Research Update: Boston Scientific Corp. 'BBB-' Rating Affirmed On Reduced Liability; Outlook Revised To Positive From Stable

Medical device manufacturer Boston Scientific Corp.'s litigation expenses related to the pelvic mesh claims have subsided, and we expect legal liabilities to be largely resolved by the end of 2018, meaningfully improving adjusted credit ratios. This also gives us confidence that the company's profitability and cash flow generation will become more stable, as the litigation payments subside. Moreover, the company has exceeded our expectations for revenue growth and profitability over the past year, benefiting from multiple new product launches. Based on the strength of recent performance, we now expect the company's EBITDA margins to remain 27%-28% in 2018-2019 and discretionary cash flow to improve to around $2 billion in 2019. However, we still expect leverage to remain around 3x in

...+ Medical device manufacturer Boston Scientific Corp.'s litigation expenses related to the pelvic mesh claims have subsided, and we expect legal liabilities to be largely resolved by the end of 2018, meaningfully improving adjusted credit ratios. + This also gives us confidence that the company's profitability and cash flow generation will become more stable, as the litigation payments subside. + Moreover, the company has exceeded our expectations for revenue growth and profitability over the past year, benefiting from multiple new product launches. Based on the strength of recent performance, we now expect the company's EBITDA margins to remain 27%-28% in 2018-2019 and discretionary cash flow to improve to around $2 billion in 2019. However, we still expect leverage to remain around 3x in 2018-2019 as the company spends most of its internally generated cash flow on acquisitions. + We are affirming our '###-' issuer credit rating and revising the outlook to positive from stable. We are...

Research Update