This article first appeared on GuruFocus .
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Total Revenue:Q3 2026 consolidated revenue of $5,138 million, up 1.5% reported; operational and organic growth also 1.5%, below the 3%5% guidance range.
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Cyber Incident Impact:Estimated ~300 bps negative impact on Q3 organic revenue growth and ~$0.07 unfavorable impact on adjusted EPS; Q4 expected to see 200300 bps impact.
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Adjusted EPS:Q3 2026 adjusted EPS of $0.73, down 3% YoY, versus guidance of $0.80$0.82.
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Adjusted Gross Margin:68.0% in Q3, down 300 bps YoY, driven by unfavorable manufacturing absorption during the cyber disruption.
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Adjusted Operating Margin:26.5% in Q3, contracting 150 bps YoY; GAAP operating margin was 16.1%, including an ~$80 million charge related to product liability cases.
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Free Cash Flow:Q3 free cash flow of $867 million ($1,047 million from operating activities less $180 million net capital expenditures).
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Cash & Leverage:Cash on hand of $609 million as of September 30, 2026; gross debt leverage ratio of 1.9x.
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Tax Rate:Q3 adjusted tax rate of 14.3%, higher than expected due to discrete tax items.
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Interest & Other Expenses:Q3 adjusted interest and other expenses of $124 million, in line with expectations.
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Neuromodulation:Sales grew 13%.
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Urology:Sales declined 3%, impacted by the cyber incident and expanding pricing pressure in China.
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Endoscopy:Sales declined 1% vs. Q3 2025, including China VBP and cyber impacts.
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Cardiovascular:Sales grew 2%; interventional cardiology and vascular therapies grew 12%.
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Interventional Cardiology:Grew 19%, with strength in global imaging and drug-eluting technologies.
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Vascular Therapies:Grew 1%, impacted by cyber and TCAR supply constraints.
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Interventional Oncology & Embolization:Grew 5%, driven by Cancer Therapies, partly offset by supply constraints.
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Cardiac Rhythm Management:Sales declined 2%; diagnostics grew high single-digits, low voltage declined mid-single-digits, high voltage declined low single-digits.
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WATCHMAN:Sales declined 6% (US down 7%, international up 4%); US concomitant procedures grew ~35%, stand-alone procedures declined high-teens.
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Electrophysiology (EP):Sales declined 5% (US down 8%, international up 2%); cyber incident estimated to account for roughly half the miss.
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Regional Performance:US flat operationally; EMEA grew 6%; Asia Pacific declined 1%.
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Q4 2026 Guidance:Organic revenue decline of 1%3%; adjusted EPS of $0.77$0.79.
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Full Year 2026 Guidance:Reported revenue growth ~4.25%; operational and organic growth ~3.75% (incl. ~50 bps FX tailwind); adjusted operating margin ~27.6%; adjusted tax rate ~12%; free cash flow ~$3.6 billion; adjusted EPS of $3.16$3.18 (3%4% growth, incl. ~$0.06 FX headwind).
Release Date: October 28, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Boston Scientific Corp ( NYSE:BSX ) expects to achieve over $500 million in savings from its restructuring program over the next three years, with more than half realized by the end of 2027.
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The company has a strong cadence of product launches in 2027 and 2028, including 2D ICE in the second half of 2027, Farawave Ultra in early 2028, and Faraflex in 2029, which are expected to drive growth.
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Boston Scientific Corp ( NYSE:BSX ) is entering new markets that could unlock $25 billion in new market opportunity by 2030, such as the AMI cardiogenic shock indication for its Vitalist platform.
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The interventional cardiology business grew 19% in Q3 2026, with strong performance in imaging and drug-eluting technologies, and the Agent DCB has treated over 400,000 patients to date.
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The company has implemented enhancements to its forecasting process, including more sensitivity and scenario analysis, objective models, and third-party data, to improve accuracy going forward.
Negative Points
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Q3 2026 organic sales grew only 1.5%, below the guided range of 3% to 5%, due to a cybersecurity incident that reduced sales growth by approximately 300 basis points.
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Adjusted EPS for Q3 2026 was $0.73, a decline of 3% and below the guidance range of $0.80 to $0.82, with the cyber incident impacting EPS by $0.07.
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The company expects continued top-line pressure into 2027, with challenges to grow revenue and adjusted EPS, excluding the Penumbra acquisition, due to persistent dynamics in WATCHMAN and EP.
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WATCHMAN sales declined 6% in Q3 2026, with US stand-alone procedures down high-teens, and the market is expected to remain under pressure with a new competitive launch in 2027.
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EP sales declined 5% in Q3 2026, and the company expects continued erosion of its PFA share position until the launch of Farawave Ultra in early 2028, with limited new product launches in 2027.
Q & A Highlights
Q: How much of the Q3 cyber incident impact was real versus order stocking, why does it bleed into Q4, and how much of the no-growth 2027 outlook reflects conservatism versus new information on markets and product timing? A: CFO Jonathan Monson estimated the cyber incident created roughly a 300 basis point revenue headwind in Q3 (about $150 million) and a $0.07 EPS hit from lost sales, unfavorable manufacturing absorption and direct costs. Q4 carries an ongoing 200-300 basis point impact (about $0.05 EPS) as elevated customer stocking is burned off. CEO Michael Mahoney said the 2027 framework is deliberately conservative: the ~75% of the business outside EP/WATCHMAN has grown ~6%, offset by about a point of China pricing pressure, while WATCHMAN is assumed to stay at current negative 7-8% market dynamics with a new competitive launch, and EP share erosion continues at H2 2026 rates until the 2D ICE launch in H2 2027 and Farapulse Ultra in early 2028.
Q: What gives you confidence that sales and EPS growth improve in 2028, especially with FerroFlex pushed to 2029 and novel PFA competition coming? A: Mahoney said 2023-2025 was a high-growth cycle led by WATCHMAN and EP, and 2026-2027 is a down cycle he expects to bottom in 2027. For 2028, the interventional cardiology, vascular and Penumbra combination should grow above WAMGR, MedSurg should grow mid-single digits at market, CRM returns to growth with the Denali defibrillator platform, WATCHMAN laps a competitive launch and may have a label change, and EP benefits from a full year of Farapulse Ultra plus the ICE launch. He expects solid growth in 2028 and above-WAMGR growth in 2029.
Q: What internal actions are you taking to bridge to 2028, and what is the status of the Penumbra deal timing? A: Mahoney said the company began a meaningful restructuring about six months ago, aligning costs to the Q4/2027 reality through de-layering, headcount and SG&A reductions while continuing to invest in growth platforms. CFO Monson said the program should deliver over $500 million of savings over three years, with more than half achieved exiting 2027, and that execution is slightly ahead of plan. On Penumbra, Mahoney said Boston Scientific remains very bullish and confident in closing, but based on regulator discussions now expects completion in early Q1 2027.
Q: Why can't MedSurg return to its historical 7-8% growth, and what needs to happen in urology, endoscopy and neuromodulation? A: Mahoney agreed mid-single-digit growth is below the segment's potential. Neuromodulation is performing well with a diversified pain portfolio and a new SCS launch in 2028; endoscopy's underlying business is strong but faces significant China pricing erosion in 2027, annualizing in Q4 2027 before accelerating in 2028; urology has been the challenge, with the company wrong on its growth trend, but three recent stone approvals and seasoning of new Axonics reps should drive improvement in 2027. He aims to get MedSurg back to roughly 7-8% growth over time.
Q: Several pipeline products slipped - is there a broader de-risking of the pipeline, and what forecasting improvements have been made? A: Monson acknowledged 2026 forecasting has been challenging and said the company has added more sensitivity and scenario analysis, more objective models and more third-party data, alongside a new operating model for greater focus and accountability. Mahoney said the business has grown larger, prompting Joe Fitzgerald's move to COO and a sector split to improve launch-date reliability, and noted roughly a six-month delay on some large platforms due to complex clinical and regulatory processes. He stressed the pipeline remains rich and is key to restoring Boston Scientific's high-performance reputation.
Q: Is the ~7% WAMGR sustainable in out-years, and what is your updated view of the US EP market into 2027-2028? A: Mahoney said WAMGR remains about 7%, with some pressure in Europe and endoscopy offset by the strong EP market, while the roughly $2 billion WATCHMAN market has pulled the overall figure down. He expects 7-8% over the next three years as Boston Scientific enters faster-growing markets such as IVL, potentially hypertension, and new EP segments with ICE and Faraflex, plus Penumbra at or above WAMGR. The company expects to grow below WAMGR in 2027 and return closer to WAMGR and beyond in 2028.
Q: With no adjusted EPS growth expected in 2027 despite restructuring, is product mix the main driver, or why shouldn't we expect EPS growth? A: Monson said mix is the biggest factor: top-line pressure is concentrated in WATCHMAN and EP, which carries a gross margin mix impact, and escalating China pricing pressure also weighs on gross margin in 2027, alongside continued investment in supply chain and quality systems. Restructuring will offset some costs and spending will be disciplined, but he expects 2027 EPS to be roughly in line with revenue, with the company challenged to grow next year. Full 2027 guidance will come on the Q4 call.
Q: What is causing the delay in the THRIVE data and Vivist launch, and why pivot Vivist to AMI cardiogenic shock rather than high-risk PCI? A: Chief Medical Officer Ken Stein said competitor data last year called into question broad mechanical circulatory support use in high-risk PCI, requiring better patient selection, whereas AMI cardiogenic shock has mortality approaching 50% and the DANGER Shock trial showed mechanical support can reduce mortality. He said Vivist's novel catheter design offers positional stability for longer CCU use and aims to minimize complexity and vascular complications. On THRIVE, enrollment has been slower than hoped during the SamaV team integration, but he remains confident in the ultrasound renal denervation technology.
Q: For Farapulse Ultra and Faraflex, is the delay product-, enrollment- or manufacturing-related, and any more detail on the Penumbra timing push? A: Group President Joe Fitzgerald said Ultra is a PMA supplement requiring no clinical study, so its roughly one-quarter delay stems from design verification and validation across hardware,
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
