Q3 2016 Financial & Operational Highlights - …investors.bostonscientific.com/~/media/Files/B/Boston...4 Q3 2016 Financial & Operational Highlights | October 26, 2016 WW Sales by

3rd Quarter 2016 Financial & Operational Highlights

October 26, 2016

2 Q3 2016 Financial & Operational Highlights | October 26, 2016

Safe Harbor for forward-looking statements andUse of Document:

Safe Harbor for forward-looking statements:This presentation contains forward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may beidentified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “estimate,” “intend” and similarwords. These forward-looking statements are based on our beliefs, assumptions and estimates usinginformation 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, actualresults 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 orto be filed with the Securities and Exchange Commission under the headings “Risk Factors” and “SafeHarbor for Forward-Looking Statements.” Accordingly, you are cautioned not to place undue reliance on anyof our forward-looking statements. We disclaim any intention or obligation to publicly update or revise anyforward-looking statements to reflect any change in our expectations or in events, conditions, orcircumstances on which they may be based, or that may affect the likelihood that actual results will differ fromthose contained in the forward-looking statements.

Use of document:This document contains certain highlights with respect to our third quarter 2016 performance anddevelopments and does not purport to be a complete summary of thereof. Accordingly, we encourage you toread our Earnings Release for the quarter ended September 30, 2016 located in the investor section of ourwebsite at www.bostonscientific.com and our Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2016 filed with the Securities and Exchange Commission.


Q3 2016 Highlights

• Revenue growth Y/Y:• +10% operational*, +11% as reported,

+9% organic*• $2,105M as reported revenue includes

immaterial FX impact Y/Y• Earnings per share:

• $0.27 adjusted* vs. $0.24 Q3:15• $0.17 GAAP vs. $(0.15) Q3:15

• Gross margin:• Adjusted*: 72.5%, consistent Y/Y

◦ Includes 120bps negative FX impact Y/Y• GAAP: 71.8%, +30 bps Y/Y

• Operating margin:• Adjusted*: 24.3%, +120 bps Y/Y• GAAP: 16.5% vs. (15.8)% Q3:15

• All three business segments aredelivering organic revenue growth

• Announced the definitive agreement toacquire EndoChoice Holdings, Inc.,which deepens BSX's existing Endoscopyportfolio with a range of gastrointestinalproducts

• Launched the Resolution 360TM

Hemoclip used to stop and help preventbleeding in endoscopic procedures

• Received FDA approval for Emblem S-ICD System, as well as MR conditionallabeling for all previously implantedsystems

• Obtained CE Mark for Lotus EdgeTM**next generation TAVR technology*Non-GAAP measure; excludes certain GAAP items. For reconciliations of non-

GAAP financial measures to the most directly comparable GAAP figures, pleaserefer to Appendix A of this document

Financial Highlights Operational Highlights

** Caution – In the U.S., the Lotus Edge is not available for use or sale


WW Sales by Segment and Business

Q3 2016 As Reported Revenue: $2,105M Revenue by business on an "as reported" basis

IC$568M

PI$257M

CRM$467M

EP$60M

Endo$367M

Uro$248M

NM$138MMedSurg

36%

RhythmManagement

25%

Cardiovascular39%

Percentages are based on actual, non-rounded amounts and may not recalculate precisely


As Reported Revenue($M) Year-over-Year Change % of BSX

Region Q3 2016

Q3 2015 Reported Constant

Currency* Reported ConstantCurrency*

US 1,207 1,089 +11% +11% 57% 54%

OUS 898 799 +12% +10% 43% 46%

TotalCompany 2,105 1,888 +11% +10%

EmergingMarkets1 202 184 +10% +19% 10% 12%

WW Sales by Geography

1We define Emerging Markets as including certain countries that we believe have strong growth potential based on theireconomic conditions, healthcare sectors, and our global capabilities. Currently, we include 20 countries in our definition ofEmerging Markets.

*Non-GAAP measure; excludes impact from changes in foreign currency exchange rates. For reconciliations of non-GAAP financial measures to the most directlycomparable GAAP figures, please refer to Appendix A of this document

Q3 2016 Highlights


Measure Q3 2016($ in Millions)

Operational*Change Y/Y

As ReportedChange Y/Y

As ReportedRevenue 825 +12% +13%

Adjusted OperatingIncome* 292 +18%

Adjusted OperatingIncome Margin* 32.8% +160 bps

Cardiovascular Performance Summary

• Cardiovascular has grown double-digits every quarter of 2016• Interventional Cardiology: Global revenue grew +13% Y/Y constant currency* (+14% as reported)

▪ Third consecutive quarter where global IC grew constant currency* revenue double-digits▪ WW DES revenue grew 14% constant currency*; remain on track for Synergy to represent 50-60% of global

DES revenue mix by end of Q4▪ Expect to deliver at the high-end of FY 2016 Structural Heart revenue goal of $175 - $200M

• Peripheral Interventions: Global revenue +11% Y/Y constant currency* (+12% as reported)▪ Fourth consecutive quarter of double-digit constant currency global growth for PI▪ Announced data from the MAJESTIC trial of the Eluvia™ Drug-Eluting Vascular Stent System**

demonstrating 92.5% freedom from total lesion revascularization (FTLR) at two years

*Non-GAAP measure; excludes certain GAAP items. For reconciliations of non-GAAP financial measuresto the most directly comparable GAAP figures, please refer to Appendix A of this document.

** Caution – In the U.S., the Eluvia peripheral drug-eluting stent system is an investigational device,limited by federal law to investigational use only

Q3 2016 Highlights







Adjusted OperatingIncome Margin* 20.1% +230 bps

Rhythm Management Performance Summary

• Cardiac Rhythm Management: Global revenue +3% Y/Y constant currency*, (+4% as reported)▪ RM adjusted operating margin* of 20.1% from standard cost reductions and strong top line performance▪ Received U.S. FDA approval for the EMBLEMTM MRI S-ICD System, as well as MR conditional labeling for

all previously implanted systems▪ Global pacer sales grew 22% constant currency* driven by strong unit share growth and price premium in

ImageReady™ MR-Conditional Pacing System• Electrophysiology: Global revenue +5% Y/Y constant currency*, (+5% as reported)

▪ EP OUS constant currency revenue* grew double-digits for the second straight quarter led by Rhythmia™

mapping system installs *Non-GAAP measure; excludes certain GAAP items. For reconciliations of non-GAAP financial measures to the most directly comparable GAAP figures, please referto Appendix A of this document.

Q3 2016 Highlights


MedSurg Performance Summary






Adjusted OperatingIncome Margin* 32.9% -90 bps

• MedSurg has grown double-digits every quarter of 2016 (YTD organic revenue growth* is 11%)• Endoscopy: Global revenue +9% Y/Y constant currency* (+11% as reported)

▪ Growth driven by the SpyGlass™ DS visualization system, Axios™ stent system and the launch of our nextgeneration Resolution™ 360 Hemostasis Clip

• Urology and Pelvic Health: Global revenue +26% Y/Y constant currency* (+26% as reported)▪ Legacy Uro/PH business (ex-AMS) grew revenue 13% constant currency*, including 14% OUS growth*▪ Strong double-digit growth in AMEA, Latin America and Emerging Markets

• Neuromodulation: Global revenue +12% Y/Y constant currency* (+11% as reported)▪ OUS revenue grew 61% constant currency* driven by strong results in both our SCS and DBS franchises▪ Cosman Medical acquisition announced in July broadens our portfolio with RF ablation systems

*Non-GAAP measure; excludes certain GAAP items. For reconciliations of non-GAAP financial measures to the most directly comparable GAAP figures, please refer toAppendix A of this document.


Q3 2016 Balance Sheet & Cash Flow Metrics

Days Sales Outstanding (DSO) Adjusted Free Cash Flow

Days Inventory on Hand (DIOH) Capital Expenditures

Sept2016

June2016

Mar2016

Dec2015

Sept2015

61 59 60 59 62

Sept2016

June2016

Mar2016

Dec2015

Sept2015

155 1401 162 163 1862

1Decrease due to tighter inventory management and higherCOGS in the quarter2 Increase due primarily to AMS male urology portfolio acquisition

Q32016

Q32015

FY2016Guidance

$440M $394M $1,600M

Q32016

Q32015

FY2016Guidance

$70M $69M ~ $350M1

1 Roughly $100M higher than FY 2015, primarily due to the

construction of our new manufacturing facility and distributioncenter in Malaysia


Measure Q4 2016 FY2016As Reported Revenue ($M) $2,140 to $2,190 $8,335 to $8,385

Operational Growth* +7% to +9% +12%

Organic Growth* +7% to +9% +9%

As Reported Growth +8% to +11% +11% to +12%

Adjusted Gross Margin* 72.0% to 73.0% ~72%

Adjusted SG&A % of Sales* 35.5% to 36.5% ~36%

Adjusted R&D % of Sales* 11.0% to 12.0% ~11%

Adjusted Operating Margin* 24.0% to 24.5% 24.0% to 24.5%

Adjusted Tax Rate* 13.5% 13.5%

Adjusted EPS* $0.27 to $0.29 $1.09 to $1.11

Adjusted EPS Growth* +2% to +10% +17% to +19%

Adjusted EPS Growth ex-FX* +11% to +19% +23% to +25%

GAAP EPS $0.15 to $0.17 $0.32 to $0.34

Q4 & FY2016 Guidance SummaryIssued October 26, 2016

*Non-GAAP measure; excludes certain GAAP items. For reconciliations of non-GAAP financial measures to the most directly comparable GAAP figures, please refer toAppendix A of this document.


Use of Non-GAAP Measures

To supplement Boston Scientific’s consolidated financial statements presentedon a GAAP basis, the Company discloses certain non-GAAP financialmeasures. These non-GAAP financial measures are not in accordance withgenerally accepted accounting principles in the United States.

A reconciliation of the non-GAAP financial measures included in this documentto the corresponding GAAP measures follows in Appendix A. In addition, anexplanation of the ways in which Boston Scientific management uses thesesupplemental non-GAAP measures to evaluate its business, and thesubstantive reasons why Boston Scientific management believes that thesenon-GAAP measures provide useful information to investors is included under“Use of Non-GAAP Financial Measures” in the Company’s most recent earningsrelease filed with the SEC on Form 8-K. This additional non-GAAP financialinformation is not meant to be considered in isolation from or as a substitutefor financial information prepared in accordance with GAAP.


Appendix ANon-GAAP ReconciliationThree Months Ended September 30, 2016 (unaudited)

QTD Rounded P&L

In millions, except per share data GAAPResults Amortization

IntangibleAsset

ImpairmentCharges

Restructuring-RelatedCharges

Acquisition-Related Charges

(Credits)

Litigation-RelatedCharges

AdjustedResults

Net sales $ 2,105 $ 2,105Cost of products sold 594 8 7 579Gross profit 1,511 — — (8) (7) — 1,526

Gross margin 71.8% 72.5%

Selling, general and administrative expenses 772 4 5 763SG&A margin 36.7% 36.2%

Research and development expenses 232 — 232R&D margin 11.1% 11.0%

Royalty expense 20 20Royalty expense margin 0.9% 0.9%

Amortization expense 136 136 —Intangible asset impairment charge 7 7 —Contingent consideration expense (benefit) (13) (13) —Restructuring charges 5 5 —Litigation-related charges 4 4 —

1,163 136 7 9 (8) 4 1,015Operating income 348 (136) (7) (17) 1 (4) 511

Operating margin 16.5% 24.3%Other income (expense):Interest expense (58) — (58)Other, net (33) (33)

Income before income taxes 257 (136) (7) (17) 1 (4) 420

Income tax expense 29 $ (16) $ (1) $ (4) $ (1) (1) 52

Net (loss) income $ 228 $ (120) $ (6) $ (13) $ 2 $ (3) $ 368

Net income per common share - assuming dilution $ 0.17 $ (0.09) $ — $ (0.01) $ — $ 0.00 $ 0.27

Weighted average shares outstanding - assuming dilution 1,379.7 1,379.7 1,379.7 1,379.7 1,379.7 1,379.7 1,379.7

Margin rates are based on actual, non-rounded amounts and may not recalculate precisely.


Three Months Ended September 30, 2016

Region: Year-over-Year Change ReportedLess: Impact of ForeignCurrency Fluctuations

ConstantCurrency

US 11% 0% 11%OUS 12% 2% 10%

Emerging Markets 10% (9)% 19%


Region: % of BSX ReportedLess: Impact of ForeignCurrency Fluctuations

ConstantCurrency

US 57% 3% 54%OUS 43% (3)% 46%

Emerging Markets 10% (2)% 12%

Appendix A(Continued)

Growth rates are based on actual, non-rounded amounts and may not recalculate precisely.



in millions, except per share data Pre-Tax Tax Impact After-TaxImpact per

share

GAAP net income (loss) $ (367) $ 169 $ (198) $ (0.15)Non-GAAP adjustments:

Intangible asset impairment charges 10 (1) 9 0.01 *Acquisition-related net charges 80 (12) 68 0.05 *Restructuring and restructuring-related net charges 21 (3) 18 0.01 *Litigation-related net credits 457 (165) 292 0.22 *Pension termination charges 36 (13) 23 0.02 *Amortization expense 131 (17) 114 0.08 *

Adjusted net income $ 368 $ (42) $ 326 $ 0.24

*Assumes dilution of 20.2 million shares for the three months ended September 30, 2015 for all or a portion of these non-GAAP adjustments.


Segment Revenue Growth MedSurg CardiovascularRhythm

Management Total BSCPercentage change in net sales, as reported 15% 13% 4% 11%

Less: Impact of Foreign Currency Fluctuations 1% 1% 1% 1%Percentage change in net sales, constant currency 14% 12% 3% 10%

Less: Impact of AMS acquisition 4% 0% 0% 1%Percentage change in net sales, organic 10% 12% 3% 9%



Three Months Ended September 30, 2016Percentage Change in Net Sales

As ReportedBasis

Less: Impact ofForeign

CurrencyConstant

Currency BasisRevenue Growth Rate

Interventional Cardiology 14 % 1 % 13 % Peripheral Interventions 12 % 1 % 11 %Cardiovascular 13 % 1 % 12 %

Cardiac Rhythm Management 4 % 1 % 3 % Electrophysiology 5 % 0 % 5 %Rhythm Management 4 % 1 % 3 % Endoscopy 11 % 2 % 9 % Urology and Pelvic Health 26 % 0 % 26 % Neuromodulation 11 % (1) % 12 %MedSurg 15 % 1 % 14 %

Net Sales 11 % 1 % 10 %

Three Months EndedSeptember 30, 2016

Revenue Growth Rate Uro/PHPercentage change in net sales, as reported 26%

Less: Impact of Foreign Currency Fluctuations 0%Percentage change in net sales, constant currency 26%

Less: Impact of AMS acquisition 13%Percentage change in net sales, organic 13%




Three Month EndedAdjusted Gross Margin 9/30/2016 9/30/2015 Basis Points ChangeGross Margin, as reported 71.8 % 71.5 % 30Less: Non-GAAP adjustments (0.7)% (1.0)%Adjusted Gross Margin 72.5 % 72.5 % 0

Three Month EndedAdjusted Operating Margin 9/30/2016 9/30/2015 Basis Points ChangeOperating Margin, as reported 16.5 % (15.8)%Less: Non-GAAP adjustments (7.8)% (38.9)%Adjusted Operating Margin 24.3 % 23.1 % 120


YTDMedsurg Revenue Growth 9/30/2016Percentage change in net sales, as reported 23%

Less: Impact of Foreign Currency Fluctuations —%Percentage change in net sales, constant currency 23%Less: Impact of AMS acquisition 12%Percentage change in net sales, organic 11%

Three Months EndedInterventional Cardiology (IC) Revenue Growth 09/30/16 06/30/16 03/31/16IC revenue growth, as reported 14% 13% 11 %Less: Impact of Foreign Currency Fluctuations 1% 1% (2)%IC Revenue Growth, Constant Currency 13% 12% 13 %



in millions Three Months EndedSegment Operating Income 9/30/2016 9/30/2015 % ChangeCardiovascular $ 292 $ 249 18%Rhythm Management 113 97 17%MedSurg 262 235 11%Segment Operating Income 667 581Corporate expenses and currency (156) (145)Intangible asset impairment charge; and acquisition-, divestiture-related net charges, restructuring- and restructuring-related netcharges, debt extinguishment charges and litigation-related chargesand credits (27) (604)Amortization expense (136) (131)Operating Income (Loss) $ 348 $ (299)

Three Months EndedSegment Operating Margin 9/30/2016 9/30/2015 Basis Point ChangeCardiovascular 32.8% 31.2% 160Rhythm Management 20.1% 17.8% 230MedSurg 32.9% 33.8% (90)


in millions Three Months EndedSegment Net Sales 9/30/2016 9/30/2015Cardiovascular $ 893 $ 797Rhythm Management 562 544MedSurg 796 697Subtotal Core Businesses $ 2,251 $ 2,038Foreign Currency (146) (150)Worldwide Net Sales $ 2,105 $ 1,843



Three Months EndedSeptember 30, 2016

Revenue Growth DES PacerRevenue growth, as reported 17% 25%Less: Impact of Foreign Currency Fluctuations 3% 3%Revenue growth, constant currency 14% 22%


Three Months Ended Three Months Ended9/30/16 6/30/16

Revenue Growth UroPH OUS EP OUS NM OUS EP OUSRevenue growth, as reported 26% 16% 69% 9 %

Less: Impact of Foreign Currency Fluctuations (1)% 1% 8% (1)%Revenue Growth, constant currency 27% 15% 61% 10 %

Less: Impact of AMS acquisition 13%Percentage change in net sales, organic 14%

Three Months EndedPeripheral Interventions (PI) Revenue Growth 09/30/16 06/30/16 03/31/16PI revenue growth, as reported 12% 13 % 12 %Less: Impact of Foreign Currency Fluctuations 1% (1)% (2)%PI Revenue Growth, constant currency 11% 14 % 14 %



Q4 2016 Estimate Full Year 2016 Estimate(Low) (High) (Low) (High)

Estimated GAAP sales growth 8% 11% 11 % 12%Less: Estimated Impact of Foreign Currency Fluctuations 1% 2% (1)% 0%

Estimated sales growth, constant currency 7% 9% 12 % 12%Less: Impact of AMS acquisition N/A N/A 3 % 3%

Estimated sales growth, organic 7% 9% 9 % 9%

in millions Quarter EndedAdjusted Free Cash Flow 9/30/2016 9/30/2015Operating cash flow, reported $ (32) $ 408 Less: Capex 70 69Free Cash Flow, reported (102) 339Plus: Restructuring Payments 18 21Plus: Special Tax Refunds/Credits (15) (26)Plus: Legal Settlements 529 33Plus: Other 10 27Adjusted Free Cash Flow $ 440 $ 394



Q4 2016 Estimate Estimated Growth(Low) (High) (Low) (High)

Estimated GAAP EPS $ 0.15 $ 0.17Estimated acquisition and divestiture-related net charges 0.01 0.01Estimated restructuring and restructuring-related charges 0.03 0.03Estimated amortization expense 0.08 0.08Litigation-related charges — —Estimated Adjusted EPS $ 0.27 $ 0.29 2% 10%Less: Estimated Impact of Foreign Currency Fluctuations (9)% (9)%Estimated Adjusted EPS, excluding FX 11% 19%

Full Year 2016 Estimate Estimated Growth(Low) (High) (Low) (High)

Estimated GAAP EPS $ 0.32 $ 0.34Estimated acquisition and divestiture-related net charges 0.07 0.07Estimated restructuring and restructuring-related charges 0.07 0.07Estimated amortization expense 0.34 0.34Litigation-related charges 0.29 0.29Estimated Adjusted EPS $ 1.09 $ 1.11 17% 19%Less: Estimated Impact of Foreign Currency Fluctuations (6)% (6)%Estimated Adjusted EPS, excluding FX 23% 25%


Appendix A(Continued)Forward-Looking Non-GAAP Financial Measures

The following is an explanation of the adjustments that management excluded from GAAP measures to calculate the

following forward-looking non-GAAP financial measures for the fourth quarter and full year 2016:

Adjusted Gross Margin: Excludes from GAAP gross margin the impacts of forecasted acquisition- and divestiture- and

restructuring-related charges or credits.

Adjusted SG&A: Excludes from GAAP SG&A the impacts of forecasted acquisition- and divestiture- and restructuring-

related charges or credits.

Adjusted R&D: Excludes from GAAP R&D the impacts of forecasted acquisition- and divestiture- and restructuring-

related charges or credits.

Adjusted Operating Margin: Excludes from GAAP operating margin the impacts of forecasted acquisition- and

divestiture- and restructuring- and restructuring-related charges or credits, and amortization expense.

Adjusted Tax Rate: Excludes from GAAP tax rate the tax impacts related to forecasted acquisition- and divestiture- and

restructuring- and restructuring-related charges or credits, and amortization expense.

Adjusted Free Cash Flow: Adjusts GAAP operating cash flow to include the impacts of forecasted capital expenditures

and excludes the impact of estimated after-tax acquisition- and divestiture-, restructuring- and litigation-payments.

Please refer to our Safe Harbor for forward-looking statements disclosure on slide 2 in conjunction with any forward

looking information presented within.

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Q3 2016 Financial & Operational Highlights - …investors.bostonscientific.com/~/media/Files/B/Boston...4 Q3 2016 Financial & Operational Highlights | October 26, 2016 WW Sales by