Boston Scientific Q3 Sales Rise 1.5% as Margins Narrow

Boston Scientific reported modest third-quarter revenue growth as gains in interventional cardiology and neuromodulation were partly offset by declines in Watchman, electrophysiology and urology. Profitability also weakened, while the medical-device maker projected a year-over-year sales decline for the fourth quarter.

Net sales for the quarter ended September 30 rose 1.5% on a reported, operational and organic basis to $5.138 billion. Organic growth was below the 3% to 5% range disclosed by the company on July 29. The August 2026 cybersecurity incident affected several businesses during the quarter, according to the presentation.

GAAP diluted earnings per share fell to $0.40 from $0.51 a year earlier. Adjusted EPS declined to $0.73 from $0.75. GAAP gross margin contracted 320 basis points to 66.7%, while adjusted gross margin decreased 300 basis points to 68.0%. GAAP operating margin fell 460 basis points to 16.1%, and adjusted operating margin narrowed 150 basis points to 26.5%.

Cardiovascular growth masks declines in key franchises

Cardiovascular sales increased 1.9% to $3.406 billion, accounting for about two-thirds of company revenue. The segment’s adjusted operating margin fell to 29.8% from 34.2%.

Interventional Cardiology and Vascular Therapies was the main growth contributor, with sales rising 12.1% as reported and 11.9% organically to $1.273 billion. Interventional Cardiology grew 19% organically, supported by the global imaging franchise and AGENT drug-coated balloon technology. Vascular Therapies grew 1%, with results affected by the cyber incident and supply constraints in transcarotid artery revascularization as disruption slowed the ramp-up of a new manufacturing site.

Other cardiovascular franchises were weaker. Watchman sales declined 5.8% to $482 million, including a 6.8% decrease in the United States. Boston Scientific attributed the performance to a market slowdown, primarily reflecting changes in patient identification and referral patterns as physicians assess clinical evidence published over the past year.

Electrophysiology revenue fell 5.7% to $816 million, including an 8.4% decline in the United States, amid the cyber incident and competitive pressure. Cardiac Rhythm Management sales decreased 1.6% to $568 million as growth in diagnostics was outweighed by declines in low- and high-voltage products. The company said system downtime affected technologies that use remote monitoring.

Interventional Oncology and Embolization revenue rose 5.2% to $267 million, driven by cancer therapies and partly offset by supply constraints.

Neuromodulation leads MedSurg performance

MedSurg sales increased 0.6% as reported and 0.7% organically to $1.733 billion. Adjusted operating margin declined to 31.4% from 33.2%.

Neuromodulation revenue climbed 13.1% to $331 million. Growth in pain products was broad-based, led by Nalu peripheral nerve stimulation technology, while the brain portfolio benefited from the Cartesia X lead and Illumina 3D software.

Endoscopy sales decreased 0.8% to $741 million. Boston Scientific said underlying performance was strong, led by AXIOS, but results were affected by gastrointestinal volume-based procurement in China and the cyber incident. Urology revenue fell 3.2% to $661 million, reflecting cyber-related disruption and broader pricing pressure in China’s stone-management market.

Fourth-quarter decline projected

Boston Scientific expects fourth-quarter reported and organic sales to decline between 1% and 3% from a year earlier. Adjusted EPS is projected at $0.77 to $0.79.

For full-year 2026, the company forecasts reported sales growth of approximately 4.25% and organic growth of about 3.75%. Adjusted EPS is expected to be $3.16 to $3.18, with an adjusted operating margin of approximately 27.6% and an adjusted tax rate of about 12%.

The company estimates full-year free cash flow of approximately $3.6 billion, based on operating cash flow of about $4.4 billion and roughly $800 million of capital spending. Third-quarter free cash flow was $867 million, down from $1.163 billion a year earlier.

Operational developments during the quarter included the start of enrollment in the Elite AF trial for the next-generation WATCHMAN Elite device and FDA clearances for an expanded SEISMIQ peripheral intravascular lithotripsy catheter size range and two StoneSmart technologies. Boston Scientific also entered a collaboration with Heartflow to explore AI-powered, CT-guided planning for percutaneous coronary intervention procedures.

The company identified the cybersecurity incident, China pricing pressure, supply constraints, competitive pressure in electrophysiology and changing Watchman referral patterns as factors affecting current performance. It also cautioned that forward-looking expectations depend on assumptions involving sales, acquisitions, clinical trials, product approvals and launches, and the continuing effects of the cyber incident.