Boston Scientific beats Q2 estimates, cuts 2026 outlook as Watchman slows

Boston Scientific's cardiovascular strength and international sales drove a second-quarter beat, but the medical device maker lowered its full-year outlook as its Watchman heart implant business faces a shift toward combination procedures that compress standalone volumes.

"Cardiovascular growth of 8.3% and double-digit gains in Asia-Pacific and Latin America supported the quarter, though Watchman procedures are seeing a shift toward combination treatments that reduces standalone case volume," Mike Mahoney, chief executive officer of Boston Scientific, said on the earnings call.

The Marlborough, Massachusetts-based company reported adjusted earnings of $0.86 per share for the quarter ended June 30, topping the $0.83 consensus estimate compiled by LSEG by 3.61%. Revenue reached $5.44 billion, up 7.5% from a year earlier and above the $5.36 billion analysts had expected. Gross margin expanded 306 basis points to 70.7%, while adjusted operating margin rose 71 basis points to 28.4%.

The lowered guidance reflects pressure on the Watchman left atrial appendage closure device, a small implant used to prevent stroke-causing blood clots in patients with atrial fibrillation. Boston Scientific now expects flat Watchman revenue in the second half as physicians increasingly combine the implant with other cardiac treatments during a single visit. The company projects full-year adjusted earnings of $3.28 to $3.32 per share, down from a prior range of $3.34 to $3.41, and organic sales growth of 5% to 6%, compared with an earlier forecast of 6.5% to 8%.

Cardiovascular Leads, MedSurg Lags

The cardiovascular unit, which generates roughly two-thirds of Boston Scientific's quarterly revenue, posted sales of $3.62 billion, up 8.3% on a reported basis. Within the segment, the company presented positive data from the FRACTURE trial of the SEISMIQ 4CE coronary intravascular lithotripsy catheter, which met its primary endpoints for procedural success and freedom from major adverse cardiac events at 30 days. The AVANT GUARD study of the FARAPULSE pulsed field ablation system demonstrated statistical superiority over anti-arrhythmic drugs in patients with persistent atrial fibrillation who had not received prior treatment.

MedSurg revenue rose 5.9% to $1.82 billion. Endoscopy grew 7.6% to $793 million, while neuromodulation climbed 12.7% to $341 million. Urology posted the slowest growth at 1.1% to $684 million.

Geographically, US revenue increased 6.2% to $3.43 billion, representing about 63% of total sales. Asia-Pacific revenue jumped 11.2% to $878 million, and Latin America and Canada surged 22.4% to $206 million. Europe, Middle East and Africa rose 6.1% to $932 million.

Restructuring and New Investments

Boston Scientific's board approved a company-wide restructuring plan on July 21 aimed at cutting costs through supply chain optimization and production shifts between manufacturing sites, with completion expected by the end of 2029. The company also invested $1.5 billion in MiRus LLC for an approximately 34% equity stake and an exclusive option to acquire its transcatheter aortic valve replacement business, which is developing the investigational SIEGEL balloon-expandable TAVR system. Separately, Boston Scientific completed a $2 billion accelerated share repurchase program, buying back about 40 million shares.

Shares rose 3.4% in pre-market trading following the report, though the stock has fallen about 52% year to date, underperforming the S&P 500's 8.5% gain. The company faces headwinds from the Watchman slowdown and a competitive structural heart market where Edwards Lifesciences and Medtronic also compete for TAVR and left atrial appendage closure share. For the third quarter, Boston Scientific expects adjusted earnings of $0.80 to $0.82 per share on revenue growth of 3% to 5%, below the $0.84 consensus estimate. The stock carries a Zacks Rank No. 4, indicating expectations of near-term underperformance relative to the broader market.

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