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37th Annual JP Morgan Healthcare Conference
Mike MahoneyChairman & Chief Executive Officer
2
Safe Harbor for Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “estimate,” “intend” and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could differ materially from the expectations and projections expressed or implied by our forward-looking statements.
Factors that may cause such differences can be found in our most recent Form 10-K and Forms 10-Q filed or to be filed with the Securities and Exchange Commission under the headings “Risk Factors” and “Safe Harbor for Forward-Looking Statements.” Accordingly, you are cautioned not to place undue reliance on any of our forward-looking statements. We disclaim any intention or obligation to publicly update or revise any forward-looking statements to reflect any change in our expectations or in events, conditions, or circumstances on which they may be based, or that may affect the likelihood that actual
results will differ from those contained in the forward-looking statements.
Non-GAAP Measures:
This document contains non-GAAP measures (denoted with *) in talking about our company’s performance. The reconciliations of those non-GAAP measures to their most comparable GAAP measures are contained within this document including appendices attached to the end of this presentation.
Financial Disclaimers:
Operational growth rates are non-GAAP measures that exclude the impact of foreign currency fluctuations. Organic growth rates are non-GAAP measures that exclude the impact of foreign currency fluctuations and the sales from the acquisitions of the American Medical Systems male urology portfolio, EndoChoice Holdings, Inc., Symetis SA, NxThera, Inc., Claret Medical, Inc. and Augmenix, Inc. in the periods for which there are no prior period related sales.
We define Emerging Markets as including certain countries that we believe have strong growth potential based on their economic conditions, healthcare sectors and our global capabilities. Currently, we have 20 countries in our definition of Emerging Markets.
Market Estimates:
Unless noted otherwise, all references to market sizes, market share positions, and market growth rates are BSX internal estimates.
All financial estimates and other projections, including but not limited to pipeline, growth drivers, and investments, as well as other references throughout this document, unless otherwise noted, exclude the acquisition of BTG plc.
3
Regulatory Disclaimers
Product Regulatory Disclaimer
LUX Dx™ Implantable Cardiac Monitor Device under development. Not available for use or sale worldwide.
EMPOWER™ Leadless Pacer Device under development. Not available for use or sale worldwide.
Apama RF Balloon Catheter Device under development. Not available for use or sale worldwide.
Cryterion Cryothermal Energy Platform Device under development. Not available for use or sale worldwide.
DirectSense™ Technology CE Marked. Not available for use or sale in the U.S.
SAVAL™ Drug eluting below-the-knee stent U.S. Caution: Investigational Device. Limited by Federal (or U.S.) law to investigational use only. Not available for sale.
VICI™ Venous Stent CE Marked. U.S.: Caution: Investigational Device. Limited by Federal (or U.S.) law to investigational use only. Not available for sale.
Ranger™ Drug-Coated Balloon CE Marked. U.S.: Caution: Investigational Device. Limited by Federal (or U.S.) law to investigational use only. Not available for sale.
LOTUS Edge™ Aortic Valve CE Marked. U.S.: Caution: Investigational Device. Limited by Federal (or U.S.) law to investigational use only. Not available for sale.
ACURATE neo™ Self-Expanding Valve platform CE Marked. U.S.: Caution: Investigational Device. Limited by Federal (or U.S.) law to investigational use only. Not available for sale.
ACURATE neo2™ Pending CE Mark. Not available for use or sale in the U.S.
WATCHMAN FLX™ Pending CE Mark. Not available for use or sale in the U.S.
DFR™ Technology Device under development. Not available for use or sale worldwide.
Vercise™ PC DBS System and Cartesia™
Directional LeadCE Marked. U.S.: Caution: Investigational Device. Limited by Federal (or U.S.) law to investigational use only. Not available for sale.
4
Boston Scientific is dedicated to
transforming lives through innovative
medical solutions that improve the
health of patients around the world.
Our Mission and Values
CaringMeaningful
Innovation
High
Performance
Global
CollaborationDiversity Winning Spirit
5
What to Expect from BSX
• Strong track record of delivering high performance & strong shareholder value
• Consistent diversification into high growth markets
• Compelling and differentiated pipeline via organic investments + M&A
• Consistent top tier revenue performance
• Double-digit EPS growth via differentiated margin expansion & strong free cash flow
6
Boston Scientific At-A-Glance
$5.5B, +7%
$2.2B, +9%
$1.7B, +7%
$0.4B, +16%
US
LACA
APACt
EMEAt
2018 Revenue1 and Operational* Growth1: (Total company: $9.8B, 8%; Organic* Growth1 7%)
Strong Growth
in Every Region
$2.6B, +7%
$1.2B, +9%
$2.0B, +2%
$0.3B, +11%
$0.8B, +23%
$1.8B, +8%
$1.2B, +11% Interventional
Cardiology
Peripheral Interventions
Cardiac Rhythm Management
EP
Endoscopy
NM
Urology &Pelvic Health
Above Market
Growth in
Most Segments
7
$0.84
$0.93
$1.11
$1.26
$1.38-
$1.40
+DD%
Y/Y
+15%+11%
+20%
+13%
+10%
-11%
2014 2015 2016 2017 2018E 2019E
- 2020E
20.2%
22.3%
24.1%25.0%
25.5-
25.75%
+50-100
bps Y/Y
2014 2015 2016 2017 2018E 2019E
- 2020E
+4% +5%
+10%+7%
+7%
+6% +8%
+12%+8%
+8%
$7.4 $7.5
$8.4 $9.0
$9.8
+7-10%
CAGR
2014 2015 2016 2017 2018 2019E
- 2020E
Reported revenue, Y/Y operational* growth
Y/Y organic* growth rates
Operational* revenue growth goal
Track Record of Delivering High Performance
Adjusted EPS*RevenueAdjusted Operating
Margin*
Sales growth consistently > mkt
CAGR ’15-’18E: 9% operational* &
8% organic*
Delivering on margin
expansion goals
Consistent double digit adj. EPS*
growth: CAGR ’15-’18E: 14%
331
Adj. operating margin* goal Adj. EPS* growth goal
8
High Growth Mkt (≥10% CAGR): NM (SCS, DBS), Structural Heart (TAVR, LAAC, Embolic Protection), EP, PI (Drug Eluting, Venous, Y904), Endo (Endoluminal Surgery, Single-use Scopes), Uro (Prostate Cancer, MIS BPH)
Moderate Growth Mkt (4 - 9% CAGR): Endo (Core), PI (Arterial Core + Core Oncology), UroPH (Core), IC (Complex Coronary)
Low Growth Mkt (≤3% CAGR): Pacer, Defibrillators, DES
2018 Revenue Mix 2021E Revenue Mix2013 Revenue Mix
~3% ~5% ~6-7%Served Market
Y/Y Growth
Low
Growth
~30%
Moderate
Growth
~50%
$10B1
High
Growth
~20%
$7B
Low Growth
~40%
Moderate
Growth
~50%
Low
Growth
~20%
Moderate
Growth
~45%
High
Growth
~35%High
Growth
~10%
Estimated Market Growth Rates
Continued Diversification into Faster Growth Markets
9
Growth Accelerators
• LAAC Global Expansion (WATCHMAN™)
• TAVR (ACURATE neo™, LOTUS Edge™) &
Embolic Protection
• Mitral Repair Technologies
• Visualization (Flex scope & FMS)
• Cancer (nVision, SpaceOAR™)
• Overactive Bladder
• Endoluminal Surgery
• Infection Prevention and Pathology
• Therapeutic Imaging
• DBS for Parkinson’s Disease and Tremor
• Other DBS indications 2023+
• Drug-eluting (ELUVIA™ DES, Ranger™ DCB)
• Therapeutic Oncology4
• Venous Stenting & Pulmonary Embolism4
IC: Structural Heart
Peripheral Interventions
Endoscopy
Urology & Pelvic Health
Neuromodulation
Rhythm Management• Single Shot Cryo & RF
• HeartLogic™ Heart Failure Alert
• Diagnostics
Expanding into High Growth Markets Approaching ~$20B
2018E
Sales2
$475M+
~$75M
<$200M
+80%
~$75M
<$1B
Defib
+7%
Market
2022E
~$8B
~$3.5B
~$2.5B
~$1B
~$2.5B
~$20B
~$2.5B
10
4
Multiple Sources of Innovation Drive Compelling Pipeline
Recent Business
Development
Adjusted R&D* Spend &
Percent of Sales
Strategic Investments &
Partnerships
$0.9B
$1.0B
$1.1B
2016 2017 2018E
3
10.9%
10.8%
10.5-11%
• Active venture capital portfolio
– 40+ investments in mixed stages
of opportunity
– 4 equity investments converted
into acquisitions in 2018
• Multiple incubators + spin outs
• Strategic partnerships
5
Tsinghua University4
11
Urology and
Pelvic HealthEndoscopy
Cancer• SpaceOAR™ Hydrogel
• nVision Ovarian cancer diagnosis
Therapeutic Imaging• SpyGlass™ DS visualization system
• EXALT™ single-use duodenoscope
Benign Prostatic Hyperplasia• GreenLight XPS™ laser therapy
• Rezūm™ in-office therapy
Stone Disease• LithoVue™ single-use ureteroscope
• Comprehensive device portfolio
MedSurg:
Category Leadership & Multiple New Growth Platforms
Pancreaticobiliary• AXIOS™ stent
• Jagwire™ Revolution guidewire
Endoluminal Surgery• ORISE™ Tissue Retractor System
• ORISE™ Gel submucosal lifting agent
• Additional launches to build toolkit
Infection Prevention• Compliance kits
• Scope valves and repair
Men’s & Women’s Health• AMS 700™ Penile Prosthesis
• AMS 800™ Urinary Control System
• Full mid-urethral sling portfolio
12
Cardiovascular:
Category Leadership & Multiple New Growth Platforms
Peripheral
Interventions
Interventional
CardiologyStructural Heart
Complex PCI• ROTAPRO™ atherectomy
• MAMBA™ microcatheters
• SENTAI™ guidewires
• JUDO™ 3 & 6 guidewires
• GUIDEZILLA™ catheter
Drug Eluting• SYNERGY™ DES
• Promus ELITE™ DES
• AGENT™ DCB
Imaging Platforms• OptiCross™ HD
• DFR™ Technology
• Physiology Tablet
• IVUS Tablet
Mitral Valve
Replace & Repair• Millipede acquisition4
TAVR• ACURATE neo2™
• LOTUS Edge™
• SENTINEL™ embolic
protection
LAAC• Watchman™
• Watchman FLX™
• TruSeal™Access System
Interventional Oncology• TheraSphere™ Y904
• Cryo & Microwave
Ablation4
• Emerging Markets
Venous• VICI™ stent
• AngioJet™ / Zelante™
catheters
• Pulmonary Embolism
with EKOS™ System4
Arterial: Drug-Eluting
Technologies• ELUVIA™ DES
• Ranger™ DCB
• SAVAL™ DES for CLI
13
Rhythm & Neuro:
Category Leadership & Multiple New Growth Drivers
ElectrophysiologyCRM
Core CRM• RESONATE™ with
HeartLogic™
• ACCOLADE™ MRI with
INGEVITY™ pacing lead
• VALITUDE™ X4 Quad
CRT-P
Implantable Cardiac
Monitor• LUX Dx™ arrhythmia
monitoring device
Therapeutic Catheters• DirectSense™
technology
• Force Sensing
technology
Mapping & Navigation• RHYTHMIA™ HDx
• LUMIPOINT™ software
Neuromodulation
Deep Brain Stimulation• Vercise™ directional
primary cell
• Brainlab partnership
Spinal Cord Stimulation• WaveWriter™ SCS with
combination therapy
• RF Ablation
Additional investments• Multiple new
neurology indications
Single Shot Therapies• Apama RF balloon
catheter system
• Cryterion cryothermal
energy platform
Modular CRM: mCRM™
• EMBLEM™ MRI S-ICD
• EMBLEM™ S-ICD with
EMPOWER™ leadless
pacer
14
Strong Product Pipeline Supports Top Tier Growth
2021E / 2022E2019E 2020E
Coronary Therapies
• SYNERGY™ DES 4.5/5.0
• MAMBA™ microcatheters
• ROTAPRO™ Atherectomy System
• OptiCross™ HD
Structural Heart
• WATCHMAN FLX™ LAAC Device – EU
• WATCHMAN™ LAAC Device – Japan
• ACURATE neo™ Valve System – Int’l expansion
• ACURATE neo2™ Valve System – EU
• LOTUS Edge™ Valve System – U.S. & EU
• Sentinel™ CPS – Int’l expansion
Peripheral Interventions
• ELUVIA™ DES SFA
• VICI™ Venous Stent – U.S.
CRM/EP
• Apama RF & Cryterion PVI Balloons – EU
Neuromodulation
• Expanded DBS platform
Endoscopy
• SpyGlass™ Visualization System next gen
• EXALT™ single-use duodenoscope launch
Urology/Pelvic Health
• LithoVue™ Ureteroscope next gen
• 5 additional launches in Stone
• SpaceOAR™ – Int’l expansion
Coronary Therapies
• SYNERGY™ XD Stent and 48 Stent
• MEGATRON™ Stent
• COMET™ II pressure wire
Structural Heart
• WATCHMAN FLX™ LAAC Device – U.S.
• ACURATE neo™ Valve expanded sizes – EU
• LOTUS Edge™ Valve System – Japan
• Sentinel™ CPS – Int’l expansion
Peripheral Interventions
• Ranger™ DCB SFA – U.S. & Japan
• Interventional Oncology Embolic Coils
• Athletis™ PTA Balloon
• IVUS Catheter
CRM/EP
• LUX Dx™ ICM Monitoring
• Force Sensing Catheter – EU
Neuromodulation
• SCS & DBS Next Gen – U.S. & EU
Endoscopy
• Single-use scope platform expansion
• AXIOS™ Stent expanded indications – U.S.
Urology/Pelvic Health
• nVision MAKO 7 Device with expanded claim
• Multiple launches in Stone
• Multiple launches in Men’s Health
• Next Gen Greenlight fiber for BPH
Coronary Therapies
• AGENT™ Drug Eluting Balloon
• Physiology/IVUS Multi Modality Tablet
Structural Heart
• WATCHMAN FLX LAAC Device – China
• ACURATE neo™ Valve expanded sizes – U.S.
• ACURATE neo2™ Valve System – U.S. & Japan
• LOTUS Edge™ Valve expanded sizes – U.S. & EU
• Millipede IRIS Transcatheter Mitral Valve Repair - EU
Peripheral Interventions
• SAVAL™ Drug Eluting Stent BTK
CRM/EP
• Empower™ Leadless Pacing/modular CRM – U.S.
• Next Gen CRM PG
• Apama RF & Cryterion PVI Balloons – U.S.
• Force Sensing Catheter – U.S.
Neuromodulation
• SCS & DBS Next Gen – U.S./EU
Endoscopy
• Single-use scope platform expansion
Urology/Pelvic Health
• Multiple launches in Stone
• Multiple launches in Men’s Health
15
BTG At-A-Glance:
Strong Strategic Fit + Compelling Value Creation
Strategic & Financial
RationaleHigh Growth Business Segments
• BTG Interventional Med
provides high growth and
strong synergies to BSX PI
• High growth expansion in
cancer therapeutics
• Strong margin & cash flow
• Compelling shareholder
returns
• Execution sweet spot
Interventional
Medicine
$172M, +15-17%
Specialty
Pharma
$168M, LSD
Licensing
$156M
Interventional Medicine:
•Durable double-digit
revenue growth
•Revenues 90% U.S. based;
strong geographic
expansion opportunities
Specialty Pharmaceuticals:
•Unique portfolio with
attractive profitability
• Lean business; largely
independent of IM business
Licensing:
•Requires no
integration
•Cash business with
limited/no overhead
• Zytiga ruling (Nov 19)
in-line with deal
expectations
Immediately $0.02 - $0.03 accretive to BSX 2019 adj. EPS*
Significant synergies of $175M+ expected (yr. 3)
(Six month Interim 2018/2019 Revenue and FY 2018/2019 Growth Outlook)6
16
Provides a Differentiated and Comprehensive Portfolio in the
Fast Growing Peripheral and Oncology Market
Guide-
wiresDrug
Elution
Stents
Balloons
Crossing
Catheters
(Roxwood)
Vena Cava
Filter
(Sentry)
Coils Micro-
catheters
Guidewires
Radio-
Embolization
Beads
(TheraSphere™)
Cryo &
Microwave
Ablation
(Galil)
Acoustic Pulse
Thrombolysis
(EKOS™)
Superficial
Venous
Disease
(Varithena™)
Venous
Stents
& IVUS
Mechanical
Thrombectomy
&
ArterialInterventional Oncology Venous
Segment Size: ~$1.6B
Growth: ~8%
Segment Size: ~$1.4B
Growth: ~7%
Segment Size: ~$3.2B
Growth: ~6-7%
Not all products and/or indications are available in all territories.
17
20.2%
22.3%
24.1%
25.0%
25.5-
25.75%
+50-100 bps Y/Y
30+%
2014 2015 2016 2017 2018E 2019E 2020E Long Term
Opportunity for Differentiated Operating Margin Expansion
Key ContributorsOpportunity beyond 2020 for 30%+ adjusted OM*
3
• SG&A productivity
– Functional expansion of Global
Business Services
– Optimizing ‘back office’ via
Centers of Excellence
– Implementation of robotic
process automation (RPA)
• Launches & commercial scale
of acquisitions + key products
• R&D efficiencies
• 5-10% annual standard cost
improvements
• Ongoing manufacturing site
optimization
18
2017 2018E 2019E 2020E
Tax Reinvestment Post-Reinvestment Estimated Tax Rate7
13% ~13% ~13%
• Previously expected operational tax rate7 of ~15% in
2019+
• Now, expect an operational tax rate7 of ~13% in
2019+, which reflects roughly equal benefit from
both our tax reinvestment strategy and favorable
OUS tax rates
‒ Q2:18 adjusted EPS included $82 million, or $0.06, benefit
from finalization of the IRS Stipulation of Settled Issues
‒ Reinvested substantially all this $0.06 benefit in Q4:18 to
optimize our structure, leveraging differences in tax rates
by jurisdiction
Long Term Operational Tax Rate7 of ~13%
3
19
~$1.9B
~$2.15B
~$2.4B
2018E 2019E 2020E
Building on Strong FundamentalsStrong Adj. Free Cash Flow* Outlook
Strong Cash Flow Outlook, Conservative Capital Structure
• Improved ability to deploy adj. free cash flow*
– 5% of 2019E-2020E adjusted free cash flow* reserved for
legal/tax audit settlements vs. 65% 2015-2018E
• Continued financial discipline around acquisitions
and investments
• Commitment to investment grade ratings
• Targeted Debt/EBITDA Leverage Ratios including
BTG acquisition4:
~2.6x by YE 2018E
~3.3x by YE 2019E
~2.6x by YE 2020E
3
95% of 2019E-2020E adjusted free cash
flow* available to deploy
20
2018E
Goals
2019E & 2020E
OperationalRevenue* Growth
+8%1 +7-10%
Contribution from Recent M&A
+80bps1 inorganic
(Symetis, NxThera, Claret, Augmenix)
+150bps
(organic/inorganic split TBD based on deal size & timing of anniversaries)
Organic Revenue* Growth
+7%1~+6-9%
(organic/inorganic split TBD based on deal size & timing of anniversaries)
Adjusted Op. Margin*
+50-75bps3 Y/Y +50-100bps Y/Y
Adjusted Tax Rate* ~12%3 ~13%7
Adjusted EPS* Growth +10-11%3 Double-digit goal
Consistent and Strong Financial Outlook
21
Appendix
References and Non-GAAP Reconciliations
22
Business Development Activity
Target Business DescriptionClosing
DateUpfront
($M)
Max Milestone
($M)
Potential Total($M)
CommentsTarget
Commercial Launch
Acquisitions – 2018
1 Endoscopy RF ablation for GI cancer Mar-18 10 — 10"Drop in the bag" for biliary franchise; minor revenue contribution
2018
2Rhythm Management
Esophageal temp monitoring
Mar-18 40# 10 50"Drop in the bag" for EP franchise;minor revenue contribution 2019
3Urology / Pelvic Health
Minimal invasive therapy for BPH
Apr-18 240#
85 325Category leadership for urologist in-office prostate health 2018
4Urology / Pelvic Health
Potential platform for earlier diagnosis of ovarian cancer
Apr-18 150 125 275Confirmatory study underway with results targeted H2:19E;minor revenue contribution
2020
5Rhythm Management
Single shot therapy -pulmonary vein isolation Jul-18 202
#— 202
Target CE Mark YE19;minor revenue contribution 2020
6 IC - Structural HeartEmbolic protection (TAVR, etc.) Aug-18 220 50 270
US NTAP reimbursement in effect Oct 1, 2018 2018
7Peripheral Interventions Peripheral venous stent Aug-18 108
#52 160
"Drop in the bag" for PI Venous franchise; filed PMA mid-2018 2019
8Urology / Pelvic Health
Organ protection in prostate cancer radiation therapy
Oct-18 500 100 600Category leadership for urologist in-office prostate health;~$50M sales FY2018E
2018
Total: $ 1,470 $ 422 $ 1,892
Pending Close – 2019
1 IC - Structural HeartTMVR - Full annuloplasty ring for mitral repair Q1:19E 325# 450 540 Initial $90M investment made 2018 TBD
2Peripheral Interventions
IO, venous and arterial portfolio additions H1:19E 4,200 — 4,200
Includes specialty pharmaceuticals and licensing segments
2019
#Previously held equity investment; purchase price represents cash paid for remaining stake not already owned
23
References
*Non-GAAP measure; for reconciliations of non-GAAP financial measures to the most directly comparable GAAP figures, please
refer to Appendix A of this document.
1Based on preliminary, unaudited sales results issued January 7, 2019
2Based on preliminary, unaudited internal estimates
3Based on 2018 guidance issued October 24, 2018
4Millipede and BTG acquisitions are signed, pending close
5Based on midpoint of 2018 guidance issued October 24, 2018 and preliminary, unaudited sales results issued January 7, 2019
6Results six months ended Sept 30, 2018 and outlook twelve months ending March 31, 2019, as reported in BTG interim results
7Estimated tax rate is operational and excludes discrete tax items, such as the benefit related to adoption of ASU 2016-09
tPrior period segment amounts revised in accordance with ASC 280, Segment Reporting, to reflect the reclassification of
Neuromodulation from the MedSurg segment to the Rhythm and Neuro segment, effective January 1, 2018. In addition, regional
totals reflect the reclassification of Middle East and Africa from the former AMEA region to Europe, also effective January 1, 2018.
24
Supplemental Non-GAAP Disclosures
25
Supplemental Non-GAAP Disclosures
26
Supplemental Non-GAAP Disclosures
27
The following is an explanation of the adjustments that management excluded from GAAP measures to calculate the following forward-looking non-GAAP financial measures:
Adjusted R&D: Excludes from GAAP R&D the impacts of forecasted acquisition- and divestiture- and restructuring-related charges or credits.
Adjusted Operating Margin: Excludes from GAAP operating margin the impacts of forecasted acquisition- and divestiture- and restructuring- and restructuring-related charges or credits and amortization expense.
Adjusted Tax Rate: Excludes from GAAP tax rate the tax impacts related to forecasted acquisition- and divestiture-and restructuring- and restructuring-related charges or credits and amortization expense.
Adjusted Free Cash Flow: Adjusts GAAP operating cash flow to include the impacts of forecasted capital expenditures and excludes the impact of estimated after-tax acquisition- and divestiture-, restructuring- and litigation-payments.
Please refer to our Safe Harbor for forward-looking statements disclosure in conjunction with any forward looking information presented within.
Supplemental Non-GAAP Disclosures