Boston Scientific (BSX) Q3 2026: U.S. Electrophysiology Sales Turn Lower

Boston Scientific (BSX) reported third-quarter 2026 results on October 28, 2026, through its earnings release and conference call, and both revenue and earnings came in below the guidance the company gave in July [1][2]. Across the four questions that had framed the company, the news was mostly negative: losses from the cybersecurity incident were not recovered, U.S. electrophysiology sales turned to decline while next-generation products slipped, Watchman stayed within guidance but has not bottomed, and the remaining roughly 75% of the business kept growing even as margin guidance moved from expansion to contraction. Management said that in 2027, excluding Penumbra, it will be challenged to grow sales and adjusted EPS, and that fourth-quarter guidance is the starting point [2].

Boston Scientific sells single-use surgical devices to hospitals worldwide. In 2025 it generated $20.074 billion of revenue, including $3.325 billion (16.6%) from electrophysiology, led by Farapulse ablation catheters, and $1.958 billion from the Watchman left atrial appendage closure device [3].

U.S. electrophysiology sales turned negative

Electrophysiology (EP) sales fell 5% on an organic basis in the third quarter, with the U.S. down 8% and international up 2% [2]. U.S. EP revenue was $606 million in the second quarter [4]; based on the prior-year quarter, third-quarter U.S. EP revenue is an estimated $560 million or so.

Management attributed the U.S. decline to share. Pulsed field ablation already accounts for about 80% of U.S. atrial fibrillation ablation, competitive share pressure has intensified since the second quarter, and the cyber outage accelerated some of the shift [2][5]. The company estimated that roughly half of the EP shortfall came from the cyber incident, mostly in international markets [2].

The path to recovering share has moved later. The company expects share losses to continue until Ferrowave Ultra launches in early 2028, after design verification and validation issues pushed it back by about a quarter; the 2D ICE imaging product is planned for the second half of 2027, and Ferriflex has slipped to 2029 [2]. EP growth went from 1.5 percentage points above the company total in the second quarter to 6.5 points below it [1][4]. The CFO said the unfavorable mix from declines in EP and Watchman is the main reason gross margin will be under pressure in 2027 [2].

Cyber incident losses were not recovered

Third-quarter net sales were $5.138 billion, up 1.5%, and adjusted EPS was $0.73 [1]. July guidance had called for sales growth of 3% to 5% and adjusted EPS of $0.80 to $0.82 [6]. The company estimated that the cyber incident reduced third-quarter sales growth by about 300 basis points, roughly $150 million, and EPS by $0.07 [2].

No catch-up followed the outage. Hospitals restocked at the end of the quarter, and burning off that inventory is expected to cut fourth-quarter sales by another 200 to 300 basis points and EPS by $0.04 to $0.05 [2]. The company lowered full-year guidance from organic growth of 5% to 6% and adjusted EPS of $3.28 to $3.32 to about 3.75% and $3.16 to $3.18, and it now guides fourth-quarter organic sales down 1% to 3% [1][6].

The midpoint of full-year EPS guidance fell by about $0.13, of which the incident accounts for about $0.115, while revenue also revealed a slowdown beyond the incident. Excluding the incident, third-quarter growth was about 4.5% and fourth-quarter growth is about -1% to 2%; management attributed the gap to intensifying EP share pressure and worsening pricing in China [2]. Third-quarter adjusted operating margin was 26.5%, down 150 basis points year over year, mainly because the shutdown raised unit manufacturing costs [2].

Other businesses kept growing as margins contracted

Watchman sales fell 6% on an organic basis in the third quarter, still within the company's earlier guidance for a mid-to-high single-digit decline in the second half [2][7]. However, the decline in U.S. standalone procedures widened from the low teens to the high teens, and growth in concomitant procedures slowed from more than 60% to about 35% [2][5].

Among the remaining businesses, interventional cardiology and vascular therapies grew 12% organically and neuromodulation grew 13%, while urology fell 3.1%, which management attributed to the cyber incident and China volume-based pricing [1][2]. Full-year adjusted operating margin guidance moved from 0 to 25 basis points of expansion to about 27.6%, and China pricing is expected to take about one point off this group's 2027 growth [2][7]. The Penumbra closing has been pushed to early 2027 [2].

Conclusion

Boston Scientific's down cycle is deeper than the July outlook implied, and the company now calls 2027 the trough. EP and Watchman have turned from growth drivers into net drags, and roughly 6% growth in the rest of the business is not enough to offset them. The third-quarter margin decline came mainly from the one-time shutdown, but the more lasting pressure comes from declines in high-margin products and China pricing; the company expects more than half of its over $500 million in three-year restructuring savings by the end of 2027, which only partly offsets that pressure [2]. Cash generation remains solid: third-quarter free cash flow was $867 million, and the company expects about $3.6 billion for the full year [2].

Business-unit dollar amounts are estimated from growth rates, and the incident's impact has not been broken out by business. Whether the fourth quarter lands within guidance, whether international EP recovers, and what the first 2027 guidance shows will strengthen or weaken this assessment.

Sources

[1] BSX 8-K filed 2026-10-28 · Q3 2026 earnings release (EX-99.1) · 2026-10-28 · 8-K · https://www.sec.gov/Archives/edgar/data/885725/000088572526000066/earningsrelease_live.htm [2] BSX Q3 2026 earnings call 2026-10-28 · transcript · 2026-10-28 · earnings_call · drillr://earning_call_summary/BSX/2026-10-28 [3] BSX 10-K filed 2026-02-17 · net sales by business unit 2023-2025 · 2026-02-17 · 10-K · https://www.sec.gov/Archives/edgar/data/885725/000088572526000010/ [4] BSX 10-Q filed 2026-08-03 · net sales by business unit 2Q26 · 2026-08-03 · 10-Q · https://www.sec.gov/Archives/edgar/data/885725/000088572526000053/bsx-20260630.htm [5] BSX Q2 2026 earnings call 2026-07-29 · business unit performance · 2026-07-29 · earnings-call · https://gateway.drillr.ai/mcp/private [6] BSX 8-K filed 2026-07-29 · full year and third quarter 2026 guidance · 2026-07-29 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000885725&type=8-K&dateb=&owner=include&count=40 [7] BSX Q2 2026 earnings call 2026-07-29 · guidance detail · 2026-07-29 · earnings-call · https://gateway.drillr.ai/mcp/private