Name: Boston Scientific Corp. (NYSE:BSX) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

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Boston Scientific Corp., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income (loss)	698)	1,041)	(82)	4,700)	1,671)
(Gain) loss on disposal of businesses and assets	22)	(78)	—)	—)	—)
Depreciation and amortization	1,136)	1,093)	1,123)	1,011)	894)
Deferred and prepaid income taxes	(63)	(124)	(82)	(4,301)	(87)
Stock-based compensation expense	220)	194)	170)	157)	140)
Goodwill and other intangible asset impairment charges	132)	370)	533)	105)	35)
Net (gain) loss on investments and notes receivable	1)	(250)	(398)	30)	(155)
Contingent consideration net expense (benefit)	35)	(136)	(100)	(35)	(21)
Inventory step-up amortization	32)	34)	58)	46)	6)
Debt extinguishment costs	194)	—)	—)	—)	—)
Other, net	124)	77)	244)	419)	(4)
Trade accounts receivable	(220)	(279)	335)	(130)	(110)
Inventories	(321)	(346)	(65)	(290)	(83)
Other assets	(209)	(134)	(200)	45)	(172)
Accounts payable, accrued expenses and other liabilities	(255)	408)	(28)	79)	(1,804)
Increase (decrease) in operating assets and liabilities, excluding purchase accounting	(1,005)	(351)	42)	(296)	(2,169)
Adjustments to reconcile net income (loss) to cash provided by operating activities	828)	829)	1,590)	(2,864)	(1,361)
Cash provided by operating activities	1,526)	1,870)	1,508)	1,836)	310)
Purchases of property, plant and equipment and internal use software	(588)	(554)	(376)	(461)	(316)
Proceeds from sale of property, plant and equipment	12)	14)	12)	7)	14)
Payments for acquisitions of businesses, net of cash acquired	(1,542)	(2,259)	(3)	(4,382)	(1,448)
(Payments for) proceeds from investments and acquisitions of certain technologies	(24)	279)	(146)	(148)	(171)
Proceeds from disposal of certain businesses and assets	5)	826)	15)	90)	—)
Proceeds from royalty rights	70)	82)	87)	52)	—)
(Payments for) proceeds from settlements of hedge contracts	56)	15)	—)	(199)	—)
Cash used for investing activities	(2,011)	(1,597)	(411)	(5,041)	(1,921)
Payment of contingent consideration previously established in purchase accounting	(336)	(15)	(49)	(66)	(19)
Payments for royalty rights	(75)	(85)	(97)	(69)	—)
Proceeds from royalty rights transfer	—)	—)	—)	256)	—)
Payments on short-term borrowings	(250)	—)	(2,950)	(1,000)	—)
Proceeds from short-term borrowings, net of debt issuance costs	—)	—)	2,245)	700)	999)
Net increase (decrease) in commercial paper	(1)	—)	(714)	(575)	21)
Payments on borrowings from credit facilities	—)	—)	(1,919)	—)	(569)
Proceeds from borrowings on credit facilities	—)	—)	1,916)	—)	569)
Payments on long-term borrowings and debt extinguishment costs	(3,184)	—)	(1,260)	(3,560)	(602)
Proceeds from long-term borrowings, net of debt issuance costs	3,270)	—)	1,683)	7,229)	987)
Cash dividends paid on preferred stock	(55)	(55)	(28)	—)	—)
Net proceeds from issuance of preferred stock in connection with public offering	—)	—)	975)	—)	—)
Net proceeds from issuance of common stock in connection with public offering	—)	—)	975)	—)	—)
Payments for repurchase of common stock	—)	—)	(535)	—)	—)
Cash used to net share settle employee equity awards	(53)	(50)	(59)	(65)	(56)
Proceeds from issuances of shares of common stock pursuant to employee stock compensation and purchase plans	136)	110)	110)	123)	102)
Cash provided by (used for) financing activities	(548)	(95)	293)	2,973)	1,432)
Effect of foreign exchange rates on cash	(9)	(5)	(2)	10)	(9)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	(1,042)	173)	1,388)	(222)	(188)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	2,168)	1,995)	607)	829)	1,017)
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	1,126)	2,168)	1,995)	607)	829)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

An analysis of the cash flow patterns between 2018 and 2022 reveals a strategy characterized by aggressive inorganic growth funded by periodic debt issuance and a resilient operating cash flow base despite volatility in net income.

Operating Cash Flow Dynamics: Cash provided by operating activities demonstrated significant growth from 310 million USD in 2018 to a more stable range between 1.5 billion USD and 1.9 billion USD from 2019 through 2022. This stability occurred despite substantial fluctuations in net income, which peaked in 2019 at 4.7 billion USD and dipped to a loss of 82 million USD in 2020. The discrepancy between net income and operating cash is largely attributable to non-cash adjustments, most notably a substantial deferred income tax benefit of 4.3 billion USD in 2019 and impairment charges that peaked at 533 million USD in 2020.
Investment and Acquisition Strategy: Investing activities were consistently negative throughout the period, reflecting a heavy commitment to capital expenditure and business expansion. Payments for the acquisition of businesses were a primary driver of cash outflows, with a peak expenditure of 4.38 billion USD in 2019 and continued significant investments of 2.26 billion USD in 2021 and 1.54 billion USD in 2022. Simultaneously, expenditures on property, plant, and equipment showed a steady upward trend, increasing from 316 million USD in 2018 to 588 million USD in 2022, indicating a consistent expansion of the physical and technological infrastructure.
Financing and Liquidity Management: Financing activities shifted from being a primary source of cash to a net use of cash over the five-year period. A major financing event occurred in 2019, where proceeds from long-term borrowings reached 7.23 billion USD, coinciding with the highest period of acquisition spending. By 2022, the strategy shifted toward debt reduction, evidenced by 3.18 billion USD in payments on long-term borrowings. The company also utilized equity markets in 2020, issuing both preferred and common stock for 975 million USD each to bolster the balance sheet during a year of net operating losses.
Working Capital and Cash Position: Working capital requirements exerted pressure on cash flows, particularly in 2018 and 2022, with total increases in operating assets and liabilities causing outflows of 2.17 billion USD and 1.01 billion USD, respectively. Inventories represented a persistent cash drain, with outflows increasing from 83 million USD in 2018 to over 300 million USD annually between 2021 and 2022. The ending cash and equivalents balance peaked at 2.17 billion USD in 2021 before declining to 1.13 billion USD by the end of 2022, reflecting the impact of increased debt repayments and continued investment spending.

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