense, goodwill and other intangible asset impairment charges, acquisition/divestiture-related net charges (credits), investment portfolio net losses (gains) and impairments, restructuring and restructuring-related net charges (credits), litigation-related net charges (credits), European Union (EU) Medical Device Regulation (MDR) implementation costs, debt extinguishment net charges, deferred tax expenses (benefits), discrete tax items and other charges (credits) as appropriate. Amounts are presented after-tax using our effective tax rate, unless the amount is a significant unusual or infrequently occurring item in accordance with FASB ASC Topic 740-270-30, "General Methodology and Use of Estimated Annual Effective Tax Rate." In addition to the explanation below, please refer to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission for an explanation of each of these adjustments and the reasons for excluding each item. The following is an explanation of each incremental or revised adjustment type, since our most recent Annual Report on Form 10-K, that management excluded as part of these non-GAAP financial measures as well as the reason for excluding each item:
•Restructuring and restructuring-related net charges (credits) - These adjustments primarily represent severance and other compensation-related charges, fixed asset write-offs, contract cancellations, project management fees, facility shut down costs, costs to transfer manufacturing lines between geographically dispersed facilities and other direct costs associated with our restructuring plans. These restructuring plans each consist of distinct initiatives that are fundamentally different from our ongoing, core cost reduction initiatives in terms of, among other things, the frequency with which each action is performed and the required planning, resourcing, cost and timing. Examples of such initiatives include the movement of business activities, facility consolidations and closures and the transfer of product lines between manufacturing facilities, which, due to the highly regulated nature of our industry, requires a significant investment in time and cost to create duplicate manufacturing lines, run product validations and seek regulatory approvals. Restructuring plans take place over a defined timeframe and have a distinct project timeline that requires, and begins subsequent to, approval by our Board of Directors. In contrast to our ongoing cost reduction initiatives, restructuring plans typically result in duplicative cost and exit costs over the defined timeframe and are not considered part of our core, ongoing operations. In addition, we may incur certain charges such as severance and other compensation-related charges, fixed asset write-offs, contract cancellations, facility shutdown costs, and inventory write-downs associated with discontinuations of significant product lines. These restructuring plans and activities are incremental to the core activities that arise in the ordinary course of our business. Restructuring and restructuring-related net charges (credits) are excluded from management's assessment of operating performance and from our operating segments' measures of profit and loss used for making operating decisions and assessing performance.
•Deferred tax expenses (benefits) - These amounts represent significant non-cash tax benefits arising from internal reorganizations or intra-entity asset transfers. The deferred tax effects related to the establishment and subsequent reversal of net deferred tax assets are excluded from management's assessment of operating performance used for making operating decisions and assessing performance.
•IEEPA tariff refund - This amount relates to the benefit recognized in connection with the recovery of previously incurred tariffs imposed under the International Emergency Economic Powers Act (IEEPA) recognized in Cost of products sold within our accompanying unaudited consolidated statements of operations. This amount is excluded from management's assessment of operating performance used for making operating decisions and assessing performance.
The GAAP financial measures most directly comparable to adjusted net income (loss), adjusted net income (loss) attributable to Boston Scientific common stockholders and adjusted net income (loss) per share are GAAP net income (loss), GAAP net income (loss) attributable to Boston Scientific common stockholders and GAAP net income (loss) per common share - diluted, respectively.
To calculate operational net sales growth rates, which exclude the impact of foreign currency fluctuations, we convert actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior periods. To calculate organic net sales growth rates, we also remove the impact of certain acquisitions and divestitures with less than a full period of comparable net sales. The GAAP financial measure most directly comparable to operational net sales and organic net sales is net sales reported on a GAAP basis.
Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP financial measure are included below and under Executive Summary and Results of Operations above.
Management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors and to establish operational goals and forecasts that are used in allocating resources. In addition, management uses these non-GAAP financial measures to further its understanding of the performance of our operating segments. The adjustments excluded from our non-GAAP financial measures are consistent with those excluded from our operating segments' measures of net sales and profit or loss. These adjustments are excluded from the segment measures reported to our chief operating decision maker that are used to make operating decisions and assess performance.
We believe that presenting adjusted net income (loss), adjusted net income (loss) attributable to Boston Scientific common stockholders, adjusted net income (loss) per share, operational and organic net sales growth rates, in addition to the corresponding GAAP financial measures, provides investors greater transparency to the information used by management for its operational decision-making and allows investors to see our results "through the eyes" of management. We further believe that providing this information assists our investors in understanding our operating performance and the methodology used by management to evaluate and measure such performance.
The following is a reconciliation of our results of operations prepared in accordance with GAAP to those adjusted results considered by management. Refer to Executive Summary and Results of Operations for a discussion of these reconciling items:
Three Months Ended September 30, 2026
(in millions, except per share data) Income (Loss) before Income Taxes Income Tax Expense (Benefit) Net Income (Loss) Net Income (Loss) Attributable to Noncontrolling Interests Net Income (Loss) Attributable to Boston Scientific Common Stockholders Impact per Share
Reported $ 733 $ 153 $ 580 $ (2) $ 582 $ 0.40
Non-GAAP adjustments:
Amortization expense 234 27 207 2 204 0.14
Goodwill and other intangible asset impairment charges 39 4 35 - 35 0.02
Acquisition/divestiture-related net charges/credits 90 29 61 - 61 0.04
Restructuring and restructuring-related net charges/credits 94 18 75 - 75 0.05
Litigation-related net charges/credits 81 19 63 - 63 0.04
Investment portfolio net losses/gains and impairments (36) (8) (28) - (28) (0.02)
EU MDR implementation costs 5 1 5 - 5 0.00
Deferred tax expenses/benefits - (66) 66 - 66 0.05
Adjusted $ 1,240 $ 177 $ 1,063 $ 0 $ 1,063 $ 0.73
Three Months Ended September 30, 2025
(in millions, except per share data) Income (Loss) before Income Taxes Income Tax Expense (Benefit) Net Income (Loss) Net Income (Loss) Attributable to Noncontrolling Interests Net Income (Loss) Attributable to Boston Scientific Common Stockholders Impact per Share
Reported $ 939 $ 183 $ 755 $ (0) $ 755 $ 0.51
Non-GAAP adjustments:
Amortization expense 225 31 194 2 191 0.13
Goodwill and other intangible asset impairment charges 0 0 0 - 0 0.00
Acquisition/divestiture-related net charges/credits 99 4 95 - 95 0.06
Restructuring and restructuring-related net charges/credits 36 6 30 - 30 0.02
Investment portfolio net losses/gains and impairments (6) (1) (5) - (5) (0.00)
EU MDR implementation costs 11 2 9 - 9 0.01
Deferred tax expenses/benefits - (47) 47 - 47 0.03
Discrete tax items - (1) 1 - 1 0.00
Adjusted $ 1,303 $ 177 $ 1,126 $ 2 $ 1,124 $ 0.75
Nine Months Ended September 30, 2026
(in millions, except per share data) Income (Loss) before Income Taxes Income Tax Expense (Benefit) Net Income (Loss) Net Income (Loss) Attributable to Noncontrolling Interests Net Income (Loss) Attributable to Boston Scientific Common Stockholders Impact per Share
Reported $ 2,955 $ 132 $ 2,823 $ (6) $ 2,830 $ 1.92
Non-GAAP adjustments:
Amortization expense 699 82 617 7 610 0.41
Goodwill and other intangible asset impairment charges 39 4 35 - 35 0.02
Acquisition/divestiture-related net charges/credits 229 65 164 - 164 0.11
Restructuring and restructuring-related net charges/credits 170 26 145 - 145 0.10
Litigation-related net charges/credits 157 35 122 - 122 0.08
Investment portfolio net losses/gains and impairments (175) (41) (134) - (134) (0.09)
EU MDR implementation costs 19 2 17 - 17 0.01
IEEPA tariff refund (83) (7) (77) - (77) (0.05)
Deferred tax expenses/benefits - 184 (184) - (184) (0.13)
Adjusted $ 4,011 $ 482 $ 3,528 $ 1 $ 3,527 $ 2.39
Nine Months Ended September 30, 2025
(in millions, except per share data) Income (Loss) before Income Taxes Income Tax Expense (Benefit) Net Income (Loss) Net Income (Loss) Attributable to Noncontrolling Interests Net Income (Loss) Attributable to Boston Scientific Common Stockholders Impact per Share
Reported $ 2,685 $ 463 $ 2,222 $ (4) $ 2,226 $ 1.49
Non-GAAP adjustments:
Amortization expense 669 93 576 7 570 0.38
Goodwill and other intangible asset impairment charges 46 8 37 - 37 0.02
Acquisition/divestiture-related net charges/credits 156 (1) 157 - 157 0.10
Restructuring and restructuring-related net charges/credits 247 32 215 - 215 0.14
Investment portfolio net losses/gains and impairments (0) 0 (0) - (0) (0.00)
EU MDR implementation costs 34 5 29 - 29 0.02
Deferred tax expenses/benefits - (139) 139 - 139 0.09
Discrete tax items - (1) 1 - 1 0.00
Adjusted $ 3,836 $ 461 $ 3,375 $ 3 $ 3,372 $ 2.26
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