Boston Scientific Corporation

Good morning and welcome to the Boston Scientific Third 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.

Thanks, Drew, and thanks, everyone, for joining us. With me today are Mike Mahoney, Chairman and Chief Executive Officer, and Dan Brennan, Executive Vice President and Chief Financial Officer. During the Q&A session, Mike and Dan will be joined by our Chief Medical Officer, Dr. Ken Stein, and Art Butcher, president of our MedSurge and Asia Pacific businesses. We issued a press release earlier this morning announcing our Q3 results, which included reconciliations of the non-GAAP measures used in this release. The release, as well as reconciliations of the non-GAAP measures used in today's call, can be found on the investor relations section of our website. Please note, 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. Guidance excludes the previously announced agreement to acquire Axonics, which is expected to close in the fourth quarter of 2024, subject to customary closing conditions. For more information, please refer to the Q3 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 are organic and relative growth is compared to the same quarter of the prior year unless otherwise specified. This call contains forward-looking statements regarding, among other things, our financial performance, business plans, and product performance and development. These statements are based on our current beliefs using information available to us as of today's date and are not intended to be guarantees of future events or performance. If our underlying assumptions turn out to be incorrect or certain risks or uncertainties materialize, actual results could vary from those projected by the forward-looking statements. Factors that may cause such differences are discussed in our periodic reports and other filings to the SEC, including the risk factors section of our most recent annual report on Form 10-K. Boston Scientific disclaims any intention or obligation to update these forward-looking statements except as required by law. At this point, I'll turn over to Mike.

Mike? Thanks, John. Thank you, everyone, for joining us today. Our Q3 results exceeded our expectations, and we continue to invest in our portfolio and capabilities to deliver differentiated performance over the long term. In Q3 24, total company operational sales grew 19%, and organic sales grew 18%, exceeding the high end of our guidance range of 13% to 15%. Our excellent growth is and will continue to be focused on our category leadership strategy, fueled by innovation, clinical evidence generation, and the winning spirit of our global team. Q3 adjusted EPS of $0.63 grew 27%, exceeding the high end of our guidance range of $0.57 to $0.59. And Q3 adjusted operating margin was 27.2%. Turning to our fourth quarter in the full year 24 outlook, we're guiding to organic growth of 14% to 16% for fourth quarter and raising our full year guidance to approximately 15%, reflecting momentum across our broad portfolio and particularly in AF solutions. Our fourth quarter adjusted EPS guidance is now $0.64 to $0.66, and we expect our full year adjusted EPS to be $2.45 to $2.47. representing growth of 20% to 21%. Dan will provide more details on our financials in a few minutes, and I'll provide additional highlights on our third quarter results along with our comments and our outlook. Regionally, on an operational basis, the U.S. grew 24% with double-digit growth or higher in six of eight business units. Our EP business continues to deliver impressive performance fueled by Ferropulse new account openings and very strong reorder rates. Europe, Middle East, and Africa grew 14% on an operational basis. This performance is driven by continued above-market performance in EP, where we continue to expand our PFA leadership, complex PCI, and structural heart. In TAVI, we received CE mark and recently launched our next-generation accurate prime valve. I also want to announce that following a nearly 30-year career at Boston Scientific, our president of EMEA, Eric Topoe, will retire in December. and Xavier Bertrand, currently the Vice President of Peripheral Interventions in EMEA, will be appointed the new President of EMEA. I want to thank Eric for his many significant contributions to the organization and congratulate Xavier on his new role. AsiaPAC grew 12% operationally with excellent performance in China, Australia, New Zealand, and grew mid-teens despite recent VBP implementations. In Japan, we received PMDA approval of the FerroPulse PFA system, and anticipate reimbursement and commercial launch in the coming weeks. I'll now provide some additional commentary on our business units. Urology sales grew 10% with double-digit growth in stone management and prostate health, including double-digit growth in both Rezum and Spacor. Within the quarter, we continue to see momentum from the launches of Lithivue Elite and the Tenacio pump with their AMS 700 device. And looking forward, we expect to close the previously announced acquisition of Exomics in the fourth quarter, and we're excited to add this excellent business into Boston Scientific in our urology business. Endoscopy sales grew 7% organically and 8% operationally, with strong growth particularly in the U.S. Our anchor products continue to drive above-market growth with Axios and Exalt-D, both drawing double digits in the quarter. We also continue to see strong double-digit growth in our endoluminal surgery franchise, We're pleased to recently receive a Category 1 CPT code for the ESG weight loss procedure, which is expected to further momentum within this business. Neuromodulation sales grew 3% organically and 17% operationally, including Relieviant, which will turn organic in November. Our brain franchise returned a low double-digit growth in the quarter in the U.S., supported by de novo implants and competitive replacements. Our pain franchise grew low single digits organically and double digits operationally. Our global SCS performance was below our expectations in a market that continues to be challenged, offset by growth in the rest of the pain portfolio, which reflects the value of our category leadership strategy. Purple intervention sales grew 10% organically and 12% operationally. Within our vascular business, we saw mid-single digit growth in arterial, with continued double digit growth in drug-eluting therapies, and low double-digit growth in venous. We're also pleased to have closed our acquisition of Silk Road Medical in mid-September, adding the innovative TCAR system to our vascular portfolio. Our interventional oncology and embolization franchise grew double digits again, driven by continued momentum from recent launches in embolization and sustained double-digit growth in therosphere. Cardiology delivered another exceptional quarter, with sales growing 29%. Within cardiology, interventional cardiology therapies grew 14%. Mid-teens growth in coronary therapies was supported by the launch of the U.S. agent performance. Continued global adoption of coronary imaging with our Vigo Plus platform and our calcium portfolio. The U.S. agent launch continues to exceed our expectations with both new account openings and strong reorder rates. We also recently commenced enrollment in the agent IDE long lesion sub-study, and completed enrollment in our vitalist early feasibility study in high-risk PCI patients. Congratulations, team, on that milestone. Our structural heart valves franchise grew double digits in third quarter, led by another quarter of above-market growth of Accurate Neo2 in Europe. In the U.S., we continue to collaborate with the FDA on our regulatory strategy, and data from the U.S. Accurate IDE will be presented at TCT on October 30th. Watchman grew 18% with continued conversion to Watchman FlexPro in the U.S. and Japan, and globally we surpassed 500,000 patients treated with the Watchman device, driven by our innovation, clinical evidence, and patient awareness efforts. Key near-term catalysts for Watchman drive our confidence in delivering high growth in this business, including the recently implemented DRG for concomitant LAAC and AF ablation. and if positive, the data readout from the option trial, which will be presented as a late-breaking clinical trial at the American Heart Association Conference on November 16th. We also recently commenced enrollment of our simplified trial, which is studying a less intensive post-procedure drug regimen enabled by our latest generation Watchman FlexPro, and continue to expect data from the champion trial in the first half of 26. Cardiac rhythm management sales grew 2% in the quarter, In third quarter, our diagnostics franchise grew high single digits driven by our implantable cardiac monitors, LuxDX, which both received CE mark within the quarter. In core CRM, strong international growth was offset by below market growth in the U.S. We're excited about new and upcoming product launches in this business, including the expanded indication of longevity lead for conduction system pacing, which received FDA approval in the quarter, and our empowered leadless pacemaker. which we now have submitted to the FDA. Electrophysiology sales grew an exceptional 177% in the quarter, driven by continued commercial execution, pull-through in our access solutions business, and increased procedure volumes, driven by excellent outcomes as well as efficiencies gained with FerriPulse. We have now treated over 125,000 patients with FerriPulse, driving rapid and transformative conversion from RF and cryo to PFA, specifically using Ferro Pulse. As a result of this accelerated conversion in the market, we now expect PFA to likely exceed our previously communicated range of 40 to 60% of global AF ablations by 2026. We are excited about the recent Ferro Pulse approvals in both Japan and China and expect these launches to have a meaningful impact on our global EP business in 2025. Recently, we received USA approval of the Ferrowave NAV catheter, which combines with a fair way of software to visualize cardiac ablation procedures exclusively with our OPAL HDX mapping system. We are pleased to have completed follow-up phase one of the Advantage AF clinical trial, which is evaluating ferropulse in the treatment of patients with drug refractory persistent AF. And we expect to submit the results of the trial to the FDA later this quarter, and anticipating presenting the results in early 25, with label expansion expected in the second half of 25. We're also studying a very new patient population of drug-naive, persistent AF patients in avant-garde. As we have neared the end of this enrollment, we have elected to temporarily pause the trial to assess a few unanticipated observations. It is our intention to resume enrollments in the near term, and based on the totality of clinical evidence and commercial real-world experience, we remain extremely confident in the unique performance of FerriPulse. In closing, we're very proud of the performance of our global teams and are confident in the sustainability of our top tier financial performance. With that, I'll hand over to Dan and provide more details on the financials.