BSX, Boston Scientific Corp
We encounter significant competition across our product lines and in each market in which our products are sold from various medical device companies.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- A consumer-brand business, where the durable asset is the brand and its hold on the shelf.
- Situation
- Cyclical. margins collapse repeatedly across the cycle, a single year misleads; look at normalized, through-cycle earnings and the balance sheet at the trough.
- What moves the needle
- Volume against price, and shelf position. What decides it: whether it can raise prices without losing the customer, and whether the brand still commands its margin.
- Is it a good business?
- Return on capital has rarely cleared the cost of capital (median 5%, above 15% in 0 of 10 years). Owner earnings agree: roughly 11% of revenue reaches owners as cash, consistently. The cycle and the balance sheet decide this one, so weigh the worst year against the median, and read the 10-K.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $8.4B | $9.0B | $9.8B | $10.7B | $9.9B | $11.9B | $12.7B | $14.2B | $16.7B | $20.1B | $20.6B |
| Gross marginGross mgn | 71% | 71% | 71% | 71% | 65% | 69% | 69% | 69% | 69% | 69% | 69% |
| Operating marginOp. mgn | 5.3% | 14.2% | 15.3% | 14.1% | −0.8% | 10.1% | 13.0% | 16.5% | 15.5% | 18.0% | 18.4% |
| Net incomeNet inc. | $347M | $104M | $1.7B | $4.7B | ($115M) | $985M | $642M | $1.6B | $1.9B | $2.9B | $3.6B |
| EPS (diluted)EPS | $0.25 | $0.07 | $1.19 | $3.33 | $-0.08 | $0.69 | $0.45 | $1.07 | $1.25 | $1.94 | $2.38 |
| Owner earningsOwner earn. | $806M | $1.1B | ($6M) | $1.4B | $1.1B | $1.3B | $938M | $1.8B | $2.6B | $3.7B | $3.5B |
| ROICROIC | 4% | 5% | 10% | 6% | -0% | 5% | 4% | 7% | 7% | 9% | 10% |
| Cash & investmentsCash+inv | $196M | $188M | $146M | $217M | $1.7B | $1.9B | $928M | $865M | $414M | $2.0B | $1.5B |
| Net debt / (cash)Net debt | $5.5B | $5.4B | $6.9B | $9.8B | $7.4B | $7.1B | $8.0B | $8.2B | $10.3B | $9.2B | $10.1B |
| Dividends / shareDiv/sh | — | — | $0.00 | $0.00 | $0.02 | $0.04 | $0.04 | $0.02 | $0.00 | — | — |
| Book value / shareBVPS | $4.89 | $5.03 | $6.23 | $9.84 | $10.82 | $11.59 | $12.21 | $13.18 | $14.65 | $16.21 | $17.30 |
Owner’s Scorecard
Will it survive?
- Can it pay its interest? 10.4×ComfortableOperating income $3.6B ÷ interest expense $349M
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
- ModerateTotal debt $11.1B ÷ operating income $3.6B
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $9.2BMeaningful net debtCash $2.0B − debt $11.1B
Netting $2.0B of cash and short-term investments against $11.1B of debt leaves $9.2B owed, about 2.5× a year's operating profit, versus the gross figure above. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Not enough data
The filing data didn't include the inputs for this check.
Is it a good business?
- SolidNOPAT $3.1B ÷ invested capital $33.4B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- Cash machineOwner Earnings $3.7B = operating cash $4.5B − capex $876M
What an owner could take out without starving the business. That's 18% of revenue. Treating stock comp as the real expense it is (less $299M of SBC) leaves $3.4B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $4.5B ÷ net income $2.9B
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Reinvests most of itDividends + buybacks $0 ÷ Owner Earnings $3.7B
Of $3.7B Owner Earnings, $0 (0%) went back to shareholders, $0 dividends, $0 buybacks. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 0.64×HarvestingCapex $876M ÷ depreciation $1.4B
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 9 of 10
Lost money in 1 year(s), look at what happened there before trusting the average.
- Return on capital ≥ 15% 0 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 5% (FY2016) → 18% (FY2025)
Margins widened over the record, pricing power intact or improving.
- Reinvestment, incremental ROIC 8%
Reinvested capital earned only a modest return, growth is getting expensive.
- Owner earnings growth +14%/yr
Free cash to owners grew about 14% a year over the record.
- Worst year 2020 · −0.8% op. margin
Operations went underwater in 2020, understand why before trusting the good years.
- Share count +0.9%/yr
Roughly flat share count, little dilution, little buyback.
- Dividend record paid
Paid a dividend in 4 of the years on record.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $20.1B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- Reinvested$5.4B · 27%
- Dividends$166M · 1%
- Buybacks$535M · 3%
- Retained (debt / cash)$14.1B · 70%
It reinvested $5.4B (27%) back into the business and returned $701M (3%) to owners, $166M in dividends, $535M in buybacks. Total debt rose $5.9B across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
read the proxy →Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- CEO pay ratio348:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio isn't proof of anything, some businesses are genuinely top-heavy in scarce skill, but a runaway figure is where Buffett starts asking whether the board is doing its job or just keeping the chair company.
- Stock-based compensation$299M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 8% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
2 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $20.1B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity NearCurrent ratio ≥ 2× · 1.62×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $11.1B vs $3.4B WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability NearA profit every year (10-yr record) · 1 loss year
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record MissUninterrupted dividends · 4 of 10 yrs
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth PassEarnings +33% over the record · +198%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $1.94/share and book value $16.21/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Boston Scientific Corp has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $3.5B on 1495M diluted shares; net debt $10.1B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Pricing power & competitionBusiness
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“As the health care industry consolidates, competition to provide products and services is expected to continue to intensify, resulting in pricing pressures, decreased average selling prices and the exclusion of certain suppliers from important market segments.”
From the recordOperating margin18.4% (TTM), near a 10-yr high - Supplier & input dependenceBusiness
A choke point upstream. A sole or limited supplier can dictate terms, and a single shortage can stop the line.
“Certain of these materials and components are purchased from single sources due to quality considerations, expertise, costs or constraints resulting from regulatory requirements.”
From the recordGross-margin cushion (TTM)69% - Concentrated dependenceBusiness
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Where coverage exists, access may depend on availability, timing, and adequacy of coding, billing, and payment mechanisms and claims processing practices.”
From the recordOwner-earnings margin at stake (TTM)17% - Debt terms & refinancingBusiness
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“In addition, our credit agreements contain a financial covenant that requires us to maintain a maximum specified leverage ratio and place other limits on our business.”
From the recordBalance sheet (TTM)$9.2B meaningful net debt · interest covered 10.4× - Litigation & contingenciesRisk Factors
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“We recorded litigation-related net credits of $ 111 million in 2023 primarily related to the settlement of offensive patent litigation.”
A judgment, not a number, weigh it against the filing yourself. - Cyclicality & demandBusiness
How the business behaves when the economy turns. A cyclical earns its keep across the whole cycle, not at the peak.
“If there were a general economic slowdown or recession, we may experience decreased customer spending or demand for our products and services, and our customers' ability to pay for our products on a timely basis, or at all, may be impacted.”
From the recordWorst year on record−0.8% operating margin (FY2020) - Regulation & policyBusiness
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“In the European Union, the General Data Protection Regulation (GDPR) imposes strict requirements and significant potential penalties.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “We determine the fair value of our derivative and nonderivative instruments using the framework prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures (FASB ASC Topic 820), and considering the estimated amount we would receive or pay to transfer these instruments at the reporting …”
- “We believe our Allowance for credit losses is adequate as of December 31, 2025; however, if significant changes were to occur in the payment practices of government customers, or if there is an increase in bankruptcies among our ambulatory surgery center or office-based customers, we may not be able…”
- “We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results…”
- “The tax reductions as compared to the taxes otherwise chargeable favorably impacted Net income (loss) attributable to Boston Scientific common stockholders by $ 540 million, $ 353 million and $ 254 million in fiscal years 2025, 2024 and 2023, respectively, and Net income (loss) per common share - di…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Medical devices
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| MDTMedtronic PLC | $33.5B | 65% | 17.8% | 7% | 15% |
| SYKStryker Corp | $25.1B | 64% | 19.5% | 10% | 17% |
| MMM3M Company | $24.9B | 40% | 18.6% | 24% | 6% |
| BDXBecton Dickinson & Co | $21.8B | 45% | 11.8% | 5% | 18% |
| BSXBoston Scientific Corp | $20.1B | 69% | 18.0% | 9% | 18% |
| BAXBaxter International Inc | $11.2B | 30% | -2.7% | -2% | 3% |
| ISRGIntuitive Surgical, Inc. | $10.1B | 66% | 29.3% | 18% | 25% |
| ZBHZimmer Biomet Holdings, Inc. | $8.2B | 70% | 13.3% | 5% | 18% |