Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Boston Scientific Corp., profitability ratios
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).
The profitability profile over the analyzed five-year period reveals a period of significant volatility, specifically centered around a sharp contraction in 2020, followed by a partial recovery in operational efficiency. While gross margins remained relatively resilient, bottom-line profitability and capital efficiency ratios have not returned to their pre-2020 peaks.
- Gross Profit Margin
- A consistent ability to manage direct costs is observed, with the margin maintaining a range between 65% and 71%. A temporary dip to 65.05% occurred in 2020, but the margin stabilized at approximately 68.8% by the end of 2022.
- Operating Profit Margin
- A V-shaped recovery pattern is evident. The margin fell from 14.14% in 2019 to a negative 0.81% in 2020. This was followed by a steady rebound, reaching 13.00% in 2022, which nearly restores the operating efficiency levels seen in 2018.
- Net Profit Margin
- Extreme fluctuations are present in this metric, characterized by an anomalous spike to 43.78% in 2019 and a subsequent drop to -0.83% in 2020. Despite a recovery to 8.76% in 2021, a downward trend resumed in 2022, with the margin closing at 5.50%.
- Return on Equity (ROE) and Return on Assets (ROA)
- Both efficiency ratios mirror the volatility of the net profit margin. After peaking in 2019, both metrics entered negative territory in 2020. A weak recovery followed, with ROE declining from 6.26% in 2021 to 3.97% in 2022, and ROA declining from 3.23% to 2.15% in the same period. This indicates a significant long-term deterioration in the return generated on both assets and shareholder equity compared to 2018 levels.
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Gross Profit Margin
Boston Scientific Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | 8,727) | 8,177) | 6,448) | 7,620) | 7,011) | |
| Net sales | 12,682) | 11,888) | 9,913) | 10,735) | 9,823) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 68.81% | 68.78% | 65.05% | 70.98% | 71.37% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 51.54% | 52.21% | — | — | — | |
| Elevance Health Inc. | 16.79% | 17.09% | — | — | — | |
| Intuitive Surgical Inc. | 67.44% | 69.32% | — | — | — | |
| Medtronic PLC | 67.98% | 65.19% | — | — | — | |
| UnitedHealth Group Inc. | 24.09% | 23.60% | — | — | — | |
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).
1 2022 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 8,727 ÷ 12,682 = 68.81%
2 Click competitor name to see calculations.
Between 2018 and 2022, a general upward trajectory in both net sales and gross profit was observed, despite a notable contraction in 2020. Net sales grew from 9,823 million US$ in 2018 to 12,682 million US$ by 2022, indicating an overall expansion in revenue generation over the five-year period.
- Gross Profit Performance
- Gross profit followed a path closely aligned with net sales, increasing from 7,011 million US$ in 2018 to 8,727 million US$ in 2022. A significant dip occurred in 2020, where gross profit fell to 6,448 million US$. However, a robust recovery was recorded in 2021 and 2022, with the figure reaching its peak at the end of the analyzed period.
- Gross Profit Margin Volatility
- The gross profit margin experienced a period of fluctuation, starting at 71.37% in 2018 and ending at 68.81% in 2022. A sharp compression is evident in 2020, when the margin declined to 65.05%, the lowest point in the series. This indicates a temporary increase in the cost of goods sold relative to sales or an unfavorable shift in product mix during that year.
- Margin Stabilization and Recovery
- Following the 2020 decline, a recovery trend emerged. The margin rose to 68.78% in 2021 and remained nearly constant at 68.81% in 2022. While the margin stabilized and recovered from the 2020 low, it did not return to the higher levels observed in 2018 and 2019, suggesting a new baseline for operational efficiency or pricing dynamics.
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Operating Profit Margin
Boston Scientific Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income (loss) | 1,649) | 1,199) | (80) | 1,518) | 1,506) | |
| Net sales | 12,682) | 11,888) | 9,913) | 10,735) | 9,823) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 13.00% | 10.09% | -0.81% | 14.14% | 15.33% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 19.16% | 19.56% | — | — | — | |
| Elevance Health Inc. | 4.94% | 5.15% | — | — | — | |
| Intuitive Surgical Inc. | 25.35% | 31.89% | — | — | — | |
| Medtronic PLC | 18.15% | 14.89% | — | — | — | |
| UnitedHealth Group Inc. | 8.83% | 8.40% | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Health Care Equipment & Services | 9.26% | 9.13% | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Health Care | 18.74% | 18.04% | — | — | — | |
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).
1 2022 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Net sales
= 100 × 1,649 ÷ 12,682 = 13.00%
2 Click competitor name to see calculations.
The operational performance between 2018 and 2022 is characterized by a period of significant volatility, marked by a severe contraction in 2020 and a subsequent multi-year recovery phase.
- Net Sales Trends
- Net sales followed a generally upward trajectory, increasing from US$ 9,823 million in 2018 to US$ 12,682 million in 2022. A temporary reversal occurred in 2020, with sales decreasing to US$ 9,913 million, followed by robust growth in the final two years of the period.
- Operating Profitability and Margin Volatility
- Operating profit margins experienced a sharp decline from 15.33% in 2018 and 14.14% in 2019 to a negative 0.81% in 2020. This collapse is reflected in the operating income, which swung from a gain of US$ 1,518 million in 2019 to an operating loss of US$ 80 million in 2020.
- Recovery and Efficiency Analysis
- A consistent recovery is evident from 2021 onward, with the operating profit margin climbing to 10.09% in 2021 and reaching 13.00% in 2022. Although operating income reached its highest point in the five-year sequence at US$ 1,649 million in 2022, the operating margin has not yet returned to the 15.33% peak observed in 2018, suggesting that operational expenses grew at a rate that slightly offset the gains in net sales during the recovery.
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Net Profit Margin
Boston Scientific Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) | 698) | 1,041) | (82) | 4,700) | 1,671) | |
| Net sales | 12,682) | 11,888) | 9,913) | 10,735) | 9,823) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 5.50% | 8.76% | -0.83% | 43.78% | 17.01% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 15.88% | 16.42% | — | — | — | |
| Elevance Health Inc. | 3.87% | 4.46% | — | — | — | |
| Intuitive Surgical Inc. | 21.25% | 29.85% | — | — | — | |
| Medtronic PLC | 15.90% | 11.97% | — | — | — | |
| UnitedHealth Group Inc. | 6.25% | 6.06% | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Health Care Equipment & Services | 7.05% | 7.14% | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Health Care | 14.65% | 15.24% | — | — | — | |
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).
1 2022 Calculation
Net profit margin = 100 × Net income (loss) ÷ Net sales
= 100 × 698 ÷ 12,682 = 5.50%
2 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by steady revenue growth contrasted with significant volatility in bottom-line profitability. While net sales expanded over the five-year period, the net profit margin exhibited extreme fluctuations, including a sharp peak in 2019 and a transition into negative territory in 2020.
- Net Sales Trend
- A general upward trajectory in revenue is observed, with net sales increasing from 9,823 million US dollars in 2018 to 12,682 million US dollars by 2022. A slight contraction occurred in 2020, but the overall trend indicates consistent growth in top-line performance.
- Net Profit Margin Volatility
- The net profit margin experienced an abnormal increase in 2019, reaching 43.78%, before dropping sharply to -0.83% in 2020. This volatility is mirrored in the net income, which shifted from a high of 4,700 million US dollars in 2019 to a net loss of 82 million US dollars in 2020, suggesting the impact of non-recurring items or significant one-time financial adjustments.
- Profitability Recovery and Compression
- Profitability returned to positive levels in 2021 with a net profit margin of 8.76%. However, a subsequent compression is noted in 2022, where the margin declined to 5.50% despite the continued rise in net sales. This indicates that while the company has maintained positive earnings, the efficiency of converting sales into net profit has decreased relative to the 2021 recovery level.
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Return on Equity (ROE)
Boston Scientific Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) | 698) | 1,041) | (82) | 4,700) | 1,671) | |
| Stockholders’ equity | 17,573) | 16,622) | 15,326) | 13,877) | 8,726) | |
| Profitability Ratio | ||||||
| ROE1 | 3.97% | 6.26% | -0.54% | 33.87% | 19.15% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Abbott Laboratories | 18.90% | 19.75% | — | — | — | |
| Elevance Health Inc. | 16.59% | 16.93% | — | — | — | |
| Intuitive Surgical Inc. | 11.98% | 14.32% | — | — | — | |
| Medtronic PLC | 9.59% | 7.01% | — | — | — | |
| UnitedHealth Group Inc. | 25.87% | 24.09% | — | — | — | |
| ROE, Sector | ||||||
| Health Care Equipment & Services | 18.40% | 17.28% | — | — | — | |
| ROE, Industry | ||||||
| Health Care | 24.82% | 25.44% | — | — | — | |
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).
1 2022 Calculation
ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × 698 ÷ 17,573 = 3.97%
2 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by significant volatility in earnings contrasted with a consistent expansion of the stockholders' equity base. While equity grew steadily every year, net income experienced drastic fluctuations, leading to a general decline in the return on equity (ROE) since 2019.
- Net Income Volatility
- Net income peaked in 2019 at 4,700 million US$, followed by a sharp decline to a net loss of 82 million US$ in 2020. Although profitability returned in 2021 and 2022, earnings remained substantially lower than the 2019 peak, with a further decrease from 1,041 million US$ in 2021 to 698 million US$ in 2022.
- Stockholders' Equity Expansion
- A consistent upward trajectory is observed in stockholders' equity, which grew from 8,726 million US$ in 2018 to 17,573 million US$ by the end of 2022. This steady increase indicates a growing capital base, which serves as the denominator for calculating equity returns.
- Return on Equity (ROE) Analysis
- ROE exhibited extreme variance, reaching a high of 33.87% in 2019 before dropping to -0.54% in 2020. The recovery to 6.26% in 2021 and the subsequent decline to 3.97% in 2022 indicates a diminished capacity to generate profit relative to the invested equity. The combination of declining net income since 2021 and a continuously expanding equity base has exerted significant downward pressure on the ROE percentage.
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Return on Assets (ROA)
Boston Scientific Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) | 698) | 1,041) | (82) | 4,700) | 1,671) | |
| Total assets | 32,469) | 32,229) | 30,777) | 30,565) | 20,999) | |
| Profitability Ratio | ||||||
| ROA1 | 2.15% | 3.23% | -0.27% | 15.38% | 7.96% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Abbott Laboratories | 9.31% | 9.40% | — | — | — | |
| Elevance Health Inc. | 5.86% | 6.26% | — | — | — | |
| Intuitive Surgical Inc. | 10.19% | 12.58% | — | — | — | |
| Medtronic PLC | 5.54% | 3.87% | — | — | — | |
| UnitedHealth Group Inc. | 8.19% | 8.15% | — | — | — | |
| ROA, Sector | ||||||
| Health Care Equipment & Services | 7.49% | 7.28% | — | — | — | |
| ROA, Industry | ||||||
| Health Care | 9.66% | 9.46% | — | — | — | |
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).
1 2022 Calculation
ROA = 100 × Net income (loss) ÷ Total assets
= 100 × 698 ÷ 32,469 = 2.15%
2 Click competitor name to see calculations.
The analysis of Return on Assets (ROA) from 2018 to 2022 reveals a period of significant volatility, characterized by an initial peak in asset efficiency followed by a sharp contraction and a subsequent partial recovery.
- Net Income Volatility
- Net income exhibited substantial fluctuations over the five-year period, increasing from US$ 1,671 million in 2018 to a peak of US$ 4,700 million in 2019. A sharp reversal occurred in 2020, with a reported loss of US$ 82 million, which directly resulted in a negative ROA of -0.27%. While profitability returned in 2021 and 2022, the net income figures of US$ 1,041 million and US$ 698 million, respectively, remained significantly lower than the 2019 peak.
- Asset Base Expansion
- Total assets demonstrated a consistent upward trend, growing from US$ 20,999 million in 2018 to US$ 32,469 million by the end of 2022. This steady increase in the asset base, without a commensurate and sustained increase in net income, has contributed to the overall dilution of the ROA in the latter half of the period.
- ROA Performance Trends
- The ROA reached a high of 15.38% in 2019, indicating a period of high operational efficiency. Following the 2020 deficit, the ratio recovered to 3.23% in 2021 before declining slightly to 2.15% in 2022. This trajectory suggests that although the company has stabilized its earnings, the efficiency of generating profit from its total asset base has not recovered to the levels observed in 2018 and 2019.
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