Q3 2019 Highlights - Boston Scientificinvestors.bostonscientific.com/~/media/Files/B/...8 Q3 2019 Financial & Operational Highlights | October 23, 2019 Measure ($ in millions) Q3 2019

Q3 2019 HighlightsOctober 23, 2019

2 Q3 2019 Financial & Operational Highlights | October 23, 2019

Safe Harbor for Forward-Looking Statements andUse of Document:

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 of1934. Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “estimate,” “intend,” "aiming" and similar words. Theseforward-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 futureevents or performance. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could differ materially from theexpectations 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 underthe headings “Risk Factors” and “Safe Harbor for Forward-Looking Statements.” Accordingly, you are cautioned not to place undue reliance on any of our forward-lookingstatements. 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-lookingstatements.

BTG Disclaimer:For the third quarter of 2019, there have been no changes to our internal reporting structure and, accordingly, we have not revised our segment reporting or geographicpresentation. We will continue to integrate the BTG Acquisition into our operations in the fourth quarter and will reassess our operating and reportable segments as well asgeographic presentation for any changes related to our internal reporting structure. Our results of operations include the results of BTG following the acquisition date ofAugust 19, 2019 (and are denoted with † throughout). BTG net sales are substantially U.S. based.

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 mostcomparable GAAP measures are contained within this document including appendices attached to the end of this presentation or in our earnings release.

Operational revenue growth excludes the impact of foreign currency fluctuations. Organic revenue growth excludes the impact of foreign currency fluctuations, sales from therecent acquisitions of Claret Medical, Inc., Augmenix, Inc., Vertiflex, Inc. and BTG plc and divestitures, each with no prior year comparable sales.We define Emerging Marketsas the 20 countries that we believe have strong growth potential based on their economic conditions, healthcare sectors and our global capabilities. Periodically, we assess ourlist of Emerging Markets; effective January 1, 2019, we updated our list of Emerging Market countries. Our current list is comprised of the following countries: Argentina, Brazil,Chile, China, Colombia, Czech Republic, India, Indonesia, Malaysia, Mexico, Philippines, Poland, Russia, Saudi Arabia, Slovakia, South Africa, South Korea, Thailand, Turkeyand Vietnam. We have revised prior year amounts to the current year’s presentation (as denoted with ‡ throughout). The revision had an immaterial impact on prior year EmergingMarkets sales.

Use of Document:This document contains certain highlights with respect to our third quarter 2019 performance and developments and does not purport to be a complete summary thereof.Accordingly, we encourage you to read our Earnings Release for the quarter ended September 30, 2019 located in the investor section of our website atwww.bostonscientific.com and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 to be filed with the Securities and Exchange Commission.

Amounts reported in millions within this presentation are computed based on the amounts in thousands. As a result, the sum of the components reported in millions may notequal the total amount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages presentedare calculated from the underlying numbers in dollars.


Q3 2019 Highlights

• Revenue growth Y/Y:• +14.2% operational*, +13.1% as reported,

+9.3% organic*• Earnings per share:

• Adjusted*: $0.39 vs. $0.35 Q3:18 • GAAP: $0.09 vs. $0.31 Q3:18

• Gross margin:• Adjusted*: 72.7%, flat Y/Y

◦ Neutral FX impact Y/Y• GAAP: 71.3%, (60) bps Y/Y

• Operating margin:• Adjusted*: 26.1%, +50 bps Y/Y• GAAP: 14.1%, (210) bps Y/Y

• Narrowed FY guidance:• Organic* revenue growth: ~7.5% • Adjusted EPS*: $1.55 - $1.58

• Surpassed 100,000 WATCHMAN™ LAAC Device patientimplants worldwide and commenced Japan launch uponsecuring positive local reimbursement. Also, presentedimplications data at TCT confirming that WATCHMAN is anaffordable stroke risk reduction strategy for Medicare andMedicare beneficiaries compared to warfarin.

• Presented positive LOTUS™ TAVR data at TCTdemonstrating significant, sustained improvement infunctional and health status following LOTUS valveimplantation versus CoreValve® systems (Medtronic), andsignificantly fewer cases of disabling stroke and moderateor greater paravalvular leak versus the CoreValve® system.

• Completed clinical trial assessing the performance of EXALT™Model D Single-Use Duodenoscope with positive resultspresented at the United European Gastroenterology WeekCongress.

• Announced the completion of the acquisition of BTG plcpursuant to the previously announced scheme of arrangement.In addition, divested microspheres and bland embolic beadproducts to Varian Medical Systems, Inc.

Financial Highlights Operational Highlights


WW Sales by Segment and Business

Q3 2019 Reported Revenue: $2,707M Revenue by Business; Segment Percentage of Total Sales

CRM$478M

EP$81M

NM$222M

IC$700M

PI$311M

Endo$486M

UroPH$359M

MedSurg31%

Rhythm andNeuro29%

Cardiovascular37%

BTGAcquisition†

3%


Three Months Ended September 30, 2019 and 2018

WW Sales Detail

(in millions)Q3

2019Q3

2018

AsReported

Basis

Less: Impact ofForeign

CurrencyFluctuations

OperationalBasis

Less: Impactof Certain

Acquisitions /Divestitures

OrganicBasis

ENDOSCOPY $ 486 $ 443 9.6% (0.8)% 10.4% — % 10.4%

UROLOGY AND PELVIC HEALTH 359 303 18.6% (0.8)% 19.4% 8.9 % 10.5%

MEDSURG 845 746 13.2% (0.9)% 14.1% 3.6 % 10.5%

CARDIAC RHYTHM MANAGEMENT 478 475 0.6% (1.2)% 1.8% — % 1.8%

ELECTROPHYSIOLOGY 81 76 5.8% (1.2)% 7.0% — % 7.0%

NEUROMODULATION 222 189 17.5% (0.8)% 18.3% 10.4 % 7.9%

RHYTHM AND NEURO 780 740 5.4% (1.1)% 6.5% 2.6 % 3.9%

INTERVENTIONAL CARDIOLOGY 700 615 13.9% (1.4)% 15.3% 0.7 % 14.6%

PERIPHERAL INTERVENTIONS 311 293 5.9% (1.0)% 6.9% (1.3)% 8.2%

CARDIOVASCULAR 1,011 908 11.3% (1.3)% 12.6% — % 12.6%

INTERVENTIONAL MEDICINE 48 n/a n/a n/a n/a n/a n/a

SPECIALTY PHARMA 23 n/a n/a n/a n/a n/a n/a

BTG ACQUISITION† 71 n/a n/a n/a n/a n/a n/a

WORLDWIDE NET SALES $ 2,707 $ 2,393 13.1% (1.1)% 14.2% 4.9 % 9.3%

EMERGING MARKETS SALES‡ (EXCLUDES BTG†) 310 267 16.1% (3.2)% 19.3%

EMERGING MARKETS‡ SALES PERCENTAGE OF TOTAL BSC (EXCLUDES BTG†) 11% 12%

UNITED STATES SALES PERCENTAGE OF TOTAL BSC (EXCLUDES BTG†) 56% 56%

INTERNATIONAL SALES PERCENTAGE OF TOTAL BSC (EXCLUDES BTG†) 41% 42%

Q3 2019 Highlights


MedSurg Performance Summary

Measure($ in millions) Q3 2019 Q3 2018 Change Y/Y

Reported Revenue $845M $746M +13.2%

Operating Income $319M $274M +16.4%

Operating IncomeMargin 37.8% 36.8% +100 bps

• Endoscopy: Global revenue +10.4% Y/Y operational* and organic* (+9.6% as reported)▪ Strong organic growth trend continued as a result of multiple product launches over the last 12-18 months and notable strength in Infection

Prevention, Therapeutic Imaging (SpyGlass DS), Biliary, and Hemostasis.▪ Remain on track for YE 2019 launch of Exalt-D single-use duodenoscope and are encouraged by the FDA communication in September

recommending the use of single-use technologies in ERCP procedures.

• Urology and Pelvic Health: Global revenue +19.4% Y/Y operational*, +10.5% organic* (+18.6% as reported)▪ Double digit organic growth fueled by momentum in core stone due to continued strength of LithoVue, lithotripsy, and lasers.▪ SpaceOAR hydrogel continues strong adoption, tracking above initial plans and is on pace to reach $100M in FY:19; became organic on the first

day of Q4.▪ Organic growth aided by contributions from Rezūm as NxThera became organic in May; adoption uptick driven by continued engagement with

insurers, physicians, and patients.

1 Under development. Not available for use or sale in the U.S.

Q3 2019 Highlights



Reported Revenue $780M $740M +5.4%

Operating Income $166M $168M -1.0%

Operating IncomeMargin 21.3% 22.7% -140 bps

Rhythm and Neuro Performance Summary

• Cardiac Rhythm Management: Global revenue +1.8% Y/Y operational* and organic* (+0.6% as reported)▪ CRM performance was led by low-single digit growth in defibrillators, reflecting strong uptake of RESONATE™ platform with HeartLogic™ (the only FDA-

approved heart failure alert system), and continued Emblem S-ICD adoption.

• Electrophysiology: Global revenue +7.0% Y/Y operational* and organic* (+5.8% as reported)▪ Growth was led by RHYTHMIA™ HDx mapping and navigation platform, as well as Lumipoint software adoption post full launch in Q2.▪ Excited to enter the large, fast growing atrial fibrillation single-shot market, and received U.S. IDE approval in late September to begin the clinical trial for the

cryo-based POLARx single-shot isolation therapy. Expect approval of POLARx in Europe by YE:19, and also continue to develop RF-based system, LUMINIZE.

• Neuromodulation: Global revenue +18.3% Y/Y operational*, +7.9% organic* (+17.5% as reported)▪ Vercise™ Deep Brain Stimulation continued its strong U.S. and international momentum, nearly doubling globally due to uptake of the Cartesia Directional Lead

and U.S. launch with full-body patient MRI labeling in August.▪ SCS saw a slight improvement from H1 results as we believe the market is showing modest signs of stabilization. We hope to see continued improvement in

SCS with the launch of a WaveWriter portfolio upgrade in Q4, and COMBO randomized clinical trial data to be presented at NANS in January 2020.▪ Vertiflex continues to see increased utilization and new account openings, and is on pace to double year-over-year and generate sales of $60M+ for FY:19.

1 CE Mark. Not available for use or sale in the U.S.

Q3 2019 Highlights



Reported Revenue $1,011M $908M +11.3%

Operating Income $281M $268M +4.8%

Operating IncomeMargin 27.8% 29.5% -170 bps

Cardiovascular Performance Summary

• Interventional Cardiology: Global revenue +15.3% Y/Y operational*, +14.6% Y/Y organic* (+13.9% as reported)• Q3 acceleration was again led by Structural Heart sales and mid-teens growth in Complex PCI.• Expect to achieve higher end of SH revenue guidance of $700-725M in 2019 with the combined strength of Watchman, ACURATE, Lotus Edge, and Sentinel:

– Watchman again grew sales ahead of plan and surpassed the 100k patients implanted milestone. Received reimbursement in Japan in early September and arebuilding out this new significant market. Strong demand for Watchman FLX continues in Europe.

– ACURATE TAVR momentum continued in Q3 in Europe and is now available in 45 countries. ACURATE neo2 is tracking for a mid-2020 European launch andwill feature a skirt to help reduce paravalvular leak.

– Lotus Edge launch is going extremely well and remains on pace to be in 150 accounts in its first 12 months. Currently in limited market release for the 15 FrenchiSleeve introducer; on track to launch Lotus Edge in Japan 2020, and continue to enroll patients in the U.S. REPRISE IV clinical trial to expand indication tointermediate-risk patients.

– Sentinel cerebral embolic protection device continues to build momentum, is now in 500 accounts globally, and is an emerging standard of care; plan to initiate in2020 the global Protected TAVR Randomized Clinical Trial to compare Sentinel protected TAVR versus unprotected TAVR.

• Peripheral Interventions: Global revenue +6.9% Y/Y operational*, +8.2% Y/Y organic* (+5.9% as reported)▪ High-single digit growth led by the launches of VICI venous stent in the U.S. and Eluvia DES in Japan, as well as strong regional growth in atherectomy.▪ Post the September Paclitaxel FDA guidance letter, physicians continue to order Eluvia as it is particularly well suited for patients at high risk of restenosis or

reintervention, which represents 40-60% of the market.

1 CE Marked. U.S.: "Caution: Investigational Device. Limited by Federal(or U.S.) law to investigational use only. Not available for sale"2 Pending CE Mark. Not available for use or sale in the U.S.


Income Statement InformationNon-GAAP ReconciliationThree Months Ended September 30, 2019 (unaudited)

in millions, except per share data GAAP Results Amortization

Acquisition /Divestitures-

RelatedCharges(Credits)

Restructuringand

Restructuring-RelatedCharges(Credits)

Litigation-RelatedCharges(Credits)

InvestmentImpairment

Charges

Medical DeviceRegulation

ChargesDiscrete Tax

ItemsAdjustedResults

Net sales $ 2,707 $ — $ — $ — $ — $ — $ — $ 2,707Cost of products sold 777 — 28 9 — 2 — 738Gross profit 1,930 — (28) (9) — — (2) — 1,969

Gross margin 71.3% 72.7%

Selling, general and administrative expenses 1,012 — 60 3 — — — 949

SG&A margin 37.4% 35.1%

Research and development expenses 306 — 9 — — — — 297

R&D margin 11.3% 11.0%

Royalty expense 15 — — — — — — 15

Royalty expense margin 0.6% 0.6%

Amortization expense 178 178 — — — — — —

Intangible asset impairment charges — — — — — — — —

Contingent consideration expense (benefit) 8 — 8 — — — — —

Restructuring charges (credits) 3 — — 3 — — — —

Litigation-related charges (credits) 25 — — — 25 — — —1,547 178 77 6 25 — — — 1,262

Operating income (loss) 383 (178) (105) (14) (25) — (2) — 707Operating margin 14.1% 26.1%

Other income (expense):

Interest expense (95) — (12) — — — (83)

Other, net (197) 2 (187) — — (1) — (11)Income (loss) before taxes 91 (176) (304) (14) (25) (1) (2) — 613

Income tax expense (benefit) (35) (19) (68) (3) (6) — — (2) 63Net income (loss) $ 126 $ (157) $ (236) $ (12) $ (19) $ (1) $ (2) $ 2 $ 550

Net income (loss) per diluted common share $ 0.09 $ (0.11) $ (0.17) $ (0.01) $ (0.01) $ (0.00) $ (0.00) $ 0.00 $ 0.39

Weighted average diluted shares outstanding 1,412.2 1,412.2 1,412.2 1,412.2 1,412.2 1,412.2 1,412.2 1,412.2 1,412.2

10 Q3 2019 Financial & Operational Highlights | October 23, 2019 Margin rates are based on actual, non-rounded amounts and may not recalculate precisely.

in millions, except per share data GAAPResults Amortization

IntangibleAsset

Impairment

Acquisition /Divestitures-

RelatedCharges(Credits)

Restructuringand

Restructuring-RelatedCharges(Credits)

Litigation-RelatedCharges

InvestmentImpairment

Charges

MedicalDevice

RegulationCharges

Discrete TaxItems

AdjustedResults

Net sales $ 7,831 $ 7,831Cost of products sold 2,265 60 18 2 2,185Gross profit 5,566 — — (60) (18) — — (2) — 5,645

Gross margin 71.1% 72.1%

Selling, general and administrative expenses 2,849 100 9 2,740

SG&A margin 36.4% 35.0%

Research and development expenses 866 24 841

R&D margin 11.1% 10.7%

Royalty expense 48 48

Royalty expense margin 0.6% 0.6%

Amortization expense 498 498Intangible asset impairment charge 105 105Contingent consideration expense (benefit) (9) (9)Restructuring charges (credits) 10 10Litigation-related charges (108) (108)

4,258 498 105 114 20 (108) — — — 3,629Operating income (loss) 1,308 (498) (105) (174) (38) 108 — (2) — 2,016

Operating margin 16.7% 25.7%Other income (expense):Interest expense (294) (61) (232)Other, net (322) — (270) (3) — (48)

Income (loss) before income taxes 693 (498) (105) (505) (38) 108 (3) (2) — 1,736

Income tax expense (benefit) (11) $ (55) $ (7) $ (114) $ (7) $ 12 $ (1) — 16 145

Net (loss) income $ 704 $ (444) $ (97) $ (391) $ (31) $ 96 $ (3) $ (2) $ (16) $ 1,590

Net income (loss) per diluted common share $ 0.50 $ (0.31) $ (0.07) $ (0.28) $ (0.02) $ 0.07 $ (0.00) $ (0.00) $ (0.01) $ 1.13

Weighted average shares outstanding 1,409.7 1,409.7 1,409.7 1,409.7 1,409.7 1,409.7 1,409.7 1,409.7 1,409.7 1,409.7

Income Statement InformationNon-GAAP ReconciliationNine Months Ended September 30, 2019 (unaudited)


Balance Sheet & Cash Flow Metrics

Days Sales Outstanding (DSO) Adjusted Free Cash Flow*

Days Inventory on Hand (DIOH) Capital Expenditures

Sept2019

Jun2019

Mar2019

Dec2018

Sept2018

62 59 59 58 61

Sept2019

Jun2019

Mar2019

Dec2018

Sept2018

170 152 148 147 155

Q3 2019

Q3 2018

FY2019Guidance

$526M $569M $2.1B

Q3 2019

Q3 2018

FY2019Guidance

$121M $77M $375M to$400M


Measure Q4 2019 FY2019Organic Growth* +8% to +9% ~7.5%Contribution from Acquisitions & Divestitures +600 bps to +680 bps ~360 bpsOperational Revenue Growth* +14% to +16% +11% to +11.5%Reported Revenue Growth +13% to +15% +9% to +9.5%FX Impact on Revenue ($M) $20M - $25M headwind $175M - $180M headwindAdjusted Gross Margin* 72.5% to 73.5% 72.25% to 72.5%Adjusted SG&A % of Sales* 34% to 35% ~35%Adjusted R&D % of Sales* 10% to 11% 10.5% to 11%Adjusted Operating Margin* 27% to 28% 26% to 26.25%Adjusted Tax Rate* ~11% ~9%Adjusted EPS* $0.42 to $0.45 $1.55 to $1.58FX Impact on EPS Neutral NeutralAdjusted EPS Growth* +7% to +14% +5% to +8%Adjusted EPS Growth, ex. 2018 IRSsettlement* +10% to +18% +11% to +13%

GAAP EPS $0.22 to $0.25 $0.72 to $0.75

Q4 & FY2019 Guidance SummaryIssued October 23, 2019


Coronary Therapies• SYNERGY™ 4.5/5.0• SYNERGY™ XD, 48mm, MEGATRON – EU• MAMBA™ MicroCatheter family• DFR™ Diastolic Hyperemia-Free Ratio

Structural Heart• WATCHMAN FLX™ LAAC Device – EU• WATCHMAN™ LAAC Device – Japan• LOTUS Edge™ Valve System – U.S. & EU• Sentinel™ CPS – Int’l expansion

Peripheral Interventions• ELUVIA™ DES SFA - Japan• VICI™ Venous Stent – U.S.• BTG pipeline post-close

CRM/EP• RHYTHMIA™ HDx w/ LUMIPOINT™ software• POLARx™ single shot cryo balloon – EU• IntellaNav MiFi™ OI Catheter w/ Direct Sense – Japan• LATITUDE™ Model 3300 CRM Programmer – U.S.

Neuromodulation• Expanded DBS platform• Superion™ InterSpinous Spacer• SCS System enhancements

Endoscopy• EXALT™ Model D single-use duodenoscope

Urology/Pelvic Health• Swiss LithoClast™ Trilogy Lithotripter – EU• Tria™ Stent Soft and Firm• Tactra™ Malleable Penile Prothesis• AdVance™ XP Male Sling – U.S.

2019E Product Launches1 2020E Product Launches1

Coronary Therapies• SYNERGY™ XD, 48 mm, MEGATRON – US• SYNERGY™ XD – Japan• COMET™ II pressure wire (Asahi partnership)• AVVIGO™ Guidance System for physiology

Structural Heart• WATCHMAN FLX™ LAAC Device – U.S.• LOTUS Edge™ Valve System – Japan• ACURATE neo2™ Valve System – EU• Sentinel™ CPS – Int’l expansion

Peripheral Interventions• Ranger™ DCB SFA – U.S.• Interventional Oncology Embolic Coils• Athletis™ PTA Balloon• OptiCross™ 35 IVUS Catheter

CRM/EP• LUX-Dx™ ICM – U.S.• DIRECTSENSE™ Catheter – U.S. • Force-Sensing Catheter – EU• LUMINIZE™ single shot RF balloon – EU• LATITUDE™ Model 3300 CRM Programmer – Int'l expansion

Neuromodulation• DBS next gen programmer

Endoscopy• SpyGlass™ Discover single-use choledochoscope• ORISE™ ProKnife

Urology/Pelvic Health• LithoVue™ Ureteroscope next gen• SpaceOAR™ & Rezūm™ – Int’l expansion• SpaceOAR™ Vue Hydrogel• Cytuity™ claim expansion

2019E & 2020E Catalysts

1 All launches are WW, unless otherwise noted


Coronary Therapies• Next gen stent• Rota Tesla Atherectomy System• SYNERGY™ XD, MEGATRON – China

Structural Heart• Millipede Transcatheter Mitral Valve Repair – EU• LOTUS Mantra™ Valve – U.S. & EU• ACURATE neo™ Prime Valve – Japan • ACURATE neo™ Prime Valve – expanded sizes U.S. & EU

Peripheral Interventions• SAVAL™ DES BTK

CRM/EP• POLARx™ single shot cryo balloon – U.S.• LUMINIZE™ single shot RF balloon – U.S.• Empower™ leadless pacing/modular CRM – U.S. TBC• Force-Sensing Catheter – U.S.• Next gen CRM pulse generator

Neuromodulation• SCS indication expansion

Endoscopy• Single-use scope platform expansion• Endoluminal surgery toolkit expansion

Urology/Pelvic Health• StoneSmart™ expansion• Core Stone enhancements• Rezūm™ enhancements

2021E Product Launches1 2022E/2023E Product Launches1

Coronary Therapies• AVVIGO™ Guidance System for IVUS• GUIDEZILLA™ II matrix expansion

Structural Heart• WATCHMAN FLX™ LAAC Device – China• ACURATE neo™ Prime Valve – U.S.

Peripheral Interventions• Ranger™ DCB SFA – Japan• AngioJet Clothunter™

• CLI Catheter

CRM/EP• POLARx™ next gen• RHYTHMIA™ 5.0• RESONATE™ 2.0

Neuromodulation• SCS and DBS next gen systems

Endoscopy• Single-use scope platform expansion• AXIOS™ Stent expanded indications – U.S.

Urology/Pelvic Health• StoneSmart™ expansion• AMS 700™ IPP enhancements• Prosthetic Urology enhancements

2021E & 2022E Catalysts

1 All launches are WW, unless otherwise noted


Business Development Activity - 2019 YTD

Target Business Description ClosingDate

Upfront($M)

MaxMilestone

($M)

PotentialTotal($M)

Comments OrganicDate

Acquisitions

Millipede(a) IC - Structural Heart TMVR - Full annuloplastyring for mitral repair Jan-19 325 125 450 Initial $90M investment made 2018 Upon Launch

Vertiflex(b) Neuromodulation Spacer for Lumbar SpinalStenosis Jun-19 465 N/A 465 Overlapping call point with SCS/

RF treatment for pain Mid-2020

BTG(c) IO, venous and arterialportfolio additions Aug-19 4,023 — 4,023 Includes specialty pharmaceuticals and

licensing segments Aug-2020

(a) Previously held equity investment; purchase price represents cash paid for remaining stake not already owned.

(b) Vertiflex contingent payments that are based on a percentage of Vertiflex sales growth in the first three years following the acquisition close. We estimate the sales-based contingent payments to be in a range ofzero to $100 million; however, the payments are uncapped over the three year term.

(c) Represents purchase price of approximately £3.312 billion using an exchange rate of U.S. $1.21: £1.00 as of August 19, 2019.


Use of Non-GAAP Measures

To supplement Boston Scientific’s consolidated financial statements presentedon a GAAP basis, the Company discloses certain non-GAAP financialmeasures. These non-GAAP financial measures are not in accordance withgenerally accepted accounting principles in the United States.

A reconciliation of the non-GAAP financial measures included in this documentto the corresponding GAAP measures follows in the Appendix. In addition, anexplanation of the ways in which Boston Scientific management uses thesesupplemental non-GAAP measures to evaluate its business and thesubstantive reasons why Boston Scientific management believes that thesenon-GAAP measures provide useful information to investors is included under“Use of Non-GAAP Financial Measures” in the Company’s most recent earningsrelease filed with the SEC on Form 8-K. This non-GAAP financial informationis not meant to be considered in isolation from or as a substitute for financialinformation prepared in accordance with GAAP.

Appendix A Sales Detail

Q3 2019 Financial & Operational Highlights | October 23, 2019 18

Year-over-Year Change

(in millions)Q3

2019Q3

2018As Reported

Basis

Less: Impactof ForeignCurrency

FluctuationsOperational

BasisMEDSURG SEGMENT:

ENDOSCOPYUNITED STATES $ 277 $ 247 12.1 % — % 12.1 %INTERNATIONAL 209 196 6.4 % (2.0)% 8.4 %

WORLDWIDE $ 486 $ 443

UROLOGY AND PELVIC HEALTHUNITED STATES $ 257 $ 214 20.2 % — % 20.2 %INTERNATIONAL 102 89 14.8 % (2.8)% 17.6 %


RHYTHM AND NEURO SEGMENT:CARDIAC RHYTHM MANAGEMENT

UNITED STATES $ 284 $ 289 (1.7)% — % (1.7)%INTERNATIONAL 194 186 4.0 % (3.1)% 7.1 %


ELECTROPHYSIOLOGYUNITED STATES $ 38 $ 37 1.2 % — % 1.2 %INTERNATIONAL 43 39 10.0 % (2.4)% 12.4 %

WORLDWIDE $ 81 $ 76

NEUROMODULATIONUNITED STATES $ 183 $ 155 18.0 % — % 18.0 %INTERNATIONAL 39 34 15.0 % (4.6)% 19.6 %


CARDIOVASCULAR SEGMENT:INTERVENTIONAL CARDIOLOGY

UNITED STATES $ 327 $ 283 15.8 % — % 15.8 %INTERNATIONAL 373 332 12.2 % (2.6)% 14.8 %


PERIPHERAL INTERVENTIONSUNITED STATES $ 155 $ 152 2.2 % — % 2.2 %INTERNATIONAL 156 142 10.0 % (1.9)% 11.9 %


BTG ACQUISITION† WORLDWIDE $ 71 n/a

Appendix A - Sales DetailThree Months Ended September 30, 2019 and 2018

Q3 2019 Financial & Operational Highlights | October 23, 2019 19

Year-over-Year Change

(in millions) 2019 2018As Reported

Basis

Less: Impactof ForeignCurrency

FluctuationsOperational

BasisMEDSURG SEGMENT:

ENDOSCOPYUNITED STATES $ 800 $ 724 10.5 % — % 10.5 %INTERNATIONAL 596 580 2.7 % (4.3)% 7.0 %

WORLDWIDE $ 1,396 $ 1,304

UROLOGY AND PELVIC HEALTHUNITED STATES $ 737 $ 623 18.2 % — % 18.2 %INTERNATIONAL 297 280 5.8 % (5.0)% 10.8 %

WORLDWIDE $ 1,033 $ 904

RHYTHM AND NEURO SEGMENT:CARDIAC RHYTHM MANAGEMENT

UNITED STATES $ 860 $ 869 (1.0)% — % (1.0)%INTERNATIONAL 607 594 2.2 % (5.2)% 7.4 %

WORLDWIDE $ 1,467 $ 1,462

ELECTROPHYSIOLOGYUNITED STATES $ 113 $ 111 1.0 % — % 1.0 %INTERNATIONAL 132 119 11.4 % (4.8)% 16.2 %


NEUROMODULATIONUNITED STATES $ 487 $ 446 9.1 % — % 9.1 %INTERNATIONAL 125 113 10.8 % (6.4)% 17.2 %


CARDIOVASCULAR SEGMENT:INTERVENTIONAL CARDIOLOGY

UNITED STATES $ 942 $ 859 9.6 % — % 9.6 %INTERNATIONAL 1,126 1,062 6.0 % (5.0)% 11.0 %

WORLDWIDE $ 2,067 $ 1,922

PERIPHERAL INTERVENTIONSUNITED STATES $ 466 $ 449 4.0 % — % 4.0 %INTERNATIONAL 475 436 9.0 % (4.6)% 13.6 %


BTG ACQUISITION† WORLDWIDE $ 71 n/a

Appendix A - Sales DetailNine Months Ended September 30, 2019 and 2018

Appendix B Income Statement Information


Appendix B - Income Statement InformationMargins

Three Months EndedAdjusted Gross Margin 9/30/2019 9/30/2018 Basis Points ChangeGross Margin, as reported 71.3 % 71.9 % (60)Less: Non-GAAP adjustments (1.4)% (0.8)%Adjusted Gross Margin 72.7 % 72.7 % 0

Three Months EndedAdjusted Operating Margin 9/30/2019 9/30/2018 Basis Points ChangeOperating Margin, as reported 14.1 % 16.2 % (210)Less: Non-GAAP adjustments (12.0)% (9.4)%Adjusted Operating Margin 26.1 % 25.6 % 50

Three Months EndedAdjusted SG&A Margin 9/30/2019 9/30/2018 Basis Points ChangeSG&A Margin, as reported 37.4% 36.4% 100Less: Non-GAAP adjustments 2.3% 0.9%Adjusted SG&A Margin 35.1% 35.5% (40)

Three MonthsEnded

Adjusted Tax Rate 9/30/2019Tax Rate, as reported (38.7)%Less: Non-GAAP adjustments (49.0)%Adjusted Tax Rate 10.3 %


Appendix B - Income Statement InformationSegment Operating Income

Note: We measure and evaluate our reportable segments based on segment net sales, operating income allocated to reportable segments, excludingintersegment profits, and operating income allocated to reportable segments as a percentage of segment net sales. Operating income allocated toreportable segments as a percentage of segment net sales is defined as operating income allocated to reportable segments divided by segment netsales. Our presentation of segment net sales to include foreign exchange fluctuations, since the chief operating decision maker (CODM) reviews operatingresults at both actual foreign exchange rates and excluding foreign exchange rates and the following presentation more closely aligns with U.S. GAAP.We exclude from operating income allocated to reportable segments certain corporate-related expenses and certain transactions or adjustments thatour CODM considers to be non-operational, such as amounts related to amortization expense, intangible asset impairment charges, acquisition/divestitures-related items, restructuring and restructuring-related items, medical device regulation charges and litigation-related items. Although weexclude these amounts from operating income allocated to reportable segments, they are included in reported consolidated operating income (loss) andare included in the reconciliation below.

SEGMENT NET SALES (dollars in millions)Q3

2019Q3

2018

MedSurg $ 845 $ 746Rhythm & Neuro 780 740Cardiovascular 1,011 908

Net Sales from reportable segments 2,636 2,393

BTG Acquisition† 71 n/a

Net Sales $ 2,707 $ 2,393

OPERATING INCOME ALLOCATED TO REPORTABLESEGMENTS (dollars in millions)

Q3 2019

% of Sales

Q3 2018

% of Sales

YoY Change

(%)

YoYChange

(bps)Less:

Fx Impact

YoYChange,excl. Fx

MedSurg $ 319 37.8% $ 274 36.8% 1.0 % 100 (0.2)% 1.2 %Rhythm & Neuro 166 21.3% 168 22.7% (1.4)% -140 (0.4)% (1.0)%Cardiovascular 281 27.8% 268 29.5% (1.7)% -170 (0.5)% (1.2)%

Operating income allocated to reportable segments 766 710BTG Acquisition† 16 n/aCorporate expenses, including hedging activities (75) (97)Intangible asset impairment charges, acquisition/divestiture-related, restructuring- and restructuring-related and litigation-related net (charges) credits (146) (77)Amortization expense (178) (148)

Operating income (loss) $ 383 $ 388

Appendix C Additional Non-GAAP

Reconciliations


Appendix C - Additional ReconciliationsAdjusted Free Cash Flow

in millions Three Months EndedAdjusted Free Cash Flow 9/30/2019 9/30/2018Operating cash flow, reported $ 502 $ 501 Less: Purchases of property, plant and equipment 121 77

Add: Proceeds on disposals of property, plant and equipment 4 —Free Cash Flow, reported 385 424

Plus: Restructuring and restructuring-related payments 14 24Plus: Acquisition-related payments 97 1Plus: Special tax payments (Refunds/Credits) (28) 3Plus: Litigation-related settlements 58 118

Adjusted Free Cash Flow $ 526 $ 569


Appendix C - Additional Reconciliations

Estimated Tax Rate FY 2019Tax Rate, GAAP basis 1 %

Less: Non-GAAP Adjustments (8)%Tax Rate, Adjusted 9 %

Less: Impact of Discrete Tax Items (1)%Less: Impact of Stock Compensation (1)%

Tax Rate, Ordinary 11 %

in millionsThree Months

EndedAdjusted Interest Expense 9/30/2018Interest expense, as reported $ (58)

Less: Non-GAAP adjustments —

Adjusted Interest Expense $ (58)

Three MonthsEnded

Neuromodulation Revenue Growth 9/30/2018Revenue growth, as reported 22.8 %Less: Impact of foreign currency fluctuations (0.7)%

Revenue growth, operational 23.5 %Less: Impact of significant acquisitions — %

Revenue growth, organic 23.5 %

Three Months Ended Interventional Cardiology Revenue Growth 3/31/2019 6/30/2019Revenue growth, as reported 2.5 % 6.7 %Less: Impact of foreign currency fluctuations (3.7)% (3.0)%

Revenue growth, operational 6.2 % 9.7 %Less: Impact of significant acquisitions 1.4 % 1.6 %

Revenue growth, organic 4.8 % 8.1 %

Three MonthsEnded

Coronary Therapies Revenue Growth 9/30/2018Revenue growth, as reported 4.0 %Less: Impact of foreign currency fluctuations (2.0)%

Revenue growth, operational 6.0 %Less: Impact of significant acquisitions — %

Revenue growth, organic 6.0 %


Appendix D - GuidanceForward-Looking Non-GAAP Financial Measures

The following is an explanation of the adjustments that management excluded from GAAP measures to calculate the following

forward-looking non-GAAP financial measures for the fourth quarter and full year 2019:

Adjusted Gross Margin: Excludes from GAAP gross margin the impacts of forecasted acquisition- and divestitures-,

restructuring-related and medical device regulation charges or credits.

Adjusted SG&A: Excludes from GAAP SG&A the impacts of forecasted acquisition- and divestitures-, restructuring-related

and medical device regulation charges or credits.

Adjusted R&D: Excludes from GAAP R&D the impacts of forecasted acquisition- and divestitures-, restructuring-related and

and medical device regulation charges or credits.

Adjusted Operating Margin: Excludes from GAAP operating margin the impacts of forecasted acquisition- and divestitures-,

restructuring- and restructuring-related and medical device regulation charges or credits and amortization expense.

Adjusted Tax Rate: Excludes from GAAP tax rate the tax impacts related to forecasted acquisition- and divestitures-,

restructuring- and restructuring-related and medical device regulation 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 divestitures-, restructuring- and litigation-payments.

Please refer to our Safe Harbor for forward-looking statements disclosure on slide 2 in conjunction with any forward looking

information presented within.

Documents

Q3 2019 Highlights - Boston Scientificinvestors.bostonscientific.com/~/media/Files/B/...8 Q3 2019 Financial & Operational Highlights | October 23, 2019 Measure ($ in millions) Q3 2019