Q2 2025 Boston Scientific Corp Earnings Call

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Lauren Tangler: I would now like to turn the conference over to Lauren Tangler, Vice President, Investor Relations. Please go ahead. Thank you, Drew. And thanks to everyone for joining us today.

Speaker Change: Please note this event is being recorded, I would now like to turn the conference over to Lauren tangler, vice president investor relations. Please go ahead.

Unknown Executive: With me on today's call are Mike Mahoney, Chairman and Chief Executive Officer, and John Monson, Executive Vice President and Chief Financial Officer.

Unknown Executive: During the Q&A session, Mike and John will be joined by our Chief Medical Officer, Dr. Ken Stein.

Unknown Executive: We issued a press release earlier this morning announcing our Q2 results, which included reconciliations of the non-GAAP measures. The release, as well as reconciliations of the non-GAAP measures used in today's call, can be found on the Investor Relations section of our website. Please note that on the call, operational revenue excludes the impact of foreign currency fluctuations, and organic revenue further excludes certain acquisitions and divestitures for which there are less than a full period of comparable net sales.

Lauren Tangler: Thank you drew and thanks to everyone for joining us today. With me on today's call. Our Mike, Mahoney chairman and chief executive officer and John Monson, Executive Vice President and Chief Financial Officer during the Q&A session Mike and John will be joined by our chief medical officer, Dr. Ken Stein,

Lauren Tangler: We issued a press release earlier this morning announcing our 222 results which included reconciliations of the non-gaap measures the release as well as reconciliations of the non-gaap measures used in. Today's call can be found on the investor relations website section of our website.

Unknown Executive: For more information, please refer to the Q2 Financial and Operational Highlights deck, which may be found on the Investor Relations section of our website. 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.

Please note that on the call, operational Revenue excludes, the impact of foreign currency fluctuations and organic Revenue, further excludes certain Acquisitions, and deves for, which there are less than a full period of comparable, net sales.

Lauren Tangler: For more information, please refer to the Q2 financial and operational highlights deck which may be found on the investor relations section of our website.

Unknown Executive: This call contains forward-looking statements regarding, among other things, our financial performance, business plans, 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 events or performance. If our underlying assumptions turn out to be incorrect or certain risks or uncertainties materialize, actual results could vary materially from those projected by the forward-looking statement.

Lauren Tangler: 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. This call contains forward-looking statements regarding among other things. Our financial performance business plans, 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.

Unknown Executive: Factors that may cause such differences are discussed in our periodic reports and other filings with the SEC, including the risk factor section of our most recent annual report on Form 10-K.

Lauren Tangler: if our underlying assumptions turned out to be incorrect or certain risks, or uncertainties, materialized, actual results could vary materially from those projected by the forward-looking statements,

Unknown Executive: Boston Scientific disclaims any intention or obligation to update these statements except as required by law.

Michael Mahoney: At this point, I'll turn it over to Mike. Thanks, Lauren, and thank you, everyone, for joining us today. Our second quarter results outperformed our expectations, led by Riccardo Basch for the segment, closing a phenomenal first half to 2025. and second quarter 25 total company operational sales grew 22% and organic sales grew 17% which exceed the high end of our guidance range of 13 to 15% and far outpacing our underlying weighted average market growth. Second quarter adjusted EPS of $0.75 grew 23%, also exceeding the high end of our guidance range of $0.71 to $0.73, inclusive of charges related to the worldwide discontinuation of our accurate valve.

Lauren Tangler: Factors that may cause such differences are discussed in our periodic reports and other filings with the SEC, including the risk factor section of our most recent annual report on form 10K. Boston, Scientific disclaims, any intention or obligation to update these forward-looking statements except as required by law at this point. I'll turn it over to Mike. Thanks Lauren. And thank you for everyone for joining us today.

Mike Mahoney: our second quarter results, outperformed our expectations, led by our cardiovascular segment, closing a phenomenal, first half to 2025,

In second quarter 25 total company, operational sales, grew 22% and organic sales grew 17% which exceeded the high end of our guidance range of 13 to 15% and far outpacing, our underlying weighted average market growth rate.

Second quarter adjusted, DPS of 75 cents grew 23% also exceeding. The high end of our guidance range of 71 to 73 cents.

Unknown Executive: Second quarter adjusted operating margin was 27.6%.

Mike Mahoney: Inclusive of charges related to the worldwide discontinuation of our accurate valve.

Mike Mahoney: Second quarter adjusted. Operating margin was 27.6%.

Michael Mahoney: Turning to our third quarter and our full year 25 outlook, we're guiding to organic growth of 12 to 14% for third quarter 25, and raising our full year guidance from 12 to 14% to 14 to 15%, reflecting the momentum across our global business. Our third quarter adjusted EPS guide is $0.70 to $0.72, and we now expect our full-year adjusted EPS to be $2.95 to $2.99, representing growth of 18 to 19 percent, inclusive of updated assumptions for tariffs and impact related to active John will provide more details within the financial section.

Mike Mahoney: Turning to our third quarter and our fourth year, 25 out. We're guiding to organic growth of 12 to 14% for third quarter, 25, and raising our full year guidance from 12, to 14% to 14, to 15% reflecting the momentum across our Global businesses.

Michael Mahoney: I'll now provide some additional highlights on the quarter. Regionally, on an operational basis, the U.S. grew 31 percent, driven by our category-leading and broad-based cardiovascular portfolio. Europe, Middle East, Africa grew 2% on an operational basis and 7% excluding the discontinuation of our accurate valve. As a reminder, the vast majority of the $200 million in accurate revenue was generated in EMEA. Within EMEA, growth within a quarter was led by double-digit growth for FerriPulse, Watchman, and Complex PCI. Asia Pacific grew 15% operationally led by strong double digit growth across our largest markets in the region. Japan, China, Australia.

Our third quarter adjusted, EPS guide is 70 to 72 cents and we now expect our full year, adjusted EPS to be 295 to 299 representing growth of 18 to 19% inclusive of updated assumptions for tariffs and impact related to Accurate. John will provide more details within the financial section.

Mike Mahoney: I'm not providing some additional highlights on the quarter.

Mike Mahoney: Regionally on an operational basis. The US grew 31% driven by our category leading and broad-based cardiovascular portfolio.

Mike Mahoney: Europe, Middle East, Africa, grew 2% on an operational basis and 7%. Excluding the discontinuation of our accurate valve.

Mike Mahoney: As a reminder, the vast majority of the 200 million dollars in accurate Revenue was generated in AA.

Within the Maya growth through the quarter, was led by double digit. Growth for faults, Watchmen and complex PCI.

Mike Mahoney: Asia-pacific, grew 15% operationally, led by strong double-digit growth, our largest markets in the region.

Michael Mahoney: Japan grew Hytenes driven by Ferropulse, which has moved into the leading position in PFA with over 15,000 patients treated since launch in Japan. Supported by new account openings and the launch of Fairwave Nav. China also returned to mid-teens growth in the second quarter, with diversified growth across businesses led by Ferripolis and IBIS. We expect this mid-teens growth to continue in China in the second half of the year.

Mike Mahoney: Japan, China and Australia.

Mike Mahoney: Japan, grew High. Teens driven by far polls which is a move which is moved into the leading position in PFA with over 15,000 patients treated since launched in Japan.

Mike Mahoney: Supported by new account openings and the launch of fairwave nav.

Second quarter with Diversified growth across businesses led by far pulse and ivis.

Michael Mahoney: I'll now provide some additional commentary on our business unit. Urology sales grew 28% operationally and 6% organically. Growth in the quarter is driven by the stone management and prosthetic urology franchises with double digit growth and resume, which received expanded indication for large glands in the U.S.

We expect this mid teens growth to continue in China in the second half of the year.

Speaker Change: I'll now provide some additional commentary on a business units.

Speaker Change: Urology, sales grew 208%, operationally and 6 organizations.

Michael Mahoney: within the quarter. Integration of Vaxonics business has progressed well as we have worked through short-term commercial disruption and destocking in the first half of the year.

Speaker Change: Growth in the quarter is driven by the stone management and prosthetic Urology. Franchises with double digit growth and resume which received expanded indication for large glands in the US within the quarter.

Michael Mahoney: Endoscopy delivered a strong quarter growing 8% globally in double digits in the US, with global performance driven by strong growth in our anchor products, including Exalt-D, Mantis, Axios, and OverStitch, which saw notable growth from both ESG and closure procedures. In the second half of the year, we expect continued high single digit growth led by our proprietary technologies. and Strategic Partnerships Global. Neuromodulation cells grew 7% in the quarter with mid-teens growth in our brain franchise, led by continued adoption of the Cartesia X HX leads and Illumina 3D in the US, both of which drive optimized patient outcomes.

Integration of bonics business has progressed well as we have worked through short-term, commercial disruption and D stocking. In the first half of the year.

Speaker Change: Endoscopy delivered, a strong quarter growing 8% globally and double digits in the US with global performance driven by strong growth in our anchor products, including the exault E, mantis axios and overstitch which saw notable growth from both ESG and closure procedures.

Speaker Change: In the second half of the year, we expect continued High single digit growth led by our proprietary Technologies.

Speaker Change: And strategic Partnerships globally.

Speaker Change: Neuromodulation sales grew 7% in the quarter with mid- teens growth in our brain franchise. But by continuing adoption of the cartesia, xhx leads and aluminum 3D in the US.

Michael Mahoney: The PAIN franchise grew mid-single digits, led by strong double-digit growth in Intracept, which surpassed 50,000 patients treated with our innovative technology backed by robust clinical evidence.

Speaker Change: Both of which Drive optimize patient outcomes.

Speaker Change: The pain franchise. Grew mids single digits led by strong d, double digit growth in the intracept, which surpassed 50,000 patients treated with our Innovative technology. Backed by robust clinical evidence.

Michael Mahoney: Cardiology delivered another outstanding quarter, with sales growing 28%. Within cardiology, interventional cardiology therapy sales grew 9% and excluding accurate grew very strong double digits. For the second half of 2025, we expect an approximate 800 basis point impact to ICTX growth in the second half from the discontinuation of ACRIB. Coronary Therapy's high teens growth was driven by Agent DCB and our global imaging portfolio, buoyed by additional support from the U.S. Coronary Society's Upgrading Intervascular Imaging to a Class Ia recommendation for complex lesions.

Speaker Change: Cardiology delivered, another outstanding quarter with sales growing 28%.

Speaker Change: Within Cardiology Interventional, Cardiology therapy sales grew 9% and excluding accurate. Grew very strong, double digits.

Speaker Change: For the second half of 2025, we expect an approximate 800 basis. Point impact to ictx growth in the second half from the discontinuation of accurate.

Michael Mahoney: Further balloting is clinical value. In the US, Agent DCB growth accelerated with new account openings and strong reorders. Supported by confidence in long-term reimbursement with permanent CPT-1 codes established in the quarter that will go into effect in January 27.

Coronary therapies High Teens growth was driven by agent DCB and our Global Imaging. Portfolio weed by additional support from the US. Coronary societies upgrading intravascular Imaging to a class 1a recommendation for complex, lesions.

Speaker Change: Further validating this clinical value.

Michael Mahoney: We continue to invest in expanding our portfolio and are pleased with the progress of our fracture trial, studying the BOLT IVL system in coronary patients, which is expected to complete enrollment by the first half of 2016. Additionally, we closed the acquisition of SONYB in the second quarter, which continues to enroll in the Thrive IDE, a global randomized and sham control study designed to demonstrate the effectiveness and safety of the TIVIS system in hypertensive patients. Cardiac arrhythmia management cells grew 1%. In Q2, our diagnostic franchise grew low double digits fueled by strong growth of our LUX-DX ICM device, with our latest generation LUX-DX2 launching in Europe in the quarter.

Speaker Change: In the US agent, DCB growth accelerated with new account, openings and strong, reorders, supported by confidence and long-term reimbursement, with permanent, cpt1 codes established in the quarter that will go into effect in January 27th.

Speaker Change: we continue to invest in, expanding our portfolio and are pleased with the progress of our FAA fracture trial, studying the bolt IBL system, and coronary patients, which is expected to complete enrollment by the first half of 26,

Speaker Change: Additionally, we closed the acquisition of Sony being the second quarter, which continued to enroll. In the Thrive IDE, a global randomized and Sham control study designed to demonstrate the effectiveness and safety of the tyus system and hypertensive patients.

Speaker Change: Partak management sales grew 1%.

Michael Mahoney: Of course here in our low voltage business declined low single digits and our high voltage business is roughly flat for the year. In the second half, we do expect contribution from our expanded conduction system pacing portfolio in the U.S. and Europe and anticipate FDA approval of the Empowered Leadless Pacemaker by year end. Watchman grew 28% in this quarter, reflecting continued concomitant uptake in the U.S. and the strong safety profile of our latest generation Watchman Flex Pro, which recently received CE mark.

And q2r diagnostic franchise group. Low low double digits fueled by strong growth of our Luxe. DX ICM device with a latest generation of Lux dx2, launching in Europe in the quarter.

Speaker Change: A core CRM are low voltage as business declined. Low single digits and are high voltage businesses. Roughly flat for the year,

Speaker Change: In the second half we do expect contribution from our expanded conduction system. Pacing portfolio in the US and Europe and anticipate FDA approval of the empowered leadless pacemaker by year end.

Michael Mahoney: We continue to invest in furthering the LAAC market, including the development of our fourth generation Watchman device, which we anticipate initiating the IDE trial for next year. We continue to see considerable physician interest in concomitant procedures, with over 60 percent of Watchman implanting EPs in the U.S. having performed a concomitant procedure.

Speaker Change: Watchman grew 28% in this quarter, reflecting continued, con comment, uptake in the US, and the strong safety profile of our latest generation Watchman Flex Pro, which recently received CE mark.

Speaker Change: We continue to invest in furthering the Lac Market, including the development of our fourth generation Watchman device, which we anticipate initi initiating, the IDE trial for next year.

Michael Mahoney: Recently, we enrolled our first patient in the OPTION-A trial, studying concomitant use of Watchman and Ferropulse in Asia. We also received expanded labeling for Watchman as a first-line therapy in post-ablation patients in the U.S. following the positive option data, supporting continued confidence in our long-term outlook. Electrophysiology sales grew 94%, lapping our first full quarter of the Ferropulse launch in the U.S., and growing mid-team sequentially, supported by accelerated placements of the OPAL mapping system, our portfolio of access solutions, and uptake of concomitant procedures. Global momentum continued through the quarter, driven by the safety, predictability, and versatility of the Ferropulse device, particularly in de novo AFib ablations for paroxysmal and persistent AF, which we recently received expanded labeling in the U.S.

Speaker Change: We continue to see considerable physician interest and can come in a procedures with over 60% of Watchmen Watchman implanting Epps in the US having performed a concocted procedure.

Speaker Change: Recently, we enrolled, our first patient in the option, a trial, studying comedy use of Watchmen and false in Asia.

Speaker Change: We also received expanded labeling for Watchmen. As a first line therapy and post ablation patients in the US following the positive option data supporting continued confidence in our long-term Outlook,

Speaker Change: Electrophysiology sales, grew 94% lapping. Our first full full quarter of the Fara pulse launched in the US and growing mid-teen. Sequentially supported by accelerated, placements of the opal mapping system. Our portfolio of access Solutions, and uptake of Conant procedures.

Speaker Change: Continue through the quarter driven by the safety predictability and versatility of the faults device. Particularly in denovo, aphid Revelations for pericol and persistent AF.

Michael Mahoney: We anticipate CE mark as well as approval in Japan and China for this expanded labeling in the coming months. We continue to invest in clinical evidence to expand the served patient population with our FerroPulse technology, including the recent initiation of the REMATCH-AF trial, designed to study FerroWave and FerroPoint in redo persistent AF patients.

Which we recently received expanded labeling, the US.

Speaker Change: We anticipate CE Mark as well as approval in Japan and China for this expanded labeling in the coming months.

Michael Mahoney: which currently represent approximately one-third of the affiliation. Also, within the quarter, we announced positive 12-month primary endpoint results from the second phase of the ADDvantage AF trial, which will be used to support approval to the Farrapoint PFA catheter as an adjunct technology to treat atrial flutter in patients with persistent AFib, which we expect to receive by year-end 25.

we continue to invest in clinical evidence to expand the serve patient population with our Fair pulse technology, including the recent initiation of the rematch AF trial designed to study Fairway and fair point in redo persistent AF patients

Speaker Change: Which currently represent approximately 1/3 of a fabulous.

Speaker Change: Also, within the quarter, we announced positive 12-month primary endpoint results from the second phase of the advantage AF trial, which will be used to support approval of the fair point. PFA catheter as an adjunct technology to treat atrial flutter and patients with persistent A-fib, which we expect to receive by year end 25.

Michael Mahoney: Peripheral intervention sales grew 17% operationally and 7% organically. Our interventional oncology and embolization franchise grew strong double digits led by our broad embolization and cancer therapies portfolio. In the quarter, we closed acquisition of Entera Medical, strengthening our interventional oncology portfolio by adding a complementary therapy to expand our offerings to treat both primary and metastatic forms of liver cancer. Within our vascular franchise, we saw low single-digit growth in arterial with low single-digit drug-eluting growth driven by our participation in the China VBP, which we anticipate will result in our ability to serve more patients across China. In Venus, we did see strong double-digit growth led by continuous strength in Verathena and notable growth in Ecos, particularly internationally.

Speaker Change: Purple intervention sales grew 17% operationally in 7% organically.

Speaker Change: Our Interventional oncology and embolization franchise grew, strong double digits led by our Broad embolization and cancer therapy is portfolio.

In the quarter, we closed acquisition of enta. Medical strengthening our Interventional oncology portfolio by adding a complimentary therapy to expand our offerings to treat both primary and metastatic forms of liver cancer.

Speaker Change: Within our vascular franchise, we saw low single digit growth in. Arterial with low. Single digit drug looting growth driven by our participation in the China DBP, which we anticipate will result in our ability to serve more patients across China.

Michael Mahoney: We continue to be pleased with the integration of Silk Road, which we expect to improve growth in the second half of the year, driven by a stabilization and investment of the commercial team.

In Venus, we did see strong double digit growth led by continuous, strength and varithena and notable growth in ecos, particularly internationally.

Michael Mahoney: In closing, I'm very proud of the commercial execution of our high performing global team, and both in the near and long term growth catalyst across our business.

Speaker Change: We continue to be pleased with the integration of Silk Road, which we expect to improve growth in the second half of the Year, driven by a stabilization, and investment of the commercial team.

Michael Mahoney: which we look forward to sharing more details at our upcoming Investor Day on September 30th in New York City.

John Monson: With that, I'll hand over to John to provide more details on the financials. Thanks, Mike. Second quarter consolidated revenue of $5,061,000,000 represents 22.8% reported growth versus second quarter 2024 and includes a 120 basis point tailwind from foreign exchange, which was favorable versus our expectations. Excluding this $50 million foreign exchange tailwind, operational revenue growth was 21.6% in the quarter. Sales impact from closed acquisitions contributed 420 basis points, resulting in 17.4% organic revenue growth, exceeding our second quarter guidance range of 13% to 15%. Q2 2025 adjusted earnings per share of $0.75 grew 23% versus 2024, exceeding the high end of our guidance range of $0.71 to $0.73, primarily driven by our strong sales performance in the quarter.

Speaker Change: In closing, I'm very proud of the commercial execution of our high-performing Global team and both in the near and long-term growth Catalyst across our businesses, which we look forward to sharing more details at our upcoming investor day on September 30th in New York City. With that, I'll hand over to John to provide more details on the financials.

John Monson: Thanks Mike.

John Monson: Second quarter Consolidated, revenue of 5 billion, 61 million represents, 22.8% reported growth versus second quarter 2024, and includes a 120 basis, point Tailwind from foreign exchange, which was favorable versus our expectations.

John Monson: Excluding this 50 million. Foreign exchange, Tailwind operational. Revenue growth was 21.6% in the quarter.

John Monson: Sales impact from closed. Acquisitions contributed 420 basis. Points. Resulting in 17.4% organic Revenue growth exceeding. Our second quarter guidance range of 13% to 15%,

John Monson: Q2 2025 adjusted earnings per share of 75 cents, grew 23% versus 2024.

John Monson: Exceeding. The high end of our guidance range of 71 cents to 73 cents, primarily driven by our strong sales performance in the quarter.

John Monson: Adjusted gross margin for the second quarter was 69.4%, representing a 100 basis point decline versus the second quarter of 2024, driven by the negative impact from inventory charges related to the worldwide discontinuation of our accurate valve. Based on the current schedule of expected tariffs, we now anticipate a full year headwind of approximately $100 million, down from our approximate $200 million estimate that we provided on our Q1 earnings call. We continue to expect full year adjusted gross margin to be roughly in line with 2020. Second quarter adjusted operating margin was 27.6%, expanding 50 basis points versus the second quarter of 2024, driven by strong drop through on our top line performance and smart spend controls offsetting the charges related to accuracy.

John Monson: Adjusted gross margin for the second quarter was 69.4% representing a 100 basis point decline versus the second quarter of 2024 driven by the negative impact from inventory, charges related to the worldwide discontinuation of our accurate valve.

John Monson: Based on the current schedule of expected tariffs. We now anticipate a full year headwind of approximately 100 million dollars down from our approximate 200 million estimate that we provided on our q1 earnings call.

John Monson: We continue to expect full year, adjusted gross margin to be roughly in line with 2024.

John Monson: Second quarter adjusted. Operating margin was 27.6%.

John Monson: On a gap basis, second quarter operating margin was 16.2%. Moving to below the line, second quarter adjusted interest and other expenses totaled $110 million, slightly unfavorable to our expectations. On an adjusted basis, our tax rate for the second quarter was 12.6%, which includes favorable discrete tax items. Our operational tax rate was 14.2% for the second quarter. Fully diluted weighted average shares outstanding ended at $1,494,000,000 in the second quarter. Free cash flow for the second quarter was $1,129,000,000 with $1,286,000,000 from operating activities less $157,000,000 in net capital expenditure. We now expect full year 2025 free cash flow to be approximately three and a half billion dollars.

John Monson: Expanding 50 basis points versus the second quarter of 2024 driven by strong drop through on our Topline performance and smart, spend controls offsetting the charges related to accurate.

John Monson: On a gap basis. Second quarter operating margin was 16.2%.

John Monson: Moving to below the line second quarter adjusted interest and other expenses totaled. 110 million slightly unfavorable to our expectations.

John Monson: On an adjusted basis. Our tax rate for the second quarter was 12.6%, which includes favorable discrete tax items. Our operational tax rate was 14.2% for the second quarter.

Free cash flow for the second quarter was 1,129 million with 1 billion, 286 million from operating activities, less 157 million in net capital expenditures.

We now expect full year, 2025 free cash flow to be approximately 3 and a half billion dollars.

John Monson: As of June 30th, 2025, we had cash on hand of $534 million. And during the quarter, we're pleased to receive a credit rating upgrade from Moody's to A3, and with this upgrade, we now hold single A-equivalent credit ratings from all three major agencies. Our Gross Debt Leverage Ratio was 2.1 times. Our top capital allocation priority remains strategic tuck-in M&A and high-growth adjacencies, followed by share repurchases. In an alignment with this strategy, we recently closed the acquisitions of Sanovi and Entera Oncology, which complement our existing interventional cardiology and peripheral interventions businesses respectively. Our legal reserve was $300 million as of June 30th, with $47 million of this reserve already funded through our Qualified Settlement Fund.

John Monson: as of June 30th, 2025 we had cash on hand of 534 million

John Monson: And during the quarter, we are pleased to receive a credit rating. Upgrade from Moody's to A3 and with this upgrade we now hold single a minus equivalent credit ratings from all 3 major agencies

John Monson: Our gross debt leverage ratio was, 2.1 times.

Our top Capital allocation priority remains strategic tuck in m&a and high growth adjacencies followed by share repurchases. In an alignment with this strategy we recently closed the Acquisitions of sonovi and intera oncology which complement our existing Interventional Cardiology and peripheral interventions businesses respectively.

John Monson: I will now walk through guidance for Q3 and full year 2025. We now expect full year 2025 reported revenue growth to be in a range of 18% to 19% versus 2024. Excluding an approximate 50-basis-point tailwind from foreign exchange, based on current rates, we expect full-year 2025 operational growth to be in a range of 17.5% to 18.5% in 2020. 18.5% Excluding a 350 basis point contribution from closed acquisitions, we expect full-year 2025 organic revenue growth to be in a range of 14% to 15% versus 2024. We expect third quarter 2025 reported revenue growth to be in a range of 17% to 19%, excluding an approximate 50 basis point tailwind from foreign exchange based on current rates.

Our legal Reserve was $300 million as of June 30th with 47 million of this Reserve. Already funded through our qualified settlement funds,

John Monson: I will now walk through guidance for Q3 and full year 2025.

John Monson: We now expect full year, 2025 reported Revenue growth to be in a range of 18% to 19% versus 2024.

John Monson: Excluding an approximate 50 basis, point Tailwind from foreign exchange, based on current rates, we expect full year, 2025, operational growth to be an range of 17.5%.

John Monson: To 18.5%.

John Monson: Excluding a 350 basis. Point contribution from closed Acquisitions. We expect full year 2025 or organic Revenue growth to be in a range of 14% to 15% versus 2024

John Monson: We expect third quarter 2025 reported Revenue growth to be in a range of 17% to 19%.

John Monson: We expect third quarter 2025 operational growth to be in a range of 16.5% to 18.5%. Excluding an approximate 450 basis point contribution from closed acquisitions, we expect third quarter 2025 organic revenue growth to be in a range of 12% to 14%.

Excluding an approximate 50 basis, point Tailwind from foreign exchange, based on current rates, we expect third quarter 2025, operational growth to be an arrange of 16 and a half percent, to 18 and a half percent, excluding, an approximate 450 basis, point contribution from closed Acquisitions. We expect third quarter 2025, organic Revenue growth to be in a range of 12% to 14%

John Monson: Based on our first half margin performance, we now expect to expand full year adjusted operating margin by 75 to 100 basis points, while increasing our level of investment in R&D to fuel durable, differentiated revenue growth. We now expect full year 2025 adjusted below the line expense to be approximately $440 million. Under current legislation, including enacted laws and issued guidance, we forecast a full year 2025 operational tax rate of approximately 14 percent and an adjusted tax rate of approximately 12 and a half percent. For 2026, we had previously forecasted a 200 to 300 basis point headwind to our tax rate, driven by changes to certain provisions scheduled under the TCJA.

Based on our first half margin performance, we now expect to expand full year. Adjusted operating margin by 75 to 100 basis points while increasing our level of investment in R&D to fuel durable, differentiated Revenue growth

John Monson: we now expect full year, 2025, adjusted below the line expense to be approximately 440 million,

John Monson: Under current legislation, including enacted laws and issued guidance. We forecast a full year. 2025 operational, tax rate of approximately 14% And an adjusted tax rate of approximately 12 and a half percent for 2026. We had previously forecasted a 200 to 300 basis point headwind to our tax rate.

John Monson: With the recent passage of the OBBB, this anticipated headwind has largely been eliminated.

John Monson: Driven by changes to certain Provisions, scheduled under the tcja.

John Monson: We'll share more specific 2026 tax rate guidance on our Q4 2025 earnings call. We expect third quarter adjusted earnings per share to be in a range of 70 cents to 72 cents.

With the recent passage of the O BBB this anticipated headwind has largely been eliminated.

John Monson: We'll share more specific 2026 tax rate guidance on our Q4, 2025 earnings call.

John Monson: Expect full year 2025 adjusted earnings per share to be in a range of $2.95 to $2.99 representing growth of 18% to 19% versus 2024 including an approximate 4 Cent headwind from foreign exchange.

John Monson: In closing, I'm pleased with our strong second quarter financial performance and look forward to executing on our full year guidance of 14 to 15% organic revenue growth, 75 to 100 basis points of adjusted operating margin expansion, and 18% to 19% adjusted earnings per share growth.

We expect third quarter adjusted, earnings per share to be in a range of 70 cents to 72 cents.

John Monson: In closing, I'm pleased with our strong second quarter financial performance and look forward to executing on our full year. Guidance of 14 to 15% organic Revenue growth,

Unknown Executive: For more information, please check our investor relations website for Q2 2025 financial and operational highlights, which outlines more details on Q2 results and 2025 guidance.

John Monson: 75 to 100 basis points of adjusted operating margin expansion and 18% to 19% adjusted earnings per share growth

Lauren Tangler: And with that, I'll turn it back to Lauren, who will moderate the Q&A. Well done, Joe. Thank you. Thanks, John.

For more information, please check our investor relations website for Q2 2025 financial and operational highlights which outlines more details on Q2 results in 2025 guidance.

Lauren Tangler: Drew, let's open up for questions for the next 35 minutes. In order for us to take as many questions as possible, please limit yourself to one question and one related follow up. Please go ahead.

Lauren Tangler: And with that, I'll turn it back to Lauren. Who will moderate the Q&A? We'll do you. Thank you. Bye. Thanks, John.

Speaker Change: True, let's open up for questions for the next 35 minutes, or so, in order for us to take as many questions as possible, please limit yourself to 1 question and 1 related, follow-up, please go ahead.

Unknown Executive: We will now begin the question and answer session.

Unknown Executive: To ask a question, you may press star than one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys.

Unknown Executive: If at any time your question has been addressed and you would like to withdraw your question, please press star than two. Please limit yourself to one question and one related follow-up.

Unknown Executive: At this time, we will pause momentarily to assemble our roster.

Robert Marcus: The first question comes from Robbie Marcus with J.P. Morgan. Please go ahead. Oh, great. Good morning, and congrats on another fantastic quarter here. Thanks, Robby.

Speaker Change: Question. You may press star then 1 on your telephone keypad. If you're using a speaker-phone please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question please press star then 2, please limit yourself to 1 question and 1 related follow-up. At this time, we will pause momentarily to assemble our roster.

Robbie Marcus: The first question comes from, Robbie Marcus with JP Morgan. Please go ahead.

Robbie Marcus: Oh great. Uh good morning and uh congrats on another fantastic quarter here.

Robert Marcus: Two from me, kind of intertwined, so it is a related follow-up. Maybe to start, though, the Watchmen number was just phenomenal, plus 30 in the U.S., 28 worldwide, big acceleration. I imagine a lot of that is coming on the back of Option and Compt Committant, but maybe just speak to the durability of that. You know, the breadth and depth of usage that's driving it and what you're hearing in the field, just as we think about going into Champion next year, you know, which could be another leg of growth for the spring. Really the reliability and the trust that the physician community and referring physicians have in that device, along with our clinical and sales team is driving that.

Speaker Change: Um, thanks, Robyn 2. 2 from me, kind of intertwined. So it is a related follow-up. Uh, maybe to start though the The Watchmen number was just phenomenal plus 30 in the US 28 worldwide, big acceleration. I imagine a lot of that is coming on the back of option and can't commit and, but maybe just speak to the durability of that. Um,

Speaker Change: You know, the the breadth and depth of usage. That's driving it. And what you're hearing in the field, um, just as we think about going into Champion next year, you know, which could be another leg of growth, uh, for this franchise.

Yeah, I'll make it some initial comments and can can certainly uh, add more detail to it. We're really pleased with the results in the quarter at 28%.

Michael Mahoney: And obviously the continued investment in clinicals that you've noted in your comments there. Concomitant, as we've said in previous calls, is really a breakthrough opportunity for hospitals, physicians, and patients to be able to use the Watchman device and the safety and efficacy profile, combined with Veripulse and the same really superior safety and efficacy profile versus the competition. And the ability to do that in the same procedure has proven to be very valuable. And we're maximizing it as best we can commercially. Looking forward, we continue to believe that this category can grow in the 20 plus 20 percent range as it continues to scale larger and larger each quarter.

Um and you also saw some good news in the script there. Uh Watchman Flex Pro approvals outside the US and uh over the next lrp period, we aim to get more contributions outside the US and we currently do today uh with that device which has proven to be uh so safe and effective in the US, which is really the the reliability and the trust that the physician community and referring Physicians have in that device along with our clinical and sales. Uh, team is driving that and obviously the uh, continued investment. And uh, clinicals that you've noted, uh, on your comments there. Uh, comment as we've said in previous, uh, calls is really a breakthrough opportunity for a hospitals Physicians and patients, um, to be able to use the Watchman device and the safety and efficacy profile combined with Vera pulse and the same, uh, really Superior safety and efficacy profile versus the competition, and the ability to do that in the same procedure as proven to be very valuable.

John Monson: And we'll provide you more updates at Investor Day in terms of our programs on our Next Generation valve and continue to focus on clinical studies. Yeah, Robbie, I don't have too much to add to that, right? Again, I think it's the positive data from option. Very pleased to see the uptake of concomitant procedures. As Mike said on the call earlier, right, 60% of our EP implanters are already adopting the use of concomitant procedures. It's a win for everyone. It's better for patients. Clearly safer, easier for them. It's a win for hospitals as well.

Speaker Change: And we're maximizing it as best we can commercially, you know, looking forward, we continue to support believe that uh this category could grow, you know, in the 20 plus 20% range as it continues to scale, larger and larger each quarter and what Friday, more updates on investor day in terms of our programs on our next Generation valve.

And uh continued focus on clinical uh studies.

John Monson: We do look forward to presenting the champion data at a major conference first half of next year. I do think it's just important to say that it will take time for all of that to play out. We're very pleased to get the updated label from the option to be used as first line therapy in post-ablation. But it still will take time for reimbursement to catch up to that updated label. And again, even once we present the data from champion, we'll still take time for those data, if they're positive, to make their way into national coverage decision and into society guide.

Robbie Marcus: Yeah, Robbie I I don't have too much to add to that. Right. Again, I think it's the positive data from option would be very pleased to see the uptake of Conga procedures. As Mike said on the call earlier, right? 60% of our VPN Planters are already adopting. The use of concom procedures, it's a win for everyone. It's better for patients. It's, you know, clearly safer easier for them. It's a win for hospitals as as as well. Uh, we do look forward to presenting the champion data at a major conference first half of next year. Uh, I do think it's just important to say that it will take time for all of that to play out. We were very pleased to get the updated label, uh, from the option, uh, to be used as first line therapy and patients post ablation. Uh, but it still will take time for reimbursement to catch up to that updated available. And again, you know, even once we present the data from champion and we'll still take time for those data,

Robbie Marcus: If they're positive to make their way into National coverage decision, uh, you know, and into, uh, Society guidelines.

Robert Marcus: Great. Maybe just to follow up on that, John, the gross margin missed the street, but some eagle-eyed people noticed there's $130 million right down from the accurate exit, which is 260 basis points to the quarter, which would have put you in a great position, big year-over-year beat and beat versus the street. Maybe just speak to the drivers of that.

Robbie Marcus: Great maybe uh just to follow up on that, John the uh, gross margin missed the street but some eagle-eyed people noticed, there's 130 million.

Robbie Marcus: Write down from the accurate uh exit which is 260 basis points to the quarter, which would have put you in a, a great uh position, big year-over-year beat and beat versus the street, maybe just speak to the drivers of that. Um,

John Monson: You know, how much of that is new products versus underlying improvements and how we should think about sort of that underlying gross margin X tariff through the rest of the year. Yeah, thanks, Robbie. And maybe a couple points. Maybe first to the eagle eyed folks. So the 130 The accurate discontinuation, you know, impacted a number of different areas of the P&L. Within the adjusted P&L, we had some inventory charges and sales returns reserves related to accurate. That totaled approximately $100 million. Then we also had restructuring and intangible asset impairment charges that impact the GAP only P&L.

Robbie Marcus: You know how much of that is new products versus, uh, underlying improvements and how we should think about sort of that, underlying gross, margin X tariff, uh, through the rest of the year. Thanks a lot.

Mike Mahoney: Yeah. Thanks, uh, Robbie and and maybe a couple points, um, maybe first to the eagle-eyed folks. Um, so the the 1:30

Mike Mahoney: You know, impacted a number of different areas of the uh the p&l within the adjusted p&l. We had some inventory charges.

Mike Mahoney: Uh, in sales returns reserves related to accurate.

Mike Mahoney: That told old, uh, call approximately a hundred million dollars.

John Monson: So that's the 130 that was in the appendix of our operational highlights that the Eagle Eye folks picked up. So as far as our adjusted gross margin, roughly a hundred million dollar impact there from the accurate charges. Importantly, really pleased to see that we're able to offset that through the strong sales performance that you heard Mike go through, as well as strong spend control to make sure that we offset the impact there and through the full P&L and delivered the strong EPS performance that you saw in the quarter.

Mike Mahoney: Then we also had restructuring an intangible asset impairment, charges that impact the Gap only pnl. So that's that's the 1 130. That was in the appendix of our uh our uh, operational highlights that the eagle-eyed folks picked up.

Mike Mahoney: so, as far as our adjusted gross margin, uh, roughly 100 million dollar impact there from the accurate charges

Mike Mahoney: Uh you know importantly really pleased to see um that we were able to offset that uh through the strong sales performance, uh that you heard Mike go through.

John Monson: And so looking forward, Robbie, I would expect gross margin for the year to be roughly flat. So we have, you know, the impact of tariffs. The impact, which are now roughly 100 million is our estimate. The impact of those accurate charges, the roughly 100 million that I just talked about, being offset predominantly by favorable mix. You saw the Watchman numbers. Ferropulse continues to perform, as you can see, very well for us. That's accretive drug gross margin. So have those two items that we didn't anticipate at the start of the year with the accurate charge and tariffs being a large headwind, but Nick's offsetting that largely to get to flat for the year as our expectation.

Mike Mahoney: Uh, as well as uh, strong spend control, uh, to make sure that we offset the impact there and, uh, through the full p&l and delivered, the, uh, the strong EPS performance that you saw on the quarter.

Robbie Marcus: And so looking forward uh Robbie uh we expect uh gross margin for the year to be roughly flat.

Robbie Marcus: Uh, so we have um, you know, the impact of tariffs.

The impact which are now roughly 100 million is our estimate, the impact of those accurate charges, the roughly 100 million that I just talked about.

Robbie Marcus: Uh, being offset predominantly by favorable mix. Uh, you saw the Watchmen numbers. Uh, faults continues to perform, as you can see very well for us uh, that secretive drug or margin.

Robbie Marcus: So have those 2 items that we didn't anticipate at the start of the year, with the accurate charge, and, and tariffs. Um, uh, being a large headwind. But, uh, mixed offsetting that largely to get to Flat for the year as our expectation, for gross margin.

Robert Marcus: Great. I appreciate it. Thank you very much.

Speaker Change: Great. Uh, appreciate it. Thank you very much.

Lawrence Biegelsen: The next question comes from Larry Biegelsen with Wells Fargo. Please go ahead. Yeah, Larry, it's, it's, well, it's a little bit all of the above.

Perfect.

Larry Biegelsen: The next question comes from, Larry biegelsen with Wells Fargo. Please go ahead.

Uh, good morning. Thanks for taking the question. I'll I'll Echo Robbie's. Congratulations. Uh,

Larry Biegelsen: So, um, you know, for, for my mic or Dr. Stein, maybe talk about the growth vectors for your EP business. You know, market growth BFA adoption, you know, new geographies, new products, Etc. How would you have us think about these pieces and what your EP business could look like. Um, in 3 to 5 years, in any color on the proposed ASC codes and what they can mean for you. Thanks for taking the question.

Michael Mahoney: And we will get a lot deeper into that, as you say, that Long-Range Plan look at our Investors Day. I think sort of the quick answer, Beyond It's all of the above is it's continued market growth in the United States, you know, as you look at the safety profile with fair wave is with the predictability of the cases, as you look at the efficacy, the accumulating data now actually for superior outcomes, compared to thermal ablation, very pleased with what we're seeing internationally. Again, as Mike mentioned in the script, over 15,000 cases have already been performed in Japan, where even though we were third to the market, we are already the clear leaders in PSA.

Larry Biegelsen: Yeah, Larry, it's it's uh, well, it's it's a little bit of all of the above and, you know, we, we will get a lot deeper into that. As you say that, you know, long range plan, look at our investors day. Uh, you know, I think sort of the the again, the quick answer.

Beyond. It's all of the above is uh it's continued market growth in the United States. You know as you look at the uh safety profile with fairwave, it's with the predictability of the cases as you look at the efficacy. The accumulating data now at 2 for Superior outcomes,

Michael Mahoney: Very pleased with the adoption that we're seeing to date of our Fairview product, Opal, our fair wave NAV catheter.

Michael Mahoney: And you mentioned the ASC, you know, the proposed rule, which in the United States from CMS, which would allow ablations to be performed in the ASC. If that's finalized, we see that as an advantage for us, we do think that we are uniquely positioned to take advantage of procedures in the ASC. And again, it gets to the safety, it gets the predictability, but also gets to some of the economic advantages using fairway with Fairview compared to the competition.

Speaker Change: compared to Thermal ablation of very pleased with what we're seeing internationally. Uh, again, you know, as as as Mike mentioned, in the script over 15,000 cases have already been performed in Japan, where even though, we were third to the market, we were already the clear leaders in PSA, uh, very pleased with the adoption that we're seeing today of our Farah view process on opal or far away of Na nav catheter, and you mentioned the ASC, uh, you know, and the the, the proposed rule, uh, which in the United States, from CMS, which would allow oblations to be performed in the ASC, uh, if that's finalized, uh, we see that as an advantage for us. We do think that we are uniquely positioned to take advantage of, uh, the procedures in the ASC. And again, it gets to the safety.

Speaker Change: Gets the predictability uh but also gets to some of the economic advantages in using Faraway with Farah view compared to the competition.

Speaker Change: Thanks so much.

Joanne Wuensch: The next question comes from Joanne Wuensch with Citibank. Please go ahead. Good morning. And I'm going to add my congratulations.

Speaker Change: The next question comes from Joanne Lynch with City Bank, please go ahead.

Joanne Wuensch: If I'd like to pivot a little bit to the med-surg business, I think that gets overlooked a fair bit. Solid high single-digit revenue growth across the segments. What would you like to highlight in there? And what do you think we may be missing? Thank you.

Joanne Lynch: Uh good morning and I'm gonna add my congratulations. Um if I'd like to Pivot a little bit to the med surg business, I think that gets overlooked a fair bit. Um, solid High, single digit Revenue growth across the segments. Um, what would you like to highlight in there and what do you think? We may be missing. Thank you.

Michael Mahoney: Hi, Joanne. Thanks for the question. I would say one, I want to highlight endoscopy, the US business grew double digits, well above the market, grew 8% globally. That's despite some headwinds that we've talked about in the past, with some low cost scope competitors in Asia and Europe, which our team has really done a nice job of addressing. So we anticipate some of that headwind being mitigated as we look to 2026. So despite that, really strong performance and endo, as you know, high margin business force as well. Also pleased to see the enhancement improvement in neuromodulation.

Michael Mahoney: The team there grew strong double digits in DBS, and the relieving acquisition has been integrated extremely well, and really providing strong and creative growth to the company, and a wider solution for, for paying physicians. And we continue, I would say to have improved momentum in spinal cord stimulation. team made a number of commercial changes over the past year or so, and that team is starting to come together and strengthening. So we anticipate, you know, continued momentum with that neuromodulation business over the horizon.

Uh, with some low-cost um, scope competitors in Asia and Europe, which our team has really done a nice job of addressing. So we anticipate, uh, some of that headwind being mitigated, as we look to 2026. So despite that really strong performance and Endo, as you know, high margin business Force as well. Also pleased to see the uh, enhancement Improvement in neuromodulation uh, the team. There grew strong double digits in, um, in DBS in the relief and acquisition has been integrated extremely well, and really providing not strong, accretive growth to the company and a wider solution for, um, for pain Physicians and we continue, I would say to have improved momentum in spinal cord. Stimulation.

Michael Mahoney: And our urology business is a fantastic franchise. It's grown a little bit under what we typically expect them to deliver. And we signaled that at the end of the first quarter call, given some supply chain constraints that we're working through, that will get better in the second half of the year, and also some low cost competition with again, that the team is addressing very proactively. The Axonics integration is a super important integration for the franchise and for the company. In the first half of the year there, we really worked through some commercial model changes, some turnover, which we anticipated, and that team is now kind of restrengthened.

Joanne Lynch: The team made a number of commercial changes over the past, uh, year or so, and that team is starting to come together and strengthening. So we anticipate, you know, continue to momentum, uh, with that neuromodulation business, uh, Over the Horizon and our Urology business, uh, is a fantastic franchise. It's it's grown a little bit under, uh, what we typically expect them to deliver and we signal that at the end of the first quarter call, given some supply chain constraints that we're working through, that will get better in the second half of the year, and also some low-cost competition with, but again, that the team is addressing very proactively. The axonics integration is a super important, uh, integration for the franchise and for the company. And the first half of the

Michael Mahoney: We also had quite a bit of stocking that we had to work through in the first half of the year. So we anticipate improvement in the Axonics growth in the second half of the year and a very strong 2026 for Axonics. So overall, MedServe has performed well, and hopefully that color was helpful.

Unknown Executive: It is.

Joanne Lynch: The year there we really worked through uh, some commercial model changes, uh, some turnover which we anticipated and that team is now kind of restraint. We also had quite a bit of stocking that we had to work through in the first half of the year. So we anticipate an improvement in the axonics growth in the second half of the year and a very strong 2026 for Exxon. So overall Med surge has performed well and hopefully that color was a helpful to you.

Speaker Change: It is. Thank you.

Rick Wise: The next question comes from Rick Wise with CFL. Please go ahead. Good morning, Mike. Hi, everybody.

Rick Wise: The next question comes from Rick Wise with ceil. Please go ahead.

Rick Wise: Maybe just start us off, if you would, by thinking about the ASC setting and how it sets up growth for next year. And help us think through one thing. Obviously, in the hospital, you're seeing very strong concomitant attachment rates or uptake rates. If the PSA moves to the ASC, I don't think that concomitant would be as prevalent. Help us think through those moving pieces. And still, is the ASC a net positive, given maybe potentially lower Watchman implants? Just help us think through all that, if you would. Yeah, thanks. Thanks, Rick. And it's a really nuanced point that you're raising.

Hi, good morning, Mike. Hi everybody. Um

Rick Wise: Maybe just start us off if you would buy, uh, thinking about, uh, the ASC, uh, uh, setting of of and how it sets up growth for next year. Uh, and help us think through 1 thing. Um, obviously in the hospital you you're seeing very strong concom, uh, attachment rates, or uptake rates. Um, if if, uh, the PFA moves to the ASC, I don't think, uh, um, you know, that it can combat would be as prevalent.

Rick Wise: Help us think through those moving pieces. And, and uh, is this still is the ASC and net positive uh given maybe potentially lower, uh uh uh Watchman implants just help us think through all that if you would

Michael Mahoney: So I'll give you our view on it. And let me just start maybe with the the upshot. We still do see it as a positive. What you need to think about are really two things. One is the pace at which procedures are going to move out into the ASC. And again, this is a proposed rule, assuming that it gets approved, there will be, it's not a step change into the ASC. Today, there are approximately 20 states in the Union where there are not CON, it's type of need, or other regulations that would limit docs from opening an ASC.

Rick Wise: Yes. Thanks, thanks. Rick and and it's a really nuanced point that you're raising. So I'll give you our view on it. And let me just start maybe with the uh, the upshot. We still do see it as a positive.

Rick Wise: uh,

Rick Wise: What you need to think about are really 2 things. 1 is the patient which procedures are going to move out.

Rick Wise: Into the ASC. Uh and and again this is a proposed rule assuming that it gets approved, you there will be it's not step change into the ASC today. There are approximately 20 States

Michael Mahoney: Makes up approximately 40%. of the market. But the other 30 states, the other 60% of the market, it's a much more gradual ability to build out into the ASC. I think the other thing that's important here is Even once you have an ASC. Physicians are going to be thoughtful in asking, you know, who are the patients where you do the procedures in the ASC versus who are the patients where you still opt to do it in a hospital setting, you know, whether it's an inpatient or an outpatient basis in the hospital. And so our anticipation would be that you begin, right, by taking the simplest patient.

In the union where there are not Co certificate of need or or other regulations, that that would limit docs from opening an ASC, uh, makes up a proximately 40%.

Rick Wise: Of the market. But but the other 30 States, the other 60% of the market. It's a much more. Gradual ability to build out into the ASC. Uh, I think the other thing that's important here is

Rick Wise: even once you have an ASC,

Rick Wise: Physicians are

Michael Mahoney: so De Novo, Paroxysmal AFib, that you start with the patients who are the least frail. And those are the opposite of the patients, right, who are candidates for the concomitant procedure or Washington. The younger you are, the less comorbidities you have, the lower your risk for stroke. And so, you know, at the outset, again, it'd be our anticipation that folks begin with the easier, simpler, more straightforward cases. And those are just not patients who would have had concomitant procedures anyway. And it'll just take time to start moving the more complex procedures out into the ASC.

Michael Mahoney: So again, net sum, we absolutely see the ASC, you know, as a positive for us, gets back to what I said earlier to Larry. We really see ourselves as having really important differentiated advantages based on the entire FirePulse ecosystem as this transition begins.

Rick Wise: Chair, thanks for that as a follow-up.

Rick Wise: Are the last comorbidities you have the lower your risk for stroke? Uh, and so, you know, at the outset again, it'd be our anticipation that folks begin with the easier. Simpler more straightforward cases and those are just not patients, who would have had convenant procedures anyway, uh, and it'll just take time to start. Moving more complex procedures out into the ASC. So, again, net, sum we absolutely see the ASC, you know, as a positive for us, gets back to what I said, uh, earlier, Larry, we really see ourselves as having really important differentiated advantages based on the entire far pulse ecosystem as this transition begins,

Rick Wise: Mike, maybe you could expand a little bit on your thoughts about Sanovi with the deal now closed. How do we think about this? Is renal denervation here now, given the recent approvals? Is this just Boston, a flyby, initial checkout of the RDN scene, and waiting for things to evolve? And maybe just share with us, if you can, just are there key clinical timelines, or data, or FDA timing? Just help us, help level set us here.

Michael Mahoney: Thank you so much. Sure. Thanks, Rick. We really like where we're positioned with hypertension. So we've liked the marker for a while. As you know, we had a previous RF product that we discontinued a number of years ago. We absolutely feel that the ultrasound technology will be preferred. We have to prove it in a clinical trial over radio frequency in terms of its effectiveness and safety profile. So we really like the technology of Sony B. We made an investment in that company and we acquired it, I guess, closed in early first quarter. So we closed recently.

Mike Mahoney: Okay, thanks for that as a follow-up. Um, Mike, maybe you could expand a little bit on your thoughts about son of the, uh, with the deal. Now, closed, how do we think about this, uh, is renal The Innovation here. Now, given the the, the recent approvals the uh, is this just Boston, a flyby initial check out of the rdn seen and waiting for things to evolve and maybe just share with us. If you can just are their key clinical timelines or data or FDA timing. Just help us help level set us here. Thank you so much.

Speaker Change: Sure, thanks Rick. Uh, we'd like we really like where we're positioned with hypertension?

Michael Mahoney: So it's a technology that we had been watching for quite a while. And we jumped on that and acquired it prior to this reimbursement decision. So our timing really was nice there. And we're early in our clinical trial. So we won't be first to market. There'll be two others. But our timing of anticipated approval, which will outline more investor day, isn't that far behind. And given the relationships that we have in this marketplace, what we think is a platform that has enhanced features and benefits over the current generations, we think we'll be well positioned to take advantage of this market over the LRP and beyond.

Speaker Change: Um so we'd like the marker for a while. As you know we had a previous RF product uh that we discontinued a number of years ago. Uh we absolutely feel that the ultrasound technology is uh per will be preferred. We have to prove it as a clinical trial uh over radio frequency in terms of its uh, Effectiveness and safety profile. Um, so we really like that technology of Sony V, uh, you know, we made an investment in that company and we acquired it. Um, I guess closed in early first quarter. Um, so we second quarter, so we close close recently. So it's it's the technology that we had been watching for quite a while. Um, and we jumped on that and acquired it prior to this uh um reimbursement decision. So our timing really was nice there and we're quite we're early in our clinical trial. So uh we won't be first to Market um there'll be 2 others but our timing of a anticipated approval which will you know outline more and investor day. Uh

Michael Mahoney: And I think this market certainly could become a multibillion dollar market over time, not overnight. And I think given that market TAM opportunity, given the growth that we'll see, but it will still need additional key milestone takedowns on reimbursement, commercial coverage, and so forth. So this market has the potential to be quite large over time. And our positioning with the device that we have, I think could make this very disruptive for us, assuming we have a positive clinical trial and the market develops.

Speaker Change: Isn't that far behind and given the relationships that we have in this Marketplace, what we think is a, a platform that has enhanced features and benefits over the current uh, Generations. We think we'll be well positioned to take advantage of this Market, you know, over the lrp and Beyond and I think this Market, you know, certainly could could become a multi-billion dollar market over time.

Uh, not overnight, and I think given that, uh, Market Tam opportunity, uh, given the growth that we'll see, but it will still need, uh, additional uh, key Milestone takedowns on reimbursement. Uh, commercial coverage, and so forth. So this Market has a potential to be quite large over time, um, and our positioning it with the device that we have, uh, I think could make this very disruptive for us. Assuming we have a positive clinical trial in the market develops.

Michael Mahoney: Thanks, Mike.

David Roman: The next question comes from David Roman with Goldman Sachs. Please go ahead. Thank you.

Thanks Mike.

David Roman: Good morning, everybody. I was I was hoping we could dive a little bit deeper into the evolution of of the EP portfolio, because clearly you've seen strong adoption on Ferropulse. But as we look at both indication expansion and new product launches, it would actually seem like there's quite a bit of runway yet yet to go here. So maybe we just kind of think about where you've had adoption so far, most likely in DeNovo, PVIs, maybe some use in persistence. You're accelerating your investment in mapping. TheraPoint should be coming at some point later this year, early next year.

David Roman: I don't think you have an ice catheter yet. You have the Bayless portfolio. So can you maybe help us think about where you are in kind of capturing the totality of the EP market from a procedure and indication perspective, but then also as you think about the disposables used in an EP case, where you are in capturing the totality of the opportunity there?

The next question comes from David Roman with Goldman Sachs please go ahead. Uh thank you. Good morning everybody. Uh I was I was hoping we could dive a little bit deeper into the evolution of of the EP portfolio because clearly you've seen strong adoption on Farah pulse. But as we look at both indication expansion and new product launches, it would actually seem like there's quite a bit of runway yet yet yet to go here. So so maybe if we could just kind of think about where you've had adoption so far. Most likely in denovo pvis, maybe some use in persistence, your accelerating your investment. In mapping Fair points should be coming at some point. Uh, later this year early next year. I don't think you have an ice catheter yet. Um, you have the balanced portfolio so so can you maybe help us, think about where you are and kind of capturing the totality of the EP Market, from a procedure, or an indication perspective. But then also, as you think about the Disposable,

Kenneth Stein: Then I had one P&L follow up. Yeah, David, and I'll just begin, again, it's everything you just said. Strategy has always been to aim for category leadership. And category leadership includes everything you just talked about. I think, first off, just in terms of today's usage of FaroPulse, as Mike mentioned in the script, right, pleased to have gotten the indication expansion into persistent AFib, as well as paroxysmal AFib. To be frank, we were already seeing a very large amount of use in persistent population already. One of the great things about FaroWave is just how really elegantly, beautifully it's suited for going beyond just pulmonary vein isolation and using posterior wall ablation as well.

Speaker Change: Is used in an EP case. Where you are in. Capturing the totality of the opportunity there, then I had 1 uh, pnl follow-up.

Speaker Change: Yeah, David and I'll just Begin Again.

Speaker Change: It's everything you just said. And so,

Kenneth Stein: And we've been very impressed already by seeing just how many have adopted that as the predominant workflow that they're using. I think it's a very important message, right, that that PVI alone is really not sufficient to address the majority of patients who are getting ablated with atrial fibrillation today. Gets into moving into mapping, as I said earlier, I've been very pleased with the uptake of FaroView on the OPALS system.

Kenneth Stein: But it also does involve us having the complete toolkit. So involve solutions, which we acquired when we acquired Bayless.

Speaker Change: To persistent A-fib, as well as paroxismo aib to be frank. We were already seeing a very large amount of use in persistent population. Already, uh, 1 of the great things about Farrow wave is just how really elegantly beautifully it's suited for doing going Beyond just pulmonary vein isolation, uh, and using posterior wall ablation as well. Uh, and we've been very impressed already by seeing, just how many Physicians have adopted that as the predominant workflow that they're using. I think it's a very important message, right? That, that pvi alone is really not sufficient to address. The majority of patients, who are getting a bladed with, uh, uh, atrial fibrillation today, gets into moving into the mapping. Uh, as I said earlier, I've been very pleased with the uptake of Farah view on the opal system. Uh, but it also does involve us having the

Kenneth Stein: We do have an ice catheter under development, but more on that at investors day. And then we do have a full portfolio of additional ablation catheters. One thing I'd like to point out, you know, FaroWave is already, we already got a second generation PFA catheter on the market before most of our competitors have a proven first generation catheter on the market. We'll have continued iteration of FaroWave. Platform. We still anticipate approval of our Farah Point catheter second half of this year. We have a so-called large focal or MAP and ablate catheter. FarahFlex, that's already in its first human use trials, very pleased with how that's progressing.

Speaker Change: Complete toolkit. So in the solutions, which we acquired when we acquired bailis, we do have an ice catheter under development, but more on that at investors day, uh, and then we do have a full portfolio of additional ablation. Catheters, 1 thing I like to point out, you know, far away is already. We already got a second generation PFA catheter on the market, uh, before most of our competitors have a, a, a proven first.

Speaker Change: First generation catheter on the market. Uh, we will have continued iteration of Farah wave

Speaker Change: Platforms. Uh we still anticipate approval of our Farah Point catheter. Second half of this year, we have a so-called large focal or map in a blade catheter. Uh Sarah Flex, that's already in its first human use trials. Very pleased with how that's

Kenneth Stein: And I think maybe the sum here is, you know, we're not one and done with FarahWave. We've got an absolute commitment to continuing to iterate both in terms of ablation catheters, but also in terms of the entire ecosystem around it. The other thing I'll add to that besides the widening of the portfolio, which is what Ken talked about, which we have a lot of investment in internally and through our VC portfolio and partners, is also regional growth. As Ken mentioned, we're a third of market in Japan. Now we're the clear market leader in Japan. The Japanese market will benefit from the persistent label that will be coming in the second half of this year.

Speaker Change: Progressing, uh, and I think maybe the, the sum here is, you know, we're not 1 and done with Far Away. We've got an absolute commitment to continuing to iterate both in terms of ablation, catheters, but also in terms of the entire ecosystem around it,

Kenneth Stein: So that should further strengthen it and we continue to roll out mapping systems there. We're very, very early days in China, which is a very, very big market for us. So a lot of emphasis on that. So we put a lot of time and attention in this. We not only want to be the clear leader in PFA, but our aim is to be the overall leader in EP in the future.

David Roman: Thank you. I appreciate all the perspective.

Yeah, the other thing I'll add to that besides the, the widening of the portfolio, which is what Ken talked about, which we have a lot of investment in internally and through our VC, uh, portfolio and partners is also a regional growth. Uh, as Ken mentioned, we're a third of Market in Japan. Now with a clear market leader, in Japan. Uh, the Japanese Market will will benefit from the persistent label. That will be coming uh, in the second half of this year. Uh, so that should further strengthen it as and we continue to roll out mapping systems. There we're very very early days in China, which is a very, very big market for us. So a lot of emphasis on that. So we put a lot of time and attention in this. We not only want to be the uh, clear leader in PFA, but our aim is to be the overall leader in EP, uh, in the future.

David Roman: And maybe just on the P&L, John, I think if you go back to Q1, you talked a little bit about a slower start to the year on OPEX. This quarter, I think you utilized OPEX as a way to offset what looks to be like a six cent headwind-ish from the dynamics with accurate.

John Monson: Are you at a point now where given the top line, it's becoming more challenging to spend all the upside and that we should start to see more operating leverage or is there something more deliberate going on in OPEX? Thanks, David. You hit the dynamics, excuse me, pretty well for the second quarter, first quarter. Say in the second quarter, there was some holdback on on OPEX and investment back into the business. As you recall, as we started the quarter on April 2, we had the updates on tariffs. And then, you know, midway through the quarter, we announced the accurate discontinuation.

Speaker Change: Uh, thank you. I appreciate all all the perspective and maybe just on the, on the p&l. Uh, John. I think if you go back to q1, you talked a little bit about a slower start to the year on Opex this quarter. I think you uh you utilize Opex as a way to offset what looks to be like a 6 Cent headwind from the Dynamics with with accurate are are are you at a point now or given the Top Line? It's becoming more challenging to spend all the upside and that we should start to see more operating leverage or leverage. Or is there something more deliberate going on in Opex?

Speaker Change: Okay. Thanks David. Um, hey, you hit the Dynamics? Excuse me, pretty well for the, the, um, uh, uh,

John Monson: So bit of a holdback on OPEX in Q2, which was important to offset the accurate charge that we stepped through earlier.

John Monson: So then if we move into the second half of the year, a couple dynamics there. We'll see the tariff impact really take hold, approximately $100 million, which predominantly impacts the second half of the year. And then we do anticipate continuing to reinvest back into the business to drive differentiated revenue growth for the near and long term. So that's the focus of the company. So I'd expect to see R&D take up a bit in Q3 and in the second half of the year. A lot we're excited about across the portfolio there. And we'll likely look to invest across the commercial team and make some commercial investment as well with launch activity going on to continue to drive the growth that we're seeing.

Speaker Change: Second quarter first quarter, say in in the uh, second quarter, there was some hold back on, uh, on Opex and investment back into the business as you recall. As we started the quarter on April, 2nd, we had, um, uh, the updates on tariffs, uh, and then, um, you know, Midway through the quarter, we announced the accurate discontinuation. So bit of a hold back on, um, uh, Opex in Q2, uh, which was important to offset, um, uh, the accurate charge that we stepped through earlier. So then, as we move into the second half of the year, a couple Dynamics there,

Speaker Change: Uh we'll see the the Tariff impact really take hold uh approximately 100 million which predominantly impacts the second half of the year. And then we do anticipate uh, continuing to reinvest

Speaker Change: uh,

John Monson: So, you know, on the whole, I'm really pleased with, you know, the 75 to 100 basis points of off-margin expansion that we're expecting for the year, and I think we're doing a nice job of balancing drop-through to the bottom line and off-margin expansion with reinvestment back into the business. And I think you'll see more of that in the second half.

Speaker Change: Launch activity going on uh, to continue to drive the growth that we're seeing.

David Roman: Excellent. I appreciate all the perspective. Thank you.

Speaker Change: So, you know, on the whole, I really pleased with um you know the 75 to 100 B basis points of margin expansion that we're expecting for the year. And I think we're doing a nice job of balancing drop through to the bottom line and top margin expansion with reinvestment back into the business and I think you can see more of that in the second half here.

Speaker Change: Excellent. Uh appreciate all the perspective. Thank you.

Travis Steed: The next question comes from Travis Steed with Bank of America. Please go ahead. Hey, everybody, congrats on a good quarter. I guess kind of before later this year, you're going to be updating the LRP at the Analyst Day, but just kind of bigger picture how you kind of see the pluses and minuses shaking up over the next few years, versus the last couple of years, and your weighted average market growth now is, you know, kind of approaching 10%. And so just think about the confidence and to continue to kind of outgrow your markets as you've kind of always done historically.

Travis Steed: The next question comes from Travis Steed with Bank of America, please go ahead.

Michael Mahoney: Thank you.

Travis Steed: Hey everybody, congrats on a good quarter. I I guess kind of before later this year, you're going to be updating the the lrp at the analyst day, but just kind of bigger picture. How you kind of see the pluses and minuses shaking up over the next few years, uh, versus the last couple of years. And your weighted average market growth now is, you know, kind of approaching 10%. And so just think about the confidence and uh to continue to kind of outgrow your markets as you as you kind of always done historically.

John Monson: Well, I think that's we have like, half a day with you at Investor Day to talk about your question. So as nothing break through here, but our goal is to continue to improve our weight average market growth rate through our organic portfolio choices we make in our venture and our M&A, which we've done over many, many years. So we anticipate that to continue. At the same time, we expect our leaders to grow faster than the markets, not every division, every region does it every quarter, but the majority of them do. So we have a strong track record of growing faster than our weight average market growth rate.

Travis Steed: Well, I think that's we have like a half a day with you at investor day to talk about your question so as nothing break through here. But our our goal is to continue to improve our weight average market growth rate. Through our organic portfolio choices, we make at our Venture and our m&a, which we've done over many many years.

Michael Mahoney: And we are, as John mentioned, we are enhancing our R&D spend. And we have many, a number of important shots on goal to drive differentiated growth over the next five years. And we'll talk a lot about that at Investor Day. Great, thank you.

John Monson: And then John, just quickly on the tax rate, with the new legislation that came out, and there was any kind of update on how you're thinking about the tax rate going forward? Yeah, so we previously, Travis, as you know, expected a two to 300 basis point headwind to the tax rate. Under the TCJA and certain rates there that were set to increase in 2026 and beyond under that now old legislation. Under the OBBB with new rates that were established there and other provisions, that headwind has largely gone away. So that's the impact to Boston Scientific from the new tax legislation.

So we anticipate that uh to continue at the same time, we expect our leaders to grow faster than the markets. Not every division every region does it every quarter but the majority of them do so we have a strong track record of growing faster than our weight of Benchmark growth rate. And uh, we are as John mentioned, uh, we are enhancing our R&D spend, um, and we have many a number of important shots on goal, uh, to drive differentiated growth over the next 5 years. Um, and we'll, we'll talk a lot about that investor day.

Great. Thank you. And then John just quickly on the the tax rate uh with some of the new legislation that came out and if there was any kind of update on how you're thinking about the tax rate uh going forward.

Travis Steed: yeah, so um, we'd previously Travis as you know um expected a 2 to 300 basis point headwind uh to the tax rate

Travis Steed: Uh, under the tcja and and certain rates there that were set to, uh, increase in 2026 and Beyond under that. Um, now old legislation under the O BBB, uh, with uh, new rates that were established there and and other provisions.

That, um, that headwind has largely gone away.

John Monson: As we get to the normal course and the Q4 earnings call, we'll update on our specific guide for tax for 2026. But that was, for the team here, a good outcome from the recent legislation. Great, thank you.

Travis Steed: So that's um, that's the impact to Boston Scientific from, uh, the new tax legislation, you know, as we get, um, to the normal course. And uh the Q4 earnings call will will update on our specific uh guide for tax for 2026. Um but that was uh for the team here, uh good outcome from the uh the recent legislation.

Travis Steed: Great. Thank you.

Michael Mahoney: The next question comes from Michael Polark with Wolf Research. Hey, good morning. I have one on Medicare rulemaking. Another thing that came out during Rate Season was the position fee for LAA was proposed down 16%. Year on year, the societies came out against this. There's so much going right in that business with watchman form factor innovation, concomitant, champion ahead. How much of a challenge does this present, if any? And do you agree with Medicare's math?

Michael Polar: The next question comes from Michael polar, with wolf research. Please go ahead.

Michael Polar: Hey, good morning. Um, I have 1 on Medicare rule making uh, another thing that came out during um,

Michael Mahoney: Thank you. We certainly think payment ought to be appropriate, the amount of work that's involved in doing a procedure. And I say, you know, my concern, you know, as someone who's done procedures is, you know, whether they are really appropriately valuing the complexity of the decision making that's involved in managing these patients. You know, we certainly are committed to giving the medical society support that they need from us to help mitigate any impact of this proposal. You know, I think, frankly, you know, in terms of impact on growth, you know, I still firmly believe doctors are going to do the right thing.

Michael Polar: Rate season was the physician fee for Loba was proposed, down 16% year on year. The societies came out against this. There's so much going right in that business with Watchmen form factor Innovation can combinate Champion ahead. How much of a challenge does this present? If any um and do you agree with with medicare's maps? Thank you.

Yeah, Michael. Well uh you we we certainly think payment ought to be appropriate to the amount of work that's involved in doing a procedure. Uh, and I say, you know, my my concern, you know, as someone who's done procedures, uh, is you know, whether they are really appropriately valuing the comp

Michael Mahoney: and are going to pick the most clinically appropriate treatment. You know, when it comes to something as important as preventing stroke, you know, I be very hopeful that this kind of a reimbursement cut, if it does persist into the final rule, still, you know, will not prevent patients from getting the treatment.

Michael Polar: City of the decision-making that's involved in managing these patients. Uh, you know, we we certainly, uh, are committed to giving the medical societies support that they need from us to help mitigate any impact of this proposal. Uh, you know, I think frankly, you know, in terms of impact on growth, uh, you know, I, I still firmly believe docs are going to do the right thing for patients and are going to pick the most clinical appropriate treatment. Uh, you know, when it comes to something, as important as preventing stroke. Uh, you know, I, I

Thank you.

Danielle Antalffy: The next question comes from Danielle Antalffy with EBS. Please go ahead. Hey, good morning, everyone. Thanks so much for taking the question. And I'll add to everyone's congratulations on another very strong quarter. Just two questions for me.

Speaker Change: The next question comes from Danielle and Ty with UBS, please go ahead.

Danielle Antalffy: Number one on Watchman and Sarah Pulse and asking the question from another direction, and that's capacity, which I appreciate, you know, the recent approval on the AIC. That's that's definitely helpful. But, you know, a lot of these EPs are also doing Watchman procedures. Yes. Now they can do it concomitantly. But at what point do we start to see capacity be an issue? And I guess the the father, are you seeing that yet?

Michael Mahoney: And then the follow up question is related to that. You know, you guys had said you're still pretty early in the. TheraPulse launch broadly. I mean, You're a year in, but you're still not getting into the sort of lower volume centers. Have you guys started to get into these lower volume centers? Are you seeing previously pretty low volume centers doing higher volumes at this point? Because now they have access to this device that democratizes ablation. Thanks so much. Thank you. Sure, Danielle, thanks for the question. I'd say just on capacity, really no difference versus previous comments.

Speaker Change: Hey, good morning everyone. Thanks so much for for taking the question and I'll I'll add to everyone's congratulations on on another very strong quarter. Um just 2 questions for me. Number 1, um, on Watchmen and therapists and asking the question from another Direction and that's capacity which I appreciate, you know, that the recent approval on the the AIC that's that's definitely helpful. But you know a lot of these EPS are also doing Watchmen procedures. Yes. Now they can do it can comment leave. But at what point uh do we start to see capacity be an issue and I guess the, the follow or are you seeing that yet? And then the follow-up question is, is related to that. You know, you guys had said, you're still pretty early in the, um,

Speaker Change: Therap, pulse launch, broadly. I mean you

Speaker Change: You're a year in but you're still not getting into the sort of lower volume centers. Have you guys started to to get into these lower volume centers? Or are you seeing previously pretty low volume? Um centers doing higher volumes at this point because now they have access to this device that democratizes um ablations thanks so much.

Michael Mahoney: Thankfully, the procedure is very safe to, Ferropulse, Watchman, or Concomitant. It's a very safe and effective, albeit complex, procedure that docs have a lot of confidence in. The hospitals do a good job of knowing the predictability and time allotment for these procedures because they've done a lot of them. So they're able to better plan. We don't like the proposed reimbursement cuts for physicians. However, on the hospital side, these are strong procedures in terms of profitability for hospitals. So we do see some hospitals investing more and more in adding additional labs and potentially prioritizing as best they can for these types of procedures.

Speaker Change: Sure, I had Danielle. Thanks for the question. I'd say just not capacity, really. No difference versus a previous comments. Uh, thankfully, the procedure is very safe and fair Paul's Watchman or can comment. It's a very safe and effective. Albeit complex, uh, procedure that docs have a lot of confidence in the hospitals. Do a good job of knowing the predictability and time allotment, uh, for these procedures because, uh, they've done a lot of them. So they're able to better plan. Um,

We don't like the the post reimbursement cuts for Physicians, however, on the hospital side, uh, the these are uh strong procedures in terms of profitability for hospitals.

Michael Mahoney: So today we don't see a big constraint. There's still a pretty healthy backlog across most centers for Watchman, Farrapals, or concomitant, which is, you know, which I guess is a good sign for the future. And as Ken talked about earlier, this ASC potential ruling, which is going to affect in 26, if it all goes through. We see about 20 states in the U.S. that potentially could act on this that don't have certificate of needs that would represent about 40% of the AFib volume. So that won't happen overnight, but over time you'll see more and more of the PBI, posterior wall, these types of procedures moving more to the ASC, which will provide some additional capacity.

Speaker Change: So, we do see some hospitals, uh, investing more and more in adding additional Labs um, or and potentially prioritizing as best they can for these types of procedures.

So today we don't see a a big constraint. Uh, there's still a pretty healthy backlog across most centers for a Watchman Fair polls. Or can comment, which is, you know, which I guess is a good sign for the future and as, as Ken talked about earlier, this ASC potential ruling uh which is going to affect in 26, if it all goes through.

Michael Mahoney: So I think the ASC ruling will help with capacity. And we continue to work on technology solutions to drive better procedure time, more productivity, and concomitant.

Speaker Change: Yeah, we see about 20 States, uh, in the US that potentially could act on this that don't have certificate of needs. That would represent about 40% of the aphid volume, so that won't happen overnight. But over time, you'll see more and more of the, uh, pvi posterior wall, but these types of procedures moving more today to see, which will provide some additional capacity. So, I think the AC ruling will help with the capacity and we continue to work on Technology Solutions to drive. Uh,

Michael Mahoney: and there was a second part of the question. Lower volume centers, are you seeing that? Lower volume centers, for sure. You know, we have put the majority of focus in Europe and U.S. and Japan on the highest volume centers for obvious reasons, but as we continue to expand the rollout in Europe primarily and U.S. and Japan, we are moving into some smaller centers as we continue to scale our commercial capabilities and our clinical footprint.

Speaker Change: Better procedure time, more productivity uh, in Congo procedures.

Speaker Change: There was a second part of the question. Lower volume centers. Are you seeing lower volume centers for sure? You know, we, uh, have put the majority of focus in the, in Europe and us and Japan on the, on the, on the highest volume centers for obvious reasons. Uh, but as we continue to, uh, expand the role out in Europe, primarily and us and Japan. We are moving into, uh, some smaller centers. Uh, as we continue to scale, our commercial capabilities in our clinical footprint.

Unknown Executive: And I understand there's time for one last questioner. That's right.

Speaker Change: And I understand there's time for 1 last questioner.

Matthew O'brien: That will come from Matthew O'Brien with Piper Sandler. Please go ahead. Good morning. Thanks so much for squeezing me in. Maybe, I think Mike talked about the concomitant percentage, about 60% of all procedures now, or all of your doctors have done at least one concomitant procedure. How has that trended over maybe the last 6 to 12 months, especially following the option readout? And then I do have a quick follow-up. Yeah, maybe I would just to clarify that. So the 60% is of, of the electrophysiologists who do Watchman implants, and of course, it's a mix of interventional cardiology, structural heart physicians, as well as electrophysiologists who do these procedures, but of the EPs who do the procedures who are also the ones who do ablation, right, 60% of EPs who have been Watchman implanters have already jumped onto the concomitant bandwagon.

That's right.

That will come from Matthew O'Brien with Piper, Sandler. Please go ahead.

Uh, good morning, thanks so much for squeezing me in. Um, maybe I think I think Mike talked about the incompetent um, percentage about 60% of all procedures. Now are all of your doctors have done at least 1 key comment, um, procedure, how has that trended over maybe the last 6 to 12 months? Um, especially following the option readout and then I do have a quick follow-up.

Matthew O'brien: Now, I think just in terms of understanding where the growth there is, right, remember Although some folks were doing concomitant procedures even before CMS established the unique DRG to pay for it, you know, really, we only have reimbursement at the hospital level for concomitant beginning in October of last year. And then the option data was only released in November of last year. So, right, this is all still a very new phenomenon. And we still, right, see physicians needing to understand how do you adopt it into the workflow. So, you know, sequentially still seeing important growth.

Matthew O'brien: in the concomitant. in the concomitant procedure. Okay, yeah, I know. Thanks for that, Dr. Stein. I know we're early days there. I guess the follow up question would really be kind of dovetailing off of David Roman's question about the breadth of the portfolio that you have here, you know, in mapping now with concomitant with, you know, obviously best in class product with Watchmen by a mile. You know, just your ability, because I know a big concern that investors have is just competition coming in, you've got some established competitors with big mapping footprints out there.

Speaker Change: Now, I think just in terms of understanding, sort of where the growth there is, right, remember? Although some folks were doing concoct and procedures even before CMS established the unique uh, drg to to pay for it, you know really we only have reimbursement at the hospital level for conom beginning in October of last year. Uh and then the option data was only released in November of last year. So right? This is all still a very new phenomenon uh and we still write see Physicians needing to understand how do you adopt into the workflow. Uh so you know, sequentially still seeing important growth.

In the concocted.

Speaker Change: Uh, in the concocted.

Speaker Change: Procedure.

Speaker Change: Okay, yeah, I I know thanks for that Dr. S, I know we're early days there, I guess the follow-up question would really be kind of dovetailing off of David Roman's question? About the breadth of the portfolio portfolio that you have here, you know, in mapping now with Khan comment it with, you know, obviously best-in-class product with Watchmen by mile. Um,

Michael Mahoney: So just your ability to kind of defend yourself, or just said another way, the moats you're building here between Opal, all the catheters, plus, you know, concomitant cases, how wide is that moat in your opinion? And how much wider can it get? Well, we continue to aim to be, as I mentioned, the clear PFA leader. And we aim to be the number one overall on EP as we widen that portfolio. I think a good testament is what happened in Japan. You know, we're a third to market in Japan without a persistent label indication, which our competitors had.

Speaker Change: You know, just your ability because I know a big concern that investors have is just competition coming in. You've got some established competitors with big mapping uh, footprint out there so just your ability to kind of defend yourself or just set another way. The most You're Building here between opal, all the catheters plus, you know, combinate cases. How how wide is that Mo in your opinion and how much wider can it get?

Speaker Change: Well we continue to aim to be as I mentioned the clear, PFA leader and we aim to be the number 1 overall in EP as we widen that portfolio, I think a good Testament is what happens in Japan. You know, we're a third to Market in Japan.

Michael Mahoney: And now we're the clear leader in Japan and we'll be adding persistent label to it. So we do feel like we have some unique advantages that are highly differentiated with Ferropulse and Ken detailed out and you'll see it investor day quite a bit, how we're widening the portfolio for and then plus the underlying market growth, you know, is nearly 20 percent. Clearly, that will slow down over time, but it'll still be likely mid-teens growth and the largest fastest growing market in med tech.

Michael Mahoney: There wasn't a question on this, but I feel like I wanna call out our interventional cardiology team. Our ICTX business is one of our largest businesses in the company and no questions on it today. And most companies don't talk about coronary therapies. They think of drug-leaving stents, but it's a great example of a business unit that our team focused on this across all of our business. on moving into faster markets and having unique technology backed by clinical support. Our coronary therapies business this year, I'm sorry, this quarter, grew high double digits. It's pretty unique for coronary therapies, and given the size of that business, and a lot of that's being driven by our imaging business, which continues to enhance, and the execution of our agent DCB in terms of its clinical study, the positive coverage decisions we've received, and the execution of that commercially.

Without a persistence, uh, labeled indication, which our competitors had. And now we're the clear leader, uh, in Japan. And we'll be adding persistent label to it. So we do feel like we have some unique advantages, uh, that are highly differentiated with pharah pulse and can detailed out and you'll see the investor day quite a bit. How we're widening the portfolio uh, for and then plus the underlying market growth. You know, is nearly 20% right now and it's clearly that will slow down over time, but it'll still be likely mid teens growth and the largest fastest growing Market in Medtech. There wasn't a question on this. If I just I feel like I want to call out our Interventional Cardiology team.

Um, you know, our ictx business is 1 of our largest businesses in the company and no questions on it today and most companies don't talk about coronary therapies and I think of drug living stance but it's a great example of a business unit that in our team focused on this across all of our business units on moving into faster, uh, way to that faster markets and having unique technology backed by clinical support in our coronary therapies business. This year, I'm sorry, this quarter grew High, double digits

Michael Mahoney: So I think it's a good example of how our business units revamp their portfolio within their own businesses, and you have a business now in what's considered a very slow market, growing strong double-digit.

Speaker Change: It's pretty unique for coronary therapies and then given the size of that business. Um, and a lot of that's being driven by our our Imaging business, we, which continues to uh, enhance and the execution of our agent DCB in terms of its clinical study, the positive coverage decisions that we've received and the execution of that commercial. So I think it's a good example of how our business units, revamp their portfolio within their own businesses and you have a business now and what's considered a very slow Market growing um strong double digits

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