J.P. Morgan - Boston Scientific/media/Files/B/... · 2017-07-12 · 4 Boston Scientific – J.P....

J.P. Morgan 34th Annual Healthcare Conference

January 12, 2016

Mike Mahoney President and Chief Executive Officer

2 Boston Scientific – J.P. Morgan 34th Annual Healthcare Conference – January 12, 2016

Safe harbor for forward-looking statements

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.


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.

In the U.S., the Eluvia™ Peripheral Stent, Lotus™ Valve System, Ingevity™ Pacing Lead,

Acuity™ X4 CRT Lead, Vercise™ DBS system, and MRI-safe defibrillators are investigational

devices and not available for sale.

In the U.S., the Watchman™ FLX device, Emblem™ MRI S-ICD device, Ranger™ Paclitaxel-

Coated PTA Balloon Catheter, implantable loop recorder, and leadless pacemaker system are not

available for sale.

All future product approval and launch dates are based on estimates of completion of regulatory

submissions, review and 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 addendum to this presentation and the

Investor Relations section of our website at www.bostonscientific.com. Footnotes referenced in

this presentation can be found on slide 20.

Disclaimers

http://www.bostonscientific.com/


BSX: What to expect from us

Consistently delivering on and exceeding financial goals1,2

• Strong culture fostering a “WINNING SPIRIT”

• 2015 Q3 YTD: 5% organic growth, +250bps adj. OM, ~20% adj. EPS growth ex FX

Transforming patients’ lives and leading in large global markets

• Entering faster growth segments, driving category leadership

• Building emerging markets scale and capabilities

Launching innovative new product cycle in 2016

• Driving consistent organic revenue growth with a long runway

Leading globally: More to come in 2017-2018 and beyond

• Launching into large, high growth markets with meaningful innovation

• Creating value: MSD rev. growth + adj. OM expansion = DD adj. EPS growth ex FX

See slide 20 for footnotes


Interventional

Cardiology

Neuromodulation

Endoscopy

Urology and

Pelvic Health

Rhythm Management

CRM, Heart Failure Management, Electrophysiology

$1.7B, +7% YTD

$369M, +8% YTD

$479M, +21% YTD

CRM $1.5B, +1% YTD EP $182M, +9% YTD

Boston Scientific at-a-glance

$723M, +15% YTD

$1.0B, +6% YTD

$75-100M FY15

revenue goal

Peripheral

Interventions

YTD operational revenue and growth as of 9/30/153

Structural Heart

See slide 20 for footnote


Strong execution: Performance since 2012

Operational Revenue Growth1,3

Adj. Operating Margin2 Adj. EPS Growth2

Sales growth acceleration ~500 bps adj. OM

expansion

Double-digit adj. EPS

growth ex FX

17.8%

18.9%

20.2%

22.5%

2012 2013 2014 2015E

11%

15%

2012 2013 2014 2015E

$7.5B

-3%

4.5%

2012 2013 2014 2015E

8% 4%

18% Excludes foreign exchange impact

(~$0.08 in 2015E)

Includes foreign exchange impact

Operational revenue growth

Organic revenue growth

-2%

* * *

8%

6%

$7.4B

2%

$7.1B

$7.2B

**Adjusted for estimated impact of Medical Device Tax

(~100bps), based on actual 2013 impact

**

*2015E represents guidance midpoint issued on Q3:15 earnings call, 10/28/15 See slide 20 for footnotes


2015 Q3 YTD: Strong operating performance

Growing above market and driving margin improvement1,2,3

• 5% organic and 7% operational revenue growth

• +250bps adj. operating margin improvement & ~20% adj. EPS growth ex FX

Strengthening emerging markets3

• +11% operational rev. growth and new capabilities, partnerships, product launches

Advancing key growth platforms for the future

• Emblem S-ICD™, Synergy™, Watchman™, Lotus™, Rhythmia™, Innova™, Eluvia™,

Precision Novi™, Spyglass DS™ product lines

Enhancing category leadership via M&A and equity investments

• AMS Male Urology portfolio, CeloNova interventional oncology

• Equity investments in multiple companies



STRENGTHEN

execution to

grow share

Strategic imperatives align execution

Preferred

category leader

gaining share in

large global

segments

New commercial

capabilities to

lead in dynamic

markets

Adjusted

operating margin

target of 25%+

by 2017

Grow emerging

markets +500bps

as % total sales

2012-2017

Accelerate

growth &

diversify into

faster segments

DEVELOP

Key

Capabilities

FUND

the Journey

to Fuel Growth

DRIVE

Global

Expansion

EXPAND into

High Growth

Adjacencies


------- Estimated market* -------

Business 2015

Size

2015

Growth

2015 – 2020

Growth Investing in Faster Growth Segments

Endoscopy $3B 4% 4-6% Visualization, pulmonary therapies, endo ultrasound

Urology and

Pelvic Health $3B 4% 4-6% Stone, BPH, ED, visualization, international

Neuromodulation $2B 5% 5-7% Severe pain, Parkinson's, OAB, international

CRM $10B 2% 0-2% S-ICD & leadless solutions, HF diagnostic solutions

Electrophysiology $3B 14% 10-15% Atrial fibrillation, mapping & navigation

Peripheral $4B 4% 4-6% Drug-eluting SFA, atherectomy, oncology, liver cancer

IC (ex SH) $8B 1% 0-3% Complex PCI, FFR, & bioresorbable technologies

Structural Heart $1.8B 35% 15-20% TAVR, LAAC, mitral

WW Total ~$35B ~3-4%

* Market size and growth rates at constant currency and are BSX internal estimates

Market outlook and investment focus

~3-6%


Cardiovascular growth drivers: 2016 & beyond

Eluvia™ DES &

Ranger™ DCB Differentiated drug-eluting

technologies

Atherectomy, DVT &

Thrombectomy clinically differentiated

products

Interventional

Oncology embolization & tumor

management

Interventional

Cardiology Structural Heart

Peripheral

Interventions

Synergy™ & Promus

Premier™

Leading DES platforms

Polaris™: IVUS &

Comet™ FFR Integrated imaging

platform

Complex PCI Broadest portfolio

to treat most

complex patients

Lotus Edge Differentiated, 2nd

generation TAVR platform

Watchman™ and 2nd

Gen Watchman FLX Left atrial appendage

closure device

Mitral Valve

Technologies


CRM growth drivers: 2016 & beyond

ICD/CRT-D Subcutaneous-ICD Pacemaker

Autogen™ Platform X4 Quad CRT-D

MINI & MRI-safe

EnduraLife™ Cost effective;

Replacement cycle

Improves in 2017-2018

Latitude Remote

Monitoring Improved compliance

and clinical outcomes

Emblem™ S-ICD Smaller, longer lasting,

LATITUDE remote

monitoring-enabled

Emblem™ MRI S-ICD MRI-Safe H2:2016E

Future development:

leadless pacemaker

Clinical Programs Market development,

expanded indications

Leadless Pacemaker Single-chamber

pacemaker, plus S-ICD

compatibility

Accolade™ MRI Ingevity™ pacing lead

Full-body MRI scans

& remote monitoring

Valitude™

X4 Quad CRT-P More pacing vectors,

Industry leading longevity


Rhythm Management growth drivers:

2016 & beyond

Diagnostics Electrophysiology

Rhythmia™ Mapping &

navigation platform;

frequent software

iterations

Atrial Fib Solutions Portfolio of navigation-

enabled, open-irrigated,

and MiFi therapeutic

catheters

Other EP Solutions Recording systems

Diagnostic catheters

Accessories

Strategic Partnerships Portfolio of wireless,

cardiac monitoring

products and services

HeartLogic™ HF solution for in-patient,

readmissions and chronic

disease management

Loop Recorder Active project to

develop an arrhythmia

monitoring device


MedSurg growth drivers: 2016 & beyond

Neuromodulation Endoscopy Urology and

Pelvic Health

Vercise™ DBS Parkinson’s, dystonia,

essential tremor

indications in EU

Precision Spectra™

Leading SCS platform

Illumina 3D™

software

Precision Novi™

Enter primary cell /

non-rechargeable market

Xlumena EUS-guided devices

provide minimally invasive to surgery

New Therapies Pulmonary:

asthma, cancer

SpyGlass DS™ Visualization

Malignant & benign

tumors

BPH, Erectile

Dysfunction, Male SUI Category leadership,

market & geographic

expansion

LithoVue™ Single-use, disposable

ureteroscope

visualization platform

Stone Disease Leading platform &

expanding globally

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Innovation beyond products: ADVANTICS

Reduction in

supply chain

costs*

67%

Average

reduction in

lab turnover*

20%

Increase in

productivity*

18%

Triple patient

readiness

from 30%*

80%

* These are real results from ADVANTICS programs. Results may vary.

Reduction in

HF 30-day

readmissions

50%

Increase in %

of patients

treated to

guidelines*

43%

*

• Reduce readmission rates and penalties

• Improve patient experience and engagement

• Optimize length of stay and site of care

• Improve utilization, patient experience and staff engagement

• Reduce supply chain costs and ensure product availability

Improve quality and standardize care for chronic cardiovascular diseases

Drive operational excellence in cardiovascular and GI labs

Powered by


• EM +11%

operational revenue3

Q3 YTD

• China +20%

operational revenue3

Q3 YTD

• Est. EM $1B in 2016

• Est. EM 12% of

mix in 2016

(vs. 8% in 2012)

• Strong team

• Expanded

distribution

• Product

registrations

• R&D & training

centers

• China JV

(Frankenman)

Driving global expansion

U.S. 52% (+8% YTD) Europe

22% (+7% YTD)

AMEA 20% (+7%

YTD)

LACA 6% (+6% YTD)

Global revenue mix

2015 YTD

---------------- Emerging Markets ----------------

Growth highlights Growth drivers

Operational Revenue3,4,5



• Accretive new

products

• 5-10% annual

standard cost

improvements

• Optimize plant

networks

• AMS benefit

• Reduce SG&A

• R&D

productivity

• Reduce

adjacency

dilution

• Outsourcing/

offshoring

• Lean business

initiatives

• AMS benefit

2012A*

2013A

2014A

2015E**

Gross Margin

Operating

Expenses

2017E

25%+

~+100bps

~+150bps

20.2%

18.9%

17.8%

Significant adjusted operating margin2 expansion:

Estimated +700bps from 2012-2017

22.5%

**2015E represents guidance midpoint issued on Q3:15 earnings call, 10/28/15

*Adjusted for estimated impact of Medical Device Tax (~100bps), based on actual 2013 impact

See slide 20 for footnote


• Accretive new

products

• 5-10% annual

standard cost

improvements

• Optimize plant

networks

• AMS benefit

• Reduce SG&A

• R&D productivity

• Reduce

adjacency

dilution

• Outsourcing/

offshoring

• Lean business

initiatives

• AMS benefit

• Accretive new

products

• 5-10% annual

standard cost

improvements

• Optimize plant

networks

• Reduce SG&A

and adjacency

dilution

• R&D productivity

• AMS benefit

• Outsourcing/

offshoring

2015E*

Gross Margin

Operating

Expense

Reductions

2017E

Operating

Margin

Improvements

2020E

25%+

Adjusted OM expansion opportunities beyond 2017

22.5%

27-28%

~+100bps

~+150bps

~+200 to

300bps

*2015E represents guidance midpoint issued on Q3:15 earnings call, 10/28/15


1. Debt repayment

2. M&A in adjacent, high-growth markets

3. Maintain flexibility

– Litigation / tax contingencies

Cash flow outlook, capital allocation priorities

2014A 2015E* 2016E

$1.26B

$1.3B+

~$1.5B

Strong Cash Flow

Adjusted FCF6: 2014 – 2016E

2016 Capital

Allocation Priorities

*2015E represents guidance issued on Q3:15 earnings call, 10/28/15 See slide 20 for footnote


BSX: What to expect from us

Consistently delivering on and exceeding financial goals1,2

• Strong culture fostering a “WINNING SPIRIT”

• 2015 Q3 YTD: 5% organic growth, +250bps adj. OM, ~20% adj. EPS growth ex FX

Transforming patients’ lives and leading in large global markets

• Entering faster growth segments, driving category leadership

• Building emerging markets scale and capabilities

Launching innovative new product cycle in 2016

• Driving consistent organic revenue growth with a long runway

Leading globally: More to come in 2017-2018 and beyond

• Launching into large, high growth markets with meaningful innovation

• Creating value: MSD rev. growth + adj. OM expansion = DD adj. EPS growth ex FX



Footnotes

1: Organic revenue growth excludes the impact of sales from divested businesses, changes in foreign

currency exchange rates and sales from the acquisitions of the interventional business of Bayer AG and

the American Medical Systems male urology portfolio over the prior year period.

2: Adjusted operating margin, and adjusted earnings per share are non-GAAP and exclude goodwill and

other intangible asset impairment charges, acquisition and divestiture-related net charges, litigation-

related charges, restructuring and restructuring-related charges, pension termination charges, discrete

tax items and amortization expense.

3: Operational revenue growth is at constant currency, and excludes divested businesses.

4: Percent of revenue shown on a constant currency basis.

5: LACA = Latin America and Canada; AMEA = Asia, Middle East , and Africa

6: 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 non-GAAP financial measures to the most directly comparable GAAP

figures, please refer to the addendum to this presentation and the Investor Relations section of

our website at www.bostonscientific.com.

http://www.bostonscientific.com/


Supplemental Non-GAAP Disclosures

Nine Months Ended September 30, 2015



Nine Months Ended September 30, 2015



Twelve Months Ended December 31, 2014, 2013, & 2012



Twelve Months Ended December 31, 2012, 2011



Twelve Months Ended December 31, 2014, 2013



YTD September 30, 2015



YTD December 31, 2014



Twelve Months Ended December 31, 2017 Estimate



Twelve Months Ended December 31, 2012

J.P. Morgan - Boston Scientific/media/Files/B/... · 2017-07-12 · 4 Boston Scientific – J.P....

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