Q3 2023 Boston Scientific Corp Earnings Call

October 26, 2023

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Good day and welcome to the Boston Scientifics third quarter 2023 conference call.

All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star keys, followed by zero after.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone.

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Please note this event is being recorded.

I would now like to turn the conference over to Laura Clark Vice President of Investor Relations.

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You can think you cockpit welcome everyone and thanks for joining US today with me on today's call are Mike Mahoney, Chairman and Chief Executive Officer, and Dan Brennan Executive Vice President and Chief Financial Officer, We issued a press release earlier. This morning announcing our Q3 2023 results, which included reconciliations of the non-GAAP measures used in the release.

We have posted a copy of that release as well as reconciliations of the non-GAAP measures used in today's call to the Investor Relations section of our website under the heading financials and filings.

Duration of this morning's call will be approximately one hour, Mike and Dan will provide comments on Q3 performance as well as the outlook for our business, including Q4 and full year 2023 guidance and we'll take your questions. During today's Q&A session, Mike and Dan will be joined by our Chief Medical Officer, Dr. Ken Stein.

While we begin I'd like to remind everyone that on the call operational revenue growth excludes the impact of foreign currency fluctuation and organic revenue growth further exclude acquisitions and divestitures for which there are less than a full period of comparable next net sales relevant acquisitions and divestitures excluded for organic growth are baylis medical which closed on.

February 14th 2022, the majority stake investment an architect scientific and Apollo Endo surgery, which closed in February and April of this year respectively.

Messengers include the Endoscopy petrology business, which closed in April of this year. Please note that we have elected to consolidate <unk> results on a one quarter lag which had been included in our Q3 reported and adjusted results.

Guidance excludes the previously announced agreement to acquire Relevent Med system, which is expected to close in the first half of 2024 subject to customary closing conditions.

For more information please refer to our financial and operating highlights deck, which may be found on our Investor Relations website on this call all references to sales and revenue unless otherwise specified are organic this call contains forward looking statements within the meaning of federal securities laws, which may be identified by words like anticipate expect may.

My belief estimate and other similar words. They include among other things statements about our growth and market share, new and anticipated product approvals and launches acquisitions clinical trials cost savings and growth opportunities, our cash flow and expected use our financial performance, including sales margins and earnings as well as <unk>.

Our tax rates R&D spend and other expenses, if our underlying assumptions turned out to be incorrect, our certain risks or uncertainties materialize.

Actual results could vary materially from the expectations and projections expressed or implied by our forward looking statements.

Or is that may cause such a difference include those described in the risk factors section of our most recent 10-K and subsequent 10-Qs filed with the SEC. These statements speak only as of today's date, and we disclaim any intention or obligation to update them at this point I'll turn it over to Mike.

Well don't Lauren Thank you and thank you for joining us today.

With another quarter of excellent results with momentum continuing fueled by new product innovation clinical evidence and our talented teams across the globe.

In Q3, 23 total company sales grew 11% operationally and 10% organically versus Q3, 'twenty, two which exceeds the high end of our guidance range of 7% and 9%.

This performance is a testament to our category leadership strategy.

Focus on innovation and strong commercial execution.

We believe that most of our global business units grew in line or faster than their respective markets.

Q3, adjusted EPS at 50 cents grew 15% versus Q3, 'twenty, two which exceeds the high end of the guidance range of 46 to 48 cents.

Q3, adjusted operating margin was 26, 1% slightly higher than anticipated.

Matt for 'twenty three guidance, we're guiding to Q4, 'twenty three organic revenue growth of eight to 8% to 10%.

And widened our full year organic guidance for approximately 11% at the high end of our prior guidance. Our Q4 'twenty three adjusted EPS estimate is 49 to 52 cents, we are raising our full year adjusted EPS range to 199 to 202.

I'll now provide additional highlights on Q3, along with comments on our 2023 outlook and then Dan will provide more details on the financials.

Unknown Executive: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchstone phone.

Recently on an operational basis. The U S grew 9% versus Q3 22, driven by strong performance within our watchman E T Endo and urology businesses.

Unknown Executive: To withdraw your question, please proceed. To the star then two.

Unknown Executive: Please note this event is being recorded.

Europe Middle East and Africa grew 11% on an operational basis for Q3 22.

Lauren Tengler: I would now like to turn the conference over to Lauren Tengler, Vice President of Investor Relations. Please go ahead. Thank you, Costa.

Farmers the region was broad based with double digit growth in seven out of 10 eight business units.

Within the quarter, we saw strong growth in E T with ongoing momentum in demand for fair pulse and polar acts.

Lauren Tengler: Welcome, everyone. And thanks for joining us today with me on today's call. Our Mike Mahoney, Chairman and Chief Executive Officer and Dan Brennan, Executive Vice President and Chief Financial Officer. We issued a press release earlier this morning announcing our Q3 2023 results, which included reconcilations of the non-gap measures used in the release. We have posted a copy of that release as well as reconcilations of the non-gap measures used in today's call to the investor relations section of our website under the heading financials and filings. The duration of this morning's call will be approximately one hour. Mike and Dan will provide comments on Q3 performance as well as the outlook for our business, including Q4 in full year 2023 guidance.

Lauren Tengler: Then we'll take your questions.

Asia Pac grew 19% operationally versus the third quarter 'twenty, two led by strength in Japan and China.

Japan grew strong double digits in the quarter with ongoing momentum from new products, most notably agent ECB resume polar fit and watchman flex.

Physician demand for our differentiated agent D. C. B remains high and we've taken a market leadership position within the quarter after launching earlier this year.

Double digit growth in China was led by our imaging a complex PCI portfolio as well as the commercial execution of the team more broadly.

These results were further supported by the performance of the accurate Tech business and we continue to expect double digit growth in China for the full year.

Lauren Tengler: During today's Q&A session, Mike Mahoney, and Mike and Dan will be joined by our Chief Medical Officer, Dr. Ken Stein. Before we begin, I'd like to remind everyone that on the call, operational revenue growth excludes the impact of foreign currency fluctuation and organic revenue growth further excludes acquisitions and investitures for which there are less than a full period of comparable net sales. Relevant acquisitions and investitures excluded for organic growth are Bayless Medical, which closed on February 14th, 2022.

I'll now provide some additional commentary on the business units.

In the quarter Urology sales grew 11% organically with.

With international growth of 18% fueled by new products and globalization efforts with all regions outside the U S growing double digits.

Globally, the stone management franchise grew double digits, driven by lifted view and laser therapies.

Zoom had another strong quarter of double digit growth backed by long term clinical data supporting international momentum with the leave nothing behind message resonating in Asia.

Lauren Tengler: The majority stakes investment in aquatex scientific and Apollo endocergery, which closed in February and April of this year respectively. The investors include the endoscopy pathology business, which closed in April of this year. Please note that we have elected to consolidate aquatex results on a one quarter lag, which have been included in our Q3 reported and not ingested results. Guidance excludes the previously announced agreement to acquire a relevant net system, which is expected to close in the first half of 2024, subject to customary closing conditions. For more information, please refer to our financial and operating highlights deck, which may be found on our investor relations website. On this call, all references to sales and revenue unless otherwise specified are organic.

Endoscopy sales grew 11% organically and 12% operationally versus third quarter 'twenty, two with broad based broad based strength across all regions.

Our single use imaging and access technologies continued to perform well both drawing double digits within the quarter.

Earlier. This month, we received U S marketing authorization for an expanded indication of the axial stent to include gallbladder drainage increasing access to more patients with this platform.

Neuromodulation sales grew 3% organically versus third quarter of 'twenty two.

Our brain franchise grew low double digits in the quarter with strength from new product launches, including the precise neural navigator five software.

Lauren Tengler: This call contains forward looking statements within the meaning of federal securities loss, which may be identified by words like anticipate expect may believe estimate and other similar words. They include, among other things, statements about our growth and market share, new and anticipated product approvals and launches, acquisitions, clinical trials, cost savings and growth opportunities are cashflow and expected use, our financial performance, including sale, margins and earnings, as well as our tax rates, R&D spend and other expenses.

This was our fifth generation DBS programming solution furthering our leadership in image guided programming for more streamlined GBS programming in the U S.

Our pain business grew low single digits, driven by spinal cord stimulation sales, which was slightly below our expectations.

We are optimistic about the opportunities ahead of our pain business included in our recent U S approval to the expanded indication of our wave rider Alpha SCS system to include D. P N, which is expected to launch early 'twenty four.

Lauren Tengler: If our underlying assumptions turn out to be incorrect, our certain risks or uncertainties materialize actual results could vary materially from the expectations and projections expressed or implied by our forward looking statements. Factors that may cause such a difference include those described in the risk factor section of our most recent 10K and subsequent 10Qs filed with the SEC. These statements speak only as of today's date and we disclaim any intention or obligation to update them.

I'm, so excited to add to our portfolio with our recently announced agreement to acquire relieve yet med systems and its intercept procedure.

Intercept is the only U S cleared system for cheaper Janet Payne, expanding our portfolio of paint offerings, which is expected to close in the first half of 2024.

Peripheral interventions sales grew 8% organically and 13% operationally, which includes the results of Atco Tech versus third quarter 'twenty two.

Michael Mahoney: At this point, I'll turn it over to Mike. Well done, Lauren, thank you, and thank you for joining us today. We're pleased with another quarter of excellent results with momentum continuing fueled by new product innovation, clinical evidence and our talented teams across the globe. In Q3-23, total company sales grew 11% operationally and 10% organically versus Q3-22, which exceeds the high end of our guidance range of 7 to 9%. This performance is a testament to our category of leadership strategy, focus and innovation and strong commercial execution.

Material franchise delivered another strong quarter growing low double digits led by ongoing success globally without drug Eluting portfolio.

And Venus data from their real P. E study was presented earlier this week, demonstrating a statistically significant lower major bleeding rates in patients with pulmonary embolism.

Peter with ethos compared to a competitive mechanical thrombectomy device.

P E study analyze nearly real time EHR data for over 2200 P patients.

Michael Mahoney: We believe that most of our global business units grew in line or faster than the respective markets. Q3 adjusted EPS at 50 cents grew 15% first Q3-22, which exceeds the high end of the guidance range of 46 to 48 cents. Q3 adjusted operating margin was 26.1% slightly higher than anticipated. Now for 23 guidance, we're guiding to Q4-23 organic revenue growth of 8 to 10% and a line in our full-year organic guidance for approximately 11%, the high end of our prior guidance. Our Q4-23 adjusted EPS estimate is 49 to 52 cents and we are raising our full-year adjusted EPS range to 199 to 202.

From 2009 to 2023 the.

This study provides new clinical evidence for providers in determining the optimal modality for each patients needs.

Our interventional oncology franchise grew double digits.

The ongoing momentum with our embolden coil launch as well as strong demand for our cancer therapies.

Within the quarter, we received FDA clearance to expand the indication the visual ice cryo Cryoablation system.

To treat pain associated with tumors that had metastasized to bone in patients who are unable to receive standard radiation therapy.

Our cardiology group delivered another excellent quarter with organic sales growth of 11% versus the third quarter 'twenty two.

Michael Mahoney: I will not provide additional highlights on Q3 along with comments on our 2023 outlook and then Dan will provide more details on the financials. Recently on an operational basis, the U.S.-9% first Q3-22 driven by strong performance within our Watchmen, EP, Endo, and Eurology businesses. You're up at least in Africa, grew 11% on an operational basis first Q3-22. Performance the region was broad-based with double digit growth and 7 out of our 10 8 business units.

Within cardiology, interventional cardiology therapy sales grew 7% organically versus third quarter 'twenty two.

Our structural heart valves franchise grew double digits in third quarter led by accurate Neo two sales performance in Europe and.

And growth within our coronary therapies franchise is fueled by ongoing success of our imaging technologies. We're pleased to have received clearance for the in vivo plus guidance system.

If he goes our next generation platform that provides high quality fast imaging.

Michael Mahoney: Within the Q4, we saw strong growth in EP, with ongoing momentum and demand for fair pulse and polar X. Asia-Pack grew 19% operationally versus Q3-22, led by strength in Japan and China. Japan grew strong double digits in the Q4, with ongoing momentum from new products, most notably agent DCB, resume, polar fit, and watch Netflix. Physician demand for our differentiated agent DCB remains high when we've taken a market leadership position within the Q4 after launching earlier this year.

With improved physiologic assessment of coronary vessels and lesions.

We continue to be pleased with the performance of agent D C B in Japan.

Importantly, our agent I D trial results were presented yesterday as a late breaker at TCT with data demonstrating statistical superiority of the agent drug coated balloon versus uncoated balloon angioplasty for the treatment of patients with instant restenosis.

With our recent regulatory submission to FDA, we anticipate approval of agent. The first drug coated balloon indicator for the coronary arteries within the U S. In the second half of 'twenty four.

Michael Mahoney: Double digit growth in China was led by our imaging and complex PCI portfolio, as well as the commercial execution of the team more broadly. These results refer to the support of the performance of the Acotec business and we continue to expect double digit growth in China for the full year.

Watching the sales grew 23% organically versus the third quarter 'twenty. Two we're very pleased with the excellent performance of this franchise and that treated more than 350000 patients globally.

Last month, we received FDA approval of the latest generation Watchman Flex probe, which is designed to improve visualization during device placement to enhanced healing post implant and treat a broader range of patient anatomies. Additionally.

Michael Mahoney: I'll now provide some additional commentary on the business units. In the Q4, Eurology sales grew 11% organically, with international growth of 18%, fueled by new products and globalization efforts, with all regions outside the US growing double digits. Globally, the Stone Management franchise grew double digits to my list of you and laser therapies. Resume had another strong quarter of double digit growth, backed by long-term clinical data, supporting international momentum with a lead nothing behind message resonating in Asia.

Additionally, enrollment has commenced and heal L. A as a post market study of the watchman Flex pro device in the U S.

We continue to expect strong growth from our Washington business backed by new technologies and significant investment in clinical evidence.

Cardiac rhythm management sales grew 5% organically versus third quarter 'twenty to.

Michael Mahoney: And ask to be sales grew 11% organically, and 12% operationally versus Q3-22, with broad-based strength across all regions. Our single-use imaging and access technologies continue to perform well, both growing double digits within the Q4. Center, and earlier this month we received US Marketing Authorization for an expanded indication of the axial extent to include gallbladder drainage, increasing access to more patients with this platform. My modulation sales grew 3% organically versus 3rd quarter 22.

In core CRM or our high voltage business grew low single digits and our low voltage business grew mid single digits.

Our diagnostics franchise grew double digits in the quarter fueled by our diverse portfolio of ambulatory E C Gs and ICM.

We continue to further innovate in the space have been launched in the U S. The next generation Lux Dx too.

And the two plus implantable cardiac monitor for a long term monitoring of arrhythmias.

Vitamin enhanced diagnostic capabilities and enabling a more efficient workflow.

Michael Mahoney: Our brain franchise grew low double digits in the quarter with strength from new product launches including the precise neural navigator 5 software, which is our fifth generation DBS programming solution, furthering our leadership and image guided programming for more streamlined DBS programming in the US. Our pain business grew low single digits driven by spinal cord stimulation sales which were slightly below our expectations. We have to mistake about the opportunities ahead of our pain business included in our recent US approval to expand the indication of our way brighter alpha SES system to include DPN, which is expected to launch in early 24.

What's your physiology sales grew 27% organically versus third quarter 'twenty to <unk>.

Our national growth of 33% was driven by excellent performance from our differentiated fair of pulse and polarize technologies as well as our access solutions franchise and the leading diverse across access platform.

U S growth of 22% was led by our access solutions franchise, along with contribution from the from the early approval I'm sorry from the approval of the polar cryoablation system, including polar fit which enables physicians to adjust and expands the cryo balloon to best fit patients individuals' anatomy.

Michael Mahoney: We're also excited to add to our portfolio with our recently announced agreement to acquire Relivient Med Systems and its Intercept procedure. Intercept is the only US clear system for virtue of genetic pain, expanding our portfolio of pain offerings, which is expected to close in the first half of 2024. Purple intervention sales grew 8% organically and 13% operationally, which includes the results of acutact versus third quarter 22. Our material franchise delivered another strong quarter growing low double digits, led by ongoing success globally with our drug alluded portfolio.

Also within the quarter, we launched virtual cross connect or polar sheath, which provides safe and efficient access to the left side of the heart during procedures expanding our access solutions portfolio.

Clinical evidence generation remains a key priority and we're pleased to have completed enrollment in the first phase of the advantage a F clinical trial studying <unk> pulse for the treatment of patients with persistent afib.

Additionally, we commenced enrollment and treated our first patient in an extension arm of the advance study to evaluate fair point, which is a point by point PSA focal catheter for CGI ablation used to treat atrial flutter.

Michael Mahoney: In Venus, data from the real PE study was presented earlier this week, demonstrating statistically significant lower major bleeding rates in patients with pulmonary embolism, who are treated with ECOs compared to a competitive mechanical trombectomy device. The real PE study analyzed nearly real-time EHR data for over 2200 PE patients from 2009 to 2023. This study provides new clinical evidence for providers in determining the optimal modality for each patient's needs. Our interventional oncology franchise grew double digits including ongoing momentum with our emboldt coil launch as well as strong demand for our cancer therapies.

Finally within the quarter, we achieved important milestones to bring in our leading PFA technology of the U S recall data from our advent I E trial was presented at ESC at the end of August comparing fair a pulse to standard of care thermal modalities meeting the primary end points.

We've also completed our U S regulatory submission and continued to dissipate the approval of fair pulse in the U S. In the second half of 'twenty four.

Through the first nine months of this year, we have grown organic sales, 12%, while growing adjusted EPS, 18% with broad based growth across all of our business units and regions.

This performance is supportive of the goal we laid out last month at our Investor day, where we aspire to be highest performing large cap med Tech company over the next three years.

Michael Mahoney: Within the quarter, we received FDA clearance to expand the indication of the visual ice cryoblation system to treat pain associated with tumors that have metastasized to bone in patients who are unable to receive standard radiation therapy. Our cardiology group delivered another excellent quarter with organic sales growth of 11% versus third quarter 22. Within cardiology, interventional cardiology therapy sales grew 7% organically versus third quarter 22. Our structural heart valve is to franchise through double digits and third quarter led by accurate NEO2 sales performance in Europe, and growth within our coronary therapy franchise is fueled by ongoing success of our imaging technologies, where please to have received clearance for the EVIGO plus guidance system.

We believe our focus on talent and culture, our relentless pursuit of innovation, while doing the right thing for society and operating responsibly sets us up to deliver a unique set of financial goals over the 24 to 26 long rage period.

Michael Mahoney: Our cardiology group delivered another excellent quarter with organic sales growth of 11% versus third quarter 22. Within cardiology, interventional cardiology therapy sales grew 7% organically versus third quarter 22. Our structural heart valve is to franchise through double digits and third quarter led by accurate NEO2 sales performance in Europe, and growth within our coronary therapy franchise is fueled by ongoing success of our imaging technologies, where please to have received clearance for the EVIGO plus guidance system.

Our L. R. P goals include growing sales, 8% to 10% CAGR over the period, while expanded adjusted operating margins by 150 basis points over the three years of double digit adjusted EPS growth annually and improvement of our free cash flow conversion to approximately 70% by 2026 with that I'll pass.

After Dan to provide more details on the financials.

Mike.

Third quarter 2023 consolidated revenue of $3.527 billion represents 11, 2% reported revenue growth versus third quarter 2022, and includes a 10 basis point tailwind from foreign exchange, which was lower than expected due to the strengthening of the U S dollar throughout the quarter excluding this.

Michael Mahoney: EVIGO is our next generation platform that provides high quality, fast imaging with improved physiologic assessment of coronary vessels and lesions. We continue to be pleased with the performance of Agent DCB in Japan. Importantly, our Agent IDE trial results were presented yesterday as a late break at TCT with data demonstrating statistical superiority of the Agent drug code balloon versus uncoated balloon angioplasty for the treatment of patients with instant restinosis. Services, with our recent regulatory submission FDA, we anticipate approval of agent, the first drug code of balloon indicated for the coronary arteries within the U.S, in the second half of 24.

$4 million tailwind from foreign exchange operational revenue growth was 11, 1% in the quarter.

Sales from acquisitions, and divestitures contributed 90 basis points, resulting in a 10, 2% organic revenue growth exceeding our guidance range of 7% to 9%.

Q3, 2023 adjusted earnings per share of 50 cents.

Michael Mahoney: Watching the sales grew 23% organically versus third quarter 22, we're very pleased with the excellent performance of this franchise and voucherated more than 350,000 patients globally. Last month we received FDA approval of the latest generation, Washington Flex Pro, which is designed to improve the visualization during device placement to enhance healing post implants and treat a broader range of patient anatomies. Additionally, enrollment is commenced in heal LA, a post market study of the Watchman Flex Pro Device in the U.S. We continue to expect strong growth from the Watchman business back by new technologies and significant investment in clinical evidence.

<unk> grew 15% versus 2022 exceeding the high end of our guidance range of 46 to 48 cents driven predominantly by our strong sales performance.

Adjusted gross margin for the third quarter was 72% slightly lower than our expectations, primarily driven by foreign exchange.

In light of our Q3 results. We now anticipate that full year 2023, adjusted gross margin will only slightly improved on a year over year basis.

Strong sales performance drove third quarter adjusted operating margin of 26, 1%, resulting in a year to date adjusted operating margin also of 26, 1% our.

Our year to date performance sets us up well to achieve our full year 2023, adjusted operating margin goal of approximately 26, 4%, which represents 80 basis points of expansion versus 2022 on.

Michael Mahoney: Cardiac rhythm management sales grew 5% organically versus third quarter 22. In course, here I'm a high voltage business grew low single digits and our low voltage business grew mid single digits. Our diagnostics franchise grew double digits in the quarter, fueled by our diverse portfolio of ambulatory ECGs and ICM. We continue to further innovate in the space, have been launched in the U.S., the next generation Lux DX2, and the 2 plus implantable cardiac monitor.

On a GAAP basis, the third quarter operating margin was 19, 6%, which includes a $111 million credit primarily related to certain IP litigation matters.

Moving to below the line.

Third quarter adjusted interest and other expenses totaled $81 million, which was in line with our expectations.

Michael Mahoney: For a long term monitoring of arrhythmias, providing enhanced diagnostic capabilities and enabling a more efficient workflow. Electrophysiology sales grew 27% organically versus third quarter 22. International growth of 33% was driven by excellent performance from our differentiated pheropoles and polar X technologies, as well as our access solutions franchise and the leading verse across access platform. U.S, growth of 22% was led by our access solutions franchise, along with contribution from the early approval, I'm sorry, from the approval of the polar cryoblation system, including polar fit, which enables positions to adjust and expand the quiet balloon to best fit the patient's individual anatomy.

On an adjusted basis, our tax rate for the third quarter was 12, 4% favorable to our expectations driven by certain discrete tax items in the quarter, our operational tax rate was 13, 9% inline with expectations.

Fully diluted weighted average shares outstanding ended at $1 $475 million in Q3.

Free cash flow for the quarter was $509 million with $698 million from operating activities less $190 million net capital expenditures.

Excluding special items adjusted free cash flow was $582 million as a result of our strong year to date adjusted free cash flow generation. We now expect full year 2023, adjusted free cash flow in excess of $2 4 billion.

Michael Mahoney: Also within the quarter, we launched verse across connect, the polar sheet, which provides safe and efficient access to the left side of the heart during procedures, expanding our access solutions portfolio. Clinical evidence generation remains a key priority and we're pleased to have completed enrollment in the first phase of the advantage AF clinical trial studying pheropoles for the treatment of patients with persistent aphid. Additionally, we commence enrollment and treat our first patient in an extension arm of the advanced study to evaluate pheropoint, which is a point by point, pfa focal catheter for CTI ablations used to treat atrial flutter.

Our top capital allocation priority remains strategic tuck in M&A, followed by annual share repurchases to offset dilution from employee stock grants, which we announced at last month's Investor day.

As of September 32023, we had cash on hand of $952 million and our gross debt leverage was two three times.

I'll now walk through guidance for Q4 and full year 2023.

Michael Mahoney: Finally, within the quarter, we achieved important milestones in bringing our leading pfa technology to the U.S. Recall data from our admin ID trial was presented at ESC at the end of August, comparing pheropoles to standard of care, thermal modalities, meaning the primary endpoints. We've also committed our U.S, regulatory submission and continued to anticipate the approval of pheropoles in the U.S, in the second half of 24.

We expect full year 2023 operational revenue growth to be approximately 12%.

Which excludes an approximate 100 basis point headwind from foreign exchange higher than our previous estimate due to the strengthening of the U S. Dollar.

Excluding the impact of closed acquisitions and divestitures, we expect full year 2023 organic revenue growth to be approximately 11% versus 2022.

Michael Mahoney: To the first nine months of this year, we have grown organic sales 12% while growing adjusted EPS 18%. Consultant, with broad-based growth across all of our business units and regions. This performance is supportive of the goal we laid out last month at our investor day, where we aspire to be the highest-performing large cat net tech company over the next three years. We believe our focus and talent and culture are relentless pursuit of innovation, while doing the right thing for society and operating responsibly, sets us up to deliver a unique set of financial goals over the 24-26 long-range period.

We expect fourth quarter 2023 operational revenue growth to be in a range of 9% to 11% versus Q3 2022 with a neutral impact from foreign exchange based on current rates.

Michael Mahoney: This performance is supportive of the goal we laid out last month at our investor day, where we aspire to be the highest-performing large cat net tech company over the next three years. We believe our focus and talent and culture are relentless pursuit of innovation, while doing the right thing for society and operating responsibly, sets us up to deliver a unique set of financial goals over the 24-26 long-range period. Our LRP goals include growing sales, 8-10% kegure over the period, while expanding the adjusted operating margins by 150 basis points over the three years, with double the adjusted EPS growth annually, and the improvement of our free cash flow conversion to approximately 70% by 20-26.

Excluding the contribution from closed acquisitions and divestitures, we expect fourth quarter 2023 organic revenue growth to be in a range of 8% to 10%.

We continue to expect our full year 2023, adjusted below the line expenses to be approximately $340 million.

Michael Mahoney: Our LRP goals include growing sales, 8-10% kegure over the period, while expanding the adjusted operating margins by 150 basis points over the three years, with double the adjusted EPS growth annually, and the improvement of our free cash flow conversion to approximately 70% by 20-26.

Our full year 2023 operational tax rate is now expected to be approximately 13, 5% under current legislation and forecasted geographic mix of sales as a result of a lower operational tax rate and favorable discrete items recognized in the third quarter. We now expect our adjusted <unk>.

Daniel Brennan: With that, I'll pass off to Dan to provide more details on the financials. Thanks, Mike. Third quarter of 2023 consolidated revenue of $3,527 million represents 11.2% reported revenue growth versus third quarter of 2022, and includes a 10 basis point tailwind from foreign exchange, which was lower than expected due to the strengthening of the US dollar throughout the quarter. Excluding this $4 million tailwind from foreign exchange, operational revenue growth was 11.1% in the quarter.

<unk> rate to be approximately 12%.

We expect a fully diluted weighted average share count of approximately 1.478 billion shares for Q4, 2023, and 1.464 billion shares for the full year 2023.

We expect full year adjusted earnings per share to be in a range of $1 99 to $2 and <unk> <unk>.

Representing 17% to 18% growth versus 2022.

Daniel Brennan: Sales from acquisitions and divestitures contributed 90 basis points, resulting in 10.2% organic revenue growth exceeding our guidance range of 7% to 9%. Q3 2023 adjusted earnings per share of 50 cents, grew 15% versus 2022, exceeding the high end of our guidance range of 46 to 48 cents, driven predominantly by our strong sales performance. Adjusted gross margin for the third quarter was 70.2%, slightly lower than our expectations, primarily driven by foreign exchange.

We continue to anticipate a neutral impact from foreign exchange.

Full year 2023 adjusted earnings per share.

We expect fourth quarter adjusted earnings per share to be in a range of 49 to 52.

For more information please check our Investor Relations website for Q3, 2023 financial and operational highlights, which outlines more details on Q3 results and 2023 guidance in closing I'm very proud of our year to date financial performance with top tier organic revenue growth of 12% adjusted operating margin of 26.

Daniel Brennan: In light of our Q3 results, we now anticipate that full year 2023 adjusted gross margin will only slightly improve on a year-over-year basis. Strong sales performance drove third quarter adjusted operating margin of 26.1%, resulting in a year-to-date adjusted operating margin also of 26.1%. Our year-to-date performance sets us up well to achieve our full year 2023 adjusted operating margin goal of approximately 26.4%, which represents 80 basis points of expansion versus 2022.

One, 1% and adjusted earnings per share growth of 18% I look forward to continued momentum in the fourth quarter to close out 2023, which will set the stage towards achieving our long range financial goals with that ill turn it back to Lawrence who will moderate the Q&A. Thanks.

Thanks, Dan contest, let's open it up to questions for the next 30 minutes or so in order for us to take as many questions as possible. Please limit yourself to one question.

Please go ahead.

We will now begin the question and answer session to ask a question we get.

Daniel Brennan: On a gap basis, the third quarter operating margin was 19.6%, which includes a $111 million credit, primarily related to certain IP litigation matters. Moving to below the line, third quarter adjusted interest and other expenses totaled $81 million, which was in line with our expectations. On an adjusted basis, our tax rate for the third quarter was 12.4%, favorable to our expectations, driven by certain discrete tax items in the quarter. Our operational tax rate was 13.9% in line with expectations.

You May press Star then one on your Touchtone phone.

Using a speakerphone, please pick up Johansson before pressing the keys.

Anytime Youre question has been addressed than you would like to withdraw your question. Please press Star then two.

Daniel Brennan: Moving to below the line, third quarter adjusted interest and other expenses totaled $81 million, which was in line with our expectations. On an adjusted basis, our tax rate for the third quarter was 12.4%, favorable to our expectations, driven by certain discrete tax items in the quarter. Our operational tax rate was 13.9% in line with expectations. Fully diluted weighted average share outstanding ended at 1,475 million in Q3. Precache flow for the quarter was $509 million, with $698 million from operating activities less 190 million net capital expenses.

At this time I will pause momentarily to assemble our roster.

And the first question comes from the line of Robbie Marcus with JP Morgan. Please go ahead.

Hi, good morning, and congrats on a great quarter and since many of US here at T. P. T O N.

Nice agent PCB trial as well.

Daniel Brennan: Fully diluted weighted average share outstanding ended at 1,475 million in Q3. Precache flow for the quarter was $509 million, with $698 million from operating activities less 190 million net capital expenses. Researches, excluding special items, adjusted free cash flow was $582 million. As a result of our strong year-to-date adjusted free cash flow generation, we now expect full year 2023 adjusted free cash flow in excess of $2.4 billion. Our top capital allocation priority remains strategic tuck-in M&A, followed by annual sherry purchases to offset dilution from employee stock grants, which we announced at last month's investor day.

I had two questions I think from a neighbor.

I had two questions I'm going to I'll just go with one here.

We go back to the analyst day.

You pointed to 10% growth in 150 basis points of operating margin expansion over the three year timeframe and I believe one of the comments was at the beginning of the range it'll be towards the lower end and accelerated as you have some of your big new product launches coming so I'm looking at 2024 here.

Daniel Brennan: Researches, excluding special items, adjusted free cash flow was $582 million. As a result of our strong year-to-date adjusted free cash flow generation, we now expect full year 2023 adjusted free cash flow in excess of $2.4 billion. Our top capital allocation priority remains strategic tuck-in M&A, followed by annual sherry purchases to offset dilution from employee stock grants, which we announced at last month's investor day. As of September 30th, 2023, we had cash on hand of $952 million and our gross debt leverage was 2.3 times.

And I see the street had 9% organic sales growth and about 50 basis points margin expansion.

To make sure we're interpreting the comments you made at the analyst day correctly and any any thoughts you have on the directionality for next year. Thanks a lot.

Daniel Brennan: As of September 30th, 2023, we had cash on hand of $952 million and our gross debt leverage was 2.3 times.

Yeah sure Robbie I think relative to the analyst day commentary, let me just reiterate just to make sure. We're all on the same page. So yes, you said, 8% to 10% organic revenue growth over the period of 24 to 26.

Daniel Brennan: I'll now walk through guidance for Q4 and full year 2023. We expect full year 2023 operational revenue growth to be approximately 12 percent, which excludes an approximate 100 basis point headwind from foreign exchange. Higher than our previous estimate due to the strengthening of the US dollar, excluding the impact of closed acquisitions and divestitures, we expect full year 2023 organic revenue growth to be approximately 11 percent versus 2022.

50 basis points of margin expansion over that three year period, which would put us assuming we're at that 26 four at the end of this year kind of near that 28, which is a nice jumping off point for that 30%.

Long term goal and then we said that the 2025 revenue growth rate would likely be higher than our 2024 revenue growth rate due to the launches that are coming in 2024.

That's really the commentary that we had relative to our to Investor day, and obviously 2020 for 2023 shaping up to be a great year. Good jumping off point heading into 'twenty, four but relative to specifics around 24, we're working through our 24 annual planning process here in the fourth quarter and as you would expect we will use that as the basis to give you the guidance when we get.

Daniel Brennan: We expect fourth quarter 2023 operational revenue growth to be in a range of 9 percent to 11 percent versus Q3 2022 with a neutral impact from foreign exchange based on current rates. Excluding the contribution from closed acquisitions and divestitures, we expect fourth quarter 2023 organic revenue growth to be in a range of 8 percent to 10 percent.

Our Q4 earnings call in January.

Alright I appreciate it thank you.

Yes.

Daniel Brennan: We continue to expect our full year 2023 adjusted below the line expenses to be approximately $340 million. Our full year 2023 operational tax rate is now expected to be approximately 13.5 percent under current legislation and forecasted geographic mix of sales. As a result of a lower operational tax rate and favorable discrete items recognized in the third quarter, we now expect our adjusted tax rate to be approximately 12 percent. We expect a fully diluted weighted average share count of approximately 1,478 million shares for Q4 2023 and 1,464 million shares for the full year 2023.

The next question is from the line of Joanne Wuensch with Citi Bank. Please go ahead.

Good morning, and thank you for taking the question since many are sitting here at TCT, I think I'm going to focus on that including I'd love. Some feedback on the data that's been presented here, particularly on the agent trial and then I found the watch tab, where trial also interesting. So anything you can comment on that would be.

Wonderful thank you.

The Doctor sign you want to comment.

Yes, Thanks, Mike Let me start again, Hey, Julien.

We're really pleased by all of the data that we saw at TCT.

Begin with agents.

And literally could not be happier with the ultimate results of that randomized trial.

Daniel Brennan: We expect full year adjusted earnings per share to be in a range of $1.99 to $2.02 representing 17 to 18 percent growth versus 2022. We continue to anticipate a neutral impact from foreign exchange on full year 2023 adjusted earnings per share.

Which again as I hoped everyone recognizes right is intended to get approval of the first drug coated balloon indicated for use in the coronary use in the United States for instant restenosis.

And in stent restenosis accounts for approximately 10% of U S. Coronary interventions today, having a drug coated balloon will allow intervention is to address these stent failures.

Daniel Brennan: We expect fourth quarter adjusted earnings per share to be in a range of 49 to 52 cents.

While leaving nothing behind we've seen how well, it's performing where we do have it approved in Japan, and just to reiterate really incredible results from the trial.

Daniel Brennan: For more information, please check our investor relations website for Q3 2023 financial and operational highlights which outlines more details on Q3 results and 2023 guidance.

<unk> endpoint of target lesion failure at 12 months was really marked statistical and clinical superiority to plain old balloon angioplasty and importantly, both clinically important reductions in target first LMI and reductions in the need for for target lesion.

Daniel Brennan: In closing, I'm very proud of our year-to-date financial performance with top-tier organic revenue growth of 12 percent. Adjusted operating margin of 26.1 percent and adjusted earnings per share growth of 18 percent.

Daniel Brennan: I look forward to continue to momentum in the fourth quarter to close out 2023 which will set the stage towards achieving our long-range financial goals.

<unk> securitization and then yet so that's that.

It was yesterday.

Day before yesterday, we saw the results of watched however.

Lauren Tengler: With that, I'll turn it back to Lauren. Thank you. Thanks, Anne.

So watched havre.

I think it was important investigator initiated trial looking at the combined use of the legacy Washington, two five device at the same time of <unk> in high risk patients.

Lauren Tengler: Cassis, let's open it up to questions for the next 30 minutes or so. In order for us to take as many questions as possible, please let me yourself to one question. Cassis, please go ahead. We will now begin the question and answer session to ask you question. You may press star than one on your touch tone phone. If you're using speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed, then you would like to withdraw your question. Please press star then two.

With atrial fibrillation undergoing tavern and I think on the one hand.

I would acknowledge that combined use of Washington to ever does face a challenging reimbursement environment, but also important trial validates the safety and the efficacy of the legacy Washington, $2 five device as compared to control therapy, including the use of <unk> in this population.

Unknown Executive: At this time, it will pose momentarily to assemble our roster.

Thank you.

Robert Marcus: And the first question comes from the line of Robbie Marcus with JP Morgan.

Robbie Marcus: And the first question comes from the line of Robbie Marcus with JP Morgan. Please go ahead. Hi, good morning, and congrats on a great quarter. And since many of us are at TCT, I'll add the nice agent BCP trial as well. I had two questions. I'm going to, I'll just go with one here. As we go back to the analyst day, you pointed to each 10% growth and 150 basis points of operating margin expansion over the three year time frame.

Michael Mahoney: Please go ahead. Hi, good morning, and congrats on a great quarter. And since many of us are at TCT, I'll add the nice agent BCP trial as well. I had two questions. I'm going to, I'll just go with one here. As we go back to the analyst day, you pointed to each 10% growth and 150 basis points of operating margin expansion over the three year time frame. And I believe one of the comments was at the beginning of the range, it'll be towards the lower end and accelerate as you have some of your big new product launches coming.

The next question is from the line of Rick Wise with Stifel. Please go ahead.

Good morning. Thank you for the question and it's one of those cities such an excellent quarter.

I guess, if I focus on one maybe you could expand on your.

Mike on your if you wanted to do it at your neuro Mod.

Comments.

Just your latest thinking just broadly what's going to help reaccelerate.

Robbie Marcus: And I believe one of the comments was at the beginning of the range, it'll be towards the lower end and accelerate as you have some of your big new product launches coming. So I'm looking at 2024 here, and I see the street at eight to 9% organic sales growth and about 50 basis points margin expansion. I just want to make sure we're interpreting the comments you made the analyst day correctly and any thoughts you have on directionality for next year. Thanks a lot.

The business of what's next from.

From here.

But more specifically.

The pn.

Michael Mahoney: So I'm looking at 2024 here, and I see the street at eight to 9% organic sales growth and about 50 basis points margin expansion. I just want to make sure we're interpreting the comments you made the analyst day correctly and any thoughts you have on directionality for next year. Thanks a lot. Yeah, sure, Robbie. I think relative to the analyst day commentary, let me just reiterate just to make sure we're all on the same page.

Indication approval.

How does that.

Affect the business when does it start contributing how should how would you have us think about.

The beneficial contribution there thanks a lot.

Thanks, Good morning, Rick.

In the third quarter as I mentioned, we're proud that most all of our businesses grew at least at most likely most of them grew above market likely with the exception of the one that you asked about neuroma.

Michael Mahoney: Yeah, sure, Robbie. I think relative to the analyst day commentary, let me just reiterate just to make sure we're all on the same page. So as you said, eight to 10% organic revenue growth over the period 24 to 26 150 basis points of margin expansion over that three year period, which would put us assuming we're at that 26th, 4th, the end of this year kind of near that 28, which is a nice jumping off point for that 30% long term goal.

Michael Mahoney: So as you said, eight to 10% organic revenue growth over the period 24 to 26 150 basis points of margin expansion over that three year period, which would put us assuming we're at that 26th, 4th, the end of this year kind of near that 28, which is a nice jumping off point for that 30% long term goal. And then we said that the 2025 revenue growth rate would likely be higher than our 2024 revenue growth rate due to the launches that are coming in 2024.

So on the neuroma business, we grew roughly 3% in the quarter.

I'll just start off before I jumped S. Yes, the brain business. Our DBS business continues to do well continues to grow share and in third quarter grew double digits again with the neural navigator. So that business continues to become a larger part of the overall mix our global SCS still is the largest piece.

Michael Mahoney: And then we said that the 2025 revenue growth rate would likely be higher than our 2024 revenue growth rate due to the launches that are coming in 2024. So that's that's really the commentary that we had relative to to invest today and obviously 2024 2023 shaping up to be a great year.

That's been under pressure as you pointed out are the pressure points really come from.

Michael Mahoney: So that's that's really the commentary that we had relative to to invest today and obviously 2024 2023 shaping up to be a great year. Good jumping off point heading into 24, but but relative to specifics around 24, you know, we're working through our 24 annual planning process here in the fourth quarter. And as you would expect, we'll use that as the basis to give you the guidance when we get to our Q4 and he's calling January. Alright, I appreciate it. Thank you.

The additional of probably a couple of new competitors in the marketplace, some competitive launches and our D. P N approval, which we're very excited about what you highlighted we received in October and but we don't expect to launch our VPN platform until like the first quarter.

Robbie Marcus: Good jumping off point heading into 24, but but relative to specifics around 24, you know, we're working through our 24 annual planning process here in the fourth quarter. And as you would expect, we'll use that as the basis to give you the guidance when we get to our Q4 and he's calling January. Alright, I appreciate it. Thank you.

Near the mid first quarter of 2024.

So this will certainly help us with our core SCS business with that additional indication and also with the relevant company that we've signed a assigned but not yet closed we expect to close that in 2024. So we think the combination of the D. P N to our existing Fcs.

John Wunch: The next question is from the land of John Wunch with Citibank. Please go ahead. Again, morning, and thank you for taking the question. Since many are sitting here at TCT, I think I'm going to focus on that, including love some feedback on the data that's been presented here, particularly on the agent trial. And then I found the Wunch cabaret trial also interesting. So anything you can comment on, that would be wonderful. Thank you.

John Wunch: The next question is from the land of John Wunch with Citibank. Please go ahead. Again, morning, and thank you for taking the question.

John Wunch: Since many are sitting here at TCT, I think I'm going to focus on that, including love some feedback on the data that's been presented here, particularly on the agent trial. And then I found the Wunch cabaret trial also interesting. So anything you can comment on, that would be wonderful. Thank you.

<unk> combined with <unk> and also our RF platform gives us a really nice category leadership position to treat pain with a variety of options, which would be differentiated. So we do expect likely some softness to continue in the fourth quarter.

And we obviously aim to improve on those results in 2024 based on what I just highlighted.

Kenneth Stein: Dr. Stein, you want to come up? Yeah, thanks, Mike. Let me start again, and hey, Joanne, we're really pleased by all of the data that we saw at PCT. I'll begin with agent, and literally could not be happier with the ultimate result of that randomized trial, which again, as I hope everyone recognizes right, is intended to get approval of the first drug-coded balloon indicated for use from the coronaries in the United States for instant restenosis, right?

I appreciate the color. Thank you.

Sure.

Kenneth Stein: Instant restenosis counts for approximately 10% of U.S, coronary interventions today. Having a drug-coded balloon will allow interventionalists to address these stent failures, while leaving nothing behind. We've seen how well it's performed, where we do have it approved in Japan, and just to reiterate the incredible results from the trial. Met endpoint of target lesion failure at 12 months, which really marked statistical and clinical superiority to planal balloon angioplasty, and importantly, both clinical and important reductions in target vessel MI and reductions in the need for target lesion re-gaskerization.

The next question is from a line of Vijay Kumar with Evercore ISI. Please go ahead.

Hey, guys congrats on the print and the database there TCT.

If I may I wanted to stick on the financial side, Dan just to clarify the 24 commentary if the exploration is all being driven by new products and need these.

New products are being launched I think you said back half next year.

Should we be perhaps thinking about the lower end of that 8% to 10%.

You mentioned gross margins.

FX impact here. So it looks like Q4 is going to look similar to Q, how would think about any FX impact from gross margins as we look at all the alcohol.

Yeah.

Sure. So it's not like the gross margin one first our gross margin in the in the third quarter was a little bit lower than we expected and it was it was predominantly driven by FX at that 72%. So we had been targeting kind of to be approaching 71% for the full year. This year we.

Kenneth Stein: And then, yeah, so that was yesterday, day before yesterday, we saw the results of watch TAVR. And so watch TAVR was an important investigator-initiated trial looking at the combined use of the legacy Washman 2.5 device at the same time of TAVR in high-risk patients with atrial fibrillation undergoing TAVR. And I think on the one hand, we sort of knowledge that combined use of Washman with TAVR does face a challenge in reimbursement environment, but also important that the trial validates the safety and the efficacy of the legacy Washman 2.5 device, as compared to control therapy, including the use of no-hatch in this population. Thank you.

We were $70 five last year, just tempering those that commentary to say you know what we might not hit the approaching 71, we might be you know will be north of $70 five, but maybe not as high as approaching 70, 71, so a bit of a nuance there, but driven by by FX and we had mentioned for 'twenty. The long range plan at Investor Day for 'twenty.

Mona Rick: The next question is from a line of requires with stifle. Please go ahead.

Kenneth Stein: Thank you.

Four five and six that there'd be a bit of an FX headwind in gross margin and 24 that should get better over that timeframe of 20 456.

Mona Rick: The next question is from a line of requires with stifle. Please go ahead.

Relative to 'twenty four organic revenue growth no, there's really not much to assume other than we'll let you know on on January 31st one we have our call. We have 8% to 10% is the CAGR for the three years as I mentioned, we will work through our annual planning process here over the back half of this quarter and we'll let you know we do have some nice launches obviously and.

And 24 as you mentioned many in the back half.

But we'll let you know on January 31st of all we think the range will be for 24.

Understood. Thanks, guys.

Michael Mahoney: Good morning. Thank you for the question. And it's wonderful to see this such an excellent quarter. I guess if I focus on one, maybe you could expand on your mic on your, if you want to do it, that you're a neuromod comments. Just your latest thinking. Just broadly, what's going to help reaccelerate the business or what's next from here? But more specifically, the PDN indication approval, how does that affect the business?

Mona Rick: Good morning. Thank you for the question. And it's wonderful to see this such an excellent quarter. I guess if I focus on one, maybe you could expand on your mic on your, if you want to do it, that you're a neuromod comments. Just your latest thinking. Just broadly, what's going to help reaccelerate the business or what's next from here? But more specifically, the PDN indication approval, how does that affect the business?

Michael Mahoney: When does it start contributing? How would you have us think about the beneficial contribution there? Thanks a lot. Thanks, Mona Rick. Your third quarter, as I mentioned, we're proud that most all of our businesses grew, at least at most likely most of them grew above market, likely with the exception of the one that you asked about neuromod. So in the neuromod business, we grew roughly 3% in the quarter. You know, I'll just start off before you, I jumped SES, the brain business, our DBS business continues to do well, continues to grow share, and in third quarter grew double digits again with the neural navigator.

Mona Rick: When does it start contributing? How would you have us think about the beneficial contribution there? Thanks a lot. Thanks, Mona Rick. Your third quarter, as I mentioned, we're proud that most all of our businesses grew, at least at most likely most of them grew above market, likely with the exception of the one that you asked about neuromod. So in the neuromod business, we grew roughly 3% in the quarter. You know, I'll just start off before you, I jumped SES, the brain business, our DBS business continues to do well, continues to grow share, and in third quarter grew double digits again with the neural navigator.

The next question is from the line of Larry <unk> with Wells Fargo. Please go ahead.

Good morning, Congrats on the print.

We've made it this far without a deal. Thanks, one question, but.

I'm going to ask it anyway, obviously diabetes and it'll be our respect a risk factor for many diseases, such as cardiovascular disease and how are you thinking about the potential long term impact of G. O P ones on your businesses and any high level thoughts Mike on how investors have reacted T. G. L. P. One in general Thank you.

Doctors time, you want to give a comment on G. L. P. One yeah. Thanks, Thanks, Mike and Hey, good morning, Larry.

I believe again right I mean does the dock I think you'd have to acknowledge these are promising agents.

On the other hand is it a dock in a realist to live through the launch of other promising agents in the past and I think status are a really good example, I forgot to acknowledge the and particularly these drugs given issues of cost issues of convenience.

And issues of Tolerability, we expect it will take at least a decade to reach peak penetration of these folks in the indicated population.

Michael Mahoney: So that business continues to become a larger part of the overall mix. Global SES still is the largest piece. That's been under pressure as you pointed out. The pressure points really come from additional, probably a couple new competitors to the marketplace. Some competitive launches, and our DPN approval, which we're very excited about, which you highlighted. We received in October, and but we don't expect to launch our DPN platform until likely first quarter, near the mid first quarter of 2024.

Mona Rick: So that business continues to become a larger part of the overall mix. Global SES still is the largest piece. That's been under pressure as you pointed out. The pressure points really come from additional, probably a couple new competitors to the marketplace. Some competitive launches, and our DPN approval, which we're very excited about, which you highlighted. We received in October, and but we don't expect to launch our DPN platform until likely first quarter, near the mid first quarter of 2024.

And even after a decade, we expect only a minority of American patients with obesity it'll be taken these drugs.

So if you think about these barriers to usage.

I begin by saying, we see very limited short term impact on cardiovascular disease and even in the long term right. Our analysis taking into account again penetration ramp of these drugs as I said and taking into account what we know this far thus far about a reported 20% reduction in cardiovascular event.

Rates suggest to us that the impact on U S coronary and peripheral procedure volumes will be minor even at peak and I think it's important to state. So we even with these drugs continue to expect both of these procedures to continue to grow in volume over the next decade.

Michael Mahoney: So this will certainly help us with our core SES business with that additional indication. And also with the Reliviant company that we've signed, but not yet closed, we expect to close that in 2024. So we need the combination of the DPN to our existing SES base, combining with the Reliviant and also our RF platform gives us a really nice category leadership position to treat pain with a variety of options, which will be differentiated. So we do expect likely some softness to continue in the fourth quarter, and we obviously aim to improve on those results in 2024 based on what I just highlighted. Appreciate the color.

Mona Rick: So this will certainly help us with our core SES business with that additional indication. And also with the Reliviant company that we've signed, but not yet closed, we expect to close that in 2024. So we need the combination of the DPN to our existing SES base, combining with the Reliviant and also our RF platform gives us a really nice category leadership position to treat pain with a variety of options, which will be differentiated. So we do expect likely some softness to continue in the fourth quarter, and we obviously aim to improve on those results in 2024 based on what I just highlighted. Appreciate the color.

Unknown Executive: Thank you.

Mona Rick: Thank you.

Furthermore, I think it's also really important to point out that cardiovascular disease is a global issue.

That there was less attribution to obesity in other regions, particularly Asia, making it less amenable to prevention with these drugs, which are frankly also very likely to be less accessible outside of the U S.

Also any decrease in cardiovascular mortality events.

Similarly be accompanied by a corresponding increase in the prevalence of other diseases that are associated with aging diseases in areas that are really very well served by our products, including things like cardiac pacing interventional oncology for many forms of cancer deep brain stimulation and finally right the assumptions.

BJ Kumar: The next question is from the length of BJ Kumar with Evercore ISI. Please go ahead. Hey guys, congrats on the print and the data being present at TCT. If I may, I want to stick to it on the financial side. And just to clarify, the 24 commentary, if the acceleration is all being driven by new products and these new products are being launched, I think it's a back half of next year.

I'm talking to in terms of our modeling right don't consider other procedural growth factors like an aging population over this period and certainly doesn't consider the long track record that we have of focusing and executing on innovation.

BJ Kumar: Should we be perhaps thinking about the lower end of the 8 to 10% and I think you mentioned gross margins. Effect impact here. So it looks like Q4 is going to look similar to Q. How do you think about any effects impact on gross margins as you look at the outlook? Sure. So I had to gross margin one first. The gross margin in the third quarter was a little bit lower than we expected, and it was predominantly driven by effects at that 70.2%.

Thank you exercise.

The next question is from the line of Travis Steed with Bank of America. Please go ahead.

Hey, Thanks for taking the question I did want to ask about fair pulse. It sounds like the update was expected approval in the second half of 'twenty four.

Curious one when that was filed with the FDA and then and maybe you can talk a little bit about scaling that up in the U S and then and the potential to see pull through on the ancillary products like mapping.

So we had been targeting kind of to be approaching 71% for the full year this year. We were 70.5 last year. Just tempering that commentary to say, you know what, we might not hit the approaching 71, we might be, you know, we'll be north of 70.5, but maybe not as high as approaching 71. So a bit of a nuance there, but driven by by effects. And we had mentioned for 20, the long range plan at investor day for 24, 5 and 6 that there would be a bit of an effects headwind and gross margin in 24 that should get better over that time frame of 24, 5, 6 relative to 24 organic revenue growth.

BJ Kumar: So we had been targeting kind of to be approaching 71% for the full year this year. We were 70.5 last year. Just tempering that commentary to say, you know what, we might not hit the approaching 71, we might be, you know, we'll be north of 70.5, but maybe not as high as approaching 71. So a bit of a nuance there, but driven by by effects. And we had mentioned for 20, the long range plan at investor day for 24, 5 and 6 that there would be a bit of an effects headwind and gross margin in 24 that should get better over that time frame of 24, 5, 6 relative to 24 organic revenue growth.

Yeah.

Maybe you take the timing of launch and you can speak to the value.

Yeah.

Yes, sure. So on timing again, as we've said I think everyone knows right are foundational pivotal scale data to submit to the FDA was advent.

Rented those results as Mike said at ESC. The end of August with simultaneous publication in New England Journal of Medicine hit all of our endpoints.

BJ Kumar: No, I, there's really not much to assume other than we'll let you know on on January 31st when we have our call. We have 8 to 10% as the cater for the three years. As I mentioned, we'll work through our annual planning process year over the the back half of this quarter and we'll let you know.

Very clean data set.

And so again as we've said we've now completed our regulatory submission to the FDA and things things are in regulators' hands. So continue to expect approval second half.

Of of next year, and I think all of the pieces that I've spoken to the U S can't wait to get their hands on it.

BJ Kumar: We do have some nice launches, obviously, and in 24, as you mentioned, many in the back half, but we'll let you know on January 31st what we think the range will be for 24.

Okay.

Right. Yeah, you saw the results in the third quarter, which are quite strong with both polar and and fair pulse I think what's important is our supply chain team has done a terrific job over the past 18 months.

Larry Biegelsen: The next question is from the line of Larry Biegelsen with Wells Fargo. Please go ahead. Good morning, congrats on the prints.

Building supply of both <unk>.

<unk> and the capital equipment needed. So we expect to see a more significant <unk>.

Kenneth Stein: Mike, we've made it this far without a geolocation question, but I'm going to ask it anyway. Obviously, diabetes and obesity are risk factors for many diseases such as cardiovascular disease. How do you think that? I'm thinking about the potential long-term impact of GOP1s on your businesses. And any high-level thoughts, Mike, on how investors have reacted to GOP1s in general. Thank you.

Install cadence.

The back half the back half of this quarter and into first quarter. So we feel like.

We have really significant improve our supply capabilities and you'll see that in 24 in Europe, and we will be ready for the U S launch.

Great. Thanks, a lot for the question congrats on a good quarter.

Yeah.

Thanks Travis.

Kenneth Stein: Dr. Stein, you want to give her a comment on GOP1? Yeah, thanks. Thanks, Mike, and hey, good morning, Larry. I think, again, right, I mean, as a doc, I think you have acknowledged these are promising agents. I, on the other hand, as a doc and a realist who live through the launch of other promising agents in the past, and I think statins are a really good example. I could got to acknowledge, and particularly these drugs, given issues of cost, issues of convenience, and issues of powerability.

Next question is from the line of Dan Daniel on the Tulsa with UBS. Please go ahead.

Hey, good morning, everyone. Thanks, so much for taking our question.

And congrats on a great quarter and the data here at TCT. Just a quick question on Q4 top line guide I imagine, there's some conservatism baked in here, but.

And if I'm looking at it correctly is implying a little bit of a deceleration and not to be nitpicky here, but just want to make sure we're understanding of what the.

Kenneth Stein: We expect it will take at least a decade to reach peak penetration of these drugs in the indicated population. And even after a decade, we expect that only a minority of American patients with obesity will be taking these drugs. So, right, if you think about these barriers to usage, I begin by saying we see very limited short-term impact on cardiovascular disease. And even in the long term, right, our analysis, taking into account, again, penetration ramp of these drugs, as I said, and taking into account what we know this far, that's far about a reported 20% reduction in cardiovascular event rates.

Tailwind versus headwinds are as we go into Q4 and heading into 2024. Thanks. So much.

Sure Danielle Yeah, I think of note. If you if you think back to our July guidance. Obviously, we didn't give specific Q4 guidance, but implied in that guidance would have been 7% and 9%. So the 8% to 10% that we have for the fourth quarter is a bit of acceleration from where that that would have been.

As always we thank the eight to 10 is a prudent number for the quarter and and believe it's a it's the right number for the quarter for to close out the year it'll put us at 11% approximately 11% organic revenue growth for the year. So I think that's a that's a great year for the company and you combine that with the other the other metrics that we have not just revenue, but the 11%.

Kenneth Stein: It suggests to us that the impact on US coronary and peripheral procedure volumes will be minor even at peak. And I think it's important to state, so we, even with these drugs, continue to expect both of these procedures to continue to grow in volume over the next decade.

Our organic revenue growth you'd see 80 basis points of margin expansion at that 26, 4% adjusted Op margin and then you get to 17% to 18% full year EPS at that 199 to kind of that milestone of over $2 to get to that 202.

Kenneth Stein: Furthermore, I think it's also a really important point out that cardiovascular disease is a global issue, that there is less attribution to obesity in other regions, particularly Asia, making it less amenable to prevention with these drugs, which are frankly also very likely to be less accessible outside of the US. Also, any decrease in cardiovascular mortality and events will necessarily be accompanied by a corresponding increase in the prevalence of other diseases that are associated with aging, diseases in areas that are really very well served by our products, including things like cardiac pacing, interventional oncology for many forms of cancer, deep brain stimulation.

That's a good year.

Thank you.

The next question is from the line of Matt Taylor with Jefferies. Please go ahead.

Hi, Thanks for taking the question.

I actually wanted to ask one on Neuromodulation talked about results below expectations in light of the competitive dynamics I was hoping you could comment on that and whether you expect any improvement in growth now that you have the pn indication.

Kenneth Stein: And finally, the assumptions that I'm talking to in terms of our modeling, don't consider other procedural growth factors, like an aging population over this period, and certainly doesn't consider the long track record that we have of focusing and executing on innovation.

Sure, Matt Yeah Theres been.

A couple of new entrants into the field.

Over the last 12 months and so they've taken it a little bit of market market share.

Overall, the market is likely I don't know, 5% to 6% ish and this year, we're likely to SCS U S are likely be below the market I mentioned earlier, a big driver there is.

Travis Steed: The next question is from the Land of Travis Steed with Bank of America. Please go ahead. Hey, thanks for a big other question. I did want to ask about Fair Pulse. The time like the update was expected approval in second half, twenty four. This curious one, when that was filed with the FDA. And then maybe talk a little bit about, you know, scaling that up in the U.S, and then in the Psyntal Vizzi, you know, pulled through on the end failure products like mapping. Maybe you take the timing of launch and you can speak to the value to the full portfolio.

Not having the Ah <unk>.

Supported D. P N, which we just recently received in October and we expect to be able to offer that capability.

In line with some of our competitors in first quarter 2024. So we do expect to have a softer fourth quarter and then we.

Acceleration improvement in 24 versus 23 for our SCS business and our brain business GBS continues to take share and grow double digits.

And again mentioned is likely the only division that's grown below the market.

Michael Mahoney: Yes, sure, Lauren. So, John, on timing again, as we said on everyone knows, right, our foundational pivotal scale data to submit to the FDA was advent, presented those results. It's like said at the SDN of August was simultaneous publication of New England Journal of Medicine. Hit all of our end points. Very clean data set. And so again, as we've said, we've now completed our regulatory submission to the FDA and things things are in regulators hands, so continue to expect approval second half of next year.

Okay. Thanks, Mike.

The next question guys.

He is from the line of Josh Jennings with TD Cowen. Please go ahead.

Hi, good morning, congratulations on the <unk>.

Wrong results in wanted to follow up on <unk> question on Cerro pulse.

Okay.

Just better understand where your U S. A.

EP sales force.

<unk> today.

How youre building that out.

We're planning to build that out.

Michael Mahoney: And I think all of the EPs that I've spoken to the U.S, can't wait to get their hands on us. Yeah, sure. The results in the the third quarter, which are quite strong with polar and and fair pulse. I think what's important is our supply chain teams on a terrific job over the past, each month in building supply of both catheters and the capital equipment needed. So, we expect to see a more significant install cadence to the back half, the back half of this quarter and into first quarters.

For the surplus launch.

And then just on top of that just thinking about the.

Full integration.

Paulson to arrhythmia and.

Developing centerview capabilities or anything of note that we should be thinking about that.

Provide clinical advantages.

That could catalyze stronger demand for arrhythmia once that integration is complete I believe at the year end of 'twenty four thanks for taking my questions.

Sure Yeah, I won't go into too many specifics on our commercial strategy we.

Michael Mahoney: We feel like we've really significant proof of supply capabilities. And you'll see that in 24 in Europe, and we'll be ready for the U.S, launch. Great, thanks a lot for the question throughout the middle quarter. Thanks, Travis.

We do have a scaled and trained.

E P. Salesforce as you imagine given the capabilities, we have with our watchman division and our EP business and our CRM business. So we have a scaled E. T force that's been trained up now and what's great to see is there are successfully selling cryo today, so having approval that and we haven't really.

Daniel: The next question is from the line of the Daniel on tell. With U.S, please go ahead. Good morning, everyone. Thanks so much for taking the question and congrats on a great quarter and the data here at TPP. Just a quick question on two four top line guide. I imagine there's some conservatism baked in here, but if I'm looking at it correctly, it isn't playing a little bit of a deceleration and not to be nitpicky here.

Nice initial I dunno, 30 days or so of cryo openings should we expect to see cryo to be a nice.

Revenue driver for Us in 2024, as we wait for the third of pulse approval. So we do have a scaled highly capable E. P commercial team and Ken if you want to comment on the <unk> offerings.

Thanks, Josh and again, we're very excited about <unk> as it stands today.

Daniel: But just once you make sure we're understanding of what the, you know, tailwinds versus headwinds are as we go into Q4 and heading into 2024. Thanks so much. Sure, Daniel. Yeah, I think of note, if you think back to our July guidance, obviously we didn't give specific Q4 guidance, but implied in that guidance would have been seven to nine percent. So the eight to ten percent that we have for the fourth quarter is a bit of acceleration from where that would have been.

We have disclosed we do have a next generation of fairways.

Catheter right, which is the ablation catheter part of the <unk> system.

That will include an embedded NAV sensor that will work with.

Novel iteration to the raising your software that we're calling for our view that we do have targeted for year end of 24, and our goal here really Josh as you know.

We're never going to compel people to use with me if they want to use Sarah pulse, but we're going to make the fairways in Fairview system compelling for physicians to use and whether there really.

Daniel: As always, we think the eight to ten is a crewed number for the quarter and and believe it's the right number for the quarter to close out the year. It'll put us at 11 percent, approximately 11 percent, again, a revenue growth for the year. So I think that's a, that's a great year for the company and you combine that with the other, the other metrics that we have, not just revenue, but the 11 percent organic revenue growth, you see 80 basis points of margin expansion at that 26.4 percent adjusted out margin and then you get to 17, 18 percent full year EPS at that 199 to kind of that milestone over two dollars to get to that 202. That's a good year.

Daniel: Thank you.

Some very novel things that we're able to do with that system combination.

We believe is going to improve physician workflow and hopefully lead to even better physician patient outcomes with the combined system, even on top of the great outcomes that we saw in advent.

Yeah.

Great. Thanks, a lot.

The next question is from the line of Christmas call with Nephron Research. Please go ahead.

Thanks, a follow up for Dr. Stein on agents and the results were certainly impressive versus P. T. A but it was noted from the podium that about 85% of ISR cases in the U S. Today are being treated with drug Eluting stents. So do you have plans to follow up the IDE study with a randomized trial versus the U S and maybe.

Matthew Taylor: The next question is from the line of Matt Taylor with Jeffries. Please go ahead. Hi, thanks for taking the question. I actually wanted to ask one on neuromodulation. Talk about results below expectations and lives of competitive dynamics. So it's open. You could comment on that and whether you expect any improvement in growth now that you have the PDN indication.

Just some thoughts on how you see agents fitting into the treatment paradigm versus that standard of care.

Yes, Chris.

Michael Mahoney: Sure, Matt. Yeah, there's been, I would a couple of new entrants into the field over the last 12 months. And so they've taken a little bit of market market share. Overall, the market's likely, I don't know, five to six percentish. And this year we're likely to, in SCS US, likely be below the market. I mentioned earlier, a big driver there is not having the support of DPN, which we just recently received in October.

Not.

I'm not going to get into what our post approval.

The research strategy is going to look like.

I think there is a lot to be learned when you see how drug coated balloons are used in Japan, and how they're used in Europe today, right and patients with in stent restenosis and fail the stent and the.

So for me once shame on you Fool me twice shame on me I don't think that there are a lot of physicians, who want to be putting.

Michael Mahoney: And we expect to be able to offer that capability in line with some of our competitors in first quarter 2024. So we do expect to have a softer fourth quarter. And then we expect acceleration improvement in 24 versus 23 for SCS business in our brain business. DBS continues to take share and grow double digits. And again, mention it's likely the only division that's grown below the market. Thanks, Mike.

Additional foreign objects into someone who has already had and in stent restenosis. So we really believe the results that we saw with agent are compelling.

And compelling enough to move the.

The vast majority of intervention hours to use agent.

In place of either plain old balloon angioplasty or in place of again.

Yet another spent in the in stent restenosis area and go home.

The other thing I'll say is you know clearly there are a lot of potential indications for the use of the agent product beyond in stent restenosis, and we'll certainly be looking.

Josh Jennings: The next question is from the land of Josh Jennings with TD Cowan. Please go ahead. Hi, good morning. Congratulations on the strong results. And one of the fault on Travis's question on, on Faripals was hoping to just better understand, you know, where your US. EP sales force stands today and, and how you're, you're building that out. You're planning to build that out and, and for the Faripals launch. And then just on top of that, just thinking about the full integration of Faripals and arrhythmia and developing these fair view capabilities.

Looking at research into all of those.

As we get beyond approval and use for the first indication.

That's helpful. Thanks.

Okay.

The next question is from the line of Michael <unk> with Wolfe Research. Please go ahead.

Good morning. Thank you for taking the question I have a question on price cost on price. The message has been you know historically, we were kind of a little negative we've moved it at the portfolio level to neutral as we jump into 'twenty for what's a good base case neutral again, a little up a little down on the cost side.

Michael Mahoney: Is there anything of note that we should be thinking about that would provide clinical advantages that could catalyze stronger demand for Faripalia once that integration is completed, I believe, at the year end of 24. Thanks for taking the questions. Sure. Yeah, I won't go into too many specifics on our commercial strategy. We do have a scaled and trained EP sales force. As you imagine, given the capabilities we have with our watchman division and our EP business and our CRM business.

Where are you seeing opportunities raw materials freight labor, where are you seeing tensions and then the last piece of this is one of your large competitors did announce and inventory obsolescence charge. This quarter I think we all can see that inventories for the sector overall are quite higher than they used to be because.

Of the Covid stresses and strains.

Can I get an update on Boston status on on inventory. Thank you.

Michael Mahoney: So we have a scaled EP force that's been trained up now. And what's great to see is they're successfully selling cryo today. So having approval that, and we had a really nice initial, I don't know, 30 days or so of cryo openings. So we expect to see cryo to be a nice revenue driver for us in 2024 as we wait for the Faripals approval. So we do have a scaled highly capable EP commercial team.

Sure Mike happy to have a lot in that question. So on the pricing historically, we've been in that kind of very low single digit decline for many years, we're starting to envision a world where we could be.

Flat so that that's a goal of ours as we go forward over the <unk> to get to flat pricing, which obviously helps helps revenue. It helps all the way down through the rest of the P&L on the cost side as you look at the traditional areas that we've talked about that have been impacted over the.

Kenneth Stein: Ken, if you want to comment on the rhythmia offerings. Yeah, thanks Josh. And again, we're very excited about Faripals as it stands today. So we have this close. We do have a next generation of Farrowave catheter, right, which is the ablation catheter part of the Faripal system that will include an embedded nav sensor. That will work with an novel iteration to the rhythmia software that we're calling Farrowview that we do have targeted for year end of 24.

The past couple of years.

When you take a freight are I'd say, that's a that's gotten better but its certainly not back to where it was though I'd say, improving but still elevated.

And obviously the conflict in the Middle East has us focused on fuel and oil is that runs the risk of of increasing off of that.

The inflation impact on our direct material costs again, I would say, it's the scenes, we're seeing signs of that stabilizing over time, but it's absolutely elevated from where it was so we still do see impact of there and then the consistency of supply it's not fully back to normal again, but it has improved so we're optimistic about the future that we are.

Kenneth Stein: And our goal here really, Josh, is, you know, I said, we're never going to compel people to use rhythmia if they want to use Faripals. But we're going to make the Farrowave and Farrowview system compelling for physicians to use. And there are really some very novel things that we're able to do with that system combination that we believe is going to improve physician workflow and hopefully lead to even better physician patient outcomes with the combined system, even on top of the great outcomes that we saw an ad.

We see a a better macro environment for for cost of goods and and that.

In that category, but we're not there yet is what I would say and then relative to the inventory yes.

I would say.

We've been building inventory over the last two or three years right. Our backorder has been elevated higher than we have like the team's done a great job over the last 12 months of getting that.

More in line with where you've been historically, so I would not point to <unk>.

Kenneth Stein: [inaudible] the IDE study with a randomized trial versus DES, and maybe just some thoughts on how you see agents fitting into the treatment paradigm versus that standard of care. Yeah, Chris, you know, not going to get into what our post-approval research strategy is going to look like. I think there's a lot to be learned when you see how drug-coded balloons are used in Japan and how they're used in Europe today, right?

No charges from our perspective is a big driver because we're still a bit in catch up mode, and making sure that we have the right amount of inventory to.

To supply so I think we're we're focused on having the right inventory, but we're.

We're not at the point, where we have too much inventory.

Yeah.

Mr. Polak have you finished with your questions.

Yes. Thank you.

Yeah, Let me take the last question.

Thanks, Mike.

The next question comes from the line of Matthew O'brien with Piper Sandler. Please go ahead.

Good morning, Thanks for squeezing me in here.

I know you guys have a domestic company, but the performance in EMEA and APAC specifically were notable.

Kenneth Stein: And patients with instant restenosis have failed the stent. And, you know, for me wants shame on you for me twice, shame on me. I don't think that there are a lot of physicians who want to be putting additional foreign objects into some of those already had an instant restenosis. So, you know, we really believe the results that we saw with agent are compelling and compelling enough to move the vast majority of interventionalists to use agent in place of either planal balloon antioplasty or in place of, again, yet another stent in the instant restenosis area.

APAC was really really strong this quarter can you just give us a little more sense for them because I think most do collectively were roughly accurate growth this quarter.

The durability of the performance in those geographies is that a function of just more and more products into those areas and so you know that's pretty straight forward or is it share thinking that's required or what's really required to continue to deliver maybe not this level of growth, which is really strong again, but a very strong growth going forward, where that you know a significant contributor to the top line for.

'twenty four 'twenty five and beyond thanks.

Sure starting with Europe is really not and thankfully, it's not a new phenomenon for our team in Europe, which we also referenced in Middle East Africa last year, they grew 12% or 12%.

Kenneth Stein: Thank you. One other thing I'll say is, you know, clearly there are a lot of potential indications for the use of the agent product beyond instant restenosis. And we'll certainly be looking at research into all of those as we get beyond approval and use for the first indication. That's helpful. Thanks.

And they are on track to grow another double digits again in 2023, so the European team, it's really a combination clearly up share taking.

Given the markets arent growing double digits in Europe.

And our European team has benefited from.

The portfolio of having.

Michael Polark: The next question is from the line of Michael Polark with Wolf Research. Please go ahead. Good morning. Thank you for taking the question. I have a question on price cost. On price, the message has been, you know, historically we were kind of a little negative. We've moved it at the portfolio level to neutral. As we jump into 24, what's the good base case neutral again, a little up, a little down on the cost side.

Many of the product launches that were talked about for second half of 'twenty four in the U S already in that marketplace. So they're doing an excellent job of launching our innovative products.

Taking share in the more developed western European markets and also building a pretty significant.

Capability in their appropriate emerging markets in Europe that also grows double digits. So the team's just done a really nice job of executing and driving our innovation launches Asia Pac had another strong quarter.

Michael Polark: Kind of where are you seeing opportunities, raw materials, freight labor, where are you seeing tensions. And then the last piece of this is one of your large competitors did announce an inventory obsolescence charge this quarter. I think we all can see that inventories for the sector overall are quite higher than they used to be because of the COVID stresses and strains. Can I get an update on Boston status on an inventory.

This year that region also will grow double digits.

<unk> grew double digits last year in double digits again this year.

And I would say the new news here is really just the strength of Japan.

It was excellent in the quarter.

We expect another strong quarter for them in the fourth quarter again, its all back to our people and our portfolio and the team of Japan launching polar X agent.

Michael Polark: Thank you. Sure, Mike. Happy to a lot of that question. So on the pricing, historically we've been in that kind of very low single digit decline for many years. We're starting to envision a world where we could be flat. So that's a goal of ours as we go forward over the LRP to get to flat pricing, which obviously helps, helps revenue and helps all the way down through the rest of the panel.

Vigo will be the next platform to launch in Japan, So that team's done a really nice job.

China I was just there for about a week and that team continues to grow nicely strong double digits. Despite all the challenges that are well known in the marketplace against big based on the strength of our portfolio.

Some of the alliances that we're doing and our team in China is quite strong. So they continue to so it's not a.

Michael Polark: On the cost side, as you look at the traditional areas that we've talked about that have been impacted over the past couple of years. When you take freight, I'd say that's gotten better, but it's certainly not back to where it was. So I'd say improving, but still elevated. And obviously the conflict in the Middle East has us focused on fuel and oil as that runs the risk of increasing off of that.

New event for US this quarter are those regions have been delivering that for for quite some time.

Thanks, Mike and thank you for that.

For joining us today, we appreciate your interest in Boston scientific.

To get to your question or if you have any follow up please don't hesitate to reach out to the Investor Relations team.

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Michael Polark: The inflation impact on our direct material cost again, I would say. We're seeing signs of that stabilizing over time, but it's absolutely elevated from where it was. So we still do see impact of there. And then the consistency of supply, it's not fully back to normal again, but it has improved. So we're optimistic about the future that we see a better macro environment for costs of goods in that category, but we're not there yet is what I would say.

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Michael Polark: And then relatively inventory, yeah, I mean, I would say for we've been building inventory over the last two or three years, right? Our backorder has been elevated higher than we have liked the teams done a great job over the last 12 months of getting that more in line before you've been historically. So I would not point to, you know, you know, charges from our perspective as a big driver, because we're still a bit in catch up mode and making sure that we have the right amount of inventory to supply. So I think we're focused on having the right inventory, but we're not at the point where we have too much inventory. Mr. Polark, have you finished with your questions?

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Michael Polark: Yes, thank you.

[music].

Unknown Executive: Can we take the last question? Thanks, Mike.

Matthew Brian: The next, our last question comes from the line of Matthew Brian with Piper's similar, please go ahead. More than thanks for squeezing me in here. I know you guys are a domestic company, but the performance in a Mia and Apex specifically were notable, and specifically Apex was really, really strong this quarter. Can you just give us a little more sense for, um, so I think those two collectively roughly after growth is quarter.

Matthew Brian: The, the durability of the performance in those geographies is that a function of just more and more products into those areas, and so, you know, that's pretty straightforward or is it shared taking that's required or what's really required to continue to ever, maybe not this level of growth, which is really strong again, but a very strong growth, going forward where that, you know, a significant contributor to the top line for 24, 25 and beyond. Sure, yeah, starting with Europe is really not a thankfully it's not a new phenomenon for our team in Europe, which we also represent Middle East Africa, you know, last year they grew 12% our 12% and they're on track to grow another double digits again in 2023.

Matthew Brian: So the European team is really a combination clearly of share taking, given the markets on growing double digits in Europe, and our European team is benefited from, you know, the portfolio of having. Many of the product launches that we talked about for second half of 24 in the US already in that marketplace, so to do an excellent job of launching our innovator products, you know, taking share in the more developed Western European markets.

Yes.

[music].

Matthew Brian: And also building a pretty significant, you know, capability in their appropriate emerging markets in Europe that also goes double digits, so the team's just done a really nice job of executing and driving our innovation with launches. Asia pack had another strong quarter this year that region also will grow double digits through double digits last year and double digits again this year. And I would say the new news here is really just the strength of Japan is excellent in the quarter and we expect another strong quarter for them in the fourth quarter.

Matthew Brian: Again, it's all back to our people and our portfolio and the team in Japan launching Polorex agent. Avigo will be the next platform to launch in Japan, so that seems really nice job in China. I was just there for about a week and that team continues to grow nicely strong double digits despite all the challenges that are well known in the marketplace. Again, based on the strength of our portfolio, some of the alliances that we're doing and our team in China is quite strong, so they continue to so it's not a new event for us this quarter, those regions have been delivering that for quite some time. Thanks Mike, and thank you for joining us today.

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