Boston Scientific Corporation

Good morning and welcome to the Boston Scientific third quarter 2026 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 2. Please note this event is being recorded. I would now like to turn the conference over to Lauren Tankler, Vice President, Investor Relations. Please go ahead.

Thank you, Drew, and thanks to everyone for joining us. With me today are Mike Mahoney, Chairman and Chief Executive Officer, and Jon Monson, Executive Vice President and Chief Financial Officer. During the Q&A session, Mike and John will be joined by Joe Fitzgerald, Executive Vice President and Group President, Cardiology, and our Chief Medical Officer, Dr. Ken Stein. We issued a press release earlier this morning announcing our Q3 2026 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 that on the call, operational revenue excludes the impact of foreign currency fluctuations and organic revenue further excludes certain acquisitions and divestitures for which there is less than a full period of comparable net sales. Guidance excludes our previously announced agreement to acquire Penumbra, which we expect to close in early 2027. For more information, please refer to the Q3 financial and operating 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 prior year unless otherwise specified. This call contains forward-looking statements regarding, among other things, our financial performance, business plans, market expectations, and product performance and development. These statements are based on our current beliefs using information available to us as of today's date and 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 the earnings release we issued earlier this morning and our periodic reports and other filings with the SEC, including the risk factor section of our most recent annual report on the Form 10-K. Boston Scientific disclaims any intention or obligation to update these forward-looking statements In addition, this call does not constitute an offer to sell or the solicitation of an offer to buy any securities or solicitation of any vote or approval in connection with the proposed transaction with Penumbra. Boston Scientific has filed with the SEC a registration statement on Form S-4 containing a proxy statement of Penumbra and a prospectus of Boston Scientific that contains important information about Penumbra, Boston Scientific, the proposed transaction, and related matters. At this point, I'll turn it over to Mike.

Thanks, Lauren. Thank you, everyone, for joining us today. I want to begin by walking through our third quarter results, provide some fourth quarter outlook, and then assumptions behind our updated view of 2027. I'll then provide more details on both the region and business unit performance and outlook. Q3 total company organic sales grew 1.5% versus our original guide of 3% to 5%. Q3 adjusted EPS of 73 cents declined 3% versus our guidance range of 80% to 82%. Our Q3 results were impacted by our previously reported cybersecurity incident, which we estimate reduced our sales growth by approximately 300 basis points and adjusted EPS by 7 cents in the quarter. Importantly, after a two-week outage as a result of the cyber incident, all operations are back up and running as of September 8th. I'm very proud of our team's resiliency and the efforts they made to help us return as quickly as possible to supporting physicians and their patients for their products. Turning to Q4, We anticipate that it will be a 200 to 300 basis points of impact from the cyber incident as we work through elevated customer orders at the end of Q3 to replenish inventory levels. Additionally, since our second quarter earnings call, EP share pressure has intensified, further accelerated by the cyber incident. We have also seen pricing dynamics in China become more challenging. To that end, we are guiding to organic revenue declines of minus one to minus 3% for fourth quarter 26, and adjusted EPS of 77 cents to 79 cents. This results in a full year 26 organic revenue growth guide of approximately 4% and EPS of 316 to 318. Boston Scientific has enjoyed several years of exceptional growth, driven by strategic investments and strong execution globally, particularly within our EP and Watchman franchises. In 26, we've seen that cycle turn and those two businesses are now weighing on our total company growth as we navigate competition and market dynamics. We believe that 2027 will be the trough in this cycle, and we have several investments and new innovations coming over the course of the next three years that we expect will support stabilization and growth for both the EP and Watchman businesses. And while the remaining 75% of our business has grown consistently, we anticipate there will be additional price headwinds in China in 2027 and the growth likely won't be enough to offset the pressure from EP and Watchmen next year. As a result, we believe we'll be challenged to grow sales and adjust EPS in 27, excluding our pending acquisition of Penumbra. Having said all that, we are taking immediate actions to prepare for the future, including through our previously announced restructuring program and the evolution of our operating structure, while ensuring that we continue to make the right strategic investments across a number of growth platforms. We have a very strong cadence of launches in 27 and 28 and anticipate entering several new markets over the next few years that will unlock $25 billion in new market opportunity by 2030. Importantly, we expect these actions to drive meaningful improvement in both our revenue and adjusted EPS performance as we aim to exit this cycle in 27 and return to delivering high performance in 28 with further improvement expected in 29. I'll now provide some more details on Q3 and full year 26. Turning to our regional performance, the U.S. was flat year over year on an operational basis driven by ICBT, IONE, and neuromodulation. Europe, Middle East, and Africa grew 6% on an operational basis with strong performance across many of our businesses. But within the quarter, there was some impact from cyber offset by a transient headwind in third quarter 25 from our ERP platform GoLive. Asia Pacific declined 1% operationally with growth impacted by the cyber incident, as well as price pressure in China. Pricing dynamics in China continue to evolve and the number of our businesses seeing VBP and other pricing impacts as a result. We expect growth in this market will moderate to single-digit growth. Turning to our business units, I'll start with neuromodulation. Sales grew 13%. In pain, growth was broad-based across the portfolio with exceptional performance with our NALU PNS technology. But within the quarter, data was presented from the IMPROVE study, evaluating our intracept technology with real-world outcomes showing improvements in pain function and quality of life at three months. In brain, growth was driven by our Cartesia X-Lead and Illumina 3D software, which enabled more precise placement and programming. Urology declined 3% this quarter, with impact from the cyber incident, as well as expanding pricing pressure in China. In stone management, we have received a number of approvals for key products, including FDA clearance of our Navigator Flex suction seat, CE mark and FDA clearance for distribution of the 7.5 slim scope, and FDA clearance of our LithoView Elite single-use ureteroscope. As we look forward, we expect these new stone launches, as well as stabilization and productivity, from our S&M Commercial Organization to help our urology performance improve its growth profile over the course of 2027. Endoscopy sales declined 1% versus Q3 2025, inclusive in impact from China VBP and cyber. Importantly, the underlying performance of this business continues to be strong, led by Axios, our differentiated technology. And as we look ahead, we expect our endoscopy performance to be slightly pressured, closer to mid-single-digit market growth until we annualized the impact from the China VBP in fourth quarter 27. Cardiovascular sales delivered growth of 2% and interventional cardiology and vascular therapies sales grew 12%. Our interventional cardiology business had another exceptional quarter growing 19% with continuous strength in our global imaging franchise and drug-eluting technologies. We had another outstanding quarter of our agent DCB which is backed by strong clinical evidence and now has been used to treat over 400,000 patients to date. We remain focused on both the near and longer term growth opportunities for this business. And last quarter received ID approval of the vital PCI trial that is studying our vital circulatory support technology in the high risk PCI population. However, considering the evolving clinical evidence in the space, we've made the decision to shift our strategy and focus our development clinical efforts on the AMI cardiogenic shock indication. We believe that our device design has the potential to be well suited to treat patients experiencing cardiogenic shock and look forward to initiating clinical efforts in 27. Our Vitalis program is one of the largest internal R&D programs and an important long-term growth driver. To solidify funding for the AMI shock program, we have entered an agreement with Blackstone Life Sciences and aim to bring this important technology to market in 2030. Our vascular therapies business grew 1% with some impact from cyber as well as TCAR supply constraints. Importantly, we anticipate that our TCAR supply to improve throughout fourth quarter with full resolution by early next year. Our seismic launch continues to go well and within the quarter we received FDA clearance for seismic IVL, sorry, seismic IVL to treat patients with severely calcified peripheral artery disease in small vessel. expanded our size matrix to now treat above the knee and below the knee. We also received FDA approval for the Ranger 035 drug-coated balloon offering an expanded size and providing a highly complimentary offering as most IVL procedures that are performed in lower limbs are also followed by drug-eluting technologies. We remain excited about the opportunity to add the Penumbra team and they're highly differentiated in the complementary portfolio to Boston Scientific. We continue to work with regulators and now expect to close in early 27 subject to the receipt of the remaining regulatory clearances. Our interventional oncology and embolization business grew 5% driven by strong performance in our cancer therapies franchise, partially offset by some supply constraints that we anticipate will be resolved in early 2027. We continue to see strong adoption of any day dosing on TheraSphere 360 as well as momentum with our hepatic artery infusion technology providing a portfolio of options for cancer treatment. Cardiac rhythm management sales declined minus 2% with some impact from the cyber incident as we navigated usage and activation of technologies that leverage remote monitoring while our systems were down. In Q3, our diagnostics franchise grew high single digits Our low voltage business declined mid single digits and high voltage business declined low single digits. We anticipate that our performance will improve over the course of 27 with new launches and ongoing momentum. Before I turn to Watchman and EP, I want to acknowledge the pressures in these two businesses and the impact that it has on our overall growth. We are acting now to strengthen the LAC market and focus our EP resources where we can compete most effectively. while investing in innovation that we believe can improve over time. On Watchman, sales declined minus 6%, declining 7% in the US and growing 4% internationally. Within the US, concomitant procedures grew approximately 35% and standalone procedures declined high teens versus third quarter 25. We continue to believe that the overall LAC market slowdown primarily reflects changes in patient identification and referral patterns. as physicians assess the clinical evidence published over the last year. Importantly, we're executing against our investment priorities that we laid out in our 2Q call. We held over 200 MedEd events in second quarter and third quarter, providing an opportunity for more than 2,000 referrers and implanters to gain a deeper understanding of the clinical evidence available. We've added more dedicated commercial resources to Watchmen to support both concomitant and standalone procedures and support the referral pathway. In the third quarter, we saw increased patient engagement, further reinforcing the strong demand for alternatives to oral anticoagulation, and highlighting the significant unmet need among patients who can't, shouldn't, or won't take lifelong OAC. We continue to believe that focusing on these priorities will support improvement in the LAC market over time. With our third quarter performance largely in line with expectations despite the cyber incident, we are maintaining our previous outlook for our Watchman business. In fourth quarter, within the U.S., we anticipate no improvement in the year-over-year standalone procedure performance and continued deceleration and concomitant procedure growth against a very high baseline. Internationally, we anticipate similar performance in Q3 and Q4, resulting in sequential flat, low single-digit declines versus Q3 26 globally. Turning to 27, we believe our investments, along with a potential label change, will improve the market over time, However, until we see the market improve, we are assuming that the market performance will be similar to Q4 with additional pressure due to a new competitive launch. We believe in the benefit of this therapy and continue to innovate and invest for the future. Within the quarter, we commenced enrollment in the Elite AF clinical trial to evaluate the safety and effectiveness of the next generation Watchman Elite platform. We anticipate bringing this fourth generation technology to market in 29. Additionally, we look forward to the late-breaking data presentation of our simplified trial at TCT, studying post-implant drug therapy using Watchman FlexPro and assessing whether a less intensive drug regimen may help mitigate post-implant bleeding risk. Turning to EP, sales declined 5% with a decline of 8% in the U.S. and 2% growth internationally. We estimate that the cyber incident contributed to roughly half our MIS primarily within our international region. But within the quarter, we continue to expand our OPAL footprint and drive more utilization of our mapping systems with our fair wave and fair point catheters. The EP market has transformed over the past few years led by our differentiated fair pulse platform. We have seen our strong market share position erode as new technologies are introduced and adoption of these different PFA form factors has been highly dynamic. While the cyber incident has accelerated some of the share shift, we do expect continued erosion of our PFA share position until we launch Ferrowave Ultra, now expected in early 28. We expect our EP performance to meaningfully improve in 28 as we expand our PFA ecosystem with 2D Ice in the second half of 27 and Ferrowave Ultra in 28 and Ferriflex, a wide area focal catheter, in 29. In the near term, we're focusing our teams where we know we can win. We have the most utilized and studied technology for de novo atrial ablation procedures with our fairway catheters. We have a differentiated portfolio available including our VersaCross transseptal needle and Watchman technology and we continue to invest to bring differentiated innovation to this large and fast-growing market. In closing, I want to restate that I remain very confident in Boston Scientific's long-term outlook. We operate in attractive markets with approximately 75% of our business historically growing approximately 66% for many quarters. We have an impactful cadence of future growth catalysts anticipated in 27 and 28 that we expect to drive meaningful improvement to our growth profile in 28 and beyond. We remain focused on execution, delivering our updated 26 guidance, taking appropriate action to evolve our organization that will create greater focus, speed, and accountability while ensuring we are continuing to invest in our long-term growth drivers. I'm incredibly grateful to our global employees for their resiliency and winning spirit. And across all of our businesses and regions, I've seen our colleagues step up in extraordinary ways, adapting quickly and supporting one another and doing what it takes to ensure we are focused on what matters, improving patient lives through a relentless pursuit of innovation. With that in hand, I'll hand over to John to provide more details.