S&P revises Boston Scientific outlook to negative on franchise pressures

S&P Global Ratings has downgraded its outlook for Boston Scientific Corp. to negative, citing commercial challenges in key product lines and the strain of its upcoming $14.5 billion acquisition of Penumbra Inc. Despite maintaining the company's A- issuer credit rating and senior unsecured debt rating, S&P warned that revenue growth will slow sharply to 4.4% in 2026 and 9% in 2027, down from previous double-digit expansions.

The downgrade comes after disappointing third-quarter results and guidance cuts triggered by issues with the WATCHMAN left atrial appendage closure device and electrophysiology franchises, which together represent over a quarter of the company's sales. Clinical trial uncertainty and increasing competition have eroded revenue streams for these critical divisions.

S&P projects that adjusted leverage will exceed 3.6x following the Penumbra acquisition, surpassing the rating agency's 2.5x trigger and remaining elevated for at least two years, even with a planned $500 million restructuring plan. To improve credit metrics and meet the 2.5x threshold by late 2028, Boston Scientific will need to successfully integrate Penumbra, halt declining sales in electrophysiology, and limit further share buybacks and acquisitions until the balance sheet is strengthened.