Boston Scientific Corporation

Good morning and welcome to the Boston Scientific second 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 Q2 results, which included reconciliations of the non-GAAP measures used in this 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 Q2 performance as well as the outlook for our business, including Q3 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 excludes the impact of foreign currency fluctuations, and organic revenue further excludes acquisitions and divestitures for which there are less than a full period of comparable net sales. Relevant acquisitions and divestitures excluded, organic growth are the majority stake investment in Aquatech Scientific Holdings 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. Divestitures include the Endoscopy Pathology Business, which closed in April 2023. Guidance excludes the previously announced agreements to acquire Axonix and Silk Road Medical, both of which are expected to close in the second half of 2024, subject to customary closing conditions. For more information, please refer to the Q2 Financial and Operational Highlights Deck, which may be found on the Investor Relations section of our website. On this call, all references to sales and revenue, unless otherwise specified, are organic. This call contains forward-looking statements within the meaning of federal securities laws 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, margin, 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 factor section of our most recent 10-K and subsequent 10-Qs filed with the SEC. This statement speaks 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, and thank you, everyone, for joining us today. Our second quarter results exceeded our expectations, led by the strength of our differentiated global cardiovascular portfolio, particularly the execution in AF solutions and the winning spirit of our global team. In second quarter, total company operational sales grew 16, organic sales grew 15, exceeding the high end of our guidance range of 10 to 12. Our top-tier growth continues to be fueled by innovation, clinical evidence generation, and our strategy of category leadership. Consistent with prior quarters, most of our businesses and regions grew well above market. Second quarter adjusted EPS of 62 cents grew 15 percent versus 2023, exceeding the high end of our guidance range of 57 to 59 cents. Second quarter adjusted operating margin was 27.2 percent, and as a result of our first half margin performance and revenue upside versus previous expectations, we now expect to expand adjusted operating margin 50 to 70 basis points for the full year. Turning to third quarter and full year 24 outlook, we're guiding to organic growth of 13 to 15 percent for third quarter and raising our full year guidance from 10 to 12 to 13 to 14 percent, reflecting momentum across our broad portfolio, particularly in our EP business unit. Our third quarter adjusted EPS guidance is 57 to 59 cents, and we expect our full-year adjusted EPS to be 238 to 242, representing growth of 16 to 18%. Dan will provide more details on our financials, and I'll provide some additional color on the quarter and the outlook for the second half of 24. Regionally and on an operational basis, the U.S. grew 17 in the second quarter, with exceptional growth in EP fueled by the continued success of the Ferropulse launch, as well as Watchman, coronary imaging, and strengthened our med-surg businesses. Europe grew 16 percent on an operational basis versus second quarter 23. This impressive performance was driven by double-digit growth in seven of our eight business units, led by robust growth in EP and strength across our growth and emerging markets. Second quarter was also a record quarter in the region for our structural heart business, following positive data presented on AccurateNeo2 at the recent EuroPCR conference. We expect this momentum to continue, supported by the launch of the larger size accurate prime valve in late 24. ASIAPAC grew 13% operationally versus a difficult comp in second quarter 23, with excellent performance in China growing high teens and Japan growing double digits. We also recently received approval in China for Ferripulse and Agent drug-coated balloon, and continue to expect approval for Ferripulse in Japan in the second half of this year. We expect the contribution from these launches will ramp over 2025. Within the quarter, pricing actions and key geographies went into effect, with the China VBP on coronary imaging and Japan reimbursement cuts in June. We do expect Asia-Pac to grow low double digits in the second half of the year, including the full impact of these pricing actions. Some additional commentary on the business units. Our urology business grew 9 percent organically in the quarter, with double-digit growth in stone management and prosthetic urology, supported by our direct-to-patient efforts driving patient awareness and early contribution from the limited market release of the Tenasio pump. International growth of 14% was driven by laser therapies and Resume. We look forward to closing this previously announced acquisition of Axonix, which we continue to expect in the second half of this year. Endoscopy sales grew 8%, both operationally and and organically in second quarter. Second quarter results were driven by above-market growth in our biliary franchise, led by high teens growth in Axios, and the high teens growth in our endoluminal surgery franchise. We continue to expect endo sales to go faster than the market throughout 24, enabled by our innovative portfolio. Neuromodulation sales grew 16 percent operationally and 4 percent organically in the quarter. our brain franchise grew low single digits with some impact from competitive product launches. We expect this business to strengthen in the second half of the year, driven by our portfolio of differentiated technologies. In second quarter, our pain franchise grew strong double digits operationally and mid-single digits on an organic basis. Our spinal cord stem business saw improved U.S. trialing cadence in the quarter, and we expect that our U.S. SCS franchise will improve in the second half of the year. The relief in business continues to perform extremely well, with more than 30,000 patients treated with the Intrasept system to date. Peripheral intervention sales grew 12% operationally and 9% organically versus second quarter. High single-digit growth in arterial was driven by continued momentum in our drug-eluting portfolio, with double-digit growth in the quarter. Mid-single-digit growth in venous was driven by momentum of ECOs supported by the real PE data set. and continued double-digit growth in Varathena. Our interventional oncology franchise grew double digits in the second quarter, driven by our broad offering across embolization and cancer therapies. Looking forward, we continue to expect to close the previously announced acquisition of Silk Road Medical in the second half of this year. Cardiology. Cardiology delivered another excellent quarter, with organic sales growing 22% versus second quarter 23%. Within cardiology, interventional cardiology therapy sales grew 9%. Growth in coronary therapies was driven by continued strength in our global imaging franchise and APAC calcium franchise. Within the quarter, we initiated a limited launch of Agent DCV in the U.S., which has received positive initial physician feedback. Our structural heart valves franchise grew strong double digits in the second quarter, led by AccurateNeo2, which continues to see growth from both new and existing accounts in Europe and Latin America. At the end of the quarter, we also completed follow-up of the full 1,500-patient cohort and the U.S. accurate IDE trial. We now expect to present this data in the first half of 2025, likely at the annual ACC meeting. Watchmen had another excellent quarter, growing 20 percent organically, with strong contribution from the ongoing launch of Watchmen FlexPro in the U.S. and Japan. The U.S. grew 20% led by further penetration into the existing indicated patient population, enabled by our innovation, clinical evidence, and patient awareness efforts. Cardiac rhythm management sales grew 3% organically in the quarter. In the second quarter, our diagnostics franchise grew double digits. This above-market growth is driven by our broad cardiac diagnostics portfolio. In Cora CRM, our high and low voltage business grew low single digits, with strong international growth partially offset by slightly below-market growth in the U.S. At the recent HRS meeting, data was presented from the modular ATP trial of the modular CRM system, which is comprised of the empowered leadless pacemaker and emblem SICD, which met all pre-specified six-month endpoints and a high rate of ATP success with no patient requests for deactivation of pacing due to pain or discomfort. Turning to EP, EP sales grew an impressive 125% organically versus second quarter 23, driven by the rapid and sustained adoption of the transformative FerroPulse PFA system. Second quarter sales were driven by outstanding commercial execution, robust supply, and positive real-world outcomes, as well as increased AF ablation volumes supported by the efficiency of the FerroPulse workflow. Our Bayless Access Solutions business also continues to see strong double-digit growth in the US with utilization in approximately 80% of PFA procedures and approximately 85% of Watchman procedures. Internationally, we saw continued FerriPulse account openings and robust utilization in Europe and launched APAC markets. Importantly, evidence on more than 20,000 patients treated with FerriPulse has been published or presented at medical conferences demonstrating the safety, efficacy, and reproducibility of the system. And within the quarter, we completed an enrollment in the NAVIGATE PF study of the Fairview software module and Fairwave NAV-enabled catheter, both of which are expected to launch in the U.S. during the second half of the year. At the recent HRS meeting, outcomes from a subanalysis of the ADVENT trial were presented. This is the very first randomized data for a PFA system demonstrating superior efficacy versus thermal modalities, with significantly more patients having achieved an arterial arrhythmic burden of less than 0.1% with FerriPulse compared to RF and cryo. We plan to continue a steady cadence of clinical evidence generation to maintain our PFA leadership, including Rematch AF, a planned trial designed to study the FerriPoint and FerriWave catheter in patients who need a redo ablation, which we expect to begin enrolling early in 2025. In closing, I'm very grateful to our global team for their commitment and winning spirit, enabling us to deliver life-changing technologies to millions of patients. We're in the most exciting chapters as a company with a track record of executing or exceeding our financial goals while delivering meaningful innovation. With that, I'll hand it over to Dan.