Boston Scientific Corporation

Good morning and welcome to the Boston Scientific first quarter 2025 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 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. We issued a press release earlier this morning announcing our Q1 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, all operational revenue excludes the impact of foreign currency fluctuations, and organic revenue further excludes certain acquisitions and divestitures for which there are less than a full period of comparable net sales. Guidance excludes the previously announced agreement to acquire Sonavi and Interra Oncology, which are expected to close during the second quarter of 2025, subject to customary closing conditions. For more information, please refer to the Q1 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 materially from those projected by the forward-looking statements. Factors that may cause such differences are discussed in our periodic reports and other filings with 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. So at this point, I'll turn the call over to Mike.

Mike? Thanks, John. Thank you, everyone, for joining us today. In Q1, we delivered excellent results, all while we continued to invest in our highly innovative portfolio and capabilities. Importantly, we remain excited about our near and long-term growth catalyst, which we believe will enable us to deliver on our fundamental aim of driving consistent, differentiated performance this year and well beyond. In first quarter 25, total company operational sales grew 22%, and organic sales grew 18%. both exceeding the high end of our guidance range of 14 to 16%. Our strong growth continues to reflect the durability of our category leadership strategy, which is powered through the meaningful innovation, clinical evidence generation, and the winning spirit of our highly engaged global team. First quarter adjusted EPS of 75 cents grew 34%, exceeding the high end of our guidance range of 66 to 68 cents. first quarter adjusted operating margin was 28.9%. Turning to our second quarter and full year 25 outlook, we are guiding to organic growth of 13 to 15% for the second quarter 25 and raising our full year guidance from 10 to 12% growth to 12 to 14% organic growth, reflecting the significant strength in our broad-based cardiology portfolio and the global execution of our category leadership strategy across our business units. Our second quarter adjusted EPS guidance of 71 to 73 cents, and we expect our full year adjusted EPS to be 287 to 294, which represents growth of 14 to 17%. This also includes an approximate 200 million impact from tariffs, based on the information that is available today, which we expect to offset through sales upside and smart reductions in discretionary spending. Dale will provide more details on this within the financials. We remain committed to our diversified global manufacturing footprint, investing across all regions and notably within the U.S., where we recently opened our new site in Georgia to continue to increase our Minnesota manufacturing capacity and footprint to support long-term growth. I'll now provide some additional highlights on our first quarter results. Regionally, on an operational basis, the U.S. grew 31% with double-digit growth in five of our eight business units, Midway through Q1, we crossed the one-year mark of the U.S. FerroPulse launch and the 10-year anniversary of Watchman's approval, two clinically impactful technologies that have helped to transform the growth profile of Boston Scientific. Europe, Middle East, and Africa grew 8% on an operational basis. This above-market growth was led by exceptional performance in EP, as well as double-digit growth in our anchor technologies across the broader portfolio, including Complex PCI, Therosphere and Interventional Ecology, Axios, and Resume. Asia Pacific grew 11% operationally, led by double-digit growth in Japan. Japan's on track to have an excellent year led by strong FaroPulse uptake, and we continue to anticipate launching FaroWave NAB and FaroView in the second half of the year. China also delivered high single-digit growth of a very tough 42% growth comp in first quarter 24, and we anticipate to deliver double-digit growth despite ongoing VBP pricing impacts in China. I'll now provide some additional commentary on our business units. As a reminder, we did have one less selling day in the first quarter of 25, which impacted our growth by approximately 200 basis points. Neurology sales grew 25% on an operational basis and 4% organically. Growth in the quarter was driven by our CoreStone franchise, and we're pleased to have completed our first Asuris fluid management case in Chile. The service system is part of our interconnected StoneSmart ecosystem, and we expect U.S. clearance in the second half of 2025. Looking ahead, we continue to be excited by the differentiated value Axonix brings and our ability to more broadly serve our customers, as we are pleased with the integration progress to date. Endoscopy sales grew 6% both operationally and organically, with balanced growth regionally and across our broad and deep portfolio. We continue to see sustained double-digit performance with a clinically differentiated Axios platform, as well as double-digit growth of both OverStitch and MantisClip, two very innovative technologies in our growing endoluminal surgery franchise. Neuromodulation sales grew 7% in the first quarter, with mid-single-digit growth in our brain franchise and high single-digit growth in our pain franchise. Within DBS, we saw improving growth exiting the quarter driven by early contribution of the launch of our Cartesia leads, and acceleration of the Lumina 3D programming algorithm in the U.S. Within our pain portfolio, Intercept grew strong double digits, and we continue to see robust demand underpinned by five-year data demonstrating the long-term efficacy and cost-effectiveness of this treatment. Cardiology delivered another fantastic quarter, with sales growing 31%. Within cardiology, interventional cardiology therapies sales grew an impressive 9%, Coronary Therapies was driven globally by double-digit growth in our imaging franchise and excellent performance from our novel Agent DCB technology. In the U.S., Agent DCB momentum was fueled by strong reorder rates and new account openings, with additional reimbursement established in the outpatient setting as of January and incremental inpatient reimbursement expected to follow later this year. Within the quarter, we're also pleased to to present the early feasibility results of our vitalis circulatory support system, with data demonstrating positive early experience and 100% technical success rate. In addition, we recently announced our agreement to acquire SonyV, which has developed a clinical stage differentiated ultrasound-based renal denervation technology. We look forward to closing this acquisition, which we expect in Q2 this year. Watchman grew 24% this quarter, reflecting robust market growth and an increase in our market share driven by strong concomitant uptake. With over half of our U.S. EP implanting customers now have been performing at least one concomitant procedure. We continue to invest in global clinical evidence, excuse me, most recently initiating the Option A trial in Asia Pacific, assessing the effectiveness of Ferripulse and Watchman in a concomitant procedure. Within the quarter in the U.S., we completed the full conversion to Watchman FlexPro, which is our third generation in market-leading technology, and we remain committed to increasing patient awareness and advancing physician training and workflow optimization. Looking ahead, we expect the U.S. label update for WATCHMAN as a first-line alternative to OACs in post-ablation patients in the second half of 25 and the Champion AF data readout in the first half of 26. Cardiac rhythm management sales grew 1% in the first quarter, Our Diagnostics franchise grew high single digits, led by double-digit growth in our LuxDX category. In Core CRM, our low-voltage business grew high single digits, and our high-voltage business declined low single digits. We've expanded our conduction system pacing offering with the recent launch of next-gen lead delivery catheters, which will provide physicians with additional tools to target the left bundle branch area of the heart. And further, we anticipate FTE approval in our leadless pacemaker in the second half of 2025. Electric physiology sales grew 145%, with fantastic performance across the globe. Globally, we are now the number two clear player in EP, and we intend to continue to expand our leadership position in PFA through clinical evidence, next-generation innovation, new offerings to fill portfolio gaps, and commercial capabilities. Within the quarter, we saw high commercial demand for Ferropulse, with strong sales in established accounts, and rapid new account openings as the global market continues to convert to PFA, given the compelling safety, efficacy, and efficiency profile. Earlier this month, results from the investigator-sponsored single-shot champion clinical trial demonstrate that Ferripulse achieves superior effectiveness for the treatment of symptomatic paroxysmal AF versus cryoablation. Importantly, this is the first prospective randomized demonstration of PFA superiority over any thermal ablation modality. We also continue to see strong adoption of our OPAL HDX integrated mapping solution, which provides operators enhanced visualization and confirmation of pulse field applications. In the first quarter, we completed enrollment in the AVANGAR trial, which studies a new patient population of drug-naive persistent AF patients. We also initiated and completed the first human case in the ELEVATE-PF trial, studying the Ferriflex catheter, which is our large focal high-density map and oblique catheter that integrates with the OPAL HDX mapping system. And tomorrow, data from the ADDvantage Phase II trial, studying FerriPoint, will be read out at the PFA Live Case Summit ahead of HRS, which we expect to support US FDA approval by year-end 2025. Also, peripheral inventions grew an impressive 16% operationally and 7% organically. Our interventional oncology and embolization franchise grew double digits across the portfolio, driven by a broad offering of embolization devices and cancer therapy technologies. In the quarter, we received FDA approval to expand the patient population and study additional areas in the brain in the Frontier trial, an early feasibility study for the use of Therosphere to treat reoccurring glioblastoma. We look forward to expanding our portfolio of offerings in this high-growth space and continue to expect the acquisition of Enteroncology to close in second quarter 25. Within our vascular franchise, we saw mid-single-digit growth in arterial and double-digit growth in venous in first quarter. And earlier this month, we completed the acquisition of Bolt Medical and also received FDA clearance of the IVL system for above-the-knee indications. We aimed to initiate a limited launch by the end of 25 as we ramped supply following the acquisition close and earlier than anticipated regulatory approval. On the coronary front, we continued to progress the fracture trial, now having enrolled patients in the U.S. Before I turn the call over, as you saw in our press release this morning, Dan Brennan has decided to retire from Boston Scientific after an outstanding 30-year career, including the last 12 years as our CFO. Thu will be succeeded by John Munson, who you know from his time leading investor relations at the end of June this year. Lauren Tangler will return to investor relations and succeed John. I would like to personally thank Dan for his leadership, his great friendship, and his many contributions over his remarkable career. Dan has been instrumental in transforming the trajectory of our financial performance and building a strong culture and values that are embedded throughout Boston Scientific. Thank you, Dan. And in closing, I'm grateful to our talented team of global employees who work every day to advance science for life, and I'm confident in the sustainability of our top-tier financial performance. With that, I'll turn it over to Dan.