Q1 2025 Boston Scientific Corp Earnings Call
strikes back in B对了, Michael Mahoney strikes back in B Thank you.
Speaker Change: Good morning and welcome to the Boston Scientific First Quarter 2025 earnings call. All participants will be in listen only mode. Should you need assistance? Please signly conference specialist by pressing star, then zero on your telephone keypad.
Speaker Change: After today's presentation there will be an opportunity to ask questions.
Speaker Change: To ask a question, you may press star than one on your telephone keypad. [inaudible]
Speaker Change: To withdraw your question, please press star of the two. Please note this event is being recorded. I would now like to turn the conference over to John Monson, senior vice president, investor relations. Please go ahead.
John Monson: Thank you Drew, and thanks everyone for joining us. With me today are Mike Mahoney, Chairman and Chief Executive Officer, and Dan Brennan, Executive Vice President and Chief Financial Officer. During the Q&A session, Mike and Dan will be joined by our Chief Medical Officer, Dr. Ken Stein.
John Monson: Please note, on the call, all operational revenue excludes the impact of foreign currency fluctuations, and organic revenue further excludes certain acquisitions and investitures for which there are less than a full period of comparable net sales.
John Monson: Guidance excludes the previously announced agreement to acquire Sonnevee and Interra Oncology, which are expected to close during the second quarter of 2025, subject to customary closing conditions.
John Monson: For more information, please refer to the Q1 Financial and Operational Highlights deck, which may be found on the Investor Relations section of our website.
John Monson: On this call, all references to sales and revenue are organic and relative growth is compared to the same quarter of the prior year unless otherwise specified.
John Monson: This call contains forward-looking statements regarding, among other things, our financial performance, business plans, and product performance and development. These statements are based on our current beliefs using information available to us as of today's date, and are not intended to be guarantees of future events or performance.
John Monson: If our underlying assumptions turn out to be incorrect, or certain risks or uncertainties materialized, actual results could vary materially from those projected by the forward-looking statements.
John Monson: Factors that may cause such differences are discussed in our periodic reports.
John Monson: and other filings with the SEC, including the risk factor section of our most recent inter-report on Formfeng K.
John Monson: Disclaves any intention or obligation to update these forward-looking statements, except as required by law. So at this point, I'll turn the call over to Mike. Mike. Thanks, John . Thank you everyone for joining us today. In Q1, we delivered excellent results. All while we continue to invest in our highly innovative portfolio and capabilities.
Speaker Change: Importantly, we remain excited about our near-and-long-term growth catalyst, which we believe will enable us to deliver on our fundamental aim of driving consistent differentiated performance this year and well beyond.
Speaker Change: In first quarter 25, total company operational sales grew 22% and organic sales grew 18%. Both exceeding the high end of our guidance range of 14 to 16%.
Speaker Change: Our strong growth continues to reflect the durability of our category leadership strategy, which is powered to the meaningful innovation, clinical evidence generation, and the winning spirit of our highly engaged global team.
Speaker Change: First quarter, adjusted EPS of 75 cents, grew 34%, exceeding the high end of our guidance range of 66 to 68 cents.
First quarter adjusted operative margin was 28.9%
Speaker Change: Turn into our second quarter and full year 25 outlook. We are guiding to our organic growth of 13 to 15% for the second quarter 25.
Speaker Change: Our second quarter adjusted EPS guidance of 71 to 73 cents, and we expect our full year adjusted EPS.
Speaker Change: To be 287 to 294, which represents growth of 14 to 17 percent.
Speaker Change: This also includes an approximate 200 million impact from terrorists, based on the information that is available today, which we expect to offset through sales upside and smart reductions in discretionary spending.
Dale will provide more details on this within the financials.
Speaker Change: We remain committed to our diversified global manufacturing footprint, investing across all regions and notably within the US, where we recently opened our new site in Georgia, and continued to increase our Minnesota manufacturing capacity and footprint to support long-term growth.
Speaker Change: I'll now provide some additional highlights on our first quarter results.
Speaker Change: Regionally, on an operational basis, the US grew 31% with double-digit growth in five of our eight business units.
Speaker Change: Made way through Q1, we crossed the one-year mark of the U.S. Phara Paul's launch, in the 10-year anniversary of Watchman's approval.
Speaker Change: To clinically impactful technologies that have helped to transform the growth profile of Boston Scientific.
Speaker Change: Europe Middle East and Africa grew 8% in an operational basis.
Speaker Change: This above-market growth was led by exceptional performance in EP, as well as double-digit growth in our anchor technologies across the broader portfolio, including complex PCI,
Asia-Pacific grew 11% operationally, led by double-digit growth in Japan.
Speaker Change: Japan's on track to have an actual year led by strong ferry pulse uptake. We continue to anticipate launching ferry wave nav and ferry view in the second half of the year.
Speaker Change: China also delivered high single-digit growth of a very tough 42% growth comp in first quarter 24 and we anticipate to deliver double-digit growth despite ongoing BBP pricing impacts in China.
Speaker Change: Obama provides an additional comment to our business units.
Speaker Change: As a reminder, we did have one less sell-and-day in the first quarter of 25, which impacted our growth by approximately 200 basis points.
Speaker Change: Duralogy Sales Group, 25% in Operational Basis, and 4% of Antiquate.
Speaker Change: Growth in the quarter is driven by a course stone franchise, and we're pleased that completed our first assurice fluid management case in Chile.
The service system is part of our interconnected StoneSmart ecosystem.
Speaker Change: Let me expect you as clearance in the second half of 25.
Speaker Change: Looking ahead, we continue to be excited by the differentiated value axonics brings that our ability to more broadly serve our customers. As we are pleased with the integration progress to date.
Speaker Change: Endoscopy sales through 6% both operationally and organically, with balance growth recently and across our deep broad and deep portfolio.
Speaker Change: We continue to see sustained double-digit performance with a clinically different shield to Axios platform, as well as double-digit growth of both over-stitch and mantis clip, two very innovative technologies in our growing endoluminal surgery franchise.
Speaker Change: Neuromodulation sales grew 7% in the first quarter, with mid-single-digit growth in our brain franchise and high-single-digit growth in our pain franchise . . . . . . . .
Speaker Change: Within DBS, we saw a proven growth exit in the quarter driven by early contribution, the launch of our Cartagio Leads and Acceleration Volumina 3D Programming Algorithm in the U.S.
Thank you.
Speaker Change: with our Painport Folio Intercept Group's long double digits, and we continue to see robust demand underpin my five-year data demonstrating the long-term efficacy and cost-effectiveness of this treatment.
Cardiology delivered another fantastic quarter, with sales growing 31%
Within cardiology, interventional cardiology therapies, sales through an impressive 9%
Speaker Change: In coronary therapies was driven globally by double digit growth in our imaging and franchise and excellent performance from a novel agent DCB technology.
Speaker Change: In the US, Agent DCB Momentum was fueled by strong reorder rates and new account openings.
Speaker Change: With additional reimbursement established in the outpatient setting as of January and incremental inpatient reimbursement expected to be followed later this year.
Within the quarter, we're also pleased.
Speaker Change: To present there will be these ability results of our vitalist circuitory support system
Speaker Change: With data demonstrating positive relief experience and 100% technical success rate.
Speaker Change: In addition, we recently announced our agreement to choir Sony V, which has developed a clinical stage differentiated ultrasound based renal denervation technology.
Speaker Change: We look forward to closing this acquisition, which we expect in Q2 this year.
Speaker Change: Watchman drew 24% this quarter reflecting robust market growth and an increase in our market share driven by strong can comment and uptake
Speaker Change: with over half of our USEP and planting customers. Now I've been performing at least one kick-home in the procedure.
Speaker Change: We continue investing global clinical evidence, most recently initiating the option A trial in Asia Pacific, assessing the effectiveness of therapist and watchman in a concomitant procedure.
Speaker Change: Within the quarter in the U.S. we complete the full conversion to Watson Flex Pro, which is our third generation in market leading technology, and we remain committed to increasing patient awareness and advancing physician training and workflow optimization.
Speaker Change: Looking ahead, we expect the U.S. label update for Watchmen as a first line alternative to OACs in post-ablation patients in the second half of 25, and a champion AFD to read out in the first half of 26.
Speaker Change: cardiac rhythm management sales grew 1% in the first quarter. Our diagnostics franchise grew high single digits, led by double digit growth and our Lex DX category.
Speaker Change: Of course, the RM are low voltage business through high single digits and the high voltage business decline low single digits [inaudible]
Speaker Change: We've expanded our connection system, pasting and offering with the recent launch of next-gen lead delivery catheters which will provide positions with additional tools to target the left one will branch area of the heart.
Speaker Change: And further, we anticipate after the approval of the Empowered Legalist Pace Maker at the second half of 25.
Let's have physiology sales through 145% [inaudible]
Speaker Change: With fantastic performance across the globe, globally we are now the number two clear player in EP and we tend to continue to expand our leadership position in PFA through clinical evidence, next generation innovation, new offerings to full portfolio gaps and commercial capabilities.
Thank you.
Speaker Change: Within the quarter, we saw high commercial demand for parapults, with strong sales and established accounts and a rapid new account opening that the global market continues to convert to PFA given the compelling safety efficacy and efficiency profile.
Speaker Change: And here earlier this month's results from the investigator sponsored single-shot champion clinical trial demonstrate that parapults achieve superior effectiveness for the treatment of symptomatic, paroxysmal, fixtismal AF versus chryolation.
Speaker Change: Importantly, this is the first perspective randomized demonstration of PFA superiority over any thermal oblation modality.
Speaker Change: We also continue to see strong adoption of our OPAL HDX integrated mapping solution.
Speaker Change: which provides operators enhanced visualization and confirmation of post-field applications.
Speaker Change: In first quarter, we completed enrollment in the Abigart trial, which studies a new patient population of drug naive persistent AAP patients.
Speaker Change: We also initiated the complete of the first human case in the elevate PF trial, studying the Fairflex Plak catheter.
Speaker Change: Research, which is our large focal-high density map and a blake catheter that integrates with the Opal HDX mapping system.
Speaker Change: In tomorrow, data from the Advantage Phase 2 trials, studying fairer point, will be read out at the PFA live case summit ahead of HRS.
Speaker Change: Center, which we expect to support US at the approval by year end 25.
Speaker Change: Also, peripheral mentions grew in a press of 60% operationally in 7% organically. [inaudible]
Speaker Change: Our interventional oncology and embolization franchise through double digits across the Portfolio, driven by a broad offering of embolization devices and cancer therapy technologies.
Speaker Change: In the quarter, we received FDA approval to expand the patient population and study additional areas in the brain in the frontier trial and early feasibility study for the use of their sphere to treat reoccurrent Cleo Blastoma.
Speaker Change: We look forward to expanding our portfolio of offerings in this high growth space and continue to expect acquisition of a terror oncology to close the second quarter of 25.
Speaker Change: Within our vascular franchise, we saw mid-single-digit growth in arterial and double-digit growth in venous and first-quarter, and earlier this month to be completely that acquisition of Bolt Medical, and also received FDA clearance of the IVL system for above the knee indication.
Speaker Change: We aim to initiate a limited launch by the end of 25 as we ramped supply following the acquisition close and earlier than anticipated regulatory approval.
Speaker Change: And the coronary found we continue to progress the fracture trial, now having her old patients in the U.S.
Speaker Change: Before I turn the call over, as you saw in our press release this morning, Dan Brennan has decided to retire from Boston Scientific.
Speaker Change: After an outstanding 30 year career, including the last 12 years as our CFO , who will be succeeded by John Monson, who you know from his time leading investor relations at the end of June this year.
Warren Tangler, who returned to investor relations and succeed John . [inaudible]
Speaker Change: I would like to personally thank Dan for his leadership, his great friendship, and his many contributions over his remarkable career.
Speaker Change: Dan has been instrumental in transforming the trajectory of our financial formants and building the strong culture and values that are embedded throughout Boston Scientific
Thank you, Dan.
Speaker Change: In closing, I'm grateful to our talented team of global employees who work every day to advance science for life and I'm confident in the sustainability of our top tier financial performance.
Speaker Change: Records, for that, I'll turn over to Dan. Thanks, Mike, and thanks for the kind words.
Dan Brennan: First Quarter Consolidated Revenue of $4,663,000,000, represents 20.9% reported growth versus first quarter 2024, and includes a 130 basis point headwind from foreign exchange, which was unfavorable versus her expectations.
Dan Brennan: Excluding this $49 million foreign exchange headwind, operational revenue growth was 22.2% in the quarter.
Dan Brennan: Sales impact from closed acquisitions contributed 400 basis points, resulting in 18.2% organic revenue growth, exceeding our first quarter guidance range of 14% to 16%.
Dan Brennan: Q-1 2025, adjusted earnings per share of 75 cents, grew 34% versus 2024, exceeding the high end of our guidance range of 66 to 68 cents, primarily driven by our strong sales performance in the quarter
Dan Brennan: Adjust the gross margin for the first quarter was 71.5%, which represents a 170 basis point improvement versus the first quarter of 2024. This strong performance was primarily driven by favorable product mix in the quarter.
Dan Brennan: First quarter, adjusted operating margin was 28.9%, this was favorable to our expectations due to our strong gross margin performance and timing of internal investments planned for the year. [inaudible]
Dan Brennan: On a gap basis, first quarter operating margin was 19.8%. Moving to below the line, first quarter adjusted interest and other expenses told $106 million.
Dan Brennan: On an adjusted basis, our tax rate for the first quarter was 9.8%, which includes favourable discrete tax items related to the benefit from stock compensation accounting.
Dan Brennan: Our operational tax rate was 13.6% for the quarter. Fully diluted weighted average shares outstanding ended at 1,493 million shares in the first quarter.
Free cash flow for the first quarter was $354 million.
Dan Brennan: With $541 million from operating activities, less $187 million in net capital expenditures.
Dan Brennan: We continue to expect full year 2025 free cash flow to be in excess of $3 billion dollars.
Dan Brennan: As of March 31, 2025, we had cash on hand of $725 million dollars.
Dan Brennan: We use one billion of the $1.5 billion Euro-denominated senior note offering completed on February 26th to repay approximately $1 billion of Euro-denominated notes.
Dan Brennan: That matured in March, 2025. During the quarter, we were pleased to receive credit rating upgrades to single A minus from both standard and pours and pitch ratings. Our gross debt leverage ratio was 2.2 times.
Dan Brennan: Our top cap of the allocation priority remains strategic tuck-in M&Ed, followed by annual Sherry purchase.
Dan Brennan: In alignment with the strategy, we recently closed the acquisition of Bolt Medical, which complements our existing interventional cardiology and peripheral portfolios. We expect to offset the associated earnings-per-shared dilution through internal cost efficiencies and trade-offs. We expect to offset the associated earnings-per-shared dilution through internal cost efficiencies and trade-offs.
Dan Brennan: Our legal reserve was $316 million as of March 31st, with $48 million of this reserve already funded to our qualified settlement funds.
Dan Brennan: I'll now walk through guidance for Q2 and full year 2025.
Dan Brennan: We now expect full year 2025 reported revenue growth to be in a range of 15% to 17% versus 2024.
Dan Brennan: Excluding an approximate 50 basis point headwind from foreign exchange based on current rates, we expect full year 2025 operational growth to be in a range of 15 and a half to 17 and a half percent
Dan Brennan: Excluding a 350 basis point contribution from closed acquisitions, we expect full year 2025 organic revenue growth to be in a range of 12% to 14% versus 2024
Dan Brennan: We expect second quarter 2025 reported revenue growth to be in a range of 17.5 to 19.5% with a neutral impact from foreign exchange based on current rates.
Dan Brennan: Excluding a 450 basis point contribution from closed acquisitions, we expect second quarter 2025 organic revenue growth to be in a range of 13% to 15% versus 2024.
Dan Brennan: We now expect full year adjusted gross margin to be roughly in line with 2024, reflecting the impact of newly enacted tariffs. Despite this headwind, we remain on track to deliver 50 to 75 basis points of adjusted operating margin expansion for the year.
Dan Brennan: We continue to expect full year 2025 adjusted below line expenses to be approximately $425 million.
Dan Brennan: Under current legislation, including an acted laws and issued guidance, we continue to forecast a full year 2025 operational tax rate of approximately 13.5% and an adjusted tax rate of approximately 12.5% and an adjusted tax rate of approximately 12.5% and an adjusted tax rate of approximately 12.5% and an adjusted tax rate of approximately 12.5%
Dan Brennan: We expect full-year adjusted earnings per share to be in a range of $2.87 to $2.94, representing growth of 14% to 17% versus 2024, including an approximate 4% to 5% headwind from foreign exchange.
Dan Brennan: We expect second quarter adjusted earnings per share to be in a range of 71 to 73 cents.
Dan Brennan: Before I turn it back to John , I want to address the evolving trade environment. With the current schedule of expected tariffs, we forecast an approximate $200 million impact in 2025. We expect to fully offset this $200 million unanticipated headwind.
Dan Brennan: Through our full-year organic sales guidance raise, target discretionary spend reductions, and a 1 cent FX benefit.
Dan Brennan: Additionally, tariffs are capitalized in the inventory and recognized in the P&L over the course of finished goods inventory turns Therefore, the Q2 impact from tariffs will be minimal and we expect to see most of the tariff impact in the second half of the year These effects are fully contemplated in the guidance ranges we are sharing today
Thank you.
Speaker Change: In closing, I'd like to thank my Boston Scientific teammates or the nearly 30 years for making this such an extraordinary place to call home. Special thanks to Mike for choosing me for this rule 12 years ago.
Speaker Change: I've thoroughly enjoyed our collaborations. I'm thrilled for Jon as he assumes the CFO role and I look forward to seeing all the great things he and the team will accomplish for physicians, patients, BSC teammates and investors in the years to come. With that, I'll turn it back to Jon.
Thanks so much, Dan.
Speaker Change: We'll do. Let's open up the questions for the next 40 minutes or so. In order for us to take as many questions as possible, please limit yourself to one question. Drew, please go ahead.
Speaker Change: We will now begin the question and answer session to ask a question you may press star than one on your telephone keypad. If you're using e-speaker phone, please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Again, please submit yourself to one question. At this time we will pause momentarily to assemble our roster.
Speaker Change: The first question comes from Robbie Marcus with JP Morgan. Please go ahead.
Robbie Marcus: Oh great, good morning and congrats on a fantastic quarter. Dan Wuensch, all the best in retirement, and John , congratulations.
I hate to start off...
Speaker Change: On such a great quarter with a tariff question, I'll leave the good performance for others past, but...
Speaker Change: Just on tariffs here, it's really impressive you're able to offset it. It looks like about 11 cents or so by my math. For a half year, how do we think about the ability as you move through the rest of the year to maybe
Speaker Change: You know, how you're thinking about the different buckets of tariffs and your ability to offset them. Thanks a lot.
Speaker Change: Sure, Robbie, just just to be clear. So, as you said, we have a 200 million dollar tariff headwind for 2025. Based on the fact that we capitalized tariffs as you would expect, Q2
Speaker Change: It doesn't have much in the way of incremental tariffs from the recent announced tariffs, so it's mostly a second half challenge
Speaker Change: You know, travel meetings. Actually, we have some programs going there and we're just looking to accelerate those programs to deliver more savings. And then we do get one penny of FX benefits. So the way I look at it is the revenue and the FX kind of offsets half and then the discretionary spend reductions offset the other half. So we're really pleased that we're able to continue the momentum of the company and drive the raise in the revenue guidance range and the raise in the adjusted EPS guidance range relative to moving manufacturing around. We're not making any money. We're not making any money. We're not making any money. We're not making any money.
Speaker Change: Decisions now relative to moving infrastructure or anything around moving manufacturing around the globe, as Mike mentioned.
Speaker Change: We just made some significant investments both in Minnesota and in Georgia in significant capacity and bricks and mortar there so we have a long standing very well optimized supply chain around the globe and not looking to make any changes to that as we sit here today.
Great, thanks a lot.
Speaker Change: The next question comes from Larry Biegelsen with Wells Fargo. Please go ahead.
Larry Beagleson: Good morning, thanks for taking the question and congrats on a really strong quarter. And of course, congratulations to Dan and Jon. Excuse me, Dan, thanks for all your help over the years and I'll miss working with you.
Speaker Change: So Mike, you mentioned that you're now number two in EP and so the market shares look very different in the US and outside the US with the US being much higher.
Speaker Change: So my questions are, Mike, do you think you can overtake J&J to become number one in EP and second, what will it take for the OUS share to catch up to the U.S. share? Thanks . . . .
Speaker Change: We have an excellent momentum broadly around the globe in E.P., so I won't speculate as to, you know,
Speaker Change: We certainly aim to be number one in that business. It'll take a few years to potentially reach that goal, but it's clear what our aim is.
Speaker Change: and a supported based on the clinical science, the breadth and depth of our PSA leadership position that we have in a significant investment that we're making in it around the world.
Speaker Change: The European Business Group, Significant, Quickly, in the first, first quarter 25. And we're really still early days, very early days in China. So China represents, you know, a plus 1 billion dollar market.
and it's an area that we're making significant investments.
Speaker Change: Clinical and Mapping and Capabilities in China, so I think you'll see...
Speaker Change: On-going impact, benefit for us throughout the year in 25 in China, and a much bigger impact in 26 in China. In our Japan team, it really didn't, has done an amazing job of launching Fair Pulse.
and Ricklill, clear number one leader in PFA. Thank you for joining us today.
Despite being the third approval in Japan. [inaudible]
Speaker Change: So we're very impressed with the execution in Japan and the US and in Europe and our China team is really building the blocks now to do the exact same thing in China. So our aim is to continue our leadership in PFA, you see massive adoption to PFA usage and we have a lot of momentum.
All right, thank you so much.
Joanne Wensch: The next question comes from Joanne Wensch with City. Please go ahead.
Good morning, and thank you for taking the question and. [inaudible]
Joanne Wensch: Congratulations to everybody all around. Dan, it's been a real pleasure to work with you over the years. I do want to send a minute or two talking about the Watchman franchise which coached its head back above 20% Euro a year growth and made some comments on concomitant procedures and additional data.
Speaker Change: Center, if you can just unpack that a little bit for us, that'd be great and thank you.
Speaker Change: Thank you for watching. Please subscribe to my channel. I hope to see you again soon. Until then, take care.
Speaker Change: Sure, we had an excellent quarter with Watchmen, it's 24% and then as we said, all of our businesses were impacted by about 200 bips of
Speaker Change: One last day, Salt Sales. So the last sales are excellent, the first quarter and can Stein, can come in a bit more, but we're seeing very strong adoption of can come in it.
Thank you.
Speaker Change: Based on the safety of your profile, ease of use, the benefits for the hospital, the benefits of the patient, the physician, it's really, it's great to see the stars aligned to doing the writing for the patient, the writing for the hospital system.
Speaker Change: And we happen to have the leading product in the LAC category and the leading product in the PFA category. And we actually gain share with LAC in the quarter, which is impressive. And we continue to invest significantly in clinical trials and next-gen products with Watchmen as well.
Speaker Change: So Dr. Stein and the other comments. Yeah, thanks Mike and Joanne, you know, as as Michael is saying, right, what we've really seen over the course of the quarter is, you know, a couple of phenomena. One is the physicians are really now digesting the incredible strength of the data. Yeah.
Speaker Change: from the option Clinical Trial, which is read out last year. We will have more data from option to be presented at the upcoming.
Speaker Change: HRS meeting. People are also, I think, just getting more accustomed to the workflow and really just how straightforward the workflow can be doing at the common procedure, particularly if it's done in
Speaker Change: Conjunction with using pharaoh pulse, people also frankly are also getting used to some of the economic advantages.
Speaker Change: Both to hospitals but also to physicians in doing this procedure in an efficient manner, you know, under the car reimbursement. So, you know, all of that has led. Thank you very much.
Speaker Change: To uptake of concomitant procedures, you know, that has been, you know, frankly faster than we would have expected, say, a quarter or two ago, and just to read over Mike said it's one of those unique things that it's good for patients. [inaudible] you know, you know, you know,
Speaker Change: First of all, avoids the need to have two procedures. It's also good for docs and good for hospitals and good for the system altogether.
Thank you. Thank you.
Thank you very much.
Speaker Change: The next question comes from Rick Wise with seafull. Please go ahead.
Good morning, Mike. Maybe talk if you would about
Speaker Change: Not tar of specifically, but sort of other aspects of the trade wars.
Speaker Change: Potential or current impact on Boston, for example, I've impressed that you still feel like you're going to see double digit.
Speaker Change: Growth in China, but maybe talk to us about the environment and how some of these trade battles are. [inaudible]
Speaker Change: Complicating Boston's performance there, and maybe just related to that, are you concerned at all? Are you anticipating supply chain disruptions or concerns? How are you planning for that? Just talk about those topics. Thank you.
Speaker Change: Sure, well, one is the company's delivered excellent results, top line and bottom line, so our ability to absorb the tariffs I think is more unique than most companies.
Speaker Change: Given the strength of the growth and the leverage that we're driving to absorb the $200 million, which is unfortunate. But we're able to absorb it and still deliver very high performance. [inaudible]
Speaker Change: You know, our operations team is excellent and we have manufacturing across the globe in the world.
Speaker Change: As Dan said, there's no major adjustments other than continuing investment.
Speaker Change: to support the long-term growth of the company. A lot of investments in the US, some in Malaysia, and ones that make sense to facilitate the
Speaker Change: John and Dan, it represents seven or eight percent of our sales approximately.
Speaker Change: And the team there, despite the challenges, does a great job. We expect to deliver double-digit growth again.
Speaker Change: Despite being one of the more impactful VBP impacts for Boston Scientific in 2025 across the P.I. portfolio and some ICTX and some end up. So a lot of VBP pressure there.
Speaker Change: But again, the innovation that we have, some of the local partnerships that we've done in China are proving to be beneficial.
Speaker Change: And we do have some small manufacturing capabilities in China which also makes sense
Speaker Change: So we think our manufacturing footprint makes the most sense for the long term and will continue to invest in that to grow. It's a dynamic market but our team
Speaker Change: team. We find ways to deal with the reality and deliver high performance, and you see we're very bullish on our full year outlook based on the guidance that we gave in sales and EPS.
Speaker Change: Thank you and thanks to Dan for everything. Congrats on a well-deserved retirement. Hope you won't miss us.
David Roman: The next question comes from David Roman with Goldman Sachs. Please go ahead.
David Roman: Thank you. Good morning, everyone. Maybe we could switch gears and talk a little bit about the Med Surge business and Mike in your prepared remarks.
David Roman: You did talk a little bit about the turn in neuromodulation here with relief and going organic and the durability of kind of the category leadership strategy and the dynamics you're seeing in the peripheral business but maybe you talked a little bit about the path from the 5%-ish organic growth we saw in Q1 here . . .
David Roman: and what are the drivers to move that back toward a high single digit growth rate, especially as silk turns organic, exonix turns organic, etc.? [inaudible]
Yeah, so again, the five is really a seven. [inaudible]
If you look at me in the days. [inaudible]
David Roman: So, you know, kind of add or slightly above market overall, if you do the days adjustment there.
David Roman: And the breaking it down at the end of the team continues to deliver at a high level. [inaudible]
Manufacturing those days impact.
David Roman: and with the broad-based portfolios, we expect to see a kind of consistent result in that business.
David Roman: The Neuroma team is really starting to strengthen its capabilities. We leave and has gone organic, which is certainly helpful.
David Roman: and we continue to invest quite a bit in that platform, as well as continue to strengthen our commercial capabilities organization. So we expect to see, you know, improvement in the NERMOD results as the year goes on based on the momentum we have there as well as in DBS.
David Roman: University of New York with the lead and so forth. Axonics is going well. It's an excellent addition to our company. And we continue to do, to do integrate that company. That will go organic at the fourth quarter. So this year.
David Roman: as well as Silk Roadwell. And in yourology is a tad under what we're used to, from a urology team. Again, very impressed with the axonics capability and...
David Roman: really the global strength we have in our Erology portfolio. We are experiencing some supply chain issues across some specific categories which I won't go into detail.
David Roman: that are impacting some back orders within urology business. So we expect that to improve, but be a bit of a headwind for us in 25. And we continue to invest across that portfolio with our stone smart in our implant business.
David Roman: So we expect the urology business to kind of grow at market, at market, I would say, in 25 and our endoscopy and neuromy business to grow above market and overall providing a really healthy balance to our excellent cardiology growth.
Travis Steed: The next question comes from Travis Steed with Bank of America. Please go ahead.
Travis Steed: Hey, congrats, Stan, on a well-deserved retirement. I just wanted to say that up front. And then I wanted to ask about margins this quarter. It was a really strong margin quarter. I don't know if that's the EP growth.
Speaker Change: Attorney Margin, Recreative, or anything else to call out. And on the tariff side, the 200 million tariffs, not sure if you're giving kind of what you're assuming in that in terms of where they're going to reach. [inaudible]
Travis Steed: Go, or after 90 days, how much that's China versus Europe ? And if the planet still in 26th, can you continue to offset, you know, the tariff headlands as they go forward?
Travis Steed: Thank you for watching. I'm Daniel Brennan. I'll see you next time.
Travis Steed: Sure, so let me hit the tariffs one first, here's the second one first, just to be 100% clear on what's in. So $200 million tariff headwind for 2025, largely in the second half.
Travis Steed: It's as you have seen in the news as we have seen, which is a 10% blanket tariff through the end of the year that reciprocal tariff rates that were put in place on April 2nd.
with the 90-day pause, would then commence early in Q3. [inaudible]
Travis Steed: He assumed they commence in early Q3. And Taraf, it's the 145 US, 125 China back and forth that's there now. And that's actually the largest component of that 200 million for us now is the China piece.
Travis Steed: Not going to get into 26. It's obviously a very fluid situation there. Just really pleased [inaudible]
Travis Steed: Center, that we've been able to offset the 200 that we see in front of us for this year, which will help us deliver 12 to 14% revenue growth, 14 to 17% EPS growth, and 50 to 75 basis points of margin expansion, all in the face of a $200 million headwind that we didn't anticipate until about 25 days ago. Thank you very much.
Travis Steed: When you look at the operating margin, kind of building off of that, 28.9, that was, I will admit, a little bit higher than I even thought it would be in Q1. So what's the driver of that? When Farrapulse grows like it's growing and you see Watchmen in the mid-20s, that's a big driver of gross margin. You saw gross margin at 71.5%. I really like that number. Obviously, tariffs will challenge that number as we go forward into the rest of 2025.
Travis Steed: Gross Margin should be in line with where we were last year, the last year was 70.3. I'd expect us to be, you know, kind of in that range because the $200 million at the Gross Margin line for tariffs is kind of a hundred basis points, a hundred basis points of impact. And so the equation
Travis Steed: that I had laid out in February might look a little differently, right? But it just goes to the flexibility, the agility and the winning spirit of the team that when confronted with the $200 million dollar headwind, we originally thought of course margin would go north, we thought SG&A would go south, R&D would tick up a little bit and we deliver 50 to 75 basis points.
Travis Steed: Grant. So now, as we sit in April , gross margins likely to go backwards.
Travis Steed: So what do you do? You look to take some actions, again discretionary actions for spending that we can eliminate and with, you know, no impact on the top line or long term growth and drive the still drive the 50 to 75 basis points of expansion and get to that 27 and a half to 27.75 .
Travis Steed: So, likely from the 28-9 that you see in Q1, we manage for the full year, the quarters you're always going to see fluctuations, you'll see the second half in particular be lower than the 28-9, but we're confident in the 27-1-1-2-2-7-5 for the year and proud of it.
Awesome, awesome answer. Thanks a lot.
Great, thanks, Joanne Wuensch,
Patrick Wood: The next question comes from Patrick Wood with Morgan Stanley. Please go ahead.
Patrick Wood: Beautiful, thanks so much and congrats to Botan and Joanne.
Patrick Wood: I'd love to just touch on the CRM, actually, of all things. And I'm curious, you know, obviously silver, the shift between high and low voltage, but I'm curious in terms of in power and the approval of Adam the second half.
Patrick Wood: You know, how you're thinking of the outlook for that division, how much is in power, impact, growth going forward, just any kind of details on the CRM side of things would love a little bit more. Thanks.
Patrick Wood: Sure, I'm really pleased with the future of CRM, I would say, yeah, so I would say we're [inaudible]
Patrick Wood: Kind of slightly below market with those results, you know, most all of our businesses grew at or most of them grew above market. Share them a tab below, which we expect likely to be the case.
for most of 2025.
Patrick Wood: But I think if you look at, you know, 26 and beyond, and it's really the momentum, maybe towards the end of 25, really confident in our serum business. A lot of investment in CSP labeling, Injeivity changes, new CSP catheters.
Patrick Wood: The power we should have approval at some point, second half of 25, so that'll have a nice...
Larger Impact in 2026.
and also...
Patrick Wood: You know, one of the biggest organic investments we've had in the company for six years now, is really the total product refresh of our SICD tacking Brady portfolio called Denali.
Patrick Wood: which will launch, starting off with with with high power in 2026 and really those impacts over across that broad portfolio throughout this draft plan period.
Patrick Wood: So we've continued to make strong investments there, excited about a power so I think you'll see maybe a slight lag in performance throughout 2025 but then hopefully improve momentum likely in fourth quarter and exonerated in 26 and throughout the strap line period
Lovely to talk to you. Thank you so much.
Patrick Wood: And, Patrick, maybe, I just want to give a little more color, just on empower.
Patrick Wood: Overall, just to make sure everyone understands why we're excited about it. Again, once we do get approval and train people and get into a full launch of it, I think A, right, it gets us into the leadless pacing space. And while we've been holding our own, we'll evolve it even without a leadless pacing, right. This is an important.
Growing Area in CRM to get into but but empower. Good.
Patrick Wood: Report for everyone who recognizes much more than just a lead with space maker and the truly differentiated feature of it.
Patrick Wood: He's the ability to communicate with SICD and provide a modular option for patients you have in SICD who go on to develop a need, either for Brady Pacing or for Anti-Tactic Carrier Pacing. [inaudible]
Patrick Wood: This is probably the most important unmet medical need in high voltage therapy today. ICD leads three times as likely to fail.
S. Brady Leads,
and recognizing all the advantages. Thank you.
Office of having a system that is leadless. [inaudible]
Patrick Wood: where the defibrillating lead is extrathoracic. We think, again, A, this is an important option for patients with an existing SICD, but also, importantly, it's an enabler for docs to use the SICD in a much broader group of primary prevention patients.
Patrick Wood: Because they don't have to be afraid that the patient is subsequently going to develop a need for pacing.
Patrick Wood: We're doing a bunch of work here, so thanks for that.
Speaker Change: The next question comes from Danielle Antalffy with UBS. Please go ahead.
Thank you. Thank you. Thank you.
Speaker Change: Hey, good morning, everyone. Thanks so much for taking the question. Dan, I'm going to miss you a lot and miss talking sports smack with you for sure. So you better keep in touch so I can continue to.
Speaker Change: To tell you how much I hate Boston sports team, sorry Mike, but John , I won't miss that. You know you're an Iowa fan.
Ha, ha, ha, ha.
Speaker Change: So, and John excited to continue working with you and excited also have Laura back. So, sorry about that long intro just a just a quick question on some of the recent acquisition. So, so I want to be interesting acquisition there and just curious about
Speaker Change: You know, when you, I know it's early, but you know what your expectations are if you can comment on timing for that acquisition and some of the milestones there clinically and regulatory and when that could be something that could really start to contribute because obviously you know we're starting to do a lot of work on that space in general and
Speaker Change: You know, the numbers can get very large, so just curious if you can give any color on that. Thanks so much.
For more information, visit www.FEMA.gov
Speaker Change: Yeah, I'll start off and maybe Dr. Sam might have some additional comments or maybe not, but we'll see here. Sony B, we're excited to close that likely in the second quarter.
Speaker Change: It's a company that we track for quite a while. It came from our venture portfolio. We do feel that the ultrasound modality will be the preferred choice.
to get the most effective hypertension relief.
Speaker Change: We clearly have to prove that out more through the clinical. That clinical trial is very, very early days in the US now so we can't comment on that too much because we don't have officially owned the company.
Speaker Change: Assuming to close the second quarter will certainly be very involved with the clinical trial.
Speaker Change: and the role of the strategy there, which is already in place. So we're very impressed with the capability of the Sony V, and we think our time is pretty good. You know, this market has to, there's some cards that need to flip in this market in terms of reimbursement.
in terms of eventual payer support.
Speaker Change: And we aim to deliver hopefully a very strong clinical result from the US trial to hopefully further support reimbursement which will be important in this category.
Speaker Change: And as that develops over time, I think our timing will be pretty good. I'll take us a bit to enroll the trial, we'll follow up and then we'll get approval.
Speaker Change: So, John , I'm sure we've said publicly when we think it would be approved or not, so more details to follow there. But we're excited about the opportunity. We think it's a differentiated product in a potentially large market.
Thank you. Thank you.
Speaker Change: Daniel, maybe just to dad on to what Mike said, you know, first of all, there are a number of cards that need to fall into place, reimbursement, finishing our pivotal. [inaudible]
Speaker Change: etc. And just high level, this is one of the most important on medical needs today.
Speaker Change: Recognize half of US adults have high blood pressure. [inaudible]
Speaker Change: Majority of whom are not adequately controlled on medications alone, accounts for probably somewhere around 150 billion dollars a year in healthcare costs in this country just reflecting the burden of [inaudible]
Speaker Change: Disease, due to uncontrolled hypertension, Councillor half of all cardiovascular disease globally, so there is a need for a solution.
and we do believe that son of a...
Speaker Change: It is likely to prove out to have important differentiated advantages over the competition ultrasound. First of all, we believe we'll turn out to be a better modality. Thank you very much.
Speaker Change: for doing renal denervation, offers greater tissue penetration, and the really unique feature on some of the data that are, is that it's able to do ultrasound based renal denervation without having a struct flow in the renal artery, which means you don't have to worry about heating to the vascular endothelium, you don't have to worry about anything to do specifically to cool, it's cooled by blood flow. You don't have to worry about anything to do. You don't have to worry about anything to do. [inaudible]
Speaker Change: So, right, to recap, very optimistic about the clinical differentiation of son of a, and if all of the cards do fall into place, this address is one of the most important on medical needs, on medical needs out there.
Thank you.
Speaker Change: The next question comes from Josh Jennings with TD Cowan. Please go ahead.
Josh Jennings: Hi, good morning. Thanks for taking the questions. I'm hoping for the question. I'm hoping to just get a state of affairs on capacity within the electrophysiology sector.
Speaker Change: Provider Capacity, clearly no hurdles in the near-term, but PFA commercialization has driven significant increases in the cardiac ablation volumes, and watchmen is obviously looking for significant growth, but maybe state of affairs of capacity today, and then just a path.
Speaker Change: to, for, for PFA to enable cases, characterization cases in AFCs or a Fibolation cases specifically. He's helped us understand the run rate of the path to opening that channel up and what Boston's doing to facilitate that. Thanks a lot.
Speaker Change: Yeah, so on capacity today. We do not see an issue.
Speaker Change: at this point in time with capacity. And one of the reasons why is this is a highly successful procedure that's very efficient.
Speaker Change: And it also continues to have strong appropriate reimbursement, and you also saw potential proposals from CMS to further increase reimbursement for both A-Fiboblation and LAC at roughly 10% .
So these are financially strong categories for hospitals.
Speaker Change: and it's very effective and very efficient procedures. Therefore, many hospitals are prioritizing...
Speaker Change: Their capital investments to meet the demand for this increased patient population for both LAC and for EP.
Speaker Change: So, we are seeing quite a bit of investment in due cast allows being invested in, created.
Around the world. [inaudible]
But again, these categories are both growing very quickly. [inaudible]
Speaker Change: So there may potentially be some more capacity constraints, which would open up your question on um...
Speaker Change: Unsighted Service, Dr. Stein, if you have any comments there? Yeah, the only other thing I'd add to that, particularly with respect to maybe moving toward an outpatient or a SC setting, there's stuff that's in our control, there's stuff that's outside of our control, outside of our control is reimbursement. [inaudible]
Speaker Change: But in our control, right, I mean, what do you need to do to move these procedures out of the inpatient hospital setting? And that's having procedures that are safe number one. [inaudible]
Speaker Change: that are efficient and that are predictable. And I submit the therapist and industry leading on all three of those.
Attempts, and...
Speaker Change: Particularly when you look at the ability to do procedures without the need for your intubated general anesthesia, [inaudible]
If you want to drive lab efficiency. And see,
with the advent of our...
Speaker Change: Farrowave Nav catheter and Farrowview software and Opal. If you want to map the ability to do the map in a way that is very cost effective without needing to pull out a separate mapping catheter. And so we've done everything that we can within our power to optimize these procedures again both for for safety, for efficiency and for predictability with therapists. And so we've done everything that we can in a way that is very cost effective without needing to pull out a separate mapping catheter.
Appreciate that. Thank you.
Speaker Change: The next question comes from Michael Polark with Wolf Research. Please go ahead.
Good morning, thank you. I'm going to thrill with a question on tax. In this Trump tempest, the questions to me have been tariffs and tax and
Michael Polark: So Dan, I was hoping for a brief refresher on why the Boston operational and adjusted tax rate is so low. Do you view this as durable? Is there anything as it relates to pillar two, some of the discussions around transfer pricing, other policy changes?
Speaker Change: Network, that might put the tax rate at risk in the out years. Help us understand why this is the way that it is. Thank you.
Dan Brennan: Sure, Mike. Yeah, so as you look at why our tax rate is where it is and it's been pretty durable for, you know, a decade or more, you look at things like the source of manufacturing, your geographic mix of business and profits.
Dan Brennan: The Treatment of Acquisitions, Integration, Location of IP, it's pretty complex as you would imagine, so that all nets down to the 13 and a half.
12.5 that we talked about today, 13.5% operational 12.5% adjusted. [inaudible]
Dan Brennan: So we've been very public in saying for the last couple years that as you look at 2026 .
Dan Brennan: There's a potential for two to three hundred basis point headwind on that relative to the sunsetting of TCJA from back in 2017 I am heartened by some of the developments in Washington some things and some discussions that are going on that might help us there so you know nothing's final until it's on paper and enacted but optimistic that that might happen but until that does we would have a two to three hundred basis point upward headwind in our tax rate for 2026 [inaudible]
Thank you.
Speaker Change: The next question comes from Vijay Kumar with Evercore ISI. Please go ahead.
Vijay Kumar: Hey guys, thanks for taking my question and Dan and Jon, congrats to both of you. I had one maybe on the pipeline here.
Vijay Kumar: I'm curious, when you look at the tabernet and watchmen, both the sort of interesting phase here.
Vijay Kumar: On Champagne, have you guys done any patient preference kind of studies, assuming the trial is a success? How should we think of adoption and any update on US FDA submission for tower?
Speaker Change: So for Antaver, there's no updates on this call. We'll continue to work with the...
Authorities in the U.S.,
Speaker Change: and hopefully we'll have a more of a clear update at some point in second quarter, but nothing new to report on the tabby front at this point. With the exception that...
Speaker Change: The Prime Valve and Europe continues to do well, we did have...
Speaker Change: I would say it's slower first two months of the quarter than a nice pickup in March and so we expect the prime results are essentially prime is going extremely well in Europe and we continue to put our focus there as it relates to accurate and
Board of News to come, regarding the US. The US.
Speaker Change: Yeah, and Vijay on champion again, we continue to expect the readout of the champion data, first half and next year.
Speaker Change: To remind everyone, right, that's our all-comer randomized trial, launchment against. . . . .
Speaker Change: Oral Anticoagulants, and we continue to believe that a positive readout on champion.
supports, you know, the continued 20% plus growth.
Speaker Change: of Washington, over the near to medium term. And, you know, as we said our last investor's day, right, that, you know, in between positive option, positive champion. And that supports tripling of the potential addressable market. [inaudible] great great great great great great
Speaker Change: Forewatchman, and from a patient standpoint, I can tell you, even that when I was in practice. [inaudible]
Speaker Change: Joseph, the single thing that patients with ACM wanted more than anything else. [inaudible]
Speaker Change: was the ability to get off blood thinners and so we do see having a one and done alternative to being on lifelong blood thinners as something that is very attractive to patients. [inaudible]
Speaker Change: Thank you for watching. I'm Daniel Monson. I'm a professor of political science at the University of Washington, and I hope you enjoyed this video. I'm Michael Monson.
University, thank you guys.
Speaker Change: And I understand there's time for one last questioner that will be from Matt Miksic with Barclays. Please go ahead.
Thank you. Thanks so much. So, I...
Speaker Change: I'm just wrapping it up here. I know you've covered a lot of ground, maybe just ask some questions. It seems a little silly to ask because you are so active in the strategic investment front, but...
Speaker Change: Maybe comments, if you have them on, on where you think you're some of your recent acquisitions can go under your. [inaudible]
Speaker Change: Under-Year Management, like Exonix, and what other areas you continue to invest in and see as opportunities to push out the portfolio. And congrats to both Joanne and Dan. We really enjoyed working with you both and appreciate you taking the question. Thank you very much.
Thanks a lot.
Speaker Change: Sure, but as you know, we're very active and continuing to just strengthen and widen our category leadership across the businesses that we have and expand our Wander, which we've done consistently over many years and aim to continue to do that.
Speaker Change: I made a few comments, so Silk and Exxonix are both in active integrations now and we'll go organic in fourth quarter.
Vary Bullish on both those platforms. [inaudible]
Speaker Change: University, you know, when they go organic in 26th and for the future, made a lot of other investments, a closing of Antara in our interventional oncology business. [inaudible] you know, you know, you know,
Speaker Change: and also some very recent news that you saw on Bolt.
Speaker Change: We're very excited about entering the IDL space by the end of the year with the both of the new applications and our PI vascular business and then below the knee and then we've initiated our clinical trial right now if that deal is closed and then we made some comments earlier about Sony v
Speaker Change: We've also made, we continue to have large expenditure fund in Metek.
Speaker Change: We continue to invest more and more in that fund as it's been a nice source of acquisition growth for the company. So, we will continue to be aggressive in the venture portfolio. Thank you.
Speaker Change: So I don't think you'd see any change in behavior here. We continue to want to deliver a highly differentiated performance, increase our wanger, and be the best place to work in that tech. And a lot of it comes through to focus on innovation and engage in our place.
Speaker Change: Great. Thanks Mike, and thanks everyone for joining us today. Appreciate your interest in Boston Scientific, and if we are 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.
Speaker Change: For You Disconnect, Drew will give you all the pertinent details for the reply. Thanks so much everyone, have a great day.
Thank you for watching. Please subscribe to my channel.
Speaker Change: Please note a recording will be available in one hour by dialing either 1-877-344-7529 or 1-412-317-0088.
Speaker Change: Using replay code 369-9621 until April 30th, 2025 at 11.59pm eastern time. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: Michael Mahoney, Robert Marcus, Daniel Brennan, Michael Mahoney, Robert Marcus, Daniel Brennan,