BOSTON SCIENTIFIC CORPBSX
BOSTON SCIENTIFIC CORP Fair Value Disclosure
NOTE D – HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS
Derivative Instruments and Hedging Activities
Our risk from changes in currency exchange rates consists primarily of monetary assets and liabilities; forecasted intercompany and third-party transactions; and net investments in certain subsidiaries. We employ derivative and nonderivative instruments, primarily forward currency contracts, to reduce the risk to our earnings and cash flows associated with changes in currency exchange rates. The success of our currency risk management program depends, in part, on forecasted transactions denominated primarily in euro, Chinese renminbi, Japanese yen, British pound sterling, Korean won, Australian dollar and Swiss franc.
Certain of our currency derivative instruments are designated as cash flow hedges under FASB ASC Topic 815, and are intended to protect the U.S. dollar value of forecasted transactions. We also designate certain forward currency contracts as net investment hedges to hedge a portion of our net investments in certain of our entities with functional currencies denominated in euro, Chinese renminbi and Japanese yen. We designate certain euro-denominated debt as net investment hedges to hedge a portion of our net investments in certain of our entities with functional currencies denominated in euro. As of December 31, 2025 and 2024, we designated as a net investment hedge our €900 million in aggregate principal amount of 0.625% senior notes issued in November 2019 and due in 2027 (December 2027 Notes).
We also use forward currency contracts that are not part of designated hedging relationships as a part of our strategy to manage our exposure to currency exchange rate risk related to monetary assets and liabilities and related forecast transactions.
Refer to Note A – Significant Accounting Policies for additional information on our accounting policies relating to derivative instruments and hedging activities.
The following table presents the contractual amounts of our hedging instruments outstanding:
| (in millions) | FASB ASC Topic 815 Designation | As of December 31, | ||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Forward currency contracts | Cash flow hedge | $ | 7,270 | $ | 2,464 | |||||||||||||||
| Forward currency contracts | Net investment hedge | 1,292 | 741 | |||||||||||||||||
Foreign currency-denominated debt(1) | Net investment hedge | 997 | 997 | |||||||||||||||||
| Forward currency contracts | Non-designated | 4,163 | 4,440 | |||||||||||||||||
| Total Notional Outstanding | $ | 13,723 | $ | 8,642 | ||||||||||||||||
(1) Foreign currency-denominated debt is the €900 million debt principal associated with our December 2027 Notes designated as a net investment hedge.
The remaining time to maturity as of December 31, 2025 is within 60 months for all forward currency contracts designated as cash flow hedges and generally less than one year for all non-designated forward currency contracts. The forward currency contracts designated as net investment hedges generally mature between and two years. The euro-denominated debt principal designated as a net investment hedge has a contractual maturity of December 1, 2027.
The following presents the effect of our derivative and nonderivative instruments designated as cash flow and net investment hedges under FASB ASC Topic 815 in our accompanying consolidated statements of operations. Refer to Note O – Changes in Other Comprehensive Income for the total amounts relating to derivative and nonderivative instruments presented within our consolidated statements of comprehensive income (loss).
| Effect of Hedging Relationships on Accumulated Other Comprehensive Income | |||||||||||||||||||||||||||||
| Amount Recognized in OCI on Hedges | Consolidated Statements of Operations(1) | Amount Reclassified from AOCI into Earnings | |||||||||||||||||||||||||||
| (in millions) | Pre-Tax Gain (Loss) | Tax Benefit (Expense) | Gain (Loss) Net of Tax | Location of Amount Reclassified | Pre-Tax (Gain) Loss | Tax (Benefit) Expense | (Gain) Loss Net of Tax | ||||||||||||||||||||||
| Year Ended December 31, 2025 | |||||||||||||||||||||||||||||
| Forward currency contracts | |||||||||||||||||||||||||||||
| Cash flow hedges | $ | (187) | $ | 42 | $ | (145) | Cost of products sold | $ | (81) | $ | 21 | $ | (60) | ||||||||||||||||
Net investment hedges(2) | (23) | 5 | (18) | Interest expense | (31) | 7 | (24) | ||||||||||||||||||||||
| Foreign currency-denominated debt | |||||||||||||||||||||||||||||
Net investment hedges(3) | (123) | 28 | (95) | Other, net | — | — | — | ||||||||||||||||||||||
| Interest rate derivative contracts | |||||||||||||||||||||||||||||
| Cash flow hedges | — | — | — | Interest expense | 4 | (1) | 3 | ||||||||||||||||||||||
| Year Ended December 31, 2024 | |||||||||||||||||||||||||||||
| Forward currency contracts | |||||||||||||||||||||||||||||
| Cash flow hedges | $ | 184 | $ | (41) | $ | 142 | Cost of products sold | $ | (183) | $ | 41 | $ | (141) | ||||||||||||||||
Net investment hedges(2) | 65 | (15) | 51 | Interest expense | (18) | 4 | (14) | ||||||||||||||||||||||
| Foreign currency-denominated debt | |||||||||||||||||||||||||||||
Net investment hedges(3) | 60 | (13) | 46 | Other, net | — | — | — | ||||||||||||||||||||||
| Interest rate derivative contracts | |||||||||||||||||||||||||||||
| Cash flow hedges | — | — | — | Interest expense | 1 | (0) | 1 | ||||||||||||||||||||||
| Year Ended December 31, 2023 | |||||||||||||||||||||||||||||
| Forward currency contracts | |||||||||||||||||||||||||||||
| Cash flow hedges | $ | 81 | $ | (18) | $ | 63 | Cost of products sold | $ | (235) | $ | 53 | $ | (182) | ||||||||||||||||
Net investment hedges(2) | 32 | (7) | 25 | Interest expense | (10) | 2 | (8) | ||||||||||||||||||||||
| Foreign currency-denominated debt | |||||||||||||||||||||||||||||
Net investment hedges(3) | (34) | 8 | (27) | Other, net | — | — | — | ||||||||||||||||||||||
| Interest rate derivative contracts | |||||||||||||||||||||||||||||
| Cash flow hedges | — | — | — | Interest expense | 3 | (1) | 2 | ||||||||||||||||||||||
(1) In all periods presented in the table above, the pre-tax (gain) loss amounts reclassified from AOCI to earnings represent the effect of the hedging relationships on earnings.
(2) For our outstanding forward currency contracts designated as net investment hedges, the net gain or loss reclassified from AOCI to earnings as a reduction of Interest expense represents the straight-line amortization of the excluded component as calculated at the date of designation. This initial value of the excluded component has been excluded from the assessment of effectiveness in accordance with FASB ASC Topic 815. In the current and prior periods, we did not recognize any gains or losses on the components included in the assessment of hedge effectiveness in earnings.
(3) For our outstanding euro-denominated debt principal designated as a net investment hedge, the change in fair value attributable to changes in the spot rate is recorded in the CTA component of OCI. No amounts were reclassified from AOCI to current period earnings.
As of December 31, 2025, pre-tax net gains or losses for our derivative instruments designated, or previously designated, as cash flow and net investment hedges under FASB ASC Topic 815 that may be reclassified from AOCI to earnings within the next twelve months are presented below (in millions):
| Designated Hedging Instrument | FASB ASC Topic 815 Designation | Location on Consolidated Statements of Operations | Amount of Pre-Tax Gain (Loss) that may be Reclassified to Earnings | |||||||||||||||||
| Forward currency contracts | Cash flow hedge | Cost of products sold | $ | (19) | ||||||||||||||||
| Forward currency contracts | Net investment hedge | Interest expense | 3 | |||||||||||||||||
Net gains and losses on currency hedge contracts not designated as hedging instruments offset by net gains and losses from currency transaction exposures are presented below:
| (in millions) | Location on Consolidated Statements of Operations | Year Ended December 31, | ||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Net gain (loss) on currency hedge contracts | Other, net | $ | (174) | $ | 56 | $ | 3 | |||||||||||||||||||
| Net gain (loss) on currency transaction exposures | Other, net | 162 | (71) | (44) | ||||||||||||||||||||||
| Net currency exchange gain (loss) | $ | (12) | $ | (16) | $ | (41) | ||||||||||||||||||||
Fair Value Measurements
FASB ASC Topic 815 requires all derivative and nonderivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. 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 date with respect to current currency exchange rates, interest rates, the creditworthiness of the counterparty for unrealized gain positions and our own creditworthiness for unrealized loss positions. In certain instances, we may utilize financial models to measure fair value of our derivative and nonderivative instruments. In doing so, we use inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability and inputs derived principally from, or corroborated by, observable market data by correlation or other means. The following are the balances of our derivative and nonderivative assets and liabilities:
| (in millions) | Location on Consolidated Balance Sheets(1) | As of December 31, | ||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Derivative and Nonderivative Assets: | ||||||||||||||||||||
| Designated Hedging Instruments | ||||||||||||||||||||
| Forward currency contracts | Other current assets | $ | 99 | $ | 149 | |||||||||||||||
| Forward currency contracts | Other long-term assets | 57 | 79 | |||||||||||||||||
| 156 | 228 | |||||||||||||||||||
| Non-Designated Hedging Instruments | ||||||||||||||||||||
| Forward currency contracts | Other current assets | 25 | 156 | |||||||||||||||||
| Total Derivative and Nonderivative Assets | $ | 181 | $ | 384 | ||||||||||||||||
| Derivative and Nonderivative Liabilities: | ||||||||||||||||||||
| Designated Hedging Instruments | ||||||||||||||||||||
| Forward currency contracts | Other current liabilities | $ | 109 | $ | 1 | |||||||||||||||
| Forward currency contracts | Other long-term liabilities | 102 | — | |||||||||||||||||
Foreign currency-denominated debt(2) | Long-term debt | 1,055 | 930 | |||||||||||||||||
| 1,266 | 931 | |||||||||||||||||||
| Non-Designated Hedging Instruments | ||||||||||||||||||||
| Forward currency contracts | Other current liabilities | 42 | 59 | |||||||||||||||||
| Total Derivative and Nonderivative Liabilities | $ | 1,308 | $ | 990 | ||||||||||||||||
(1) We classify derivative and nonderivative assets and liabilities as current when the settlement date of the contract is one year or less.
(2) Foreign currency-denominated debt is the €900 million debt principal associated with our December 2027 Notes designated as a net investment hedge. A portion of this notional is subject to de-designation and re-designation based on changes in the underlying hedged item.
Recurring Fair Value Measurements
On a recurring basis, we measure certain financial assets and financial liabilities at fair value based upon quoted market prices. Where quoted market prices or other observable inputs are not available, we apply valuation techniques to estimate fair value. FASB ASC Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The category of a financial asset or a financial liability within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:
•Level 1 – Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.
•Level 2 – Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.
•Level 3 – Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.
Assets and liabilities measured at fair value on a recurring basis consist of the following:
| As of | |||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Money market funds and time deposits | $ | 1,075 | $ | — | $ | — | $ | 1,075 | $ | 120 | $ | — | $ | — | $ | 120 | |||||||||||||||||||||||||||||||
| Publicly-held securities | 17 | — | — | 17 | 19 | — | — | 19 | |||||||||||||||||||||||||||||||||||||||
| — | 181 | — | 181 | — | 384 | — | 384 | ||||||||||||||||||||||||||||||||||||||||
| Licensing arrangements | — | — | — | — | — | — | 24 | 24 | |||||||||||||||||||||||||||||||||||||||
| $ | 1,092 | $ | 181 | $ | — | $ | 1,273 | $ | 139 | $ | 384 | $ | 24 | $ | 547 | ||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| $ | — | $ | 1,308 | $ | — | $ | 1,308 | $ | — | $ | 990 | $ | — | $ | 990 | ||||||||||||||||||||||||||||||||
| Contingent consideration liability | — | — | 385 | 385 | — | — | 171 | 171 | |||||||||||||||||||||||||||||||||||||||
| Licensing arrangements | — | — | 7 | 7 | — | — | 33 | 33 | |||||||||||||||||||||||||||||||||||||||
| $ | — | $ | 1,308 | $ | 392 | $ | 1,700 | $ | — | $ | 990 | $ | 203 | $ | 1,194 | ||||||||||||||||||||||||||||||||
Our investments in money market funds and time deposits are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. These investments are classified as Cash and cash equivalents or Other current assets within our accompanying consolidated balance sheets, in accordance with GAAP and our accounting policies. In addition to $1.075 billion invested in money market funds and time deposits as of December 31, 2025 and $120 million as of December 31, 2024, we held $965 million in interest-bearing and non-interest-bearing bank accounts as of December 31, 2025 and $364 million as of December 31, 2024.
Our recurring fair value measurements using Level 3 inputs include those related to our contingent consideration liability. Refer to Note B – Acquisitions and Strategic Investments for a discussion of the changes in the fair value of our contingent consideration liability.
Non-Recurring Fair Value Measurements
We hold certain assets and liabilities that are measured at fair value on a non-recurring basis in periods after initial recognition. The fair value of a measurement alternative investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. Refer to Note B – Acquisitions and Strategic Investments for a discussion of our strategic investments and Note C – Goodwill and Other Intangible Assets for a discussion of the fair values of our intangible assets including goodwill.
The fair value of our outstanding debt obligations, excluding finance leases, was $11.154 billion as of December 31, 2025 and $10.330 billion as of December 31, 2024. We determined fair value by using quoted market prices for our publicly registered senior notes, classified as Level 1 within the fair value hierarchy, and face value for commercial paper, term loans and credit facility borrowings outstanding. Refer to Note E – Contractual Obligations and Commitments for a discussion of our debt obligations.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 18, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 19, 2019 | |
| 2017 | Feb 20, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 24, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.