Q4 2023 Boston Scientific Corp Earnings Call

Good morning, and welcome to the Boston Scientific fourth quarter 2023 earnings call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Lorne Tinkler, Vice President Investor Relations.

Lauren Tengler: Please go ahead.

Lauren Tengler: Thank you drew 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 Brennan Executive Vice President and Chief Financial Officer, We issued a press release earlier. This morning announcing our Q4 and full year 2023 results, which included reconciliations of the non-GAAP measures used in the release.

Lauren Tengler: 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 the duration of this morning's call will be approximately one hour, Mike and Dan will provide comments on Q4 and full year performance as well as the outlook for the business, including Twenty-twenty for guidance.

Speaker Change: And then 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.

Speaker Change: Before we begin I'd like to remind everyone that on this 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 net sales.

Speaker Change: Relevant acquisitions, and divestitures excluded for organic growth or Baylis medical which closed on February 14th 2022. The majority stake investment an architect scientific holding limited Apollo Endo surgery and relevant medical which closed in February April November 2023, respectively.

Speaker Change: Divestitures include the Endoscopy petrology business, which closed in April 2023.

Speaker Change: <unk> excludes the previously announced agreement to acquire Exxon Ex Inc, 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.

Speaker Change: This call contains forward looking statements within the meanings of federal Securities laws, which may be identified by words like anticipate expect me believe estimate and other similar words. They include among other things statements about our growth and market share new unanticipated product approvals and launches acquisitions clinical trials cost savings and growth.

Speaker Change: Opportunities, our cash flow and expected use our financial performance, including sales margins and earnings as well as our tax rates R&D spend and other expenses, if our underlying assumptions turned out to be incorrect or a certain risks or uncertainties materialize actual results could vary materially from the expectations and projections expressed or.

Speaker Change: <unk> by our forward looking statements.

Speaker Change: Factors that may cause such differences 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.

Michael F. Mahoney: Thanks, Laura and thank you to everyone for joining US today 2023 results were excellent.

Michael F. Mahoney: Our global performance represented one of the strongest years in company history exceeded in our finished the goals that we set for the year.

Michael F. Mahoney: This performance was fueled by innovation in clinical evidence generation commercial execution, and the winning spirit of our global teams.

Michael F. Mahoney: In fourth quarter 23, total company operational sales grew 15% organic sales grew 14% versus fourth quarter 'twenty two.

Michael F. Mahoney: Exceeding the high end of our guidance range of eight to 10.

Michael F. Mahoney: Full year 'twenty, three operational sales growth of 13% versus 2022, while organic sales grew 12% exceeding our guidance of approximately 11% for the full year.

Michael F. Mahoney: Importantly, six separate business units grew sales double digit in the fourth quarter and double digits for the full year of 2023 and.

Michael F. Mahoney: And all of our regions also grew double digits in the fourth quarter and double digits full year of 2023.

Operator: Good morning, and welcome to the Boston Scientific fourth quarter 2023 earnings call. All participants will be in listen-only mode.

Michael F. Mahoney: This performance is a testament to our category leadership strategy and our focus on innovation bolstered by commercial excellence.

Operator: Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad.

Michael F. Mahoney: Fourth quarter adjusted EPS at 55 cents grew 24% versus 2022 exceeding the high end of our guidance range of 49 to 52.

Michael F. Mahoney: Full year adjusted EPS of $2.05 grew 20% versus 2022 also exceeded the high end of our guidance range of $1 99 to $2.02.

Operator: To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Lauren Tengler, vice president of investor relations. Please go ahead.

Michael F. Mahoney: Q4, adjusted operating margin was 26, 6% in full year 'twenty three was $26 three.

Lauren Tengler: Thank you, Drew. 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 Q4 and full year 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 in 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.

Michael F. Mahoney: What is exciting because it exceeds pre pandemic levels.

Michael F. Mahoney: We generated full year cash loved $1 8 billion and adjusted free cash flow of $2 5 billion in line with our expectations.

Michael F. Mahoney: Now for our 'twenty 'twenty four outlook, we expect healthy procedure volumes to continue in our guidance organic growth of seven to nine for first quarter 'twenty four and eight to nine for the full year 2024.

Michael F. Mahoney: Q1, 24, adjusted EPS estimate is 50 to 52 cents, we expect our full year adjusted EPS to be 223 to $2 27.

Lauren Tengler: Mike and Dan will provide comments on Q4 and full year performance as well as the outlook for the business, including 2024 guidance, and then 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. Before we begin, I'd like to remind everyone that on this call, operational revenue growth excludes the impact of foreign currency fluctuations, and organic revenue growth further excludes acquisitions and divestitures for which there are less than a full period of comparable net sales. Relevant acquisitions and divestitures excluded for organic growth or Bayless Medical, which closed on February 14, 2022; the majority stake investment in Aquatech Scientific Holding Limited, Apollo Endosurgery, Divestitures include the endoscopy pathology business, which closed in April 2023.

Michael F. Mahoney: Presenting a growth of 9% to 11%.

Michael F. Mahoney: This guidance excludes the acquisition of Exxon X, which is expected to close in the first half of 'twenty four.

Michael F. Mahoney: Despite pressures on margins in 'twenty, four from FX headwinds as well as investments in manufacturing capacity and selling expenses to fuel our exciting launches we remain committed to improving operating income margins in 2024 and to our goal of improving adjusted operating margin by 150 basis points in 'twenty.

Michael F. Mahoney: 4% to 26, Oh, Dan will provide more details on those financials for both 2020, three and 'twenty 'twenty four.

I'll now provide additional highlights and 'twenty threes results along with comments on our outlook.

Michael F. Mahoney: Originally on an operational basis, the U S grew 11% for fourth quarter 'twenty two.

Lauren Tengler: Guidance excludes the previously announced agreement to acquire Exonix, Inc., 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.

Michael F. Mahoney: Our full year 'twenty three 2023 grew 10% with particular strength in our watchman E P Endo and neuro business units.

Michael F. Mahoney: Europe Middle East Africa grew 12% on an operational basis versus Q4, 'twenty, two and 13% on a fee.

Lauren Tengler: This call contains forward-looking statements within the meaning of federal securities laws, 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 in 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 our tax rates, R&D, spend, and other expenses. If our underlying assumptions turn out to be incorrect, or if 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 differences include those described in the risk factors section of our most recent 10-K and subsequent 10-Qs filed with the SEC.

Michael F. Mahoney: Full year basis.

Michael F. Mahoney: This above market growth was supported by new and ongoing product launches across the portfolio.

Michael F. Mahoney: Price discipline, and a strong commercial execution.

Michael F. Mahoney: We're excited about the year ahead with ongoing momentum across the region, particularly with our innovative E P portfolio and further opportunity and our growth in emerging markets within the EMEA region.

Asia Pacific grew 17% operationally versus Q4, and 19 versus the full year 2022, with all major markets growing strong double digits, Japan had a strong year growing double digits for 'twenty, two with ongoing momentum from new products, most notably agent D C be resumed polar fit and watchman flex.

And a full year basis, China grew approximately 20% versus 2022 this.

Michael F. Mahoney: This consistent growth is fueled by the diverse portfolio focus on innovation and strong commercial execution.

Lauren Tengler: 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. Thanks, Lauren.

Michael F. Mahoney: Looking ahead, we expect China to be an accretive mid teens growth or over our 24 to 26 alert P and to achieve over 1 billion sales in 'twenty four supported by new product launches supply chain agility and sustained investments in our talent and capabilities.

Michael F. Mahoney: Thank you, everyone, for joining us today. The 2023 results were excellent. And our global performance represented one of the strongest years in company history, exceeding our financial goals that we set for the year. This performance is fueled by innovation and clinical evidence generation, commercial execution, and the winning spirit of a global team. In fourth quarter twenty-three, total company operational sales grew fifteen percent, and organic sales grew fourteen percent versus fourth quarter twenty-two, exceeding the high end of our guidance range of eight to ten. Fully Year 23, operational sales growth of 13% versus 2022, while organic sales grew 12%, exceeding our guidance of approximately 11% for the full year. Importantly, six of our eight business units grew sales double digits in the fourth quarter and double digits for the full year 2023. And all of our regions also grew double digits in the fourth quarter and double digits for the full year 2023.

Michael F. Mahoney: The team Latin America grew 17%.

Operationally versus both Q4 and full year 'twenty two with seven of eight business units growing double digits on a full year basis.

Speaker Change: I'll now provide some additional commentary in our views.

Urology had an excellent quarter.

Speaker Change: 10% organic growth versus Q4, 'twenty, two and then a full year basis grew 11% organically.

Speaker Change: Full year growth was led by our stone management and prosthetic urology globally and in 2023, we relaunched our direct to patient campaign driving therapy awareness for erectile dysfunction, and supporting double digit growth within our prosthetic urology franchise.

Speaker Change: We're excited about the opportunities that that neurology included in our recently announced agreement to axon Ax and medical technology company that offers innovative devices treat urinary and bowel dysfunction.

Michael F. Mahoney: This performance is a testament to our category leadership strategy and our focus on innovation bolstered by commercial excellence. Fourth quarter adjusted EPS of $0.55 grew 24% versus 2022, exceeding the high end of our guidance range of $0.49 to $0.52. Full year adjusted EPS of $2.05 grew 20% versus 2022, also exceeding the high end of our guidance range of $1.99 to $2.02. Q4 adjusted operating margin was 26.6%, and full year 23 was 26.3, which is exciting because it exceeds pre-pandemic levels. We generate a full-year cash flow of $1.8 billion and a pre-cash flow of $2.5 billion, in line with our expectations.

Speaker Change: We look forward to bringing these complementary portfolios together and expanding access to differentiated technologies for physicians and patients.

Speaker Change: Endoscopy sales were also excellent quarter growing 12% operationally and 11% organically versus fourth quarter, 'twenty, two and the full year basis, growing 12% operationally and 11% organically.

Speaker Change: Within the quarter strong results were led by ask Jos in single use scopes, both growing double digits and a full year basis. All regions grew double digits supported by the broad and deep portfolio, new product innovation and focus on commercial excellence.

Neuromodulation sales grew 7% operationally and 3% organically versus fourth quarter, 'twenty, two and a full year basis, 7% operationally and 5% organically versus 'twenty two.

Michael F. Mahoney: Now for our 2024 outlook. We expect healthy procedure volumes to continue and are guiding to organic growth of seven to nine for first quarter twenty four and eight to nine for the full year twenty twenty. Our Q1 2024 adjusted EPS estimate is $0.50 to $0.52. We expect our full-year adjusted EPS to be $223 to $227, representing growth of 9% to 11%. This guidance excludes the acquisition of Exonix, which is expected to close in the first half of 2024.

Speaker Change: Our brain franchise grew double digits, both in the quarter and on a full year basis, driven by the precise genus portfolio and our innovative image guided programming, which is designed to improve the precision and efficiency of the deep brain stimulation procedure.

Speaker Change: And fourth quarter on an organic basis, our pain franchise was flat year over year, which was in line with our expectations. We expect our performance to improve in 2020 for them with a recent launch of our U S wave writer Alpha D. P N indication and the strong real world data on fast recently presented at Nance.

Speaker Change: Furthermore, with the completion of our relieve in Med systems acquisition in the fourth quarter. We're excited about our ability to offer an expanded pain portfolio.

Michael F. Mahoney: Despite pressures on margins in 24 from FX headwinds, as well as investments in manufacturing capacity and selling expenses to fuel our exciting launches, we remain committed to improving operating income margins in 2024 and to our goal of improving adjusted operating margin by 150 basis points in 24 to 26. Now, Dan will provide more details on those financials for both 2023 and 2024. I'll now provide additional highlights on 23 results along with comments on our outlook. Regionally, on an operational basis, the U.S. grew 11% for its fourth quarter, 2022.

Speaker Change: That supports a comprehensive treatment algorithm.

Speaker Change: Now include the novel interest up system for the treatment of chronic low back pain.

Speaker Change: Peripheral interventions sales were excellent also growing 12% operationally and 10% organically versus Q4, and a full year basis grew 13% operationally and 11% organically versus 'twenty two.

Speaker Change: Our two of our growth was led by the performance of our drug Eluting portfolio. Both in Q4 and on a full year. This market remains underpenetrated with more than half. The proceeds are still being used with bare metal devices underscoring the importance of our ongoing commitment to innovation and clinical evidence.

Speaker Change: And Venus Q4, instead of the growth was led by our market, leading verrucose vein technology. Additionally, in fourth quarter ethos growth was supported by real P. E. The largest real world and near real time dataset evaluating advanced therapies for pulmonary embolism patients.

Michael F. Mahoney: Full year 2023 grew 10% with particular strength in our Watchmen, EP, Endo, and Euro business. Europe, Middle East, and Africa grew 12% on an operational basis versus Q4'22 and 13% on a full-year basis. This above-market growth is supported by new and ongoing product launches across the portfolio, Price Discipline, and Strong Commercial Execution.

Speaker Change: Our interventional oncology franchise performed extremely well in fourth quarter, and a 2023 growing low double digits with strength across our portfolio, a robust embolization technologies and cancer therapies.

We continue to look to expand our clinical evidence and are pleased to have commenced enrollment in the Roman trial, which will assess the safety and efficacy of using their sphere in combination with immunotherapy to treat HCC. The most common type of primary liver cancer.

Michael F. Mahoney: We're excited about the year ahead with ongoing momentum across the region, particularly with our innovative EP portfolio and further opportunity in our growth and emerging markets within the EMEA region. Asia Pacific grew 17% operationally versus Q4 in 19 versus the full year 2022, with all major markets growing strong double digits. Japan had a strong year growing double digits for 22 with ongoing momentum from new products, most notable being Agent, DCB, Resume, Polar Fit, and Watchman Flex. On a full year basis, China grew approximately 20% versus 2022.

Speaker Change: Cardiology delivered tremendous quarter delivered a tremendous fourth quarter and year with both operational and organic sales growing 14% versus fourth quarter and for the full year 2022.

Speaker Change: Within cardiology interventional cardiology therapy as sales grew 10% for the full year and for the quarter and full year.

Speaker Change: On a full year basis, the coronary therapies franchise growth was driven by strong performance in our international regions and our imaging franchise globally.

Speaker Change: Agent drug coated balloon continues to form very well in Japan, and we now expect approval of agents in the U S. In the first half of 2024.

Michael F. Mahoney: This consistent growth is fueled by the diverse portfolio, focus on innovation, and strong commercial execution. Looking ahead, we expect China to be an accretive mid-teens growther over our 24-26 LRP and to achieve over $1 billion in sales in 2024, supported by new product launches, supply chain agility, and sustained investments in our talent and capabilities. The Team Latin America grew 17%. Operationally, versus both Q4 and full year 22, 22 with seven of eight business units growing double digits on a full year basis. I'll now provide some additional commentary on our BU's. Urology had an excellent quarter, 10% organic growth versus Q4'22 and, on a full year basis, grew 11% organically. Foliar growth was led by our stone management and prosthetic urology globally.

Speaker Change: Agent DCD will be the first coronary drug eluting balloon in the U S.

Speaker Change: Intercut indicated for in stent restenosis.

Speaker Change: Providing physicians and their patients so a solution for this unmet clinical need.

Our structural heart valves franchise grew double digits in both for fourth quarter and on a full year basis led by the performance of accurate Neo two in Europe and.

Speaker Change: And we now have treated more than 70000 patients to date with our accurate technology globally.

Speaker Change: As we look ahead, we anticipate approval of accurate crime in Europe in 2025.

Speaker Change: However, after reviewing a planned interim analysis of the U S accurate I D data, we will now wait for the full one year data from the RCT cohort of 500 patients to determine our regulatory strategy there.

Michael F. Mahoney: And in 2023, we launched our direct-to-patient campaign, driving therapy awareness for erectile dysfunction and supporting double-digit growth within our prosthetic urology franchise. We're excited about the opportunities ahead in urology, including our recently announced agreement to acquire Axonix, a medical technology company that offers innovative devices to treat urinary and bowel dysfunction. We look forward to bringing these complementary portfolios together and expanding access to differentiated technologies for physicians and patients. Endoscopy sales were also excellent in the quarter, growing 12% operationally and 11% organically versus fourth quarter 22, and on a full year basis growing 12% operationally and 11% organically.

Speaker Change: Therefore, we no longer anticipate the approval vacuum prime in the U S in 2024 <unk>.

Speaker Change: Additionally in alignment with the FDA, we are suspending enrollment in the single arm continued access study, while continuing to enroll in the randomized extended durability cohort.

Speaker Change: We expect to have more information in the second half of 2024 following the full data review.

Speaker Change: Watchman sales grew 23% organically versus fourth quarter, 22, and 25% on a full year basis.

Speaker Change: Q4 finished with record sales and strong utilization in all major markets. We have now treated over 400000 patients globally with a watchman technology.

Speaker Change: U S Q4 growth of 23% was supported by the breadth of the portfolio and the initial launch of watchman Flex probe, which we expect to move into full launch in the first quarter.

Michael F. Mahoney: Within the quarter, strong results were led by Axios and SignalU Scopes, both growing double digits. On a four-year basis, all regions grew double digits, supported by the broad and deep portfolio, new product innovation, and focus on commercial excellence. Neuromodulation cells grew 7% operationally and 3% organically versus fourth quarter 22. Our brain franchise grew double digits both in the quarter and on a full year basis driven by the precise genus portfolio and our innovative image guided programming, which is designed to improve the precision and efficiency of the deep brain stimulation procedure. In the fourth quarter, on an organic basis, our pain franchise was flat year-over-year, which was in line with our expectations.

We continue to expand the breadth of clinical evidence supporting this technology and are pleased with the pace of enrollment within our post market heal L. A a trial.

Speaker Change: Our newly added cohort, which is studying watchman flex probe and underrepresented patient populations.

Speaker Change: We also look forward to initiating or a monotherapy trial simple simplified trial later this year, which will study of watchman flex pro with a simplified post implant drug regimen.

Speaker Change: Cardiac rhythm management sales grew 5% organically versus Q4, 'twenty two and on a full year basis grew 6% organically versus 'twenty two.

Speaker Change: On a full year basis, our diagnostics franchise grew double digits outpacing market growth driven by a broad portfolio and ongoing investments in innovation.

Speaker Change: In core CRM in both fourth quarter, and a full year basis, our high voltage business grew low single digits and our low voltage voltage business grew mid single digits.

Michael F. Mahoney: We expect our performance to improve in 2024 with the recent launch of our U.S. WaveRider Alpha DPN indication and the strong real-world data on FAST recently presented at NANS. Furthermore, with the completion of our Relievent Med Systems Acquisition in the fourth quarter, we're excited about our ability to offer an expanded pain portfolio that supports a comprehensive treatment algorithm now including the novel Intracept system for the treatment of chronic low back pain. Peripheral intervention cells were excellent, also growing 12% operationally and 10% organically versus Q4. And the foliar bases grew 13% operationally and 11% organically versus 22.

2023 performance was driven by our differentiated high voltage portfolio and shock polarity options.

As we look ahead, we expect our core CRM growth to be in line with the market performance in 'twenty four.

Speaker Change: Turning to electrophysiology sales grew 43%, both operationally and organically versus fourth quarter 'twenty, two and then a full year basis grew 37% operationally and 33% organically versus 'twenty two.

Speaker Change: U S fourth quarter sales grew 40% organically driven by our polar X launch and ongoing momentum with our access solutions portfolio.

Speaker Change: Our international E T growth accelerated in the fourth quarter growing 46% organically fueled by improved fair Pulse Council supply and we now have treated over 40000 patients globally with a favorite pulse technology to date.

Michael F. Mahoney: Our two-year growth was led by the performance of our drug looting portfolio, both in Q4 and for a full year. This market remains underpenetrated, with more than half the procedure still being used with bare metal devices, underscoring the importance of our ongoing commitment to innovation and clinical evidence. In Venus, Q4 experience growth was led by Verathina, our market leader in varicose vein technology. Additionally, in the fourth quarter, ECOS growth was supported by RealPE, the largest real-world and near real-time dataset evaluating advanced therapies for pulmonary embolism patients. Our interventional oncology franchise performed extremely well in the fourth quarter and in 2023, growing low double digits with strength across our portfolio of robust embolization technologies and cancer therapies. We continue to look to expand our clinical evidence and are pleased to have commenced enrollment in the ROWEN trial, which will assess the safety and efficacy of using Therasphere in combination with immunotherapy to treat HCC, the most common type of primary liver cancer.

Speaker Change: And with the news. This morning that we received FDA approval for a pair of pulse we are thrilled to enter the U S market immediately.

We continue to invest in clinical evidence study, new indications and support access to our favorite pulse technology late last year, we initiated the oven guard trial to evaluate the safety and efficacy of the system as a first line treatment for persistent AF compared to anti Arrhythmic drug therapy.

Speaker Change: Additionally, a real world data was presented DHA for more than 17000 patients treated with fear of pulse the manifest 17 K registry.

Speaker Change: Which reinforced our real world safety profile of the <unk> platform.

Speaker Change: With no reports of permanent phrenic nerve palsy, or pulmonary vein stenosis or esophageal injury and an overall major adverse rate event rate of less than 1%.

Speaker Change: We're excited to bring this innovative technology to more markets and expect approval of fair pulse in Japan.

Speaker Change: China, and Japan likely in the second half of this year.

Speaker Change: In closing I'm very proud of our global team, what we were able to accomplish in 23, resulting in full year organic sales growth of 12% and adjusted EPS growth of 20%.

Michael F. Mahoney: Cardiology delivered a tremendous fourth quarter and year, with both operational and organic sales growing 14% versus the fourth quarter and for the full year 2022. Within cardiology, interventional cardiology therapy sales through 10% for the quarter and its full year. On a full year basis, the coronary therapies franchise growth was driven by strong performance in our international regions and our imaging franchise globally. Agent Drug-Coated Balloon continues to perform very well in Japan, and we now expect approval of Agent in the U.S. in the first half of 2024. Agent DCB will be the first coronary drug looting balloon in the U.S. indicated for instant restenosis, providing physicians and their patients a solution for this unmet clinical need.

Speaker Change: We're excited about the year ahead and remain focused on our talent and sustaining a culture that is motivated to drive differentiated performance and achieve our long range plan goals those goals as a reminder, our sales an average of 8% to 10% over the three year period, while expanding adjusted operating margin by 150 basis points.

Speaker Change: Including double digit adjusted EPS growth and improvement of our free cash flow conversion to approximately 70% in 2026.

Speaker Change: All of that I'll pass over to Dan to provide more details on the financials. Thanks, Mike.

Daniel Brennan: Fourth quarter 2023, consolidated revenue of $3 billion $725 million represents 14, 9% reported growth versus fourth quarter of 2022 and includes a 40 basis point tailwind from foreign exchange in line with our expectations. Excluding this $12 million tailwind from foreign exchange operational.

Michael F. Mahoney: Our Structural Hard Valves franchise grew double digits in both the fourth quarter and on a full year basis, led by the performance of Accurate Neo II in Europe. And we now have treated more than 70,000 patients to date with our Acura technology globally. As we look ahead, we anticipate approval of ACRIP Prime in Europe in 2025. However, after reviewing a planned interim analysis of the U.S. ACRID IDE data, we will now wait for the full one-year data from the RCT cohort of 1,500 patients to determine our regulatory strategy. Therefore, we no longer anticipate the approval of ACR Prime in the U.S. in 2024. Additionally, in alignment with the FDA, we are suspending enrollment in the single-arm continued access study while continuing to enroll in the randomized extended durability cohort.

Daniel Brennan: <unk> growth was 14, 5% in the quarter sales from closed acquisitions and divestitures contributed 90 basis points, resulting in $13, 6% organic revenue growth exceeding our guidance range of 8% to 10% Q.

Daniel Brennan: Q4, 2023 adjusted earnings per share of 55 cents grew.

Daniel Brennan: <unk> grew 24% versus 2022 exceeding the high end of our guidance range of 49 to 52.

Primarily driven by our strong sales performance.

Daniel Brennan: The year 2023, consolidated revenue of 14 billion and $240 million, representing 12, 3% reported revenue growth versus full year 2022, and includes an 80 basis point headwind from foreign exchange again in line with our expectations. Excluding this $104 million of headwind from foreign exchange.

Daniel Brennan: Operational revenue growth for the year was 13, 1% sales from closed acquisitions and divestitures contributed 80 basis points, resulting in 12, 3% organic revenue growth exceeding our guidance range of approximately 11%.

Michael F. Mahoney: We expect to have more information in the second half of 2024 following the full data review. Watchman sales grew 23% organically versus fourth quarter 22 and 25% on a full year basis. Q4 finished with record sales and strong utilization in all major markets. We have now treated over 400,000 patients globally with the Watchman technology. U.S. Q4 growth of 23% was supported by the breadth of the portfolio and the initial launch of Watchman Flex Pro, which we expect to move into full launch in the first quarter. We continue to expand the breadth of clinical evidence supporting this technology and are pleased with the pace of enrollment within our post-market HEAL-LAA trial, including our newly added cohort, which is studying Watchman Flex Pro and underrepresented patient populations. We also look forward to initiating our monotherapy trial, the simplified trial, later this year, which will study a Watchman FlexProbe with a simplified post-implant drug regimen.

Full year 2023, adjusted earnings per share of $2 five.

Daniel Brennan: Grew 20% versus 2022 exceeding the high end of our guidance range of $1 99 to $2 and to adjust.

Daniel Brennan: Adjusted gross margin for the fourth quarter was 74%, resulting in full year 2023, adjusted gross margin of 77% in line with our expectations and representing a 20 basis point.

Daniel Brennan: <unk> versus full year 2022, inclusive of a 220 basis point headwind from foreign exchange.

Daniel Brennan: In 2024, we expect a mixed benefit from our new launches with offsetting headwinds from FX and the incremental investment in our manufacturing capacity and as a result, we anticipate our full year 2024, adjusted gross margin will be at or slightly below our full year 2023 right.

Daniel Brennan: Fourth quarter adjusted operating margin was 26.6%, resulting in a full year 2023, adjusted operating margin of 26, 3%, improving 70 basis points versus 2022.

Michael F. Mahoney: Cardiac rhythm management cells grew 5% organically versus Q4-22 and on a full year basis grew 6% organically versus 22. On a full year basis, our diagnostics franchise grew double digits, outpacing market growth, driven by our broad portfolio and ongoing investments in innovation. And CORE CRM in both fourth quarter and the full year, our high voltage business group had a low single digit growth, and our low voltage business group had a mid single digit growth. 2023 performance was driven by our differentiated high voltage portfolio and shock polarity option.

Daniel Brennan: We expect to expand adjusted operating margin in 2024 by another 30 to 50 basis points balancing progress towards our long range plan goal of 150 basis points over the three years 2024 to 2026 with flexibility for critical investments to support key launches.

Daniel Brennan: On a GAAP basis, the fourth quarter operating margin was 15, 7%, resulting in a full year reported operating margin of 16, 5% moving to below the line fourth quarter adjusted interest and other expenses totaled $79 million, resulting in full year adjusted interest and other expense of 300.

Michael F. Mahoney: As we look ahead, we expect our core CM growth to be in line with the market performance in 2024. For Ferdinand Electrophysiology, sales grew 43% both operationally and organically versus fourth quarter 22, and the full year basis grew 37% operationally and 33% organically versus 22. U.S. fourth quarter sales grew 40% organically, driven by a Polarex launch and ongoing momentum with our Access Solutions portfolio.

Daniel Brennan: And $31 million in line with our expectations.

Daniel Brennan: On an adjusted basis, our tax rate for the fourth quarter was 10% and.

Daniel Brennan: And 11, 2% of the full year 2023.

Daniel Brennan: A favorable discrete tax items and the benefit from stock compensation accounting, our operational tax rate was 14, 6% for the fourth quarter and 13, 9% for the full year again in line with expectations.

Daniel Brennan: Fully diluted weighted average shares outstanding ended at $1 billion 477 million shares in Q4, and $1 billion 464 million shares for full year 'twenty two 'twenty three free cash flow for the quarter was $718 million with $984 million from operating activities.

Michael F. Mahoney: Our international EP growth accelerated in the fourth quarter, growing 46% organically, fueled by improved FerriPulse console supply, and we now have treated over 40,000 patients globally with the FerriPulse technology to date. And with the news this morning that we received FDA approval for FerriPulse, we are thrilled to enter the U.S. market immediately. We continue to invest in clinical evidence to study new indications and support access to our FerriPulse technology. Late last year, we initiated the AVANTGARDE trial to evaluate the safety and efficacy of the system as a first-line treatment for PSIS and AF compared to antiarrhythmic drug therapy. Additionally, real-world data was presented to AHA for more than 17,000 patients treated with FerriPulse from the Manifest 17K registry, which reinforced the real-world safety profile of the TheraPulse platform, with no reports of permanent phrenic nerve palsy or pulmonary vein stenosis or esophageal injury and an overall major adverse event rate of less than 1%.

Daniel Brennan: Less $267 million of net capital expenditures, excluding special items adjusted free cash flow was $913 million full year 2023 cash flow was $1 8 billion and adjusted free cash flow was $2 $5 billion both in line with.

Daniel Brennan: <unk>.

Daniel Brennan: For 2024, we expect full year free cash flow to be in excess of $2 billion, which includes approximately $800 million of expected payments related to acquisitions restructuring litigation and other special items as of December 31, 2023, we had cash on hand, and $865 million and our grow.

Daniel Brennan: <unk> debt leverage was two three times.

Daniel Brennan: We expect to fund the axon ex acquisition through a mix of cash on hand, and new debt, which will be determined prior to or at the time of close our top capital allocation priority remains strategic tuck in M&A, followed by annual share repurchases to offset dilution from employee stock grants.

Daniel Brennan: We're excited to bring this innovative technology to more markets and expect approval of Ferropulse in China and Japan, likely in the second half of this year. In closing, I'm very proud of our global team and what we were able to accomplish in 23, resulting in fully organic sales growth of 12% and adjusted EPS growth of 20%. We're excited about the year ahead and remain focused on our talent and sustaining a culture that's motivated to drive differentiated performance and achieve our long-range plan goals. Those goals, as a reminder, are sales on average of 8 to 10 percent over the three-year period while expanding adjusted operating margin by 150 basis points, including double-digit adjusted EPS growth and improvement of our free cashflow conversion to approximately 70% in 2026.

Daniel Brennan: Our legal reserve was $377 million as of December 31, a decrease of $30 million versus the prior quarter $108 million of this reserve is already funded through our qualified settlement funds.

Speaker Change: Now I'll walk through guidance for the first quarter and the full year 2024.

Speaker Change: We expect full year 2024 reported revenue growth to be in a range of eight 5% to nine 5% versus 2023, excluding an approximate 50 basis point headwind from foreign exchange based on current rates, we expect full year 2020 for operational revenue growth to be 9%.

Speaker Change: At 10%.

Excluding a 100 basis point contribution from closed acquisitions, we expect full year 2020 for organic revenue growth to be in a range of 8% to 9% versus 2023.

Daniel Brennan: With all of that, I'll pass it over to Dan to provide more details on the financials. Thanks, Mike. Fourth quarter 2023 consolidated revenue of $3,725,000,000 represents 14.9% reported growth versus fourth quarter 2022 and includes a 40 basis point tailwind from foreign exchange, in line with our expectations, excluding this $12 million tailwind from foreign exchange. Operational revenue growth was 14.5% in the quarter.

Speaker Change: We expect first quarter 2020 for reported revenue growth to be in a range of seven 5% to nine 5% versus first quarter of 2023, excluding an approximate 100 basis point headwind from foreign exchange based on current rates, we expect first quarter 2024 operational growth to be eight five.

Speaker Change: Per cent to 10, 5%, excluding a 150 basis point contribution from closed acquisitions, we expect first quarter 2020 for organic revenue growth to be in a range of 7% to 9% versus Q1 2023.

Daniel Brennan: Sales from closed acquisitions and divestitures contributed 90 basis points, resulting in 13.6% organic revenue growth, exceeding our guidance range of 8% to 10%. Q4 2023 adjusted earnings per share of $0.55 grew 24% versus 2022, exceeding the high end of our guidance range of $0.49 to $0.52, primarily driven by our strong sales. The year 2023 consolidated revenue of $14,240,000,000 represents 12.3% reported revenue growth versus full year 2022 and includes an 80 basis point headwind from foreign exchange. Again, in line with our expectations, excluding this $104 million headwind from foreign exchange, operational Sales from closed acquisitions and divestitures contributed 80 basis points, resulting in 12.3% organic revenue growth, exceeding our guidance range of approximately 11%.

Speaker Change: We expect our full year 2024, adjusted below the line expenses to be approximately $330 million.

Speaker Change: Under current legislation, including enacted laws and issued guidance under OECD pillar two rules, we forecast a full year 2024 operational tax rate of approximately 14% and an adjusted tax rate of approximately 13%. We continue to monitor tax legislation globally, including the currently.

Speaker Change: Drafted law to partially repeal U S. R&D capitalization, if the law were to be passed as currently proposed we would expect a tailwind of approximately 100 basis points to our operational tax rate in 2024.

Speaker Change: We expect full year adjusted earnings per share to be in a range of $2 23.

Speaker Change: To $2 27.

Speaker Change: Representing 9% to 11% growth versus 2023, including an approximate <unk> <unk> headwind from foreign exchange at current rates and existing hedging contracts, which will be recognized ratably through the year. We expect first quarter adjusted earnings per share to be in a range of 50 to 52.

Daniel Brennan: Full year 2023 adjusted earnings per share of $2.05 grew 20% versus 2022, exceeding the high end of our guidance range of $1.99 to $2.02. Adjusted gross margin for the fourth quarter was 70.4%, resulting in full year 2023 adjusted gross margin of 70.7%, in line with our expectations and representing a 20 basis point improvement versus full year 2022, inclusive of a 220 basis point headwind from foreign exchange.

Speaker Change: For more information please check our Investor Relations website for Q4, 2023 financial and operational highlights, which outlines more details on Q4 and full year results and 2020 for guidance and closing I'm very proud of our 2023 performance and look forward to executing on our 2020 for guidance.

8% to 9% organic revenue growth, 30% to 50 basis points of adjusted operating margin expansion and adjusted EPS growth of 9% to 11% before I turn it back over to Lauren for the Q&A I wanted to provide a quick update a key part of our talent strategy is moving high potential individuals throughout the company to give them a broad set of <unk>.

Daniel Brennan: In 2024, we expect a mixed benefit from our new launches, with offsetting headwinds from FX and the incremental investment in our manufacturing capacity, and as a result, we anticipate our full year 2024 adjusted gross margin will be at or slightly below our full year 2023 rate. Fourth quarter adjusted operating margin was 26.6%, resulting in a full year 2023 adjusted operating margin of 26.3%, improving 70 basis points versus 2022. We expect to expand Adjusted Operating Margin in 2024 by another 30 to 50 basis points, balancing progress towards our long-range plan goal of 150 basis points over the three years from 2024 to 2026 with flexibility for critical investments to support key launches. On a gap basis, the fourth quarter operating margin was 15.7%, resulting in a full year reported operating margin of 16.5%. Moving to below the line, fourth quarter adjusted interest and other expenses totaled $79 million, resulting in full year adjusted interest and other expenses of $331 million, in line with our expectations. On an adjusted basis, our tax rate for the fourth quarter was 10%.

Speaker Change: <unk> as part of this effective March one Loren Tango will become the global controller for our urology business unit, providing financial leadership to the global business and importantly, playing a key role in the integration of the Exxon X business, Laura and previously spent many years within our urology business, making her uniquely qualified for this opportunity.

Following Lawrence transition John Monson currently our Chief Accounting Officer will move to our Investor relations function, leading alley, Davao and the rest of the team I know the investment community will join me in thanking Lauren for her leadership and contributions and in welcoming John to the role with that I'll turn it back to Lawrence who will moderate the Q&A.

Lawrence: Thanks, So much Dan drew let's open it up to 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 true. Please go ahead.

Lawrence: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

Speaker Change: Youre using a speakerphone please pick up your handset before pressing the keys.

Any time Youre question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Daniel Brennan: 11.2% for the full year 2023, including favorable discrete tax items and the benefit from stock compensation accounting. Our operational tax rate was 14.6% for the fourth quarter and 13.9% for the full year, again, in line with expectations. Fully diluted weighted average shares outstanding ended at $1,477,000,000 shares in Q4 and $1,464,000,000 shares for full year 2023. Free cash flow for the quarter was $718,000,000, with $984,000,000 from operating activities, less $267,000,000 of net capital expenditures.

Speaker Change: The first question comes from Robbie Marcus with Jpmorgan. Please go ahead.

Robbie Marcus: Oh great.

Robbie Marcus: Congrats on a really good quarter and congratulations Laura on the promotion.

Robbie Marcus: I wanted to ask on two of the biggest product drivers in 2020 for watchman and Sarah Pulse pulse got approval today wanted to see what's included in guidance for this year and how to think about phasing over the year, how long will it take to get into hospitals and approved on formularies.

Robbie Marcus: And then second on Watchman look still had a very good quarter in fourth quarter, but growth slowed a little bit how should we be thinking about the potential for watchman in 20% plus growth in 2024, thanks a lot.

Daniel Brennan: Excluding special items, adjusted free cash flow was $913 million. Full year 2023 cash flow was $1.8 billion, and adjusted free cash flow was $2.5 billion, both in line with expectations. For 2024, we expect full-year free cash flow to be in excess of $2 billion, which includes approximately $800 million of expected payments related to acquisitions, restructuring, litigation, and other special items. As of December 31, 2023, we had cash on hand of $865 million, and our gross debt leverage was 2.3 times. We expect to fund the Axonix acquisition through a mix of cash on hand and new debt, which will be determined prior to or at the time of close. Our top capital allocation priority remains strategic tuck-in M&A, followed by annual Sherry purchases to offset dilution from employee stock grants. Our legal reserve was $377 million as of December 31st, a decrease of $30 million versus the prior quarter.

Speaker Change: Sure. Thanks, Roger for his comments start with watchman, just an excellent platform.

Speaker Change: A growth of 23% a quarter, 25% for the full year.

Speaker Change: Terrific work and as you know that product gets larger larger for us.

Speaker Change: Had to cut the script back because the clinical investments, we're making with watchman go on for a while and we can we can touch on those if interested but as you know.

Speaker Change: We continue to exceed likely 90% share in the U S.

Speaker Change: We'll be rolling out our watchman flex pro.

More as a percent of our total mix in the U S. In the first quarter and throughout the year. So we are continuing to see that which is differentiate platform. So with the clinical work that we're doing.

Speaker Change: And the watchman flex grow.

Speaker Change: And the this terrible she is likely to be in the market in 2024 as well we continue to expect to gain share and we aim to significantly widen the market opportunity through this clinical trial. So full steam ahead with watchman unfair pulse, maybe the most exciting day I've had in.

Daniel Brennan: $108 million of this reserve is already funded through our qualified settlement. Now, I'll walk through guidance for the first quarter and the full year 2024. We expect full year 2024 reported revenue growth to be in a range of 8.5% to 9.5% versus 2023. Excluding an approximate 50 basis point headwind from foreign exchange based on current rates, we expect full year 2024 operational revenue growth to be 9% to 10%. Excluding a 100 basis point contribution from closed acquisitions, we expect full year 2024 organic revenue growth to be in a range of 8% to 9% versus

Speaker Change: In my career at Boston Scientific.

Speaker Change: With this platform that we have based on the results that we've seen in Europe, and the enthusiasm globally for our <unk> platform and to receive approval today was really exciting we did anticipate a first quarter approval for fair pulse and as you might expect we expect the impact fair pulse to be somewhat in <unk>.

Quarter and much more significant as the year goes on as we work with contracting with hospitals.

Speaker Change: Getting that contract and.

Speaker Change: Getting the capital approved in rolling it out, but we have a lot of experience in doing that to grow our European.

Daniel Brennan: We expect first quarter 2024 reported revenue growth to be in a range of 7.5% to 9.5% versus first quarter 2023. Excluding an approximate 100 basis point headwind from foreign exchange based on current rates, we expect first quarter 2024 operational growth to be 8.5% to 10.5%. Excluding a 150 basis point contribution from closed acquisitions, we expect first quarter 2024 organic revenue growth to be in a range of 7% to 9% versus Q1 2023. We expect our full year 2024 adjusted below-the-line expenses to be approximately $330 million. Under current legislation, including enacted laws and issued guidance under OECD Pillar 2 rules, we forecast a full year 2024 operational tax rate of approximately 14 percent and an adjusted tax rate of approximately 13 percent.

Speaker Change: Our success that we've enjoyed our team is trained we had installation team we continue to divest in that so we're really excited about.

Speaker Change: Aiming to disrupt the market with what we think is the premier PFA platform.

Speaker Change: Great. Thanks, a lot.

Speaker Change: The next question comes from Joanne Wuensch with Citi. Please go ahead.

Joanne K. Wuensch: Thank you and good morning.

Joanne K. Wuensch: Don't want to leave a fair pulse quite yet.

Joanne K. Wuensch: A lot of questions on this call, but if you were looking for China, and Japan approval in the second half of 'twenty four could you sort of outline what you think those opportunities may be and then can you just give a quick highlight on some of the other sort of higher profile cardiology companies such as.

Joanne K. Wuensch: Paul or an agent.

Yeah, So Ken can help me out, but obviously, China and Japan represent significant opportunities in the EP market.

Speaker Change: There is there are the largest markets that we compete in.

Kenneth Stein: In those.

Speaker Change: Countries and we currently are under scale, particularly in China.

Speaker Change: Japan, we've built a lot of momentum over the last call. It 18 months with our polar X launch so in Japan that grew I don't know I think over 40% of our EP business.

Daniel Brennan: We continue to monitor tax legislation globally, including the currently drafted law to partially repeal U.S. R&D capitalization. If the law were to be passed as currently proposed, we would expect a tailwind of approximately 100 basis points to our operational tax rate in 2024. We expect full-year adjusted earnings per share to be in a range of $2.23 to $2.27, representing 9% to 11% growth versus 2023, including an approximate $0.04 headwind from foreign exchange at current rates and existing hedging contracts, which will be recognized readily through the year. We expect first-quarter adjusted earnings per share to be in a range of $0.50 to $0.52.

Speaker Change: And so we have a more scaled commercial team.

Speaker Change: Capabilities in Japan, and the eventual approval in the second half of this year in Japan with fair pulse will really be the <unk>.

Speaker Change: Next leg of the growth stool in Japan for us So a lot of confidence there the market China may be even bigger.

We're a bit more under scaled in China. So we will be making a lot of investments. There we have a brand new leader, we're excited about and shyness around our EP business under Joon Chang, so we'd be making additional commercial investments clinical investments and hope to have approval in the second half of the year in China. So those would be nice growth drivers for us in 'twenty for more significant in 2020.

Speaker Change: Five.

Speaker Change: And agent.

Daniel Brennan: For more information, please check our investor relations website for Q4 2023 financial and operational highlights, which outline more details on Q4 and full year results and 2024 guidance. In closing, I'm very proud of our 2023 performance and look forward to executing on our 2024 guidance of 8% to 9% organic revenue growth, 30 to 50 basis points of adjusted operating margin expansion, and adjusted EPS growth of 9% to 11%. Before I turn it back over to Lauren for the Q&A, I wanted to provide a quick update. A key part of our talent strategy is moving high potential individuals throughout the company to give them a broad set of experiences. As part of this, effective March 1st, Lauren Tengler will become the global controller for our urology business unit, providing financial leadership to the global business and, importantly, playing a key role in the integration of Axonics. Lauren previously spent many years within our urology business, making her uniquely qualified for this opportunity. Following Lauren's transition, John Monson, currently our Chief Accounting Officer, will move to our Investor Relations Function, leading Allie DeVoe and the rest of the team.

Speaker Change: Ken do you want to comment a bit more than triples.

Kenneth Stein: I'd love to comment on fire for US again, it is a very exciting day.

Joanne.

Speaker Change: In terms of question, specifically about Japan, and China, right I think we can.

Speaker Change: Got to realize MAA Afib is a global.

Speaker Change: <unk> I hate to use the word pandemic, but is it is pandemic.

Speaker Change: Now and.

Speaker Change: We're really pleased about the strength of the clinical trial data that we have as well as the commercial experience in Europe with as.

Speaker Change: As Mike said.

Speaker Change: Greater than 40000 patients already treated to date and it's that strength of the clinical data right that led us to the really.

Speaker Change: Rapid approval that we got from the FDA and that has led us to update our anticipated approval times, both in Japan, and China again, I think having said that we.

Speaker Change: We look to those approvals in the second half. So I don't think we're going to expect to really see too much material out of that until we get into.

Speaker Change: 2025, but they are both large and important markets and large and important patient populations that are currently really very much underserved in terms of access to ablation technology.

Speaker Change: Thank you.

Daniel Brennan: I know the investment community will join me in thanking Lauren for her leadership and contributions and in welcoming John to the role. With that, I'll turn it back to Lauren, who will moderate the Q&A. Thanks so much, Dan. Drew, we're going to 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. Drew, please go ahead.

Jim: Hey, Jim.

Jim: Thanks Joanne. Thank you. The next question comes from Larry Eggleston with Wells Fargo. Please go ahead.

Larry Biegelsen: Good morning, Thanks for taking the questions. Congrats on a strong finish here in the approval of federal pulse.

Larry Biegelsen: The U S.

Larry Biegelsen: I'm Sarah Pulse can you talk about the manufacturing capacity for the catheter in console upon launch in <unk>.

Larry Biegelsen: Expectations for the EP business. This year you grew 43% in Q4 23, any reason why growth would be lower in 'twenty four and I have to ask you to please clarify your comments around accurate neo two it sounds like something happened with fries, which is the larger size what what are the implications for the other.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Robbie Marcus: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Robbie Marcus with J.P. Morgan. Please go ahead. Oh great, congratulations on a really good quarter and congratulations.

Speaker Change: <unk> in Europe, and the U S. Thank you.

Speaker Change: Thanks, Larry starting with a fair pulse.

Really very proud of the global supply chain team and what they've done over the past 18 months and the fair Pulse group that we recently acquired a while ago, but they've done a tremendous job in building our capabilities to supply. This for the U S launch and to expand in Europe, and eventually Asia as we just highlighted.

Michael F. Mahoney: Wanted to ask you on two of the biggest product drivers in 2024, Watchmen and TheraPulse. TheraPulse got approval today. Wanted to see what's included in guidance for this year and how to think about phasing it out over the year, how long it will take to get into hospitals and approved on formularies. And then second, Watchmen, it looked, still had a very good quarter and fourth quarter, but growth slowed a little bit. How should we be thinking about the potential for Watchmen and 20% plus growth in 2022? Thanks a lot.

Speaker Change: So we are now.

Speaker Change: Significantly improved our catheter.

Unsold catheter and counsel supply.

Speaker Change: We opened numerous centers in Europe in the fourth quarter and we're ready to go. So we at this point don't anticipate supply being an issue.

Speaker Change: To continue to support Europe or to facilitate the U S launch given the capabilities and investments that we've made and approvals.

Michael F. Mahoney: Sure. Thanks, Robbie, for the comments. I'll start with the Watchmen.

Michael F. Mahoney: It's just an excellent platform. We had growth of 23% for the quarter, and 25% for the full year. Terrific work. And as you know, that product gets larger and larger for us. I had to cut the script back because the clinical investments we're making with Watchmen go on for a while, and we can touch on those if we're interested. But as you know, we continue to exceed likely 90% share in the U.S. We'll be rolling out Watchman Flex Pro more as a percent of our total mix in the US in the first quarter and throughout the year. So you'll continue to see that, which is a differentiated platform. So with the clinical work that we're doing and the Watchman Flex Pro, and the stirruple sheet likely to be in the market in 2024 as well, we continue to expect to gain share, and we aim to significantly widen the market opportunity through these clinical trials. So, full steam ahead with Watchmen.

Speaker Change: To manufacture and multiple locations so great work by the supply chain team and we're ready to launch this in the U S.

An accurate neo too as I mentioned in the earnings script, maybe just two overall points, we continue to do very well with accurate neo two in Europe.

Speaker Change: Implanting I think the number 70000 and continuing to grow faster than the market in Europe and we are on track for what we have is called Prime in Europe in 2025.

Speaker Change: So that continues to move forward as planned with respect to the trial as I mentioned in the script.

Speaker Change: Based on the interim analysis, we now need to wait for the full one year follow up of the 500 patients and as a result of that we don't we will not be receiving approval for accurate neo in 2024, and we will wait until likely the near the end of 2024 for the full readout.

Speaker Change: Accurate IDE study to determine our path forward.

Michael F. Mahoney: On Ferripulse, maybe the most exciting day I've had in my career, Boston Scientific, with this platform that we have based on the results that we've seen in Europe and the enthusiasm globally for our PFA platform, and to receive approval today was really exciting. We did anticipate a first quarter approval for Ferripulse, and as you might expect, we expect the impact of Ferripulse to be somewhat in the first quarter and much more significant as the year goes on as we work with contracting with hospitals, getting on contract, and getting the capital approved and rolling it out. But we have a lot of experience of doing that through the European success that we've enjoyed. Our team is trained.

Speaker Change: Thank you and congrats Laurel.

Speaker Change: The next question comes from Vijay Kumar with Evercore ISI. Please go ahead.

Vijay Muniyappa Kumar: Hey, guys. Thanks for taking my question and congrats on a really strong finish here, maybe just one on that.

Vijay Muniyappa Kumar: Guidance here, perhaps for Dan Dan the 8% 9%.

Vijay Muniyappa Kumar: It looks like five calls.

Vijay Muniyappa Kumar: <unk> guided assume back half launch, it's coming in a little bit ahead.

Vijay Muniyappa Kumar: Can you just walk us through that eight to nine.

Vijay Muniyappa Kumar: Is that correct that federal policy, perhaps assumptions have changed any impact from.

Vijay Muniyappa Kumar: <unk> our base impact that we should be aware of what is what are you assuming for pricing and not just grow 24. Thank you.

Michael F. Mahoney: We have an installation team, and we continue to invest in it. So we're really excited about aiming to disrupt the EP market with what we think is the premier PFA platform. Great, thanks a lot.

Speaker Change: Sure. So the V. P assumptions are the same as they've always been really no change there.

Speaker Change: You saw in December when we issued the press release on Avon Guard, we moved up the timing of expected.

Joanne K. Wuensch: The next question comes from Joanne Wuensch with Citi. Please go ahead. Thank you and good morning.

Speaker Change: Expected at our pulse launch to Q1, so we've been anticipating Q1 launch and that 8% to 9% full year in the 7% to 9% for the first quarter in terms of revenue growth contemplated a Q1.

Michael F. Mahoney: I don't want to leave Fair Pulse quite yet, and I suspect there will be a lot of questions about it on this call. But if you're looking for China and Japan approval in the second half of 24, could you sort of outline what you think those opportunities may be? And then can you just give a quick highlight on some of the other higher profile cardiology companies, such as Polar and Yeah, so Kent can help me out. But obviously, China and Japan represent significant opportunities in the EP market. These are the largest markets that we compete in, in those countries, and we are currently under-scaled, particularly in China.

Speaker Change: Q1 approval of Ferro pulse as Mike said, there's probably some contribution in Q1, but more of that contribution comes in Q2 to Q4. So the eight to nine has that.

Speaker Change: As that contemplated in the in the overall AR.

Speaker Change: And the overall guide.

Speaker Change: And then pricing so I would say on pricing as we were basically flat in 2023 and the goal is to be flat again in 2024, so likely no impact would be the goal in 2024 versus 2023.

Speaker Change: Okay.

Speaker Change: Okay, sorry, Dave Dan any days impact here.

Dave: Not all the days, there's a lot of the obviously a lot of noise in days around the world through the year. It's all contemplated in guidance all in eight to nine for the full year.

Michael F. Mahoney: In Japan, we've built a lot of momentum over the last, call it 18 months, with our Polar X launch. So, in Japan, you know, that grew, I don't know, I think over 40% of our EP business. And so we have a more scaled commercial team and capabilities in Japan, and the eventual approval in the second half of this year in Japan for Ferropulse will really be, you know, the next leg of the growth stool in Japan for us. So a lot of confidence there.

Speaker Change: Fantastic. Thank you guys.

Speaker Change: Sure Vijay. Thanks. The next question comes from Danielle <unk> with UBS. Please go ahead.

Danielle: Hey, good morning, everyone. Thanks, so much for taking the question just a follow up question on accurate at E. L. Q, Mike if I could so I. Appreciate the comments that you did provide just curious I mean, obviously, you're getting pretty strong guidance here for 2024, I mean is the right read.

Michael F. Mahoney: The market in China may be even bigger. We're a bit more under-scaled in China, so we'll be making a lot of investments there. We have a brand new leader we're excited about in China to run our EP business under Jun Chang. So we'll be making additional commercial investments, clinical investments, and hope to have approval in the second half of the year in China. So those will be nice growth drivers for us in 2024, and more significant in 2025. And Agent Ken, would you like to comment a bit more on Firefox, Dr. Stein? I would love to comment on Firefox again.

Danielle: Here that regardless of what happens with accurate neo too and timing there youre sticking to your long term sales growth guidance that you provided back in September and sort of how do we think about this as a long term growth contributor now given this little wrinkle here and and learn we will Miss you very much.

Kenneth Stein: It is a very exciting day. Joanne, I think, you know, in terms of questions specifically about Japan and China, right, I think we've got to realize AFIB is global. I hate to use the word pandemic, but it is a global disease.

Speaker Change: Thanks, so much.

Speaker Change: Florida is not leaving the company shall be around.

Speaker Change: See or we don't.

Speaker Change: Let's see here.

Speaker Change: Okay, well I'll work my way and we're going to go away.

Kenneth Stein: Now, and we're really pleased about the strength of the clinical trial data that we have, as well as the commercial experience in Europe, with, as Mike said, more than 40,000 patients already treated to date. And it's that strength of the clinical data that led us to the really, I think, the best results, the rapid approval that we got from the FDA and that has led us to update our anticipated approval times both in Japan and China. Again, I think having said that, you know, we look to those approvals in the second half, so I don't think we're going to expect to really see too much material out of that until we get into 2025, Oh, H&M.

Speaker Change: Once in a while so we're excited for John to come in and Lauren to to move out no no upside for Lorne to go to urology.

Speaker Change: <unk>.

Speaker Change: Yes, so to answer your question.

Speaker Change: We are fully committed to the 8% to 10% organic growth CAGR over the 24 to 26 periods that we provided in Investor day, absolutely no change in that outlook and pleased with the 23 performance as you know we grew 12, so absolutely no.

Speaker Change: Change to those financial goals.

Speaker Change: Accurate continues to do well in Europe.

Speaker Change: Product Thats used every day by many European physicians and we're excited about getting the larger size approve there we are disappointed.

Speaker Change: That we didn't get accurate over the goal line for approval in 2024. So at this point, we need to wait until the full data sets up in Hollywood up for year end.

Kenneth Stein: Thank you, Joanne. Thank you. The next question comes from Larry Biegelsen with Wells Fargo. Please go ahead. Good morning.

And read out likely before the end of this year in 2024, and we will take it from there in terms of the U S launch, but we are disappointed we're not going to launch that.

Larry Biegelsen: Thanks for taking the questions that congratulate you on a strong finish here and the approval of Ferropulse in the US. On Ferropulse, can you talk about the manufacturing capacity for the Catherine console upon launch and, Expectations for the EP business this year. You grew 43% in Q4 of 23, any reason why growth would be lower in 24? And I have to ask you to please clarify your comments around accurate Neo2. It sounds like something happened with Prime, which is the larger size.

Speaker Change: Very end of this year and into next.

Speaker Change: But absolutely no change to our financial guidance that we gave at Investor day.

Speaker Change: Okay, Great and also welcome John Sorry didn't mean to leave you out.

John: Thanks, so much guys.

John: Thanks Danielle.

John: The next question comes from Travis Steed with Bank of America. Please go ahead.

Travis Steed: Hey, Thanks for taking the question, maybe one more follow up on on on top of or remind us what the interim look was was that just like a six month look at the data and now you're going to wait for one year data for the lines of separate and.

Michael F. Mahoney: What are the implications for the other sizes of Neo2 in Europe and the US? Thank you. Thanks, Larry. Starting with FerriPulse, I'm really very proud of the global supply chain team and what they've done over the past 18 months in the FerriPulse group that we recently acquired a while ago. But they've done a tremendous job in building capabilities to supply this for the U.S. launch and to expand in Europe and eventually Asia, as we just highlighted. So we are now significantly improving our catheter and council supply. We opened numerous centers in Europe in the fourth quarter, and we're ready to go. So, at this point, we don't anticipate supply being an issue to continue to support Europe or to facilitate the U.S. launch, given the capabilities and investments that we've made and approval to manufacture in multiple locations.

Travis Steed: And parents have you. If you think what you saw in them from what you're still pretty confident that at one year. We can have a U S type of launch or does this put the whole U S sovereign launch at risk.

Speaker Change: Are you are you able to hear us okay.

Speaker Change: Yeah, I can hear you loud and clear.

Great Doctor go South of <unk> as our Chief Medical Officer, as you know for ICT X in structural heart, maybe you could comment a bit.

Speaker Change: Yes, I'll take the comment just about the data.

Speaker Change: So essentially what happened in the trial was done as part of a planned interim analysis, we made the decision to wait before one year data. It is important just to note that the accurate IV study is still an active clinical study with active clinical follow up and so as a result, we cannot disclose any data related to the trial at this time.

Michael F. Mahoney: Great work by the supply chain team, and we're ready to launch this in the U.S. On AccurateNeo2, as I mentioned in the earnings script, maybe just two overall points, we continue to do very well with AccurateNeo2 in Europe, implanting, I think the number is 70,000, and continue to grow faster than the market in Europe, and we are on track for what we have is called prime in Europe in 2025 So that continues to move forward as planned. With respect to the trial, as I mentioned in the script, based on the interim analysis, we now need to wait for the full one-year follow-up of the 1,500 patients. And as a result of that, we won't be receiving approval for accurate NEO in 2024, and we will wait until, likely, near the end of 2024 for the full readout of the accurate IDE study to determine our path forward. Thank you. Congratulations, Lawrence!

Speaker Change: We will expect as Mike said, a readout of the study in the second half of 2024 following the full data review.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Great. Thank you.

Speaker Change: Okay.

Speaker Change: The next question comes from Josh Jennings with TD Cowen. Please go ahead.

Josh Jennings: Good morning, Thanks for taking the questions and congratulations.

Josh Jennings: Strong end of the year.

Josh Jennings: I wanted to ask about the international cardiac completion market.

Josh Jennings: Boston Incredible fourth quarter 40, plus percent growth some of your competitors delivered really strong international.

Josh Jennings: Growth in the electrophysiology businesses as well.

What's going on in the international market I mean are we seeing the promise of PSA driving market expansion. This early.

Vijay Muniyappa Kumar: The next question comes from Vijay Kumar with Evercore ISI. Please go ahead. Hey guys, thanks for taking my question and congrats on a really strong finish here. Maybe just one on the guidance here, perhaps for Dan. Dan, the eight to nine percent, it looks like Farrah Paul's, the prior guide had assumed a back half launch, so it's coming in a little bit ahead. Can you just walk us through that eight to nine? Is that right that Farrah Paul's perhaps assumptions have changed?

Josh Jennings: Or is there any pricing dynamics going on but I.

Josh Jennings: I think it's 20% almost market growth internationally for credit completion this year.

Josh Jennings: I wanted to get some details there and whether that could translate to PSA launches in United States driving market expansion, which I think you guys detailed in here.

Speaker Change: Investor day, Thanks for taking the question.

Speaker Change: Dutch Dino will take a shot at it Josh.

Robert J. Marcus: Thanks, Mike.

Daniel Brennan: Any impact from VBP or Dave's impact that we should be aware of? What are you assuming for pricing in Fisker 24? Thank you. Sure, so the VVP assumptions are the same as they've always been; really, there's really no change there. As you saw in December when we issued the press release on Avant Garde, we moved up the timing of the expected Ferropulse launch to Q1, so we've been anticipating a Q1 launch. And that 8 to 9% full year and the 7 to 9% for the first quarter in terms of revenue growth contemplated a Q1 approval of Ferropulse. As Mike said, there's probably some contribution in Q1, but more of And then there is pricing.

Robert J. Marcus: I think it's a couple of factors here and I don't think it's I don't know that I can parse out for you how much is getting contributed from each but again I think we just begin with the fact that.

Robert J. Marcus: That atrial fibrillation is an incredibly common arrhythmia again as I said earlier it is literally pandemic.

Robert J. Marcus: Worldwide.

Robert J. Marcus: I know for instance in the U S right a quarter of adults over the age of 40 will experience a fair that at some point in our lives.

Robert J. Marcus: And ablation.

Robert J. Marcus: Even with legacy thermal technologies.

Robert J. Marcus: Things for us like stable point of polar X.

Robert J. Marcus: Is incredibly effective it's more effective than drugs.

Robert J. Marcus: On a global scale it is still <unk>.

Robert J. Marcus: Really incredibly underpenetrated as a market.

Daniel Brennan: So I would say on pricing is that we were basically flat in 2023, and the goal is to be flat again in 2024. So, likely, no impact would be the goal in 2024 versus 2023. Pintasch, sorry, and Dave Dan, are there any Dave's actually here?

Robert J. Marcus: And much of the growth that you see really just reflects I think increasing realization in the cardiology community the referring physician community about the relative efficacy and safety of all ablation technologies, and then you layer on top of it.

Robert J. Marcus: <unk>.

Robert J. Marcus: The promise and the data with Sarah pulse rate and Fera pulse again ex a procedure that's already effective it is at least as effective at is clearly safer and it's also much more efficient than thermal ablation and so that enables.

Daniel Brennan: Now all the days, there's obviously a lot of noise and days around the world through the year, it's all contemplated in guidance, all in the eight to nine for the full year. Fantastic. Thank you guys. The next question comes from Danielle Antalffy with UBS. Please go ahead. Hey, good morning, everyone.

Danielle Antalffy: Thanks so much for taking the question. Just a follow-up question on AccurateNEO2, Mike, if I could. I really appreciate the comments that you did provide.

Robert J. Marcus: Docks and medical centers to scale this out much better right in and start to get into this underpenetrated population. So maybe a long winded answer but the short answer is it's both.

Michael F. Mahoney: Just curious. I mean, obviously, you're giving pretty strong guidance here for 2024. I mean, is the right read here that regardless of what happens with AccurateNEO2 and the timing there, you're sticking to your long-term sales growth guidance that you provided back in September? And sort of, how do we think about this as a long-term growth contributor now given this little wrinkle here? And Lauren, we will miss you very much. Lauren's not leaving the company. She'll be around. You're still going to see her,

Robert J. Marcus: Traumatic Lee Underpenetrated population to begin with and then on top of that you have the accelerated impact of therapy.

Speaker Change: Appreciate that thank you.

Speaker Change: The next question comes from Richard <unk> with <unk> Securities. Please go ahead.

Richard: Hi, Thanks for taking the questions and congrats on a really strong finish to the year.

Michael F. Mahoney: Yeah, but we won't get to see her. I'll work my way in. We'll work our way in once in a while. We're excited for John to come in and Lauren to move out.

Richard: Thanks, Mike My first my first question.

Richard: Just going back to <unk>.

Richard: At your Analyst Day, you had you had talked to you know an expectation in that level of confidence that you could disrupt that market in the U S Railroad relatively quickly out of the gate I'm just curious.

Michael F. Mahoney: No, we're excited for Lauren to go to urology. Yes, so to answer your question... We are fully committed to the 8-10% organic growth CAGR over the 24-26 period that we provided for investor day. Absolutely no change in that outlook, and I'm pleased with the 23 performance, as you know where we grew 12. So absolutely no change to those financial goals. You know, Accurate continues to do well in Europe. It's a product that's used every day by many European physicians, and we're excited about getting the larger size approved there.

Richard: You don't get something approaching 20% share of the market over time, which is what you've done.

Richard: In other markets with infrastructure capabilities and I'm, just curious does anything change there with the indeterminate kind of a view of what the next steps are for the U S. I'm just trying to focus on that commentary a bit does your outlook for the franchise in the U S change.

Michael F. Mahoney: We are disappointed that we didn't get an accurate over-the-goal line for approval in 2024, so at this point, we need to wait until the full data sets have been followed up for a year and read out likely before the end of this year in 2024, and we'll take it from there in terms of the U.S. launch. But we are disappointed we're not going to launch that at the very end of this year and into next, but absolutely no change to our financial guidance that we gave at Investor Day. Okay, great. And also, welcome, John. Sorry, I didn't mean to do that.

Speaker Change: <unk> and then I have a follow up.

Speaker Change: Yes, just a few clarifying points again in Europe, where we set the 70000 valves and physicians use it routinely on an everyday basis, we continue to grow faster than the market there and have continued to done that for.

Speaker Change: I don't know 10 quarters in a row.

Speaker Change: So we make nice progress.

Speaker Change: We are excited about getting the large valve size are approved in Europe.

Speaker Change: I believe in 2025 is the time period in the U S. You know honestly, we first of all I would state that we have never quoted a market share goal.

Speaker Change: <unk> in the U S. So we never set 'twenty.

Speaker Change: Im not sure if that was what you put in your models or not.

Danielle Antalffy: Thanks a lot, guys. Thanks, Danielle. The next question comes from Travis Steed with Bank of America. Please go ahead.

Speaker Change: But based on the results that we've seen in Europe, we've always been confident in our ability to have accurate be a meaningful growth driver in the U S. As we stated at Investor Day.

Travis Steed: Hey, thanks for taking the question. Maybe one more follow-up on TAVR. Can you remind us what the interim look was?

Speaker Change: As a result of this we are disappointed that we're not going to have this launched in 2024.

Travis Steed: Was that just like a six-month look at the data? Now do you need to wait for one-year data for the line to separate? And I'm curious if you think what you saw in the interim looks, are you still pretty confident that at one year we could have a U.S. TAVR launch? Or does this put the whole U.S. TAVR launch at risk? John, are you able to hear us okay? Yeah, I can hear you loud and clear.

Speaker Change: As we talked about based on the data that we just highlighted in the script and as <unk> mentioned, we now need to wait for the full year data the full one year follow up on the 59 patients.

Speaker Change: And then working with the FDA and submitting that in having a data readout.

Speaker Change: By year end 2024, and we will take it from there so.

Travis Steed: Great. Dr. Osanthanathan is our chief medical officer, as you know, for ICTX and structural heart. Maybe he could comment a bit?

As <unk> said the trial still active so.

Speaker Change: We do not expect any of this news to alter our 8% to 10% organic growth over the three year period, we're coming off of 12, we continue to grow faster than most all of our peers and drop EPS faster than our peer group.

Speaker: Yeah, I'll take a comment just about the data. So essentially, what happened in the trial was that, as part of a planned interim analysis, we made the decision to await the full one year data. It is important just to note that the accurate ID study is still an active clinical study with active clinical follow-up. As a result, we cannot disclose any data related to the trial at this time.

Speaker Change: And we're still very committed to those financial targets.

Speaker Change: And we're hopeful that accurate will continue to be a big growth driver for us, but a lot of it depends on that data readout.

Speaker: We will expect, as Mike said, a readout of the study in the second half of 2024, following a full data route. Great, thank you. The next question comes from Josh Jennings with T.D. Cowan.

Speaker Change: And fourth quarter 'twenty four.

Speaker Change: Okay. Thanks for that and then maybe just on M&A you know you've been you've been active in 2023 and congrats on a really didn't and putting more recently axon ex early this year I'm just curious on kind of how we should think about how aggressive and opportunistic there'll be over the next 12 months you mentioned.

Josh Jennings: Please go ahead. Good morning. Thanks for taking the questions and congratulations for a strong end of the year. Wanted to ask about the international cardiac ablation market. Boston's incredible fourth quarter 40 plus percent growth some of your competitors delivered really strong international growth in their electrophysiology businesses as well. What's going on in the international market? I mean, are we seeing the promise of PFA driving market expansion this early, or is there some pricing dynamics going on?

Speaker Change: Obviously your first priority remains.

Speaker Change: Deploying capital for tuck ins, but do we kind of think of you guys and a little bit of a digestion period or or kind of steady as she goes just as aggressive and opportunistic as you have been in the past.

Speaker Change: Sure I can take that one so as you mentioned Exxon X. The most recent deal we did super pleased with that I think that is a classic tuck in for Boston scientific it's Oh.

Kenneth Stein: But I think it's 20% market growth internationally for credit completion this year. I just want to get some details there and whether that could translate to PFA launches in the United States driving market expansion, which I think you guys have detailed in your investor day. Thanks for taking the question. Dr. Stein, you want to take a shot at it? Yeah, Josh.

Speaker Change: It's one I think as you look back these types of deals, we really do well with them. We're super excited to have that close and welcome the Exxon X team into the the Bse family as you said, we've been remarkably consistent over a long period of time tuck in M&A is still the number one capital allocation priority for us and we will continue to be active in terms of the how active.

Speaker Change: Over the near to medium term. This is not a major event like a major Delevering event, then we need to do this is take on a little bit of additional debt.

Speaker Change: Debt over a period of time, and then over a very reasonable period of time.

Kenneth Stein: Thanks, Mike. I think there are a couple of factors here, and I don't think it's, I don't know that I can parse out for you, you know, how much is getting contributed from each. But again, I think we just begin with the fact, right, that atrial fibrillation is an incredibly common arrhythmia. Again, as I said earlier, it is literally a pandemic worldwide. I know, for instance, in the US, a quarter of adults over the age of 40 will experience AFib at some point in their lives. And ablation, even with legacy thermal technology. Stable Point or Polar X is incredibly effective; it's more effective than drugs. But on a global scale, it is still very effective, really incredibly underpenetrated as a market, and much of the growth that you see really just reflects, I think, an increasing realization in the cardiology community, the referring physician community about the relative efficacy and safety of all ablation technologies, and then you layer on top of that the promise and the data with TheraPulse, right, and TheraPuls So maybe a long-winded answer, but the short answer is that it's both a dramatically underpenetrated population to begin with, and then on top of that, you have the accelerated impact of testosterone.

Speaker Change: We'll be right back to where we are today relative to our our leverage goals. So I'd look at it I look for us to continue to be active in the tuck in M&A space.

Speaker Change: In 'twenty four and beyond.

Okay again, congrats on an outstanding <unk>.

Speaker Change: Thank you. Thank you.

Speaker Change: The next question comes from Patrick Wood with Morgan Stanley. Please go ahead.

Patrick Wood: Amazing. Thank you for taking the question and congrats on I'm going to stick with axon, except I'm, sorry, Ed I appreciate it hasn't closed yet, but I'm just kind of curious.

Patrick Wood: Urology <unk> Boston has a very sizeable distribution network across I guess, primarily stone management, but a whole bunch of different areas, how youre thinking about the ability to drive adoption and L. B foster and like really pushed out asset.

Patrick Wood: <unk>, having just play with the numbers and correct me, if I'm wrong, but as some assumption of slightly foster growth once you've acquired.

Patrick Wood: Sonic Sandy Street previously had and that at least that's where I end up with the numbers feel free to correct me, but how are you thinking about the commercialization really pushing that through the distribution network. Thanks.

Speaker Change: Sure well, we haven't closed yet we hope to first half of this year.

Speaker Change: Yeah.

Speaker Change: The team at our axon has done an amazing job with this platform since starting the company years ago.

Speaker Change: And taking significant share in what is a strong double digit growth market.

Speaker Change: The team at <unk> tonics.

Kenneth Stein: I appreciate that. Thank you. The next question comes from Richard Newitor with Truist Securities. Please go ahead.

Speaker Change: Speak too much for them. It Hasnt closed yet is also done a remarkable job in a few areas. One that just the core technology, where they've gained leverage that to gain share the.

Richard Newitor: Hi, thanks for taking the questions and congrats on a really strong finish to the year. My first question is just going back to TAVR. At your analyst day, you had talked about the expectation and level of confidence that you could disrupt that market in the U.S. relatively quickly out of the gate. I'm just curious if, you know, I can get something approaching a 20 percent share of the market over time, which is what you've done, you know, in other markets with your disruption capabilities. I'm just curious, does anything change there with the indeterminate kind of view of what the next steps are for the U.S.? I'm just trying to focus on that commentary a bit, you know; does your outlook for the franchise in the U.S. change with TAVR? And then I have a follow-up. Yeah, just a few clarifying points.

Speaker Change: The clinical data that they have the commercial excellence that they possess and also expanding the market through their direct to patient marketing and awareness. So this is a significant global opportunity and the patient awareness of this treatment is still early days and so that's one reason why we acquired the company.

Speaker Change: Was the momentum they have the technology and the long term market cater that we see based on the global opportunity. The market today is nearly all U S. That's something we'll evaluate.

Speaker Change: More in the future here as to whether it makes sense for us to bring this to.

Speaker Change: Select markets outside the U S. Given the data that we have as you mentioned we have.

Speaker Change: A significant commercial channel in our urology business through all of our different business units within urology. So this is a ideal fit it.

Michael F. Mahoney: Again, in Europe, where we have 70,000 valves and physicians use them routinely on an everyday basis, we continue to grow faster than the market there and have continued to do so for, I don't know, 10 quarters in a row. So we make nice progress, and we're excited about getting the large valve size approved in Europe. I believe 2025 is the time period. In the US, you know, honestly, we, first of all, I would state that we've never quoted a market share goal for TAVR in the US. So we never set 20.

Speaker Change: It is an adjacency for us we don't have any competitive product.

Speaker Change: This area. So it's a nice adjacency for us that will allow us to compete more comprehensively with urology customers, but.

We aim to.

Speaker Change: You know take Exxon next level, but that team has done a terrific job to date.

Speaker Change: Amazing Thanks for taking the question.

Speaker Change: Sure.

Speaker Change: And just to verify do we have time for one more question.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: And please keep that question will come from Michael Hallmark with Wolfe Research. Please go ahead.

Michael F. Mahoney: Hey, good morning, Thanks for sneaking me in I'll ask a gross margin question, Dan I heard in the script for 24 flat to maybe slightly down.

Michael F. Mahoney: I'm not sure if that's what you put in your models or not, but based on the results that we've seen in Europe, we've always been confident in our ability to have Acura be a meaningful growth driver in the US, as we stated at investor day. You know, as a result of this, we are disappointed that, as we talked about based on the data that we just highlighted in the script, we're not going to have this launched in 2024. And as Janar mentioned, we now need to wait for the full year data, the full one year follow-up on the 1500 patients. And then working with the FDA and submitting that and having a data readout, you know, by year-end 2024, and we'll take it from there. So we, as Janar said, the trial is still active. So we do not expect any of this news to alter our 8 to 10% organic growth over the three-year period. We're coming off of 12.

Michael F. Mahoney: Year on year in the guide.

Speaker Change: The world seems to be calmer on price cost, but as we all know that.

Middle East is flaring and so I'm curious one have you built in any cushion for kind of.

Speaker Change: Cost push from those events and to in real time or are you are you seeing any impact in the field and if so what does that look like.

Speaker Change: Yeah, I can give you the short answer and a little bit longer answer so the short one is.

That we've contemplated all that our team is super close to everything relative to our global supply chain our net.

Speaker Change: Network and so there.

Speaker Change: Everything that we have in the guidance that we gave contemplates what we know today and what the guidance that that theyre, giving us on that which does impact us is minimal.

Speaker Change: Overall on gross margin, but a little bit longer answer.

Speaker Change: If you look at 'twenty three we came in pretty much right, where we expected at that 77% and then as we said at the Investor Day in September we said it would be challenge to contribute to our margin expansion goals in 'twenty four right, which is that's probably going to prove out to be true because we're saying will be either at or slightly below.

Michael F. Mahoney: We continue to grow faster than most of our peers and drop EPS faster than our peer group. And we're still very committed to those financial targets. And we're hopeful that Accurate will continue to be a big road driver for us, but a lot of it depends on that data readout and Fourth Quarter 24. Okay, thanks for that.

But that's that's okay. As there are many other areas of the P&L and as you know we have a pretty solid track record over time of managing all of those lines of the P&L to drive margin expansion. Most recently that 70 basis points last year. So for 24, I'd kind of point to two headwinds in <unk> that'll that'll.

Richard Newitor: And then maybe just on M&A, you know, you've been active in 2023 and congrats on Relievint and more recently Axonix early this year. I'm just curious about kind of how we should think about, you know, how aggressive and opportunistic you'll be over the next 12 months. You mentioned, obviously, your first priority remains deploying capital for Tuckins, you know, but do we kind of think of you guys in a little bit of a digestion period or, kind of steady as she goes, just as aggressive and opportunistic as you have been in the past? Sure, I can take that one.

Speaker Change: That will play out and again have us at that kind of at or slightly below the 77, we put up last year.

Speaker Change: And one is inflation and so that's probably a little bit of a tailwind right. So the macro factors are improving.

Speaker Change: In general relative to inflation and other things, but as a reminder, we enter into contracts for many elements of materials for 2024 already last year. So we don't want to see that full benefit but in 'twenty five and 26 I'd like to believe there's even more benefit there not only from from it from the macro side of inflation, but also for gross margin in total.

Daniel Brennan: So, as you mentioned, Axonix, the most recent deal we did, super pleased with that. I think that is a classic tuck-in for Boston Scientific. It's one, I think, as you look back, these types of deals we really do well with, and we're super excited to have that close relationship and welcome the Axonix team into the BSE family. As you said, we've been remarkably consistent over a long period of time. Tuck-in M&A is still the number one capital allocation priority for us, and we'll continue to be active. In terms of how active over the near to medium term, this is not a major event, like a major delevering event that we need to do.

Speaker Change: And then our mix.

Speaker Change: You know getting the Ferro pulse approval today, that's exciting because.

Speaker Change: That's a great mix thing for the company and many of our other launches are as well and then on the headwind side Foreign exchange was a headwind in 'twenty three continue in 'twenty four and as I said at Investor Day, a good problem to have but we also need to make investments in manufacturing capacity to support the sales growth growing 12 last year and then eight to nine this year, but.

Daniel Brennan: This is to take on a little bit of additional debt over a period of time, and then, over a very reasonable period of time, we'll be right back to where we are today relative to our leverage goals. So, I'd look for us to continue to be active in the tuck-in M&A space in 24 and beyond. Okay, again, congrats on an outstanding 4Q.

Speaker Change: We're absolutely committed to the 150 basis points over three years gross margin probably won't pay a lot of bills for US 24, but I think it's certainly well in 25 and 26, you know recall, we used to be north of 72% back in 2019, and we are maniacally focused to get there and then to get the overall operating margin.

Patrick Wood: Thank you. Thank you. The next question comes from Patrick Wood with Morgan Stanley. Please go ahead.

On the doorstep of 28, when we get to 2026 and that puts that 30% long term goal that we've had kind of right on our line of sight as were in 2026.

Patrick Wood: Amazing. Thank you for taking the question. And congrats, Lauren. I'd like to stick with Axonics, if that's all right.

Speaker Change: Thank you.

Michael F. Mahoney: I appreciate it hasn't closed yet. But I'm just kind of curious, urology, you know, Boston has a very sizable distribution network across, I guess, primarily stone management, but a whole bunch of different areas. How are you thinking about, you know, the ability to drive adoption in OAB faster and really push that asset? I'm guessing, you know, having just played with the numbers, and correct me if I'm wrong, but as some assumption of slightly faster growth once you've acquired Axonics and the street previously had in there? At least that's where I end up with the numbers. Feel free to correct me. But how are you thinking about commercialization really pushing that through the distribution network? Thanks. Sure. Well, we haven't closed it yet. We hope to in the first half this year.

Okay.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Thanks for joining us today, we appreciate your interest in Boston scientific if we were unable to get to your question or if you have any follow ups. Please don't hesitate to reach out to the Investor Relations team before you disconnect drew will give you all of the pertinent details for replay.

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Speaker Change: Please note a recording will be available in one hour by dialing either 187734475 to nine or one for 12317008 H using replay code to 3943.

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Speaker Change: Okay.

Michael F. Mahoney: You know, The team at Axtonics has done an amazing job with this platform since starting the company years ago to take a significant share in what is a strong double-digit growth market. The team at Axtonics, we can't speak too much for them, because it hasn't closed yet, has also done a remarkable job in a few areas, one in just the core technology, where they've leveraged that to gain share, the clinical data that they have, the commercial excellence that they possess, and also expanding the market through their direct-to-patient marketing and awareness. So this is a significant global opportunity, and patient awareness of this treatment is still in the early days, and so that's one reason why we acquired the company: the momentum they have, the technology, and the long-term market that we see based on the global opportunity.

Speaker Change: Okay.

Speaker Change: [music].

Michael F. Mahoney: The market today is nearly all U.S., so that's something we'll evaluate more in the future here as to whether it makes sense for us to bring this to select markets outside the U.S. given the data that we have. As you mentioned, we have a significant commercial channel in our urology business through all of our different business units within urology. So this is an ideal fit. It is an adjacency for us. We don't have any competitive products in this area.

Michael F. Mahoney: So it's a nice adjacency for us that will allow us to compete more comprehensively with urology customers. But we aim to take exotics to the next level, but that team has done a terrific job to date. Amazing.

Patrick Wood: Thanks for taking the question. Sure. And just to verify, do we have time for one more question? Yes, one last question, please. Okay, that question will come from Michael Polark with Wolf Research. Please go ahead. Good morning.

Michael K. Polark: Thanks for sneaking me in. I'll ask you a gross margin question. Dan, I heard in the script for 24 flat to maybe slightly down year on year in the guide. The world seems to be calmer on price-cost, but, as we all know, the Middle East is flaring, and so I'm curious, one, have you built in any cushion for kind of cost push from those events into real time; are you seeing any impact in the field? And, if so, what does that look like? I can give you the So the short one is that we've contemplated all that. Our team is super close to everything relative to our global supply chain network.

Daniel Brennan: And so everything that we have in the guidance that we gave contemplates what we know today and the guidance that they're giving us on that, of which the impact is minimal. Overall, on gross margin, the little bit longer answer, you know, if you look at 23, we came in pretty much right where we expected at that 70.7%. And then, as we said at investor day in September, we said it would be, you know, challenged to contribute to our margin expansion goals in 24, which is probably going to prove out to be true, because we're saying we'll be either at or slightly below. But that's okay.

Daniel Brennan: There are many other areas of the P&L, and as you know, we have a pretty solid track record over time of managing all those lines of the P&L to drive margin expansion. Most recently, that 70 basis points last year. So for 24, I'd kind of point to two headwinds and two tailwinds that'll play out and again have us at that kind of at or slightly below the 70.7 we put up last year. And one is inflation. And that's probably a little bit of a tailwind, right?

Daniel Brennan: So the macro factors are improving in general relative to inflation and other things. But as a reminder, we entered into contracts for many elements of materials for 2024 already last year. So we don't see that full benefit. But in 25 and 26, I'd like to believe there's even more benefit there, not only from the macro side of inflation but also for gross margin in total. And then our mix. So, you know, getting Faro Pulse approval today is exciting because that's a great mix thing for the company, and many of our other launches are as well. And then on the headwind side, foreign exchange was a headwind in 23, and it continued in 24.

Daniel Brennan: And as I said, it's a good problem to have, but we also need to make investments in manufacturing capacity to support the sales growth, growing 12 last year and then 8 to 9 this year. But we're absolutely committed to the 150 basis points over three years. Gross margin probably won't pay a lot of bills for us in 24, but I think it certainly will in 25 and 26.

Daniel Brennan: You know, recall, we used to be north of 72% back in 2019. And we are maniacally focused on getting there and then to get the overall operating margin, you know, kind of on the doorstep of 28 when we get to 2026. And that puts that 30% long-term goal that we've had kind of right in our line of sight as we're in 2026. Thank you. Thanks for joining us today. We appreciate your interest in Boston Scientific. If we were unable to get to your question or if you have any follow-ups, please don't hesitate to reach out to the Investor Relations team. Before you disconnect, Drew will give you all of the pertinent details for your replay. Thank you. Please note that a recording will be available for one hour by dialing either 1-877-344-7529 or 1-412-317-0088 using replay code 2394361 until February 7, 2024 at 11:59 p.m. Eastern Time. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: .... G. L. Z. A. M. S. F. S. E. V. A. M. S. F. S. F. F. B. H. H. S. F. O. S. F. O. S. F. BF-WATCH TV 2021