Boston Scientific Corporation

Good morning and welcome to the Boston Scientific First Quarter 2024 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to John Monson, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Drew, and welcome everyone, and thanks for joining us today. With me on today's call are Mike Mahoney, Chairman and Chief Executive Officer, and Dan Brennan, Executive Vice President and Chief Financial Officer. We issued a press release earlier this morning announcing our Q1 results which included reconciliations of the non-GAAP measures used in the release. We have posted a link to that release as well as reconciliations of the non-GAAP measures used in today's call to the investor relations section of our website under the heading financials and filings. The duration of this morning's call will be approximately one hour. Mike and Dan will provide comments on Q1 performance as well as the outlook for our business, including Q2 and full year 2024 guidance. And then we'll take your questions. During today's Q&A session, Mike and Dan will be joined by our Chief Medical Officer, Dr. Ken Stein. Before we begin, I'd like to remind everyone that on the call, operational revenue growth excludes the impact of foreign currency fluctuations and organic revenue growth further excludes acquisitions and divestitures for which there are less than a full period of comparable net sales. Relevant acquisitions and divestitures excluded for organic growth are the majority stake investment in ACOTEC Scientific Holding Limited, and the acquisitions of Apollo Endosurgery and Relievant Med Systems, which closed in February, April, and November 2023, respectively, as well as our acquisition of the Endoluminal Vacuum Therapy Portfolio from Bbron, which closed in March 2024. The investigators include the endoscopy pathology business, which closed in April 2023. Guidance excludes the previously announced agreement to acquire Axonix, Inc., which is expected to close in the second half of 2024, subject to customary closing conditions. For more information, please refer to our Q1 financial and operational highlights deck, which may be found on our investor relations website. On this call, all references to sales and revenue, unless otherwise specified, are organic. This call contains forward-looking statements within the meeting of federal securities law, which may be identified by words like anticipate, expect, may, believe, estimate, and other similar words. They include, among other things, statements about our growth and market share, new and anticipated product approvals and launches, acquisitions, clinical trials, cost savings, and growth opportunities. Our cash flow and expected use of cash, our financial performance, including sales, margins, and earnings, as well as our tax rates, R&D spend, and other expenses. If our underlying assumptions turn out to be incorrect or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements. Factors that may cause such differences include those described in the risk factors section of our most recent 10-K and subsequent 10-Qs filed with the SEC. These statements speak only as of today's date and we disclaim any intention or obligation to update them except as required by law. At this point, I'll turn it over to Mike.

Mike? Thanks, Sean. Thank you to everyone for joining us today. Our first quarter results surpassed our expectations, fueled by our innovative portfolio, including the nearly 90 new products we launched globally in 2023, the execution of our category leadership strategy, and the winning spirit of our global team. In the first quarter of 24, total company operational sales grew 15%, and organic sales grew 13% versus first quarter 23, which exceeds the high end of our guidance range of 7% to 9%. Our strong growth continues to be diversified across businesses and regions. In the quarter, six of our eight business units in all of our regions grew double digits. We believe that most business units grew faster than their respective markets with differentiated portfolios and strong commercial execution supported by healthy procedural demand. First quarter adjusted EPS was 56 cents, which grew 21% versus 2023. which exceeds the high end of our guidance range of 50 to 52 cents. First quarter adjusted to operating margin was 26.2%. Turning to our second quarter and full year 24 outlook, we are guiding to organic growth of 10 to 12% for second quarter 24 and raising our full year guidance from 8 to 9 to 10 to 12%, reflecting momentum from our innovative portfolio, healthy procedural volumes, and continued execution by our global team. Our second quarter 24 adjusted EPS guidance is $0.57 to $0.59, and we expect our full year adjusted EPS to be $2.29 to $2.34, representing growth of 12% to 14%. Dan will provide more details on our financials, and I'll provide additional highlights on our first quarter, along with comments on our 24 outlook. Regionally, on an operational basis, the U.S. grew 13% versus first quarter, with particular strength in EP fueled by the launch of Ferropulse midway through the quarter, as well as on our Watchman, ICTX, urology, and endoscopy business units. Europe, Middle East, and Africa grew 13% on an operational basis versus first quarter 23. This above-market growth was led by exceptional performance in EP, as well as double-digit growth in our endoscopy, urology, and PI businesses. We expect to continue to outpace the market driven by continued broad-based momentum across our business and investment in emerging markets. Asia-Pac grew 26% operationally versus first quarter 23, led by strong double-digit performance in all of our cardiovascular business units. Japan grew double digits, driven by Agent DCB, Resume, and our Access Solutions products. China delivered excellent results, growing strong double digits, with seven of our eight business units growing double digits. I'll now provide some additional commentary on our business units. In urology, sales grew 10% both operationally and organically versus first quarter 23 with double-digit growth in stone management as well as prosthetic urology. Resume performed well in the quarter both in the U.S. and internationally and secured reimbursement status in France. We look forward to closing the previously announced acquisition of Axonix now expected in the second half of 2024. Endoscopy sales grew 12% operationally and 10% organically versus first quarter 23. Strong first quarter results were driven by the breadth of our portfolio, underpinned by differentiated anchor products such as Axios and our single-use imaging products. Within the quarter, we also received CE mark for our mantis clip, and NICE in the UK issued positive guidance for the ESG endoscopic bariatric surgery procedure. both expected to further momentum in our growing endoluminal surgery franchise. Neuromodulation sales grew 10% operationally and declined 1% organically versus first quarter 23. Our brain franchise grew high single digits in the quarter with low double-digit U.S. growth driven by our comprehensive directional stimulation offering enabled by image-guided programming. In first quarter, our pain franchise grew low double digits operationally but declined mid-single digits on an organic basis, with continued pressure in our U.S. SCS business. In the U.S. during first quarter, we did receive FDA approval and recently launched the Waverider symptom non-surgical back pain indication in our next generation fast autodose. Importantly, the Relivium business continues to perform very well with steady expansion of payer coverage, and we expect sales from the novel intracept procedure to grow by 50% in 2024. Peripheral intervention sales grew 16% operationally and 11% organically versus first quarter 23. Double-digit growth in arterial was bolstered by our drug-eluting portfolio, supported by the strength of clinical evidence and global commercial execution. In venous, we saw continued above-market growth from Varathena and clot management continue to perform well in line with expectations. Our interventional oncology franchise grew strong double digits in first quarter, driven by our broad offering of embolization devices, including the embold coil family and cancer therapies. In the quarter, Therosphere also grew double digits, and data from the real-world study Proactiv was presented, demonstrating positive outcomes in patients with intermediate and advanced HCC retreated with Therosphere. Cardiology sales delivered another excellent quarter, with both operational and organic sales growing 18% versus first quarter 2023. Within cardiology, interventional cardiology therapy sales grew an impressive 13% organically versus first quarter 23. Growth in coronary therapies was driven by continued strength in our international regions, led by our imaging portfolio and agent DCB in Japan. In the U.S., we're also pleased with the ongoing launch of Avigo Plus, which is our AI-guided imaging platform. We also received FDA approval of our agent DCB in first quarter, and we expect to initiate a limited launch in second quarter as we ramp supply following the earlier than anticipated regulatory approval. Our structural hard valves franchise once again grew mid-teens in first quarter, led by Accurate Neo2, which continues to see growth from both new and existing accounts. We have now submitted for CE Mark for our next generation Accurate Prime valve, which we continue to expect to launch in Europe in 2025. Watchman had another strong quarter, growing 19% organically and maintaining our market-leading share position. In the US, Watchman FlexPro moved into full launch, and we received FDA clearance for the TruSteer steerable sheath, allowing physicians to achieve more optimal device positioning in the widest range of LAA anatomies. International growth was driven by ongoing momentum within the quarter, We received approval and launched Watchman Flex Pro in Japan and Canada, which will support continued growth in these markets. Cardiac rhythm management sales grew 5% organically in the first quarter of 23. In the first quarter, our diagnostics franchise also grew double digits, led by strong market adoption of our second-generation Lux DX ICM device. In core CRM, our low-voltage business grew mid-single digits, and our high-voltage business grew low-single digits. Our Emblem SICD continues to maintain a strong share position. We've seen very limited impact in Europe or the U.S. from a recent competitor's launch. We expect to remain the clear market leader in this space and look forward to the upcoming data presentation at HRS of Modular ATP, which is a pivotal trial studying the use of the Emblem SICD in conjunction with our Empowered Leadless Pacemaker to function as a single chamber pacemaker. as well as to provide anti-tachycardia pacing when needed. We anticipate FDA approval of the modular CRM system and standalone empowered leadless pacemaker in 25. Electrophysiology sales grew 72%, both operationally and organically, versus first quarter 23, driven by the adoption of the transformative FairPulse platform. International first quarter sales grew 59%, with continued FerriPulse account openings and robust utilization in Europe. U.S. first quarter sales grew 85% organically, propelled by the mid-first quarter launch of FerriPulse, where I've already made good progress entering the high-volume accounts supported by compelling clinical evidence, commercial execution, and investment in our supply chain. Early feedback in FerriPulse has been extremely positive with rapid adoption from both RF and Cryo users. Electrophysiologists appreciate Ferripulse's unique safety profile, ease of use, effectiveness, and efficiency of the procedure. We expect our broad EP portfolio coupled with our other AF solutions to drive significant global growth in 24 and beyond. We also intend to extend our leadership in PFA by investing in innovation, clinical evidence, and global capabilities. Within the quarter, we commenced enrollment of the Navigate PF clinical trial. studying integrated cardiac mapping with a Fairview software and Fairwave non-enabled catheter, both of which are expected to launch in the U.S. during the second half of the year. We also completed enrollment of phase two in the Advantage AF clinical trial, studying our Fairpoint device for CTI ablations, which is expected to launch in the U.S. in 2025. And we also anticipate data from phase one of the Advantage trial for persistent AF, to be presented in fourth quarter 2024. We also look forward to our clinical late breakers at the upcoming HRS meeting in May, which aims to highlight the unique capabilities of FerriPulse. Also of note, this week we released our 2023 performance report, highlighting the company's actions to improve patient outcomes while prioritizing our environmental, social, and governance goals. We continue to make progress in all three key areas. innovating care to meet patient needs, empowering people and shaping a healthier planet, while performing with integrity. While we always have more to do, I know that our values-driven culture and the commitment of our global teams to this challenge, what's possible, will continue to raise the bar. In closing, I'm very grateful to our global employees who work every day to advance science for life. We remain committed to investing for the long term while delivering top-tier financial performance in 2024 and beyond. And with that, I'll hand it over to Dan to provide more details on the financials. Thanks, Mike.