Citi's Global Health Care Conference February 25,...
Transcript of Citi's Global Health Care Conference February 25,...
1 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Citi's Global Health Care Conference
February 25, 2013
™
2 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
This presentation contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements may be identified by words like
“anticipate,” “expect,” “project,” “believe,” “plan,” “estimate,” “intend” and
similar words. These forward-looking statements are based on our beliefs,
assumptions and estimates using information available to us at the time and are
not intended to be guarantees of future events or performance. If our underlying
assumptions turn out to be incorrect, or if certain risks or uncertainties
materialize, actual results could differ materially from the expectations and
projections expressed or implied by our forward-looking statements. Factors that
may cause such differences can be found in our most recent Form 10-K and Forms
10-Q filed or to be filed with the Securities and Exchange Commission under the
headings “Risk Factors” and “Safe Harbor for Forward-Looking Statements.”
Accordingly, you are cautioned not to place undue reliance on any of our forward-
looking statements. We disclaim any intention or obligation to publicly update or
revise any forward-looking statements to reflect any change in our expectations or
in events, conditions, or circumstances on which they may be based, or that may
affect the likelihood that actual results will differ from those contained in the
forward-looking statements.
Safe Harbor For Forward-Looking Statements
3 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
This presentation includes products that have not been approved
or cleared by the U.S. Food and Drug Administration and
are not available for sale in the U.S.
All future product approval and launch dates are based on estimates
of completion of regulatory submissions, review and/or approval or
clearance, as well as other business considerations.
For reconciliations of non-GAAP financial measures used in these
presentations to the most directly comparable GAAP figures, please
refer to the Investor Relations section of our website at
www.bostonscientific.com.
Disclaimers
4 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Focused on Turning Around Performance in 2013…
A turnaround in markets that are challenging but improving
Making significant changes to improve execution and performance
A clear strategy to accelerate revenue and earnings growth
Delivering strong cash flow and balanced capital allocation strategy
Advancing science for lifeTM – committed leadership team
…and Driving Consistent Revenue and Adjusted Earnings Growth
5 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Tailwinds
Demographics
(e.g. aging population,
comorbidities)
Emerging Markets growth
New treatments for: Hypertension, Transaortic Valve, Left
Atrial Appendage and Asthma
Convergence of device and
informatics; increasing patient
awareness
Increasing scale of Accountable
Care Organization model
Headwinds
Significantly stronger economic
buyer, increased pricing pressure
Medical device tax
Economic conditions in Europe,
Middle East, Africa (EMEA)
Local competitors in Emerging
Markets
Increasing scale of Accountable
Care Organization model
Market Changes…
…are Driving both New Challenges and Global Opportunities
6 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
ICD Battery Longevity
Alair ®
S-ICD© LOTUS™
Renal Ablation
Increase Patient
Access to Therapy
Reduce Healthcare Costs
Improve Patient Outcomes
SYNERGY™
…Aligning Incentives Between our Customers and BSC
Boston Scientific Platforms Drive Unique Value…
7 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
2012 Served Market †
$30B -1%
2017E Served Market †
$40B +4%
MedSurg ~18% CRV
~78%
MedSurg ~19%
CRV ~66%
Percent of Market Revenue
CRV Mkt Share
MedSurg Mkt Share
BSC’s Portfolio Transformation…
MedSurg Mkt Share
CRV Mkt Share
Adjacencies ~4%
Adjacencies ~15%
…is Well Underway Source: BSC Internal Estimates
Percent of Market Revenue
8 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Large End Markets Expected to Stabilize…
CRV
MedSurg
2012A
Growth†
2013E
Growth†
2014-2015E
Growth†
2016-2017E
Growth†
IC (4%) (4%) (2%) (1%)
CRM (5%) (3%) (2%) (1%)
EP 10% 12% 12% 11%
PI 4% 5% 5% 5%
Endo 4% 4% 5% 5%
Uro/WH (3%) 2% 5% 5%
Neuromodulation 6% 6% 7% 8%
Core Market Total (1%) 0% 2% 2%
Adjacencies 30%+ 30%+ 30%+ 30%+
Total Served Market (1%) 1%+ 2%+ 4%+
…with Growth Accelerating from Adjacencies Source: BSC Internal Estimates
9 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
2012 Percent of Revenue†
Adjacencies
6%
Adjacencies
13%
2015E Percent of Revenue†
2017E Percent of Revenue†
MedSurg/PI
40% EP
4%
IC/CRM
43%
MedSurg/PI
42%
IC/CRM
49%
EP
3%
Adjacencies
0.4%
MedSurg/PI
40%
IC/CRM
58%
EP
2%
Source: BSC Internal Estimates
…and ~60% of our Business in Higher Growth Markets
More Balanced Portfolio: IC/CRM Returning to Growth…
10 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Creating a global operating model
New Asia-Pacific leadership and Emerging Markets infrastructure
Strengthening sales model in the U.S. and EMEA
Stronger corporate sales organization
R&D alignment to improve productivity
Leaner organization to improve speed
…to Drive Growth and Improve Global Execution
Operational Changes Being Made...
11 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
STRENGTHEN
Execution to
Grow Share
EXPAND
into High Growth
Adjacencies
DRIVE
Global
Expansion
FUND
the Journey
to Fuel Growth
DEVELOP
Key
Capabilities
Our People: Engagement, Development, Retention
Our Values: Caring, Meaningful Innovation, High Performance, Global Collaboration, Diversity, Winning Spirit
Boston Scientific – Advancing science for lifeTM
Strategic Imperatives
12 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
We are Strengthening our CRV Pipeline…
S-ICD®
EpicTM Iliac SES
SynergyTM
Next Gen ICD/CRT-D System
Promus
PREMIERTM
iLab® Polaris
CrossBoss® and Stingray® CTO System
Rhythm Management Interventional Cardiology Peripheral Interventions
IntellaTip MiFi™
Constellation CE
OffRoad™
Rubicon™
18/35
…with Meaningful Innovation to Gain Share
13 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
BSC’s Unmatched Commitment to IC…
Complex PCI Future Growth Opportunities
DES Core IVUS Specialty Coronary
CTO LAAC
HTN
(RD) TAVR FFR
BSC
ABT
MDT
STJ
…Broadest and Deepest IC Product Portfolio Source: BSC Internal Estimates
Standard PCI
14 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Rhythm Management Strategy is Focused…
…on Providing the EP a Comprehensive Set of Solutions
Comprehensive EP Product Offering
S-ICD®
System WATCHMAN®
Rhythmia
Medical
Next Gen
ICD/CRT-D
System
Patient Management
Next Gen Stim /
Ablation
Therapies
15 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
…Expanding Share and Global Reach
Differentiated Pipeline in MedSurg…
Genesys
HTA®
Ablation
Endoscopic Bronchial Ultrasound
Endoscopy Urology / Women’s Health Neuromodulation
StarFireTM
Laser Obtryx®IITM
WallFlex® Transhepatic
NEXT GENERATION
Precision SPECTRATM
16 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Hypertension Severe Asthma
Left Atrial Appendage
EP / Atrial Fibrillation
Deep Brain Stimulation
Expanding into New Adjacencies…
Transcatheter Aortic Valve
Replacement
2017E
Market†
$700M
2017E
Revenue † Goal
$50M+
2017E
Market†
$2,600M
2017E
Revenue † Goal
$150M+
2017E
Market†
$4,300M
2017E
Revenue † Goal
$350M+
2017E
Market†
$1,500M
2017E
Revenue † Goal
$200M+
2017E
Market†
$400M
2017E
Revenue † Goal
$200M+
2017E
Market†
$500M
2017E
Revenue † Goal
$200M+
…Accelerating Our Growth and Leveraging Our Capabilities Source: BSC Internal Estimates
17 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
2012A 2017E Total Company
Revenue†
Total Company
Revenue†
Aligned globally for growth
More balanced global portfolio
Building new capabilities in
Emerging Markets
Brazil, Russia, India and China
(BRIC) growing +30%
BRIC 4%
International
41%
U.S.
53%
International
43%
BRIC 10%
International
41%
U.S.
50%
International
40%
Driving Global Expansion…
…to Accelerate Growth and Establish New Capabilities Source: BSC Internal Estimates
18 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Gross margin expansion
Transitioned to self-manufactured stents
Manufacturing Value Improvement Programs (VIPs)
Strategic pricing
Continued focus on productivity initiatives
Delivering on restructuring program
R&D productivity
Corporate function and SG&A initiatives
…to Help Drive Profitability
Funding the Journey to Fuel Growth…
19 Boston Scientific Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
2017E† 2012A†
Adjusted Operating Margin Expansion Opportunity…
19%
Opex† Gross Margin†
% of Sales
25% 4%
2%
…Expected to Yield 600 bps over 5 Years Source: BSC Internal Estimates
Note: Adjusted Operating Margin is Non-GAAP and exclude goodwill and other intangible asset impairment charges, acquisition and divestiture- related net
credits, litigation, and restructuring-related charges, discrete tax items and amortization expense. For reconciliations of non-GAAP financial measures to the
most directly comparable GAAP figures, please refer to the Investor Relations section of our website at www.bostonscientific.com.
20 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Estimate through 2017†
Adjusted Free Cash
Flow†1
$6.5B+
Q4 2012 Cash on Hand†
$0.2B
$6.7B+
Expected Future Capacity for:
Acquisitions:
Growth adjacencies
Near-term revenue contribution
Stock repurchases under new $1B program
Risk contingencies
Legal & tax
…Continued Strong Free Cash Flow
Improved Profitability to Drive…
Source: BSC Internal Estimates
1 - Adjusted Free Cash Flow excludes any potential amounts related to acquisition-, divestiture- and litigation-related items, significant tax audit settlements and restructuring and
restructuring-related items. For reconciliations of our non-GAAP financial measures, please refer to the Investor Relations section of our website at www.bostonscientific.com.
21 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Operational
Revenue*
Adjusted
OI*
Adjusted
EPS*
Adjusted
FCF*
2014 – 2015E †
• Low-single digit
• Improve by 100 bps
annually
2013E†
• (2%) to 2%
• 18% to 19% (19+% excluding Med Device tax)
• $0.64 to $0.70 (Includes $0.04 of Med Device tax
impact)
Projected to Return to Growth in H2 2013…
…Followed by Consistent Revenue and Adjusted Earnings Growth Source: BSC Internal Estimates
2016 – 2017E†
• Mid-single digit
• Improve by over
100 bps annually
*All numbers are Non-GAAP and exclude goodwill and other intangible asset impairment charges, acquisition and divestiture- related net credits, litigation, and
restructuring-related charges, discrete tax items and amortization expense. For reconciliations of non-GAAP financial measures to the most directly comparable
GAAP figures, please refer to the Investor Relations section of our website at www.bostonscientific.com.
• Mid-high single digit
growth
• Strong cash flow
• High-single to low
double digit growth
• Strong cash flow • Strong cash flow
22 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Q&A
23 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Thank You
24 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Appendix
25 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Regulatory Disclosures CRM
WATCHMAN® Left Atrial Appendage Closure Device CE Marked.
In the U.S., this is an investigational device and not available for use or sale.
ADVANTIO® – INGENIO® – INVIVE® pacemakers MRI
Compatibility
CE Marked.
In the U.S., these are investigational devices and not available for use or sale.
RELIANCE® 4-FRONT lead
CE Marked.
In the U.S., this is an investigational device and not available for use or sale.
INGEVITY™ pacing leads Worldwide, this is an investigational device and not available for use or sale.
Next Gen ICD/CRT-D System Device under development. Not available for use or sale worldwide.
IntellaTip MiFi™ Open Irrigated Catheter Worldwide, this is an investigational device and not available for use or sale.
Blazer® OI A-Fib Catheter
CE Marked.
In the U.S., these are investigational devices and not available for use or sale.
Rhythmia™ Medical Mapping System Device under development. Not available for use or sale worldwide.
Interventional Cardiology
Synergy™ bioabsorbable polymer drug-eluting stent CE Marked.
In the US, this device is investigational and is not available for use or sale.
Promus PREMIER™ Everolimus-Eluting PtCr Stent
Worldwide, this device is investigational and is not available for use or sale.
Note – CE mark is expected any time. Once it is CE mark, the caution can change to:
CE Marked.
In the US, this device is investigational and is not available for use or sale.
Lotus™ Aortic Valve System This is an investigational device worldwide and is not available for use or sale.
iLab® Polaris Device under development. Not available for use or sale worldwide.
OptiCross™ Imaging Catheter Device under development. Not available for use or sale worldwide.
Guidezilla™Guide Extension Catheter Device under development. Not available for use or sale worldwide.
Agent™Drug Coated Balloon Catheter Device under development. Not available for use or sale worldwide.
Neuromodulation
GUIDE™ DBS programming system Device under development. Not available for use or sale worldwide.
Peripheral Interventions
Vessix™ Renal Denervation System CE Marked.
In the U.S., this device is not available for use or sale.
Innova™ SFA Stent CE Marked.
In the U.S., this is an investigational device and not available for use or sale.
Cobalt-Chromium Iliac BES CE Marked.
In the U.S., this device is not available for use or sale.
Ranger™ Drug-Coated Balloon Device under development. Not available for use or sale worldwide.
OffRoadTM Re-Entry Catheter CE Marked.
In the U.S., this is an investigational device and not available for use or sale.
Direxion™ Microcatheter Device under development. Not available for use or sale worldwide.
Expel™ Device under development. Not available for use or sale worldwide.
26 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.
Financial Disclosures
Market Represent Boston Scientific’s served markets. Identified growth markets CAGRS are for 2012-2017.
Operational Revenue and Growth Represents revenue on a constant currency basis excluding divested businesses.
Adjusted Gross Margins Represents gross margins excluding restructuring related costs.
Adjusted Operating Expense, Adjusted Operating Income and Adjusted EPS These results exclude acquisition and divestiture- related net charges, litigation, and restructuring-related
charges, discrete tax items and amortization expense.
Adjusted Free Cash Flow Excludes any potential amounts related to acquisition-, divestiture- and litigation-related items, significant tax
audit settlements and restructuring and restructuring-related items.
Non-GAAP Financial Measures For reconciliations of non-GAAP financial measures used in these presentations to the most directly
comparable GAAP figures, please refer to the Investor Relations section of our website at
www.bostonscientific.com.