When examining a company’s earnings quality, it is always informative to compare its accounting policies, disclosure practices, and non-GAAP adjustments to others in the same industry. Deviations from the norm quickly become apparent. One company utilizing a more aggressive policy or adjustment is easy to spot- as is a company that doesn’t fall in line with a questionable practice that the others justify by saying “everyone does it.”

The major med tech companies lend themselves well to this type of comparison. These include Boston Scientific ($BSX), Edwards Lifesciences ($EW), Medtronic ($MDT), Stryker ($SYK), and Zimmer Biomet ($ZBH). Most of these companies make huge adjustments to their GAAP results. We will take a quick look at all five and compare how much they ask investors to ignore the amortization of acquired intangibles, restructuring costs, litigation costs, and regulatory costs. It quickly becomes apparent that one of these companies is much more conservative in its adjustments than the others.