Healthcare Conference - Boston Scientific/media/... · 2016 Q3 YTD: Top-Tier Operating Performance Growing well above market & driving significant margin improvement1,2,3 • 9% organic

1

J A N U A R Y 1 0 , 2 0 1 7

35th Annual JP Morgan

Healthcare Conference

Mike Mahoney Chairman & CEO

2

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.

3

Our Mission and Values

Caring Meaningful

Innovation

High

Performance

Global

Collaboration Diversity Winning Spirit

Boston Scientific is dedicated to

transforming lives through

innovative medical solutions

that improve the health

of patients around the world.

4

What to Expect from Us

Company pride – living BSX values

• Transforming patients’ lives through meaningful innovation and a “WINNING SPIRIT”

Consistently delivering on and exceeding financial commitments1,2

• Beating Investor Day and long range plan targets

• YTD Q3:16: 9% organic growth, +170bps adj. OM, 27% adj. EPS growth ex. FX

Driving category leadership and expanding globally

• Gaining share globally while building scale & new capabilities in emerging markets

Enhancing long term growth profile, investing to lead in faster growth markets4

• Diversifying into large, high-growth markets with differentiated product portfolio

Building shareholder value: More to come in 2017-2018 and beyond1,2

• 2017: MSD rev. growth + OM expansion = double digit adj. EPS growth

• Beyond 2017: Accelerating revenue growth & significant OM improvement potential

See slide 20 for footnotes.

5

Interventional Cardiology

Neuromodulation

Endoscopy

Urology and Pelvic Health

Rhythm Management CRM, Heart Failure Management, Electrophysiology

$1.9B, +13%

$407M, +11%

$773M, +14%1

(growth ex. AMS)

$1.5B, +2% $192M, +5%

Boston Scientific At-A-Glance Q3:16 YTD

$815M, +13%

$1.1B, +10%

FY16E $200M+

Peripheral Interventions

YTD operational revenue and growth2 as of 9/30/2016 (total company: $6.7B, +13%)

Structural Heart


6

Operational

Revenue Growth1,3 Adj. Operating Margin2 Adj. EPS Growth2

Sales growth

acceleration

~650 bps adj. OM

expansion

Double-digit adjusted

EPS growth ex-FX

-3%

5%

9%

2012 2013 2014 2015 2016E*

Delivering High Performance

17.8%

18.9%

20.2%

22.3%

24.3%

2012 2013 2014 2015 2016E*

11%

15%

2012 2013 2014 2015 2016E*

18%

$7.5B

11% 4%

Excludes foreign exchange impact

(~$0.10 in 2015, ~$0.05 in 2016E)

Includes foreign exchange impact

Operational revenue growth

Organic revenue growth

-2%

8%

$7.4B

2%

$7.1B

$7.2B **Adjusted for estimated impact of Medical Device Tax (~100bps), based on actual 2013 impact

**

23%

6%

12%

$8.4B

24%

See slide 20 for footnotes. *2016E represents guidance midpoint issued on Q3:16 earnings call, 10/26/16

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2016 Q3 YTD: Top-Tier Operating Performance

Growing well above market & driving significant margin improvement1,2,3

• 9% organic & 13% op. revenue growth – strong new launches, global share gains

• +170bps adj. operating margin improvement and ~25% adj. EPS growth ex. FX

Strengthening global capabilities & emerging markets3

• Operational revenue growth +15% in AMEA, +11% EU, +13% U.S., +16% in LACA

• +21% in Emerging Markets; new capabilities, partnerships, product launches

Advancing key growth platforms for the future

• Emblem S-ICD™, Synergy™ stent, Watchman™ LAAC device, Lotus™ valve, Rhythmia™ mapping & navigation system, Innova™ stent, Eluvia™ DES, Ranger™ DCB

• Precision Novi™ and Vercise™ systems, Axios™ stent, Spyglass DS™ visualization system, LithoVue™ single-use ureteroscope

Enhancing category leadership via M&A and equity investments

• Tuck-in acquisitions & portfolio of 20+ strategic equity investments


8

Strategic Imperatives Align Our Global Execution

STRENGTHEN

Category

Leadership

Grow faster

than peers in

large global

markets

EXPAND into

High Growth

Adjacencies

Accelerate

growth &

diversify into

faster segments

DRIVE

Global

Expansion

Grow emerging

markets &

scale to 15%

total BSX sales

FUND

the Journey

to Fuel Growth

Increase adj.

operating

margin2 to

~28% in 2020

DEVELOP

Key

Capabilities

Lead in a

dynamic

market & build

new global

capabilities


9

Market Growth Estimates:

Investing into New & Adjacent Faster Growth Segments

Business '16E

Market

Size4

’16E

Market

Growth4

2020E

Market

Size4

‘16 - ’20E

Market

CAGR4

Key Investment Areas, New Markets

Interventional

Cardio (ex-SH) $8.3B 1% $8.6B 0-2% Complex PCI, PCI Guidance, Heart Failure

Structural Heart $3.1B 30% $6.3B 20% TAVR, LAAC, Mitral Replace & Repair

Peripheral

Interventions $5.2B 6% $6.7B 6-8% Drug-eluting, Oncology, Venous, EM

Cardiac Rhythm

Management $12.1B Flat $12.9B 0-2% S-ICD/Leadless, Diagnostics, Heart Failure

Electrophysiology $4.1B 15% $6.3B 10-15% Mapping, Navigation, Therapeutic Solutions

Endoscopy $4.3B 5% $5.4B 5-6% Visualization, Pulmonary, Oncology, Infection, EM

Urology &

Pelvic Health $3.5B 4% $4.4B 5-7% Stone, Prostate Health, ER, Globalization

Neuromodulation $2.5B 10% $3.6B 8-12% Pain, DBS Movement Disorders

WW Total $43B 4-5% $54B 5-6% Continuing to invest in higher growth segments

Markets +100 - 200bps vs 2015 Investor Day est.


10

Peripheral

Interventions

Interventional

Cardiology Structural Heart

Cardiovascular:

Category Leadership & Growth Drivers

Eluvia™ DES &

Ranger™ DCB Differentiated drug- eluting technologies

Zelante™ DVT Products for

Venous/DVT market; ATTRACT study read

out Q1:17E

Interventional

Oncology Embolization & tumor

management

Synergy™ &

Promus Premier™

Market-leading DES platforms

Polaris™: IVUS &

Comet™ FFR Integrated imaging

platform

Complex PCI Broadest portfolio

to treat most complex patients

Lotus Edge™

Differentiated, TAVR platform launching in

the U.S. by YE 2017

Watchman™ Left atrial

appendage closure device

Mitral Valve

Replace & Repair Building a portfolio of replace & repair tools

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Rhythm Management:


EnduraLife™

Battery

Technology Industry-leading

longevity

Emblem™ MRI

S-ICD MRI compatibility,

remote-monitoring

enabled

Resonate Next gen platform

compatible with

HeartLogic™ + MRI

late 2017 US

launch

Electrophysiology Diagnostics ICD/CRT-D Pacemaker

Leadless

Pacemaker Developing

modular system:

single-chamber

pacemaker

with S-ICD

compatibility for ATP

Valitude™

X4 Quad CRT-P More pacing

vectors; industry-

leading longevity

Accolade™ MRI Ingevity™ pacing

lead; full-body MRI

& remote

monitoring

Strategic

Partnerships Portfolio of wireless,

cardiac monitoring

products and

services

Implantable

Cardiac Monitor Developing

arrhythmia

monitoring device

HeartLogic™ Developing HF

Dx solution:

a composite alert

to reduce

heart failure

hospitalizations

Other EP Solutions Recording systems,

diagnostic

catheters, and

accessories

Atrial Fibrillation

Solutions Navigation-

enabled, open-

irrigated, MiFi,

contact sensing

catheters

2nd gen

Rhythmia™ HDx Mapping &

navigation

platform

12

Urology and

Pelvic Health Neuromodulation Endoscopy

MedSurg:


Precision Spectra™

Precision Novi™

Leading SCS platforms, Illumina 3D™software & non-

rechargeable system

Vercise™ PC DBS

System & Cartesia ™

Directional Lead 1st Directional System

for Parkinson’s, dystonia, & tremor

globally; US DBS launch YE2017E

RF Ablation Comprehensive

range solutions for pain management

SpyGlass DS™ Visualization

Optimizes pancreatico-biliary

procedural efficiency

& productivity

Endoluminal Surgery - Oncology Endoscopic resection

of lesions in colon, esophagus or

stomach

Infection Control &

Pathology Services Solutions for

Ambulatory Surgery Center market

Stone Disease &

LithoVue™ Single-

Use Ureteroscope Leading platform,

next gen technology, and expanding

globally

Men’s Health Category leadership, market & geographic

expansion

Women’s Health Expanding portfolio

technologies & global footprint

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Enhancing Long Term Growth Profile:

Investing to Lead into Faster Growth Markets

Low Growth

37%

Moderate Growth

50%

2016E Revenue mix:

$8.4B

2020E Revenue mix 2012 Revenue mix:

$7.2B

Low

Growth 46%

Moderate Growth

47%

High Growth Mkt (>7% CAGR): SCS, TAVR, LAAC, EP, DBS, PI Drug Eluting, Venous, HF Diagnostics

High

Growth 7%

High

Growth 13%

Low

Growth

25%

Moderate

Growth

50%

High

Growth

25%

Low Growth Mkt (0 - 3% CAGR): Pacer, Defib., DES

Moderate Growth Mkt (4 - 6% CAGR): Endo, Complex PCI, Oncology, UroPH, WH, IC (ex. SH, DES)

Estimated Market Growth Rates4


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• Emerging Markets

Q3:16 YTD +21%

operational revenue3

• Emerging Markets

expected to reach

$1B in revenue in 2016

• China Q3 YTD +22%

operational revenue3

• Emerging markets 12%

of mix as of 9/30/2016

(vs. 7% in 2012)

• Global orientation

• Portfolio registration,

new launches

• Talent importer

• MedSurg, PI focus

• New R&D and

physician training

capabilities

• New Malaysian

manufacturing/

distribution facility

Driving Global Expansion:

Emerging Markets Focus

Operational Revenue3

LACA +16%

U.S.

+13%

Europe

+11%

AMEA

+15%


Global revenue mix & Y/Y

growth Q3:2016 YTD

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

Growth highlights Growth drivers

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Partners

• Turnkey setup &

equipment

financing

• Maintenance &

servicing

financing

• Care process

improvement

• Supply chain

optimization

• Care variation

and

standardization

opportunities

• Heart Failure

patient support

Upgrade

facilities

Improve

operational

effectiveness

Standardize HF

care to improve

outcomes and

reduce costs

ADVANTICS Solutions:

Enhancing Category Leadership

Capital Financing Performance Optimization

• Managed

cathlabs & ORs

• Materials

management

Share risks and

accountability

Managed Services

• Patient referral

management

• Growth advisory

Increase patient

access to

therapies

Service Development

Disease Management

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• Accretive new

products

• Reduce SG&A

• Less adjacency dilution

• 5-10% annual standard

cost improvements

• Optimize plant network

• R&D productivity

• AMS benefit

• Shared services

2012A

2013A 2014A 2015A 2016E** 2017E

Adjusted OM2

Improvements 2020E

25%+

A Track-Record of Driving Operating Margin Expansion…

AND a Significant Future Opportunity

24.3%

~28% ~+300bps

22.3%

20.2%

18.9%

17.8%*

* **

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

2016E represents guidance midpoint issued on Q3:16 earnings call, 10/26/16


17

M&A

Share repurchases

Resolve contingencies/liabilities

Cash Flow Outlook, Capital Allocation Priorities

2014A 2015A 2016E* 2017E 2018E 2019E

$1.3B $1.4B

~$1.6B

Strong Cash Flow

Adjusted FCF5: 2014 – 2019E

~$1.8B ~$2.0B

~$2.2B

Reserved contingencies

~$2B

~$4B M&A and

Share Repurchases

See slide 20 for footnotes. *2016E represents guidance issued on Q3:16 earnings call, 10/26/16

2017 – 2019 Capital

Allocation Priorities

Strong Cash Flow

Adjusted FCF5: 2014 – 2019E

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VC (Selected)

Tuck-in M&A

Future Pipeline

Disciplined & Balanced Approach to M&A

2011 - 2012 - 2013 - 2014 - 2015 - 2016

Peripheral

Vasc.

LumenR

http://rhythmia.com/?pn=0

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What to Expect from Us

Company pride – living BSX values

• Transforming patients’ lives through meaningful innovation and a “WINNING SPIRIT”

Consistently delivering on and exceeding financial commitments1,2

• Beating Investor Day and long range plan targets

• YTD Q3:16: 9% organic growth, +170bps adj. OM, 27% adj. EPS growth ex. FX

Driving category leadership and expanding globally

• Gaining share globally while building scale & new capabilities in emerging markets

Enhancing long term growth profile, investing to lead in faster growth markets4

• Diversifying into large, high-growth markets with differentiated product portfolio

Building shareholder value: More to come in 2017-2018 and beyond1,2

• 2017: MSD rev. growth + OM expansion = double digit adj. EPS growth

• Beyond 2017: Accelerating revenue growth & significant OM improvement potential


20

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, adjusted earnings per share , and adjusted earnings per share excluding

changes in foreign currency exchange rates 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, debt extinguishment charges, pension termination

charges, discrete tax items, amortization expense and/or changes in foreign currency exchange rates.

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

4. Unless otherwise noted, all references to market sizes, market share positions, and market growth rates

are BSX internal estimates

5. 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/

21

Regulatory Disclaimers

Product Regulatory Disclaimer

Eluvia™ Drug-Eluting

Vascular Stent System

CE Marked. US: “Caution: Investigational Device. Limited by Federal (or

US) law to investigational use only. Not available for sale.”

RangerTM Drug-Coated

Balloon



Lotus™ Valve System CE Marked. US: “Caution: Investigational Device. Limited by Federal (or


Tachy MRI CE Marked. Not available for use or sale in the U.S.

Rechargeable Vercise™

Deep Brain Stimulation

System



Insertable Cardiac Monitor

Devices under development. Not available for use or sale worldwide.

HeartLogicTM/Cardiac

Diagnostics & Monitoring

Leadless Pacemaker

RESONATETM

Mitral Valve Technologies

Next Gen LAAC

Next Gen Ablation

22

Acronyms Used

Acronym Definition

TAVR Transcatheter Aortic Valve Replacement

LAAC Left Atrial Appendage Closure

DES Drug-Eluting Stents

DCB Drug-coated Balloon

WH Women’s Health

ER Erectile Restoration

DBS Deep Brain Stimulation

EU Europe

LACA Latin America, Canada

EM Emerging Markets

23

Appendix A: Non-GAAP Reconciliations

Nine Months Ended

Revenue Growth Rate 09/30/16

Revenue growth rate, as reported 13%

Less: Impact of foreign currency fluctuations 0%

Operational revenue growth rate 13%

Less: Impact of AMS acquisition 4%

Organic revenue growth rate 9%

Adjusted Operating Margin 09/30/16 09/30/15

Operating margin, as reported 5.0% -1.0%

Less: Non GAAP adjustments -19.3% -23.6%

Adjusted operating margin 24.3% 22.6% 170

Nine Months Ended

Basis Points Change

Adjusted EPS, excluding FX 09/30/16 09/30/15

EPS, as reported 0.16 (0.07)

Less: Non GAAP adjustments (0.65) (0.74)

Adjusted EPS 0.81 0.67

Less: Impact of foreign currency fluctuations (0.04) 0.00

Adjusted EPS, excluding FX 0.85 0.67 27%

Nine Months Ended

% Change

24


Interventional Cardiology 12% -1% 13% 0% 13%

Peripheral Interventions 12% -1% 13% 0% 13%

Cardiac Rhythm Management 1% -1% 2% 0% 2%

Electrophysiology 4% -1% 5% 0% 5%

Endoscopy 10% 0% 10% 0% 10%

Urology & Pelv ic Health 60% -1% 61% 47% 14%

Neuromodulation 9% -2% 11% 0% 11%

Interventional Cardiology 1,695 (175) 1,870 0 1,870

Peripheral Interventions 757 (58) 815 0 815

Cardiac Rhythm Management 1,378 (103) 1,481 0 1,481

Electrophysiology 179 (13) 192 0 192

Endoscopy 1,060 (88) 1,148 0 1,148

Urology & Pelv ic Health 731 (42) 773 226 547

Neuromodulation 395 (12) 407 0 407

Less: AMS

Acquisiton

Less: FX Impact Constant Currency

Less: AMS

AcquisitonRevenue Growth (%)

Nine Months Ended September 30, 2016

Revenue (in millions) As Reported Less: FX Impact Constant Currency


As Reported Organic

Organic

25


(Low) (High) (Low) (High)

Estimated GAAP EPS $0.32 $0.34

Estimated acquisition and divestiture-related net charges 0.07 0.07

Estimated restructuring and restructuring-related charges 0.07 0.07

Estimated amortization expense 0.34 0.34

Litigation-related charges 0.29 0.29

Estimated Adjusted EPS $1.09 $1.11 17% 19%

Less: Estimated Impact of Foreign Currency Fluctuations -6% -6%

Estimated Adjusted EPS, excluding FX 23% 25%

Full Year 2016 Estimate Estimated Growth

FY 2016 EPS Guidance

Revene growth, as reported 1%

Less: Impact of foreign currency fluctuations -7%

Operational Revenue Growth 8%

Less: Impact of Bayer & AMS Acquisitions 3%

Organic Revenue 5%

Revene growth, as reported 4%



Less: Impact of Bard & Bayer Acquisitions 2%

Organic Revenue 4%

Revenue Growth - FY 2014


Revene growth, as reported -1%



Revene growth, as reported -5%


Operational Revenue Growth -3%



26


Operating margin, as reported -4.4%

Less: Non GAAP adjustments -26.7%

Adjusted operating margin 22.3%




Operating margin, as reported 1.7%






Less: Estimated impact of Medical Device Tax 1.0%

17.8%

Adjusted Operating Margin - FY 2015




27


Regional Revenue Growth Rates Reported Constant Currency

AMEA 17% 2% 15%

EU 10% -1% 11%

U.S. 13% 0% 13%

LACA 2% -14% 16%

Emerging Markets 8% -13% 21%

China 16% -6% 22%


Less: Impact of

Foreign Currency

Fluctuations

Adjusted Free Cash Flow (in millions ) FY 2015 FY 2014

Operating Cash Flow, as reported 600$ 1,269$

Less: Capex (248) (259)

Free Cash Flow 352 1,010

Plus: Restructuring Payments 95 115

Plus: Contingent Payments 57 103

Plus: Special Tax Refunds/Credits (74) (72)

Plus: Legal Settlements 799 57

Plus: Other 136 49

Adjusted Free Cash Flow 1,366$ 1,261$

Documents

Healthcare Conference - Boston Scientific/media/... · 2016 Q3 YTD: Top-Tier Operating Performance Growing well above market & driving significant margin improvement1,2,3 • 9% organic