Welcome Susie Lisa Vice President, Investor Relations 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. Regulatory Disclaimers
Product Regulatory Disclaimer AXIOSTM – Gallbladder and Bile Duct Drainage indications Europe only. Not available for use or sale in the U.S. SpyGlassTM Next Gen Device under development. Not available for use or sale worldwide. LithoVueTM Next Gen Device under development. Not available for use or sale worldwide. GUIDE™ DBS System CE Marked. Not available for use or sale in the U.S. CE Marked. US: “Caution: Investigational Device. Limited by Federal (or US) law to Vercise™ Deep Brain Stimulation System investigational use only. Not available for sale.” Vercise™ PC Deep Brain Stimulation System CE Marked. Not available for use or sale in the U.S. Vercise™ Directional System CE Marked. Not available for use or sale in the U.S. Vercise Gevia™ DBS System CE Marked. Not available for use or sale in the U.S. SCS & DBS Next Gen Devices under development. Not available for use or sale worldwide. HV / TACHY MRI Conditional Labeling CE Marked. Not available for use or sale in the U.S. Leadless Pacemaker, EMPOWERTM Modular Pacing System, Emblem Pace Device under development. Not available for use or sale worldwide. Implantable Cardiac Monitor Device under development. Not available for use or sale worldwide. DirectSenseTM Technology Device under development. Not available for use or sale worldwide. Force Sensing Technology Device under development. Not available for use or sale worldwide. IntellaNavTM MiFi OI AF ablation catheter Pending CE Mark. Not available for use or sale in the U.S. Regulatory Disclaimers
Product Regulatory Disclaimer CE Marked. US: “Caution: Investigational Device. Limited by Federal (or US) law to RangerTM Drug-Coated Balloon investigational use only. Not available for sale.” Drug-Coated Balloon, Drug Eluting Stent – Below-the-knee indication Device under development. Not available for use or sale worldwide. Next Gen Embolics Device under development. Not available for use or sale worldwide. CE Marked. US: “Caution: Investigational Device. Limited by Federal (or US) law to EluviaTM Drug eluting self-expanding SFA stent investigational use only. Not available for sale.” CE Marked. US: “Caution: Investigational Device. Limited by Federal (or US) law to Embozene TANDEMTM Drug Eluting Microspheres investigational use only. Not available for sale.” OncozeneTM / EmbozeneTM Microspheres Not indicated for use as drug-eluting microspheres. AngioJet ZelanteDVTTM Catheter – Pulmonary Embolism indication Outside current device labeling. Lotus™ Valve System Not available for use or sale worldwide. Lotus EdgeTM Not available for use or sale worldwide. Lotus Next Gen Device under development. Not available for use or sale worldwide. CE Marked. US: “Caution: Investigational Device. Limited by Federal (or US) law to ACURATETM Self Expanding Valve Platform investigational use only. Not available for sale.” ACURATE neoTM AS Valve System Pending CE Mark. Not available for use or sale in the U.S. Mitral Valve technologies Devices under development. Not available for use or sale worldwide. Tricuspid technologies Devices under development. Not available for use or sale worldwide. WATCHMANTM FLX Pending CE Mark. Not available for use or sale in the U.S. WATCHMANTM FLX Next Gen Device under development. Not available for use or sale worldwide. High Definition IVUS catheter Device under development. Not available for use or sale worldwide. Agenda
Time Topic Presenter 7:30am Welcome Susie Lisa
7:35am Strategic Overview Mike Mahoney
7:55am MedSurg Dave Pierce, Art Butcher, Maulik Nanavaty 9:00am MedSurg Q&A 9:15am Rhythm Management Joe Fitzgerald, Ken Stein, M.D. 9:45am Rhythm Management Q&A 10:00am Break Jeff Mirviss, Kevin Ballinger, Nick-Spadea-Anello, 10:10am Cardiovascular Ken Stein, M.D., Ian Meredith, M.D. 11:35am Financial Overview Dan Brennan 11:55am Q&A – All Topics All 12:55pm Wrap up Mike Mahoney 1:00pm Box lunch with management team until 1:30pm Opening Video Financial Disclaimers
Market Estimates:
Unless noted otherwise, all references to market sizes, market share positions, and market growth rates are BSX internal estimates.
Non-GAAP Financial Measures:
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. Constant Currency Measures:
Operational Revenue and growth are at constant currency and exclude divested businesses. References to constant currency are based on internally- derived standard currency exchange rates, which may differ from year to year. Standard currency rates changed in January 2017, however, we have not restated constant currency measures for the prior period and are using internally-derived standard currency exchange rates in place during the referenced period.
Adjusted Operating Margin and Earnings Per Share (EPS) Measures:
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. Adjusted Free Cash Flow Measures:
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.
Strategy Overview
Mike Mahoney Chairman & CEO Our Mission and Values
Boston Scientific is dedicated to transforming lives through innovative medical solutions that improve the health of patients around the world.
Meaningful High Global Caring Diversity Winning Spirit Innovation Performance Collaboration What to Expect from BSX
1. Living BSX values
2. Driving category leadership and expanding globally
3. Enhancing long term outlook by entering into multiple large and high growth markets
4. Consistently delivering revenue and adjusted EPS growth in top tier of peer group
5. Building shareholder value with disciplined capital allocation strategy Track Record of Delivering High Performance
Operational Adj. Operating Margin* Adj. EPS Growth* Revenue Growth*
Organic revenue growth* Includes foreign exchange impact* Operational revenue growth* Excludes foreign exchange impact* (~$0.10 in 2015, ~$0.06 in 2016)
24.1% 26% +26% $8.4B 23% +23% 12% +12% 22.3% $7.5B +20%
8% +10% 20.2% $7.4B +8% +15% 18.9% +6% 17.8% +11% +11% +5% $7.1B +4% $7.2B +2%
2012 2013 2014 2015 2016 2012*** 2013 2014 2015 2016 2012 2013 2014 2015 2016 -3% ***Adjusted for estimated impact of Medical Device Tax -2% (~100bps), based on actual 2013 impact Consistent double-digit Strong, consistent sales growth ~630 bps adj. OM expansion adjusted EPS growth* Boston Scientific At-A-Glance: 2016 FY16 reported revenue and operational growth* (total company: $8.4B, +12%)
Interventional Endoscopy Cardiology $2.3B, +13% $1.4B, +10%
Urology and Structural Heart Pelvic Health $200M+ $1.0B, +14%* (growth ex. AMS)
Peripheral Neuromodulation Interventions $1.0B, +12% $560M, +12%
Rhythm Management CRM Electrophysiology $1.9B, +3% $245M, +5% Strategic Imperatives Align Our Global Execution
STRENGTHEN EXPAND into High DRIVE FUND BUILD Category Growth Global the Journey Stronger Leadership Adjacencies Expansion to Fuel Growth Capabilities
• Digital Health Innovation driving Accelerating growth Building scale and • Health Economics Increase adjusted growth faster via diversification into capabilities, targeting • Advantics operating margin* to than peers in large faster growth Emerging Markets • Patient awareness ~28% in 2020 global markets segments growth +15% • Commercial excellence Competing & Innovating in Faster Growth Markets
2016E ‘16 - ’20E 2016E 2020E Business Market Market Key Investment Areas, New Markets Market Size Market Size
Growth CAGR
Cardiology $7.5B 1% $8B 0-2% Complex PCI, PCI Guidance, Heart Failure
Structural Heart $3B 35% $6B 20% TAVR, LAAC, Mitral Replace & Repair
Peripheral $6B 7% $7.5B 6-8% Drug-eluting, Oncology, Venous, CLI
Cardiovascular
CRM + Diagnostics $10B 1% $10.5B 0-2% S-ICD/Leadless, Diagnostics, Heart Failure Mgmt. Rhythm EP $4.5B 12% $6.5B 10-12% Mapping, Navigation, Therapeutic Solutions
Endoscopy $3B 5% $3.5B 5-6% Visualization, Pulmonary, Oncology, Endoluminal surgery
Urology & PH $3.5B 5% $4.5B 5-6% Stone, Prostate Health, ER, Globalization MedSurg Neuromod $2.5B 10% $3.5B 8-12% Pain, Brain, Movement Disorders
WW Total ~$40B 4-5% ~$50B 5-6% Continuing to invest in higher growth segments Strong Culture of Delivering Meaningful Innovation
Research & Development Global Strategic Partnerships
• Higher R&D investment as % sales than peers • Multiple incubators & external partnerships • Leveraging R&D synergies between divisions • Venture investments in Israel & China • Expanding BSX global R&D capabilities in EM* • IBM Research and other partnerships
Community of Innovation Business Development
• BSX “Imagine If… “drives employee engagement • Successful BD track record over past 5 years • Evolving our BSX culture of innovation with recognition • Active venture capital fund: • Open innovation digital health competitions, partnering • ~30 investments in mixed stages of opportunity with Google *EM = Emerging Markets Innovation that Delivers Real Economic Value Selected examples:
• NHS ~£6M saving in 5 years by reducing avoidable CRT-D replacements2 1 • Estimated to save U.S. Healthcare System ~$300M in 2015 & 20161
• Potential $15B reduction in U.S. Heart Failure hospitalization costs in 2 BSX ICD/CRT-D patients3
• Reduces risk of stroke & bleeding with quality of life benefits compared to warfarin 3 • Provides overall healthcare cost savings compared to warfarin at 10 years4
• 32% decrease in asthma exacerbations & reduction in associated hospitalizations; 4 discounted 5-year cost of $28K vs. omalizumab $117K5,6,7,8
• Lowers ureteroscope operating costs by $500+ and Operating Room costs by up to 5 $375 per case9 ADVANTICS Solutions: Enhancing Category Leadership
Partners
Performance Capital Financing Service Development Managed Services Disease Management Optimization
• Turnkey setup & • Care process • Patient referral • Managed cath • Care variation and equipment improvement management labs & ORs standardization financing opportunities • Supply chain • Growth advisory • Materials • Maintenance & optimization management • Heart Failure servicing financing patient support
Standardize HF Improve Increase patient Share risks and care to improve Upgrade facilities operational access to accountability outcomes and effectiveness therapies reduce costs Strengthening Growth via Portfolio Diversification
Estimated Market Growth Rates High Growth Mkt (>7% CAGR): TAVR, LAAC, EP, SCS, DBS, PI Drug-Eluting, Venous, HF Diagnostics Moderate Growth Mkt (4 - 6% CAGR): Endo, Complex PCI, Oncology, Urology, Women’s Health Low Growth Mkt (0 - 3% CAGR): Pacer, Defibrillators, DES
2012 Revenue Mix 2016 Revenue Mix 2020E Revenue Mix $7.2B $8.4B
Low High Low Low High Growth Growth Growth Growth Growth 37% 46% 13% 25% 25% Moderate Moderate Growth Moderate High Growth 47% Growth 50% Growth 50% 7% Expanding into Multiple High Growth Adjacencies That Will Approach ~$13B in 2020
BSX 2016 Market Growth Accelerators Sales 2020E • LOTUS - TAVR IC: TAVR + LAAC $200M+ $5B • ACURATE - TAVR • WATCHMAN global expansion
• Eluvia - DES PI Drug Eluting ~$25M $2B • Ranger – DCB • Critical Limb Ischemia (CLI)
RM Diagnostics • Heart Failure --- $1B • ICM
• Pathology Endo new markets ~$50M $2B • Infection • Endo-luminal surgery
• Visualization Uro new markets ~$50M $2B • Cancer • Overactive bladder
Neuromod - Brain ~$25M $1B • Vercise – Brain • Other indications 2020+
~$0.3B ~$13B Significant New Launches + Core Portfolio Cadence
2017E 2018E 2019E 2020E-2021E
IC IC IC IC • LOTUS Edge – EU Q4:17 • LOTUS Edge – U.S. • WATCHMAN FLX Next • ACURATE neo TF – ACURATE TAVR – OUS mid-18 Gen LAAC – EU U.S./Japan CRM • ACURATE – OUS • WATCHMAN - Japan • LOTUS Next Gen – EU • WATCHMAN FLX Next Expansion • LOTUS – Japan • Resonate HV MRI – U.S. Gen LAAC – U.S. • ACURATE neo AS – EU EP PI PI • RHYTHMIA HDX – WW CRM • Eluvia SFA DES - U.S. • Ranger SFA DCB – U.S. NMD • Resonate MRI & • I/O Embolic Coils - WW • DES BTK – WW • Gevia DBS MRI & Dir. HeartLogic HF Alert – CRM/EP CRM/EP Lead – EU WW • Leadless Pacing & • ICM Monitoring & Dx – • Vercise DBS – U.S. EP Modular CRM – EU WW • DirectSense Rx • Force Sensing Afib Catheter – EU/U.S. (EP) • Force Sensing Afib Catheter – U.S. Catheter – EU Endo Endo • Axios Transluminal Stent • SpyGlass Next Gen – WW – Japan Uro NMD • SCS & DBS Next Gen – • LithoVue Next Gen – WW U.S./EU Emerging Markets to Drive ~150bps/Growth
Emerging Markets1 Emerging Markets1 Growth Emerging Markets1 Revenue* Drivers & Key Capabilities Partnerships
$1.4B • Global orientation Partnerships & VC Investments • Portfolio registration, new launches • New R&D and physician training $900M capabilities
• New Malaysia manufacturing plant $625M • Equity investments in key countries
• Shift to minimally invasive Tsinghua techniques University
Latin America: Expanding access 2013 2017E* 2020E*
*Forecast years at standard FX rates Our Winning Spirit
23,000 volunteer Forbes America’s Best PEOPLE hours Employers 150+ Global FORTUNE World’s Most STEM events Admired Companies
Reduced greenhouse Achieved 78% gas emissions by 11k recycle index PLANET Recycled 8k tons of 21st greenest solid waste company in the U.S. by Newsweek
120 Close the Gap 100% on Corporate health equity sites Equality Index for LGBT Top supporter of Inclusiveness Historically Black 100% on Disability Colleges and Equality Index PRACTICES Universities
References
* Non-GAAP measure; for reconciliations of non-GAAP financial measures to the most directly comparable GAAP figures, please refer to Appendix A of this document
Slide 9 (Innovation that Delivers Real Economic Value) 1. Our modeling shows that in 2015 and again in 2016, our EnduraLife™ Battery Technology saved the U.S. Healthcare System approximately $300 million – a number quantified by using an average reimbursement value for outpatient ICD replacements that were avoided because of our long-lasting devices. Source: Stein, Ken. Becker’s Hospital World August 2016.
2. The National Institute of Health and Care Excellence (NICE) have recommended Boston Scientific’s ENDURALIFE-powered CRT-D devices, following an evaluation by their Medical Technologies Evaluation Committee (MTEP): From its evaluation of submitted evidence, NICE concluded that the extended battery life observed with ENDURALIFE -powered CRT-Ds is likely to reduce the number of avoidable replacement procedures a patient may have to undergo, thereby offering improved outcomes for patients and potential savings to the NHS of approximately £6 million in the first five years. Source: MTG 294. NICE medical technology guidance: ENDURALIFE-powered CRT-D devices for treating heart failure. March 2017
3. $6 Billion in US healthcare system costs are driven by HF hospitalizations of patients with implanted ICD’s or CRT-D’s. HeartLogic can detect 70% of these hospitalization events a median of 34.5 days in advance of hospitalization, allowing care teams enough time to change therapy and reduce admissions.
4. Reddy VY, Akehurst RL, Armstrong SO, et al. Time to cost-effectiveness following stroke reduction strategies in AF: warfarin versus NOACs versus LAA closure. J Am Coll Cardiol. 2015;66(24):2728-39.
5. Castro et al. 2010 AJRCCM. Effectiveness and Safety of Bronchial Thermoplasty in the Treatment of Severe Asthma.
6. Cox et. al. 2007 NEJM. Asthma Control during the Year after Bronchial Thermoplasty.
7. Pavord et al. 2007 Ann Allergy Asthma Immunol. Safety of bronchial thermoplasty in patients with severe refractory asthma.
8. Zafari et al. 2016 PLoS One. Cost-Effectiveness of Bronchial Thermoplasty, Omalizumab, and Standard Therapy for Moderate-to-Severe Allergic Asthma.
9. Results dependent on facility specific characteristics and does not represent all possible scenarios.
Slide 14 (Emerging Markets Focus to Drive ~150bps/Growth)
1. We define Emerging Markets as including certain countries that we believe have strong growth potential based on their economic conditions, healthcare sectors, and our global capabilities. Currently, we include 20 countries in our definition of Emerging Markets
MedSurg MedSurg: Category Leadership & Growth Drivers
Urology and Endoscopy Neuromodulation Pelvic Health
™ Stone Disease & ™ Precision Spectra SpyGlass DS ™ LithoVue™ Single-Use Visualization Precision Novi Ureteroscope Optimizes pancreatico- Leading SCS platforms, ™ Leading platform, next biliary procedural Illumina 3D software & gen technology, and efficiency & productivity non-rechargeable expanding globally system Vercise™ PC DBS Endoluminal Surgery - System & Cartesia ™ Men’s Health Oncology Directional Lead Category leadership, Endoscopic resection of 1st Directional System for market & geographic lesions in colon, Parkinson’s, dystonia, & expansion esophagus or stomach tremor globally; U.S. DBS launch YE2017E
Women’s Health Infection Control & RF Ablation Expanding portfolio Pathology Services Comprehensive range technologies & Solutions for Ambulatory solutions for pain global footprint Surgery Center market management MedSurg Urology & Pelvic Health Dave Pierce Senior Vice President and President, Urology & Pelvic Health Urology & Pelvic Health Vision 2020+
Imagine a world where… Surgeons worldwide have access to flexible ureteroscopy procedures to treat patients with stone disease and also utilize new approaches to stone procedures that reduce the cost of care per patient
Patients are educated and empowered to take advantage of all treatment options for erectile dysfunction
Minimally invasive procedures are the standard of care and fully replace hysterectomy for women with benign gynecological conditions
272727 Leadership in Urology & Pelvic Health
Market Factors BSX Growth Drivers • Innovative new products, • Demographics and disease clinical programs, and prevalence (age, obesity, patient education diabetes, vascular disease) • Global expansion and focus • Specialized therapeutic on emerging markets interventions increasing device utilization • Compelling opportunities in adjacent markets • Increasing patient access • Tuck-in M&A
Market BSX 2016 Size Growth 2016-2020 est. CAGR Revenue Share Position Growth* +14% ~$3.5B +5% +5% - 6% $1.0B #1 (ex. AMS)
*Growth in constant currency, excluding the impact of the AMS Male Urology portfolio acquisition 282828 Large and Growing Markets
Stone Disease Men’s Health Women’s Health $1.3B Market $700M Market $1.5B Market +5-7% Growth +4-6% Growth +4-6% Growth • 6% of the population • 15M men worldwide • 35% of women worldwide worldwide affected by affected by urinary affected by urinary kidney stone disease1 incontinence2 incontinence4 • High BMI significantly • 50% of men age 50+ • 12% of reproductive-aged increases risk of kidney affected by benign women affected by stone development prostatic hyperplasia3 abnormal uterine bleeding5
292929 Category Leadership in Stone Disease
Committed to Lead LithoVue™ - Transforming fURS Innovative single-use technology that is transforming $1.3B global market
flexible ureteroscopy (fURS) 1) The most Comprehensive Device Portfolio for the clinical management of stone disease Rapid technology uptake • 800+ hospitals globally • 10,000+ procedures • 30+ posters, abstracts and publications 2) Clinical Education and Training • Driving growth with pull-through • Stone Institute Workshops • Preceptor Training Center of Excellence Programs
• Preceptorship and Proctorship Training Programs LithoVue delivers tangible financial 3) Partnerships to Drive Clinical Evidence and clinical benefits
303030 LithoVue™: Physician’s Perspective
313131 LithoVue™: Transformational Technology
Today • Economic benefits: Establish LithoVue as standard of care for complex stone procedures • OR efficiency: Greater throughput increasing procedural volume • Pull through: $0.40 for every $1 of LithoVue sales
No repairs. Tomorrow • Economic evidence drives greater No sterilization. utilization for routine stone procedures No compromise. • Greater global access to flexible ureteroscopy advances care worldwide
323232 Revitalized Focus in Men’s Health to Expand Global Reach
Strengthening Leadership Spotlight on Erectile Dysfunction $700M global Men’s Health market Leading with 70% global market share
15K+ patients Erectile Dysfunction (ED): $250M MC treated annually Incontinence (MC): $150M BPH BPH: $300M ED 50% of men over age 40 are affected by some degree of Erectile Dysfunction1 Expanding Global Reach • Untreated ED associated with severe ∙ Portfolio innovation ∙ Physician training ∙ Patient awareness ∙ problems including anxiety and depression
Main causes of Erectile Dysfunction • 40% vascular causes 15% Other Accelerating Patient Education • 30% diabetes* related 40% 15% Rx Vascular FIXincontinence.com • 15% prescription medication and Edcure.org • 15% other causes 30% 500,000+ patient Diabetes sessions in 2016 *Diabetic men develop ED 10 to 15 years earlier than men without diabetes2 333333 Continued Innovation in Women’s Health to Drive Procedural Adoption
Strengthening Leadership Spotlight on Tissue Resection in GynSurg
$1.5B global Women’s Health market Up to 40% of reproductive-aged women will develop 1 uterine fibroids or polyps
GynSurg: $1.1B PF Symphion Pelvic Floor (PF): $400M System™ GynSurg Resectr™ Focus on Innovation ∙ Clinical data ∙ Surgical training ∙ Expanding product portfolio ∙
Hysteroscopic Resection Procedures (U.S.) +11%
Physician Education and Training Pelvic Floor Institute • 120+ • Clinical training physicians • Economic tools collaborating • Patient education on research 2015 2016 2017E 2018E 2019E 2020E Expanding Globally through Stone Leadership
Leading with Stone Strong International Revenue Growth Leverage stone to expand leadership and Under-represented internationally strengthen capabilities globally
2016 Revenue International: ~$300M Int’l
U.S.: ~$700M U.S.
Stone Disease International Revenue Growth • Deliver physician education and clinical training $450M • Innovate to meet market needs $300M • Drive LithoVue momentum
Women’s and Men’s Health • Deliver physician education and clinical training • Strengthen commercial capabilities 2016 2017E 2018E 2019E 2020E • Build patient awareness Stone Disease Men's Health Women's Health 35 Compelling Opportunities in Adjacent Markets
$7.0B Key Growth Drivers Core Markets $2.6B New Adjacencies Accelerate into new adjacencies Market Expansion • Expanding visualization • Urologic cancer • Overactive bladder $4.4B Core Growth Drive above market growth in the core $3.5B • Stone Disease leadership • Globalization in developed and emerging markets
2016 2020E
363636 Urology & Pelvic Health: Leadership in Large and Growing Markets
• $3.5B UroPH market has strong growth and favorable demographics
• BSX is $1B category leader, outpacing the market and led by:
• Portfolio of leading technologies
• Disruptive, innovative new products
• Strong international growth, led by kidney stone franchise
• Compelling adjacent market opportunities
373737 References
Slide 4 (Large and Growing Markets): 1. Scales CD Jr, Smith AC, Hanley JM, et al. Prevalence of kidney stones in the United States. Eur Urol. 2012 Jul;62(1):160-15. 2. National Health and Nutrition Examination Survey 2001–2010. 3. Benign Prostatic Hypertrophy. American Urological Association. 2016. www.auanet.org/education/benign-prostatic- hypertrophy.cfm www.auanet.org/education/benign-prostatic-hypertrophy.cfm. Accessed May 20, 2016. 4. Olsen AL, Smith VJ, Bergstrom JO, et al. Epidemiology of surgically managed pelvic organ prolapse and urinary incontinence. Obstet Gynecol. 1997 Apr;89(4):501-6. 5. Spencer CP, Whitehead MI. Endometrial assessment revisited. Br J Obstet Gynaecol. 1999 Jul;106(7):623-32.
Slide 8 (Revitalized Focus in Men’s Health to Expand Global Reach): 1. Feldman HA, Goldstein I, Hatzichristou DG, et al. Impotence and its medical and psychosocial results of the Massachusetts Male Aging Study. J Urol. 1994 Jan;151(1):54-61. 2. Malavige LS, Levy JC. Erectile dysfunction in diabetes mellitus. J Sex Med. 2009 May;6(5):1232-47.
Slide 9 (Continued Innovation in Women’s Health to Drive Procedural Adoption): 1. Okolo S: Incidence, aetiology and epidemiology of uterine fibroids. Best Pract Res Clin Obstet Gynaecol. 2008, 22: 571- 588. 10.1016/j.bpobgyn.2008.04.002.
383838 MedSurg Endoscopy Art Butcher Senior Vice President and President, Endoscopy Endoscopy Vision 2020+
Imagine a world where…
Accurate, timely diagnosis using interventional imaging catheters slows the progression of pancreatic cancer and other GI diseases
Minimally invasive, early endoscopic intervention reduces costly surgery of the esophagus, stomach and colon, enabling patients to recover more quickly
Infection prevention measures in the GI lab reduce antibiotic resistant infections, saving patient lives and delivering healthcare savings World Leader in Flexible Endoscopy Devices
Market Factors BSX Growth Drivers
• Large, diverse markets with • Device portfolio is expanding the significant disease burden and market increasing device utilization • Category leadership driving core • Endoscopic procedures and business faster + new devices are attractive adjacencies accelerate growth alternatives to surgery and Rx • Globalization & Emerging • Growing specialization of Markets medical and surgical endoscopists • Tuck-in M&A
Market BSX 2016 Size Growth 2016-2020 est. CAGR Revenue Share Position Growth* ~$3.0B +5% +5% - 6% $1.4B #1 +10%
*Growth in constant currency Doubling Our Served Markets By 2020
$7.0B Key Growth Drivers Core Markets $3.5B New Adjacencies Market Expansion Accelerate into new adjacencies • Pathology • Infection Prevention • Endoluminal Surgery
$3.5B Core Growth
$3.0B Drive above market growth in core • Biliary Disease Intervention • Pulmonary Disease Intervention
2016 2020E Category Leadership in Large and Growing Markets + Broadening into Adjacencies
Market Market 2016E 2020E Key Accelerators Pancreaticobiliary • EUS* indications $1.2B $1.5B • Imaging Disease • Surgery to Endoscopy
Gastrointestinal • Pathology $800M $2.0B • Cancer ablation Cancer • Endoluminal surgery
Gastrointestinal • Clipping adoption $600M $1.0B • Closure Bleeding • Ingestible technology
Infection Prevention • Compliance kits $300M $2.0B • Scope valves and repair & Other** • Procedural devices
• Asthma Pulmonary $100M $500M • Lung cancer
~$3.0B ~$7.0B *EUS = Endoscopic Ultrasound **Other includes Enteral Access and Scope Repair Transforming the Standard of Care SpyGlass™ DS System
First and only minimally invasive, single-use, single operator digital cholangioscope
Compelling outcomes and data • 30,000+ patients in 50+ countries • Accurate, real-time diagnosis • >90% stone clearance success rates • Changes clinical management in 64% of patients relative to traditional diagnostic approaches
1M+ ERCPs annually Stricture Pancreatic Stone duct Transforming the Standard of Care AXIOS™
Revolutionary stent designed specifically for EUS* guided transluminal therapy
Bile Duct Current indications: Possible new indications: Gallbladder • Gallbladder (EU) • Gallbladder (US) • Pseudocyst drainage • Gastric Outlet Obstruction • Walled-off necrosis • Type II Diabetes • Bile duct drainage (EU) • Obesity Small Intestine
High growth segment within the biliary market
*EUS = Endoscopic Ultrasound Accelerating into New Adjacencies Valuable Solutions for the GI Practice & Patients
Pathology Services Infection Prevention $600M Ambulatory Surgery Center market (U.S.) $775M global market Dedicated commercial team servicing Antibiotic resistant infections cost the U.S. 1,700 GI Ambulatory Surgery Centers $20 billion each year
8.5M biopsies each year • Market leading RJ4 biopsy forceps
The only U.S. lab with GI Enhanced safety for patients and pathology specialists healthcare providers • Improves DX accuracy Ensures compliance with infection control guidelines Next day, secure electronic data transfer Improves operational efficiency and • Improves efficiency inventory control Evolution of Minimally Invasive Surgery
Open Surgery Laparoscopic Surgery Endoluminal Surgery
17% of patients undergoing surgery for complex polyps experience significant adverse events and 13% require readmission1
Surgical Resection (n=731) Endoscopic Resection (n=1981) Length of Stay 5 days 0 days 12 Month Mortality 1.4% 0 Hospital Costs $15K $2K Hospital Charges $53K $15K Accelerating into New Adjacencies Endoluminal Surgery
Endoluminal surgery is emerging as alternative to surgical resection of cancer or pre-cancer GI Cancer Worldwide Prevalence • 2.8M gastrointestinal cancers 92% of colonic pre-cancer / • 11-22M adenoma (pre-cancer) cancer surgical resections • 6M Barrett’s Esophagus (pre-cancer) could have been managed endoscopically
Esophageal Stomach Colorectal Pre-cancers BSX will lead with a comprehensive portfolio of devices for the Surgical Endoscopist
Lifting* Cutting Graspers* Traction* Closure
*Expected to be available in 2018 Endoluminal Surgery at Work Endoscopy: Category Leader + Meaningful Market Expansion
• Track record of consistent high performance, outpacing our markets
• Exciting growth sector with compelling outlook/shift to minimally invasive techniques
• Several significant market expansion opportunities in play to accelerate the business
• Clear category leadership, deep portfolio, multiple platforms
• Margins accretive to BSX
• Aiming for $2B in revenue in 2020
References
Slide 9 (Evolution on Minimally Invasive Surgery) 1. Gastroinest Endosc 2016; 84:296-303 MedSurg Neuromodulation
Maulik Nanavaty Senior Vice President and President, Neuromodulation Neuromodulation Vision 2020+
Imagine a world where…
25M+ patients suffering from chronic neuropathic pain receive personalized therapy, giving them their lives back, at every moment, every day
A smart, connected, ecosystem transforms the current surgical practice and optimizes outcomes for movement disorder patients
New targeted therapy options exist for patients with stroke (2M+) and other neurodegenerative disorders (10M+) Positioned for Leadership in a Fast Growth Market
Market Factors BSX Growth Drivers
• SCS MultiWave platform: • Highly underpenetrated − Illumina 3D™ market − MRI: Montage™ • Low patient awareness − LUMINA data • DBS franchise • Technology evolution − Vercise™ PC Directional • Unmet clinical needs − Vercise™ Gevia MRI Directional • Global expansion • Clinical programs • International expansion
Market BSX 2016 Size Growth 2016-2020 est. CAGR Revenue Share Position Growth* ~$2.5B +10% +8% - 12% $560M #2 +12%
*Growth in constant currency Pain (SCS): Expanding a Winning Pain Portfolio and Leading with Rigorous Clinical Research
Spectra™ SCS Broadest Lead Illumina 3D™ Systems Portfolio Multiwave™ Cosman
Options for Patients Precision with Neural (32 contacts, MRI Unrivaled Flexibility and 1 Personalized Therapy RF Ablation Targeting Algorithm compatibility , Non- Coverage Rechargeable)
15+ ongoing clinical research studies and RCTs2 to help prove personalized therapy is the future of pain relief: • PROCO3 (Q2-17): Double-blind crossover RCT to evaluate the role of frequency on SCS patient outcomes • WHISPER4 (Q4-17): Crossover RCT to evaluate the effectiveness at sub-perception amplitude • ACCELERATE5 (H2-18): Crossover RCT to evaluate the safety and effectiveness at high-rate SCS • RELIEF6 (on-going): Global registry to evaluate long-term real world outcomes Strong cadence of technology with 2 new platforms launching over next 24 months
Pain (SCS): Future of Pain Relief = Personalized Waveform Therapy
60% of Patients Use Patients Prefer Their Own Multiple Waveforms Achieve Multiple Waveforms Individualized Stim Patterns Excellent Pain Reduction
2 10 8 D = 6.2 4 8 40% 1 khz 7.9 standard 14 Burst 6 28 Anode rate only Intensificatio 17 n/ 4 Prism Patient # Patient 23
Standard Scale (NRS) 18 Rate 2 60% used novel Numeric Rating 16 1.7 stim waveforms 0 9 Baseline NRS Follow-up NRS
Change in pain score at mean 180 days Registry retrospective study on waveform Case study of individual patients’ post-implant using standard rate (16%), use at least 20% of the time1 n=250 waveform use over one week1 n= 30 1kHz (61%), and both combined (13%)2 n= 77
With Illumina 3D™ and Multiwave™, Spectra is the only SCS platform designed to deliver the Right Waveform and stimulate the Right Target at the Right Time
Pain (SCS): Neural Targeting Algorithm (Illumina 3D) Delivers Superior Long Term Results
2 year LUMINA Data1 published in Pain Medicine, January 2017
10.0 8.75 9.0 Previous Generation System
8.0 7.17 D = 4.23 D = 5.34 7.0 100% 6.0 81% 5.0 74% 3.41 80% 71% 4.0 3.21 2.92 2.96 2.94 3.35 3.30 3.02 63% 3.0 60% 51% 2.0 1.0 41% 0.0 40%
Responder Rate Responder 20%
Numeric Rating Scale (NRS)ScaleRatingNumeric (N=141) (N=169) (N=47) (N=34) (N=45) (N=73) 0% OVERALL PAIN at LEG PAIN at 24 BACK PAIN at 24
ALL PATIENTS SEVERE PATIENTS 24 months months months
Illumina 3D™ delivered sustained pain relief in real world patients and demonstrates superior outcomes vs. a previous generation system Pain (SCS): PROCO RCT – True Level 1 Study 2017 INS Congress in May 2017
The PROCO RCT1 Study Background and Outcomes
10 Background: Back pain results (n = 20, p = .00002) • Double blind, crossover, multicenter study comparing 1kHz vs. 4kHz vs. 9 7kHz vs. 10kHz
8 • Key inclusion criteria: persistent lower back pain for > 90 days and 6.77 lower back pain NRS ≥ 5 7 • E-diary prompted each patient for 180 data points 6 • Supported by multiple years of mechanism of action research (pre- clinical)
5
Outcomes:
4 3.48 3.34 diary) - 3.11 3.21 • Frequencies from 1-10 kHz provide similar pain relief when proper neural 3 dosing is used to optimize therapy • 1 kHz provides excellent pain relief at 1/3 the charge of higher frequencies 2
Mean Mean (e NRS • Patients need multiple options: 1 – No single waveform can treat all patients – A system should provide precise targeting over 3 or more vertebral levels 0 Baseline 1 kHz 4 kHz 7 kHz 10 kHz
When using proper targeting • Frequency is NOT the determinant factor and neural dosing algorithm: • BSX 1kHz uses two-thirds less energy with equivalent outcomes Brain (DBS): Revolutionizing Brain Modulation Therapy
Vercise™ DBS Systems Brainlab Visualization Smart Programming
Precision Control of Directionality Personalizes Programming for Advanced Surgical Planning Captures Outcomes with MICC* Patients
BSX best-in-class system solution to meet market needs: • High-growth, underpenetrated market • ~$600M worldwide market shifting away from a single player market
• BSX poised to enter U.S. in late 2017/early 2018 with compelling new technology
• System capabilities to potentially treat other neurological disorders
*MICC = Multiple Independent Current Control Physician’s Take: The Power of Vercise™ Brain (DBS): Driving Superior Outcomes with Vercise™
Highest quality of life improvement First to introduce system flexibility designed to
at 6 months and 3 years expand therapeutic window
Conventional Therapy Vercise™ Therapy Stimulation Induced Side Stimulation Effect 6 Induced Side 6.87 D = +1.5 mA D = -2.2 mA Effect 4 (+64%) (-41%) 4.63 2 3.05 0 Therapeutic Window Stimulation Induced Side Mean Amplitude (mA) Amplitude Mean Range Effects Window VANTAGE Study – PercentageImprovement inQOL (%) Lancet Neurology 2015 and Neurosurgery 2016 CUSTOM-DBS Study4 – MDS 2014
Vercise™ MICC platform is the most flexible DBS system designed to improve patient outcomes and minimize side effects Path to Leadership in Brain Modulation: Technology Backed By Clinical Evidence
U.S. launches of Vercise™ PC and New Vercise™ Gevia™ Indications
Next Generation System
Vercise™ PC – First Directional System with 1 integrated Clinical Effects Map (EU) Anticipated U.S. approval of MRI, Personalized Visualization Vercise™ Gevia™ – First MRI conditional 1st gen (non-directional) system3 Rechargeable Directional System (EU)2
Today 2018 2019 2020+
18+ ongoing clinical research studies4 helping drive Brain Modulation to be a meaningful contributor to BSX:
• INTREPID5 (Q4:17) : First & only prospective, double-blind multi-center RCT; evaluating Vercise™ DBS System for U.S. entry • DBS Directional6 (2019): Evaluating therapeutic advantages of Cartesia™ Directional Lead w/Vercise™ PC DBS System • DBS Registry7 (on-going): First comprehensive registry of real world outcomes to establish improvement in quality of life Neuromodulation: Strong Growth Driven by Leading Innovation
• Exciting large, underpenetrated and high-growth markets (SCS & DBS)
• Pain – SCS expanding leadership footprint through personalized therapy – Broadest portfolio: neural targeting algorithms and waveforms, MRI, primary cell, 32 contacts, RF – Commitment to rigorous clinical and pre-clinical research: LUMINA, WHISPER, PROCO, ACCELERATE – Significant international expansion opportunity
• Brain – DBS franchise poised for accelerated share gains with the most innovative platforms – Winning directional system supported by extensive clinical data – Integrated offering: Directional System, visualization, MRI, Brainlab partnership – U.S. launch targeted end of 2017/early 2018
• Convergence of technology and clinical insights unlocking new treatments for neurological disorders (Stroke, OCD, Depression, Alzheimer’s, and others) References
Slide 4 (Pain (SCS): Expanding a Winning Pain Portfolio and Leading with Rigorous Clinical Research):
1. 1.5 Tesla MRI conditional when all conditions of use are met
2. Includes company and investigator-sponsored research studies 3. Evaluation of Spinal Cord Stimulation Pulse Rate On Clinical Outcomes (PROCO) NCT02549183
4. Effectiveness of the Precision Spinal Cord Stimulator System at Sub-Perception Amplitude (WHISPER) NCT02314000 5. Safety and Effectiveness Study of the Precision SCS System Adapted for High-Rate Spinal Cord Stimulation (ACCELERATE) NCT02093793 6. RELIEF - A Global Registry to Evaluate Long-Term Effectiveness of Neurostimulation Therapy for Pain (RELIEF) NCT0171905 Slide 5 (Pain (SCS): Future of Pain Relief = Personalized Waveform Therapy): 1. Clinical Application of Novel Neurostimulation Waveforms Using a Single Spinal Cord Stimulation Device: A Real-World Device Utilization Registry Presented by Anthony Berg, MD at WVSIPP 2016 2. Improved Spinal Cord Stimulation Outcomes Associated with Percutaneous Lead Placement and Multiple Waveform Programming Technique, Pyles et al., Poster Presentation, INS 2017 Slide 6 (Pain (SCS): Neural Targeting Algorithm (Illumina 3D) Delivers Superior Long Term Results): 1. Veizi et al, “SCS with Anatomically Guided (3D) Neural Targeting Shows Superior Chronic Axial Low Back Pain Relief Compared to Traditional SCS.” Pain Medicine Jan 2017. Slide 7 (Pain (SCS): PROCO RCT - True Level 1 Study in SCS): 1. Evaluation of Spinal Cord Stimulation Pulse Rate On Clinical Outcomes (PROCO) NCT0254918 References
Slide 10 (Brain (DBS): Driving Superior Outcomes with Vercise™):
1. Vantage:
• 1 Year: Timmermann et al., Multiple-source current steering in subthalamic nucleus deep brain stimulation for Parkinson’s disease (the VANTAGE study): a non-randomised, prospective, multicentre, open-label study Lancet Neurology 2015; 14: 693–701
• 3 Years: Timmerman et al, “Three-Year Outcomes of a Prospective, Multi-center Trial Evaluating Deep Brain Stimulation With a New Multiple-Source, Constant-Current Rechargeable System in Parkinson Disease.” Neurosurgery. Aug 2016.
2. VA Study: Follett et al., Pallidal versus Subthalamic Deep-Brain Stimulation for Parkinson’s Disease. NEJM 362;22; Weaver et al., 2012 Randomized trial of deep brain stimulation for Parkinson disease: Thirty-six-month outcomes, AAN
3. Deuschl 2006: A Randomized Trial of Deep-Brain Stimulation for Parkinson’s Disease. NEJW 355;9
4. CUSTOM-DBS: Volkmann et al., Presented at 2014 Annual Meeting of the International Parkinson and Movement Disorders Society, June 2014
References
Slide 11 (Path to Leadership in Brain Modulation: Technology Backed By Clinical Evidence):
1. Vercise™ PC System, Vercise Gevia™ System, and Cartesia Directional Lead: CE Marked. Not available for use or sale in the U.S. 2. 1.5 Tesla MRI conditional when all conditions of use are met 3. Vercise System: CE Marked. Caution: Investigational Device. Limited by US federal law to investigational use only. Not available for sale in the U.S. 4. Includes company and investigator-sponsored research studies 5. Deep Brain Stimulation (DBS) for the Treatment of Parkinson's Disease (INTREPID) NCT01839396 6. Directional Data:
• Steigerwald et al. “Directional deep brain stimulation of the subthalamic nucleus: a pilot study using a novel neurostimulation device.” Movement Disorders. 2016;
• Reker et al, “Directional deep brain stimulation: A case of avoiding dysarthria with bipolar directional current steering: Parkinsonism and Related Disorders 2016 Aug
• “Scientists Test Next Generation Deep Brain Stimulation Leads to Improve Targeting the Subthalamic Nucleus with Fewer Adverse Effects” NEUROLOGY TODAY | Jul 2016 7. Registry of Deep Brain Stimulation With the VERCISE™ System: Vercise DBS Registry NCT02071134
Q&A Rhythm Management Cardiac Rhythm Management and Electrophysiology Joe Fitzgerald Executive Vice President and President, Rhythm Management Ken Stein, M.D. Senior Vice President and CMO, Rhythm Management and Global Health Policy
Rhythm Management: Strong Results Since 2015
• Consistent revenue performance and above-market growth • Significant improvement in profitability – ~400bps improvement in adjusted operating income expected in 2017 • Strong cadence of global CRM portfolio approvals / launches: – Created a new category with S-ICD – Launched new platforms: Brady MRI, Quad CRT, Tachy MRI, MultiSite pacing – Captured #2 de novo ICD share in many major markets • Expanding EP portfolio: RHYTHMIA™ roll-out & therapeutic catheter launches Rhythm Management Vision 2020+
Imagine a world where…
An implantable battery technology generates savings for healthcare systems and lowers patients infection risk by reducing the number of avoidable replacement procedures a patient may have to undergo…with BSX’s ENDURALIFE™ batteries, that world is today
A Heart Failure diagnostic predicts heart failure events weeks before they occur and allows clinicians to intervene earlier and empowers caregivers to make a real difference in HF management….with BSX’s HeartLogic™, that world is today
An ICD or pacemaker leaves the vasculature untouched, allowing a modular approach to cardiac rhythm management that matches the risk of an intervention with the patient’s therapeutic need…with BSX’s mCRM™ platform, that world is coming soon
A cutting edge mapping system visualizes the heart’s electrical activity like never before and enables physicians to spend less time gathering data and more time diagnosing and treating complex arrythmias…with BSX’s RHYTHMIA HDx™ mapping system, that world is today Rhythm Management: CRM + EP + Diagnostics A Growing Market with Continued Innovation
Market Factors BSX Growth Drivers
• CRM implants growing with • CRM Innovation: S-ICD, demographics ENDURALIFETM, and MultiSite • Large & increasing burden Pacing of heart failure • HF Diagnostic + HeartLogic™ • EP: growing global ™ procedure volume; clinical • EP: RHYTHMIA & improved catheter cadence unmet need with 30% AF redo rates • Meaningful clinical science
Market BSX 2016 Size Growth Revenue Share Position Growth* ~$14B +1% ~$2.1B #3 +3%
*Growth in constant currency Rhythm Management: Significant Global Market Opportunity
CRM EP Diagnostics
Other Ablation ICM & Other ICD/CRT-D Pacemaker Rhythmia HeartLogic Solutions Diagnostics
CRM EP ICM Total RM
2016 Market Size $9.3B $4.3B $0.6B $14B+
5 year CAGR (2016-2021) flat +10-12% +8-10% +3-5% Broad Portfolio of Innovative Products and Solutions to Address Large Markets
Left Atrial Appendage Closure Mapping & Ablation
Patient Management Modular CRM Systems Clinical Evidence
Diagnostics & Monitoring Cardiac Rhythm Management Integrated Rhythm Management Strategy
CRM: Grow CRM Revenue > Market
Expand Diagnostics and Monitoring Product Offerings
Differentiate with mCRM™
EP: Scale RHYTHMIA™ and Expand Catheter Portfolio
Improve Profitability Rhythm Management: Category Leadership & Key Growth Drivers
ICD/CRT-D Pacemaker Diagnostics Electrophysiology
RESONATETM HV HeartLogic™ Family of Devices Accolade™ MRI HF Dx solution: RHYTHMIA™ HDx Next gen platform Ingevity™ pacing lead; a composite alert Mapping & compatible with full-body MRI & to reduce heart failure navigation platform HeartLogic™ + MRI remote monitoring hospitalizations coming late 2017 US
Implantable Atrial Fibrillation Valitude™ EMBLEM™ MRI S-ICD Cardiac Monitor Solutions X4 Quad CRT-P MRI compatibility, Developing Navigation-enabled, More pacing vectors; remote-monitoring arrhythmia monitoring open-irrigated, MiFi, industry- leading enabled device contact sensing longevity catheters LAAC mCRM™: S-ICD + ENDURALIFE™ Leadless Pacemaker* Other EP Solutions Battery Technology Developing modular WATCHMAN Recording systems, Industry-leading system: single-chamber Left atrial diagnostic catheters, longevity pacemaker with S-ICD appendage closure and accessories compatibility for ATP device CRM Next Gen: RESONATE™ HV Devices 4 Key Feature Sets to Drive Global Share Gains
1 2 ENDURALIFE™ Battery Technology MRI Conditional Labeling
Expect U.S. Approval in Q4:17
3 4 SmartCRT™ Therapy HeartLogic™ Heart Failure Diagnostics (including MultiSite Pacing)
First and only company with ENDURALIFE™ & HeartLogic™ technologies RESONATE Feature #1) ENDURALIFE™ Battery Tech: Industry-Leading Longevity
U.S. CRT-D Explants (Actual + Forecast)*
• Published data validate the benefit of ICD longevity: ~80% of replacement device infections could have been avoided if all ICDs lasted 9 years 2014 2015 2016 2017 2018 2019 2020 or longer2. • Modeling estimates show ENDURALIFE™ Battery Tech saved the U.S. healthcare system ~$300M in U.S. ICD Explants (Actual + Forecast)* 20153.
15 2014 2015 2016 2017 2018 2019 2020 • Real world data on BSX devices implanted since’08 Expect ~100bp per year of WW CRM growth acceleration through show projected battery longevity of 9.7–15.2 years4. 2020 driven by replacements *BSX actual plus forecasted explants by therapy include upgrades & other elective procedures
RESONATE Feature #3) SmartCRT™: Tailoring CRT for Patients at Implant
3 aspects to SmartCRT functionality that will help drive CRM share gains
Where When How to pace to pace to pace
Site of+ latestACUITY™ X4 Maximize Options to activation global contractility maximize response Lead ACUITY™ X4 Leads SmartDelay™ MultiSite Pacing
LV VectorGuide™
Labeled for up to 13.3 years1 longevity with MultiSite Pacing ON RESONATE Feature #4) HeartLogic™: Improving Heart Failure Management
The Economic Burden of Heart Failure BSX’s Solution: HeartLogic™
U.S. HF Costs ($B) $11 $5 $17 $12 $22 $42
2017E: $39B 2030E: $70B10
• Globally, Heart Failure is the largest economic burden in health care: $200B11 in costs worldwide • The first and only heart failure diagnostic that has − HF is a ~$40B problem in the U.S. been validated for detecting early indications of − Projected to grow to $70B in costs by 203010 worsening heart failure • HF hospitalizations account for 80% of direct costs − Average U.S. hospital provides over $9M in • Multiple sensor inputs without an additional HF care per year − One HF hospitalization in the U.S. costs ~$23K12 implant, helping clinicians move from reactive • 2016 total Readmission Penalties in the U.S. > $420M13 treatment to proactive care HeartLogic™ Heart Failure Diagnostic Offers Trending and Alerts
HeartLogic™
Heart Failure Diagnostic
Algorithm evaluates risk and changes from patient baseline across multiple parameters (%) Sensitivity
(HeartLogic)*
*
5 Integrated into a simple index with customizable alert HeartLogic Results : • 70% sensitivity in detecting HF events • 34 Days median time to HF event • Only 1.47 unexplained alerts per patient year HeartLogic™ Poised to Drive Preferential Share
Improving HF Patient Care
Predictive & Sensor & Data Care Population Analytics Management Platforms Coordination Supported by a Robust Program of Clinical Evidence
2017 2018 2019 2020
Clinical Outcomes MANAGE-HF
Real World Experience HeartLogic™ Registry
Economic Outcomes Reimbursement & Cost-Effectiveness Pilots Insertable Cardiac Monitor (ICM): Entering a New ~$750M Adjacency in 2019
Diagnostic-only device platform designed for cardiac monitoring Arrhythmia Management (Syncope and AF) and extensible to other diseases
• Unique device design
• Algorithms to detect atrial arrhythmia, pause, bradycardia and Tachycardia
Insertable Monitor Implant Tools • System differentiation: seamless patient interface and back-end monitoring
• Multiple commercial synergies with core CRM global teams
Mobile Handset with Patient Interface & • FDA and CE Mark expected H1:2019 Connectivity Bridge Differentiate with Modular CRM (mCRM™) EMBLEM™ MRI S-ICD and Related Systems
Portfolio Enhancements Market Opportunity • ~$750M opportunity • >29,000 global implants
Clinical Leadership
• U.S. post-approval data demonstrate continued • Current ongoing clinical science: 6 positive outcomes : − UNTOUCHED: Primary prevention penetration − 66.6% Primary Prevention, Low EF Patients − PRAETORIAN: TV-ICD/S-ICD Head-to-head − 98.7% success in acute conversion of VT/VF − MADIT S-ICD: Potential indication expansion arrhythmias roughly the size of the primary prevention ICD − Complication-free rate of 96.2% at 30 days market
Emblem S-ICD continues to be the 1st & only S-ICD globally – ongoing share advantage Unique Leadership in mCRM™ Will Help Match Therapy to Patients
mCRM™ = EMBLEM S-ICD + EMPOWER™ Leadless Pacemaker
• Physicians will be able to match device therapy to clinical need in a modular approach • Demonstrated pre-clinical in vivo feasibility − Multiple upcoming abstracts on mCRM™ • Clinical investments to prove safety and efficacy: − EMPOWER MPS and MODULAR ATP IDE − Clinical start expected in 2019 Electrophysiology: Platform Emerging to Generate Growth > Market
Electrophysiology Portfolio
INTELLAMAP ORION Mapping Catheter Mapping and LAB SYSTEM PRO Navigation recording system
Therapeutic Catheters
Diagnostic RHYTHMIA HDx™ Catheters MAPPING SYSTEM Navigation & MIFI Ablation Catheters
EP Recording Systems
RHYTHMIA™ Mapping System: Winning Placements and Share Gains
Setting the Standard in Active in > 25 countries, with More Slated to High Definition Mapping Launch Over the Next Two Years
faster 5x MAPPING7 Exponentially more data
the DATA POINTS8 25x See detail never seen before
Worldwide 0.01mV >13,000 CASES NOISE THRESHOLD9 Peer-Reviewed More accurate & complete mapping >50 JOURNAL ARTICLES DirectSense™ Technology: New Tool for Physicians in RX/Therapeutic Catheters
DirectSense™ Technology will provide physicians with a new tool that enables more information on the tip-to-tissue interface
• Enhanced confidence in the location, stability, and proximity of a catheter relative to tissue
• Enabled via a software upgrade to RHYTHMIA HDx™ when used with the IntellaNav™ MiFi OI catheter
• CE Mark targeted H2: 2017
Force Sensing Technology: Expanding our RX / Therapeutic Portfolio
Force Sensing technology will further expand capabilities of RHYTHMIA HDx™
• Addresses > $800M global market opportunity • Provides physicians the contact force measurements of catheter-to-tissue • Currently in design verification and validation testing with RHYTHMIA HDx™ integration • CE Mark targeted H2: 2018 Force Sensing Technology: Leveraging, Adding Capabilities to RHYTHMIA HDx Rhythm Management: Innovative Products Targeting Large Markets
• Driving CRM Market Share gains with differentiated portfolio: – RESONATE family drives success in high voltage segments – ENDURALIFE™ offers significant battery longevity advantages over competition – EMBLEM™ MRI S-ICD continues to be the world’s only subcutaneous ICD system • Building EP Market Share gains with a unique mapping system and a full portfolio of catheters – RHYTHMIA HDx™ and Force Sensing will accelerate share gains • Entry into ICM / Diagnostics space provides highly leveraged growth • Strategic investments offer access to new growth channels • Continued strong leverage expected in Operating Income – Targeting >400bps adjusted operating margin operational improvement 2017 to 2020 Rhythm Management References
Slide 9 (CRM Next Gen: RESONATE™ HV Devices), Slide 11 (Resonate Feature #3) SmartCRT™):
1. Assumes: 2.0V RA, LV-only, 2.0V LVa, 2.0V LVb, 700Ω, No LATITUDE, No Respiratory Rate Sensor, No Heart Failure Sensor Suite
Slide 10 (Resonate Feature #1) EnduraLife™ Battery Tech):
2. Ramachandra. Impact of ICD Battery Longevity on Need for Device Replacements. PACE 2010; 33:314–319. Based on a subset of the study population (n=5) with infections of subsequently replaced ICDs.
3. Stein. Longer battery lives for cardiac devices are here today, but adoption still lags. Becker’s Hospital World; August 2016.
4. Boston Scientific Data on File. February 2016
Slide 13 (HeartLogic™ Heart Failure Diagnostic Offers Trending and Alerts):
5. Boehmer et al. A Multisensor Algorithm Predicts Heart Failure Events in Patients With Implanted Devices. Results from the MultiSENSE Study. JACC: Heart Failure. Volume 5 Issue 3. March 1, 2017
Slide 16 (Differentiate with mCRM™):
6. Heart Rhythm. 2017 May 11. pii: S1547-5271(17)30594-5. doi: 10.1016/j.hrthm.2017.05.016. [Epub ahead of print]
Slide 19 (RHYTHMIA™ Mapping System):
7. Based on approximate mapping speed of 95 pts / minute in the right atrium in 5 swine USING THE ST. JUDE PRECISION ENSITE MAPPING SYSTEM. Ptaszek LM, et al. “Rapid High-Density Automated Electroanatomical Mapping Using Multiple Catheter Types.” Poster Session PO097 APHRS 2015.
8. Based on approximate mapping speed of 491 pts / minute in the right atrium in 5 swine USING THE BOSTON SCIENTIFIC RHYTHMIA MAPPING & NAVIGATION SYSTEM. Ptaszek LM, et al. “Rapid Acquisition of High-Resolution Electroanatomical Maps Using a Novel Multielectrode Mapping System.” JICE. Nov 2012.
9. C1. Ptaszek L, Chalhoub F, Perna F, Beinart R, Barrett C, Danik S, Heist EK, Ruskin J, Mansour M, Rapid Acquisition of High-Resolution Electroanatomical Mapping Using a Novel Multi-Electrode Mapping System. J Interv Card Electrophysiol. 2012 Nov 22
Slide 12 (Resonate Feature #3) SmartCRT™):
10. “Forecasting the impact of heart failure in the United States: a policy statement from the American Heart Association.” Heidenreich, Paul A et al. Circulation Heart failure, May 2013, Vol.6(3), pp.606-19
11. Extrapolated from “The annual global economic burden of heart failure.” Cook, C. et al. International Journal of Cardiology, 15 February 2014, Vol.171(3), pp.368-376
12. “Costs of heart failure-related hospitalizations in patients aged 18 to 64 years.” Wang, Guijing, et al. The American journal of managed care, October 2010, Vol.16(10), pp.769-76
13. Advisory Board: https://www.advisory.com/research/financial-leadership-council/at-the-margins/2015/09/cms-final-readmissions-penalties Rhythm Management References
Slide 10 (Resonate Feature #1) EnduraLife™ Battery Tech):
15. Haarbo J, Hjortshoj S, Johansen J, Jorgensen O, Nielsen J, Petersen H. Device Longevity in Cardiac Resynchronization Therapy Implantable Cardioverter Defibrillators Differs Between Manufacturers: Data from the Danish ICD Registry. Presented at HRS 2014. http://ondemand.hrsonline.org/common/presentation-detail.aspx/15/35/1241/9000. Boston Scientific = 136 patients, Medtronic = 651 patients, St. Jude Medical = 1,587 patients, Bitronik = 369 patients. Time to exchange of the device because of battery depletion or device failure recorded in the Danish ICD Registry was the endpoint. The four-year survival rate for devices in the Danish Registry study was 81.1% for Medtronic and 95.7% for Boston Scientific (P<0.01).
J. Williams, R. Stevenson. Contemporary cardiac resynchronization implantable cardioverter defibrillator battery longevity in a community hospital heart failure cohort. Presented at HFSA 2014. http://www.onlinejcf.com/article/. S1071-9164(14)00389-3/fulltext. Boston Scientific = 53 patients, Medtronic = 28 patients, St. Jude Medical = 10 patients. Four-year survival rate calculated using device replacements for battery depletion as indicated by ERI.
Ellis CR, Dickerman DI, Orton JM, Hassan S, Good EG, Okabe T, Andruilli JA, Quan KJ, Greenspon AJ. Ampere Hour as a Predictor of Cardiac Resynchronization Defibrillator Pulse Generator Battery Longevity: A Multicenter Study. PACE 2016 doi: 10.1111/pace.12831 first published online 11-MAR-2016. The five major institutions performing the study include, at Vanderbilt University, Henry Ford Hospital, University of Michigan, Thomas Jefferson University, Cooper Health System, North Ohio Heart Center. Boston Scientific = 322 patients, Medtronic = 794 patients, St. Jude Medical = 186 patients. Five-year survival rate calculated using device replacements for battery depletion as indicated by ERI.
Landolina M, Curnis A, Morani G, Vado A, Ammendola E, D’onofrio A, Stabile G, Crosato M, Petracci B, Ceriotti C, Bontempi L, Morosato M, Ballari GP, Gasparini M. Longevity of implant Cardioverter-defibrillators for cardiac resynchronization therapy in current clinical practice: an analysis according to influencing factors, device generation, and manufacturer. Europace2015;17:1251-58. doi:10.1093/eurospace/euv109. First published online: May 14, 2015. Medtronic = 532 patients, Boston Scientific = 291 patients, St. Jude Medical = 106 patients, Biotronik = 20 patients, Sorin = 69. Five-year survival rate of latest marketed devices (between 2006 to 2010) calculated using device replacements for battery depletion as indicated by ERI.
Zanon F, Martignani C, Ammendola E, Menardi E, Narducci ML, De Filippo P, Santamaria M, Campana A, Stabile G, Potenza DR, Pastore G, Iori M, La Rosa C, and Biffi M. Device Longevity in a Contemporary Cohort of ICD/CRT-D Patients Undergoing Device Replacement. Doi:10.1111/jce.12990, First published online 20-APR-2016. Comparison of device longevity by Kaplan-Meier curves of CRT-D systems extracted between March 2013 and May 2015. Medtronic = 195 patients, Boston Scientific = 157 patients, St. Jude = 72, Biotronik = 9.
Provided by Dr. Ernest Lau on 04/29/15 in support of Lau E, Wilson C, Ashfield K, McNair W, McEneany D, Roberts M, Large Capacity LiMnO2 Batteries Extended CRTD Longevity in Clinical Use Compared to Smaller Capacity LiSVO Batteries Over 6 Years. Presented at HRS 2015. Medtronic = 62 patients, Boston Scientific = 27 patients, St. Jude = 66 patients. Five-year survival rate calculated using device replacements for battery depletion as indicated by ERI. (Kaplan Meier Curve)
von Gunten S, Schaer BA, Yap SC, Szili-Torok T, Kühne M, Sticherling C, Osswald S, Theuns DA. Longevity of implantable cardioverter defibrillators: a comparison among manufacturers and over time. Europace. 2015 Nov 25; . Epub 2015 Nov 25. Total patients = 3436.
Alam MB, Munir MB, Rattan R, Adelstein E, Jain S, Saba S. Battery longevity from cardiac resynchronization therapy defibrillators: differences between manufacturers and discrepancies with published product performance reports. Europace 016;doi:10.1093/europace/euw044. First published online: 22-MAR-2016. Kaplan Meier curves depicting survival of CRT devices free from battery depletion by device manufacturer. Battery Longevity in Cardiac Medtronic = 416 patients, Boston Scientific = 173 patients, St. Jude Medical = 57patients. Previously evaluated these patients at a four-year survival rate calculated using device replacements for battery depletion as indicated by ERI. 2014; Europace (2014) 16,246-51.
Shabanna Din, Shabanna, Mcgee, Rao, Archana, Wright, Jay D. Longevity of implantable cardioverter defibrillators: The impact of device manufacturer and device type on device longevity were assessed. Europace. 2015 Nov 25; . Epub 2015 Nov 25. Total patients = 3436. Cardiostim Abstract 2016. Total patients = 1489 Q&A Cardiovascular Cardiovascular: Category Leadership & Growth Drivers
Peripheral Interventional Structural Heart Interventions Cardiology
LOTUS Edge™ Eluvia™ DES & Ranger™ Synergy™ & Differentiated, TAVR DCB Promus Premier™ platform launching in Differentiated drug- Market-leading the U.S. mid-2018E eluting technologies DES platforms
Polaris™: IVUS & ACURATE neo™ TF AngioJet Zelante™ DVT Comet™ FFR Unique top-down Products for Venous/DVT Integrated imaging deployment valve, market; ATTRACT study platform simplifying TAVI TBD
Interventional Complex PCI WATCHMAN™ Oncology Broadest portfolio Left atrial appendage Embolization & tumor to treat most closure device management complex patients Cardiovascular Peripheral Interventions Jeff Mirviss Senior Vice President and President, Peripheral Interventions Peripheral Interventions Vision 2020+
Imagine a world where…
More effective tumor management extends and improves lives while giving liver cancer patients new hope
New venous technologies reduce hospital stays and re-interventions for more than 3 million patients
Early intervention and monitoring eliminates many of the 220,000 lower-limb amputations annually due to critical limb ischemia Peripheral Interventions: Large Patient Population with Unmet Medical Needs
Market Factors BSX Growth Drivers
• Aging population • Interventional Oncology • Under-diagnosed & under-treated • Venous populations • Drug-eluting technologies • Heterogeneity of disease • Critical Limb Ischemia • Room to innovate
Market BSX 2016 Size Growth 2016-2020 est. CAGR Revenue Share Position Growth* ~$5.7B +7% +6% - 8% $1.0B #1 +12%
*Growth in constant currency Under-Diagnosed and Under-Treated Market Segments
Interventional Peripheral Critical Limb Venous Disease Oncology Artery Disease Ischemia
>700K ~2.5M >200M >220K people worldwide cases of DVT in people worldwide Lower limb are diagnosed with the U.S. and Europe have peripheral amputations in the liver cancer each year5 annually3,4 artery disease1 U.S. and Europe annually2
Interventional Peripheral Artery Critical Limb Venous Disease Oncology Disease Ischemia Market Segment Size $1.7B $1.0B $2.5B $500M 2016 Growth +6% - 7% +10% +7% +10% - 12% Delivering the Broadest and Deepest Portfolio
Expanding Category Leadership in PI
Peripheral Critical Limb Interventional Venous Disease Oncology Artery Disease Ischemia
• Spherical embolics • AngioJet System • Ranger DCB SFA • DES BTK • Emerging markets • Venous stenting • Eluvia DES SFA • Atherectomy • Indication expansion • Adjunctive • Clinical leadership technologies
Differentiated Solutions Across Disease States Expanding Interventional Oncology Solutions
Extend Reach of Embolization Portfolio to New Conditions and Markets
DELIVER Trial • Goal to be first and only with Level 1 data for microspheres • Randomized DEB-TACE vs cTACE* • Working to finalize trial design
Emerging Markets Focus • Significant China opportunity
™ ™ Oncozene /Embozene Microspheres Future Portfolio Tight calibration enables precise placement, deep tumor penetration and complete embolization • Expand access & delivery tools • Expected use in primary liver cancer and metastatic • Next generation detachable coil colorectal cancer • Differentiated vascular plug • Expanding into additional indications *DEB-TACE = Drug-Eluting Bead Transarterial Chemo-Embolization; cTACE = Conventional Transarterial Chemo-Embolization Venous Solutions to Address Many Unmet Clinical Needs
Building Portfolio from Marketing-Leading AngioJet Foundation
ATTRACT Trial • Reinforced current practice • Benefit in Ilio-Femoral DVT • Sub-analyses to provide additional data
Growth Opportunity • Large, under-treated populations • Tremendous unmet clinical need ™ AngioJet ZelanteDVT Catheter Build Complete Venous Portfolio Powerful catheter designed to rapidly remove • Pulmonary Embolism solution* thrombus and restore blood flow • Veniti™ Stent equity investment • Most-studied, most versatile, market-leading platform • High-Pressure Balloon • Combines aspiration with PowerPulse™ lytic delivery Intravascular Ultrasound (IVUS) • Sustained, double-digit growth • Highly Differentiated Portfolio of SFA Solutions
DES is Key Differentiator That Pulls Through the Entire PI Portfolio
2020 SFA Market ~$2.7B Heterogeneous Treatment Algorithm = Eluvia will • Physicians want choice of technology compete for • Variety of different strategies utilizing ATH DCB, DES, POBA, BMS and procedures POBA with other atherectomy
SFA* DCB technologies Strategy Unique to BSC BMS • Only company with DES, DCB & DES atherectomy • Technology solution for virtually every case Eluvia is market-leading technology that will compete for procedures with DCB, POBA and BMS Unique Contracting Advantage • Eluvia will lead in $150M+ 2020 DES market • Drives both share and pull-through • May take procedural share from DCB, BMS and POBA *SFA: Superficial femoral artery PAD Solutions: ELUVIA™ DES
Peripheral DES Technology Offers a Sustainable Competitive Advantage
Highly differentiated technology supported by both head-to-head and health economic data • Expected U.S. launch mid-2019 1. IMPERIAL IDE TRIAL n=485
™ • Eluvia vs. Zilver®PTX®, FDA /Japan Approval Eluvia DES • Enrollment complete Sustained drug release and purpose-built SFA stent • 12 month follow-up in 2018 platform create technology of choice for SFA 2. EMINENT RCT TRIAL n=750 • Designed to solve unique challenge of restenosis in the SFA • Unrivaled 96% 12 month primary patency • Randomized trial; Eluvia vs. BMS • 92.5% freedom from TLR at 24 months – • Health economic data showing superiority • Highest reported in comparable SFA trials • Currently enrolling • Matrix includes longest DES available PAD Solutions: Ranger™ DCB
Differentiated DCB Backed by Market-Moving Clinical Evidence
Ranger DCB is expected to enter U.S. market supported by unparalleled clinical evidence • Expected U.S. launch 2020 1. RANGER SFA TRIAL n=105 • 86% Primary Patency at 12 months • 91% freedom from TLR at 12 months RANGER II SFA (IDE) n=396 2. RANGER II SFA (IDE) n=396
• Trial expected to drive U.S. approval in 2020 Ranger™ DCB 3. COMPARE TRIAL n=410 Share-taking platform offers best-in-class drug-transfer • First RCT head-to-head trial in the field and low drug dose with broadest size matrix • Comparative data to drive Ranger adoption • Designed to have low particulates1 with highly effective coating 4. ATHERECTOMY + DCB n=250 • Lower 2 mcg dose of Paclitaxel delivers top tier efficacy • RCT Ranger vs Ranger + JetStream • Longest DCB on the market: 200mm (~40% U.S. market) • Demonstrates differentiated solution • Low profile .018” platform with innovative balloon protector Critical Limb Ischemia Patients Need Options
Current CLI Treatment Options Are Limited
Standard POBA case below-the-knee shows 35% lumen loss from 3.8mm lumen post- 2.48 mm lumen procedure to 15 minutes procedure at 15 minutes post-procedure due to vessel recoil
Images courtesy of Jihad Mustapha, MD 2
Few treatment options exist for CLI patients: • Current standard of care is POBA or amputation
DCB may not be preferred technology for CLI: • Multiple randomized DCB clinical trials below-the-knee (BTK) have failed • Evidence points to significant vessel recoil in BTK arteries after angioplasty1 • BTK arteries have significant calcium + significant elastic-neointimal hyperplasia, creating a robust barrier limitingFDA drug Recognizes uptake with theshort Need-acting toDCB Advance the Standard of Care in CLI CLI Solutions: Changing the Standard of Care
DES Below-the-Knee is Foundation for Future BTK Portfolio
Differentiated technology selected for Expedited Access Pathway (EAP) designation by FDA • First ever in Peripheral branch of FDA • EAP accelerates market approval by ~2 years
To qualify for EAP Program, device must provide for more effective treatment and at least one of the following: DES Below-the-Knee (BTK) • Represent breakthrough technologies • No approved or cleared alternatives exist • Coronary DES used BTK have demonstrated high patency • Offer clinically meaningful advantages over • Purpose built DES BTK could become standard of care existing approved or cleared alternatives • Up to $500 million market opportunity • The availability of which is in the best interest of patients • Only company pursuing DES BTK Peripheral Interventions: Investing to Extend Leadership and Innovation
Boston Scientific is investing to extend leadership in the PI space • Significant opportunities in IO, Venous, Drug Elution and CLI • Room to innovate – significant unmet needs to address • Broadest and most differentiated portfolio in the industry • Compelling technology pipeline supported by robust clinical programs
Technologies designed to enable better outcomes and reduced costs • Interventional Oncology – High growth market with plans to expand indications • Venous – Clear leader today with investments to expand as venous market grows • DES – Significant progress toward global availability of unique solution • DCB – Robust clinical program to support to support differentiated technology • CLI – DES BTK designed to be a breakthrough technology with accelerated timeline References
Slide 4 (Under Diagnosed Markets): 1. Comparison of global estimates of prevalence and risk factors for peripheral artery disease in 2000 and 2010: a systematic review and analysis Fowkes, F Gerald R et al. The Lancet , Volume 382 , Issue 9901 , 1329 - 1340. 2. Alvaro Alonso, MD, and Lawrence A. Garcia. The Costs of Critical Limb Ischemia. Endovascular Today. 2011; Aug: 32-36 3. US Figure: Gerotziafas GT, et al. Prophylaxis of Venous Thromboembolism in Medical Patients. Curr Opin Pulm Med. 2004; 10:356-365. 4. Europe Figure: Cohen AT, Agnelli G, Anderson FA, Arcelus JI, Bergqvist D, Brecht JG, Greer IA, Heit JA, Hutchinson JL, Kakkar AK, Mottier D, Oger E, Samama MM, Spannagl M; VTE Impact Assessment Group in Europe (VITAE). Venous thromboembolism (VTE) in Europe. The number of VTE events and associated morbidity and mortality. Thromb Haemost. 2007 Oct;98(4):756-64. 5. American Cancer Society http://www.cancer.org/cancer/livercancer/detailedguide/liver-cancer-what-is-key-statistics Slide 10 (Ranger DCB): 1. Carlos A. Gongora, Masahiko Shibuya, Jeffrey D. Wessler, Jenn McGregor, Armando Tellez, Yanping Cheng, Gerard B. Conditt, Greg L. Kaluza, Juan F. Granada; Impact of Paclitaxel Dose on Tissue Pharmacokinetics and Vascular Healing; JACC: Cardiovascular Interventions Jul 2015, 8 (8) 1115-1123; DOI: 10.1016/j.jcin.2015.03.020 Slide 11 (Treating CLI): 1. Early Recoil After Balloon Angioplasty of Tibial Artery Obstructions in Patients With Critical Limb Ischemia Frederic Baumann, MD; Jacqueline Fust; Rolf Peter Engelberger, MD;Ulrike Hügel, MD; Do-Dai Do, MD; Torsten Willenberg, MD; Iris Baumgartner, MD; Nicolas Diehm, MD. 2. Mustapha, JA et al The Journal of CV Surgery 2017 June; 58(3):383-401 Cardiovascular Interventional Cardiology
Kevin Ballinger Executive Vice President and President, Interventional Cardiology Interventional Cardiology Vision 2020+
Imagine a world where…
Surgical turndown and complex patients are provided coronary therapy treatment options and the opportunity for optimal revascularization
A one-time procedure that offers a lifetime of protection for 20 million nonvalvular atrial fibrillation patients at high risk for stroke - WATCHMAN™
Valvular heart disease is treated percutaneously, seamlessly and without complications on a same day admission Key Innovations Driving Market Expansion
Market Growth Drivers BSX Growth Drivers
• Significant complex • Category leadership in coronary disease complex PCI remains untreated • Leadership in LAAC • 5M+ U.S. Afib patients technology • ~3% of adults have • Differentiated and aortic stenosis complementary TAVR • Emerging mitral solutions portfolio
Market BSX 2016 Size Growth 2016-2020 est. CAGR Revenue Share Position Growth* ~$10.5B +7% +6-8% $2.3B #1 (3-way tie) +13%
*Growth in constant currency Global IC Market (Coronary Therapies + Structural Heart) Estimated to Grow +7% & Reach $15B in 2021
Coronary Therapies Structural Heart
Complex PCI Stents TAVR LAAC Mitral PCI Guidance
Coronary Therapies Structural Heart Total Cardiology 2016 Market Size $7.5B $3B $10.5B 5yr CAGR (2016-2021) +1% +20% +7% Est. 2021 Market Size $8.0B $6.5B $14.5B Est. 2021 Share Position #1 #2 #1 Gaining Share in Coronary Therapies & Diversifying into Faster Growth Markets
Diversifying BSX IC Revenue Mix
2021E 2014 2016 2% 10% ~40% 40% ~30% 36% 54% 58% ~30%
Market Size = $9B Market Size = $10.5B Structural Heart Market Size = $14.5B Complex PCI Stents Coronary Therapies: Delivering Stent Leadership
DES portfolio drove +12% growth in $4B+ global stent market in 2016 • SYNERGY™ Stent mix >60% BSX global DES sales 45% with price premium Q1 2017 Estimated U.S. • SYNERGY™ consistently low sub-acute, late and Market Share very late ST in 18,000 patients across 9 studies - 0.06% per year ST rate beyond 1 year in EVOLVE II - Numerically lowest ST rates in SCAAR Registry (98K patients) - 0% ARC ST (def/prob) at 1-year in Belfast Registry - Statistically lower ST than all other DES in Kang meta- analysis (111K patients) • Continued product innovation: - Over-the-wire SYNERGY™ - 48 mm SYNERGY™ - Trans-radial enhanced DES - Future indications: CTO, Short DAPT ST = Stent Thrombosis CTO = Chronic Total Occlusion DAPT = Dual Anti-Platelet Therapy Coronary Therapies: Global Expansion of Complex PCI, Significant Underserved Patient Population
BSX is the Category leader in $2.5B complex PCI trusted (cPCI) global market partner for treating • Strategic focus on complete patients with revascularization to improve complex PCI patient care • Best-in-class cPCI training programs • Continued Product Innovation: - Chronic Total Occlusion (CTO) PCI - Plaque modification (Atherectomy) - Transradial interventions • EM Opportunity: China cPCI +23% revenue growth in 2016 Coronary Therapies: Differentiated PCI Guidance Portfolio; Now Entering FFR Market
Multi-modality system guides confident treatment decisions • Global leader in IVUS • FFR Market growing ~10%, BSX new entrant • COMET™ FFR pressure wire developed with Asahi for true workhorse performance • Continued product innovation - High Definition IVUS - Ease-of-use enhancements - Time saving software features
FFR = Fractional Flow Reserve IVUS = Intravascular Ultrasound Cardiovascular Structural Heart - WATCHMAN Nicholas Spadea-Anello Structural Heart - LAAC Vice President and General Manager Ken Stein, M.D. Senior Vice President and CMO, Rhythm Management and Global Health Policy
WATCHMANTM Left Atrial Appendage Occlusion WATCHMAN™ in NVAF Patients: Safe Alternative to Long-Term Warfarin Therapy for Stroke Prevention
Significant Market Opportunity
20M WW Atrial fibrillation patients 5X greater risk of stroke Need alternative to manage stroke risk given clinical and financial consequences
50% Patients discontinue warfarin within 2 years 30% discontinue any NOAC within 2 years
Market with 4% utilization of indicated market $1B Current penetration: ~1% of indicated patients Reimbursement: All components in place in U.S., the largest LAAC market Asia: China growth + 2019E Japan approval WATCHMAN™ LAAC Global Share Leadership Exceeding Expectations
Strong Execution of Growth-Focused Strategy
™ 30K WATCHMAN patients implanted to date Focused on excellent outcomes Educating range of medical specialists and patients Accretive margins to overall BSX
98% Procedural Success Rate Real World data – EWOLUTION
5 Lead on Competition in U.S. Years Drive awareness, build referral channels Increase center utilization: Unique commercial model Continue to expand clinical evidence 2nd gen WATCHMAN FLX U.S. launch as competitors enter Global LAAC Market Could Approach $1B with 4% Penetration of U.S. Indicated Population
Total AFIB Population: WW – 20M, U.S. – 5M • Market driven by U.S. growth • Market growth accelerates with Non-Valvular AFIB Population ~ 95% U.S. contraindicated indication (~2021) High Risk for Stroke (CHA2DS2-VASC >=2) ~ 75% • Competition unlikely to enter U.S. market until 2020+ • Every point of penetration into Cannot Meaningful Able to U.S. indicated population adds tolerate reason to take OAT OAT seek an OAT long- ~$250M in market potential alternative term • Japan market expansion 2019E Strict OAT OAT Tolerant Contraindicated Intolerant (60%) with approval & reimbursement (5%) (35%) WATCHMAN™: Safe Alternative to Long-Term Warfarin Therapy, with Comparable Stroke Risk Reduction
• 98%+ implant success rate in EWOLUTION • Complication rates similar to ablation therapy
SAFE PROTECT AF / PREVAIL EWOLUTION Registry Meta Analysis: (Late Breaker Clinical Trial at HRS): • 27% reduction all cause mortality* • 84% reduction stroke rate versus • 52% reduction CV/unexplained death* expected stroke rate** • 72% reduction major bleeding • 48% reduction major bleeds versus EFFECTIVE > 6 months post procedure* expected bleeding rate***
• 92% of patient were able to stop taking warfarin after 45 days • 99% of patients were able to stop taking warfarin at 1 year SUCCESSFUL * versus rate on warfarin, ** versus projected rate on no therapy, *** versus projected rate on warfarin Coordinated Therapy Awareness Initiatives to Increase Utilization
Therapy Referrer Medical Direct to Consumer Awareness Reps Education Advertising
Local tactics to grow Local, regional, and Multi-channel marketing therapy acceptance in national education that directly engages WM markets through local programs targeted at the referring physicians & therapy awareness events referring physician patients Patient Education Key to Developing LAAC Market
Television Digital Wallboards watchman.com
Newspaper Education Animation Education Seminars
Media Online Point of Care WATCHMAN™ TV Commercial Designed to Educate Patients and Drive Outreach Comprehensive Clinical Plan to Penetrate and Grow the Market
Non-Valvular Atrial Fibrillation Patient Population OAT Risk >>Benefit OAT Risk << Benefit Unable to take Reasons to seek an alternative to Able to take long term blood thinners long term blood thinners blood thinners
NCDR Registry (ongoing)
SALUTE: JPN approval trial (2017E complete) ASAP Too (2021E complete) WM with TAVR ISR (2017E start)
WM with Ablation (2018E start)
Prior Intracranial Hemorrhage (2018E start)
Prior GI Bleeds (2019E start)
Renal Dysfunction (2019E start)
Ablation with WM vs. Ablation with NOAC (2019 start)
Comprehensive Approach to Penetrate and Grow the Market WATCHMAN™ FLX: Designed to Broaden Treatment Matrix and Improve Ease-of-Use
Closed distal end with fluoro marker – Partial deployment can be advanced into LAA
Shorter device length and wider use matrix to treat more LAA anatomies
18 anchors with increased fixation strength WATCHMAN FLX WATCHMAN
• Designed for greatly enhanced stability and ease-of-use • Designed for greater apposition to appendage wall − New anchor design, additional anchors and reduced main body taper • Anticipate beginning EU and U.S. clinical trials mid-year 2018 • Anticipate U.S. launch as competition is gaining approval of first generation devices Cardiovascular Structural Heart – TAVR Kevin Ballinger Executive Vice President and President, Interventional Cardiology Ian Meredith, M.D. Executive Vice President and Global Chief Medical Officer Investing for Structural Heart Leadership
5 Year Vision: #2 in Global TAVR Share and Deliver $1B+ of Incremental Revenue
• The most comprehensive TAVR portfolio with two complementary valves
• LOTUS™ launch driven by REPRISE III data showing superior efficacy over CoreValve
• Global expansion of the ACURATE™ platform into U.S. and Japan markets
• Investments in Mitral and Tricuspid therapies to drive long-term growth Unique TAVR Portfolio Offering: 2 Workhorse Platforms Enable Optimal Physician Choice
LOTUS™ ACURATE™ Mechanically Expanding Valve Platform Self Expanding Valve Platform Complete Control Simplifying TAVI
Designed for: Designed for: • Full repositioning and retrievability • Intuitive implantation • Precise placement, freedom from PVL • Top down deployment & low PPM • Predictable results • Flexible delivery system
Best suited for patients with: Best suited for patients with: • Severe calcification • Tortuous anatomies • Bicuspid valves • Small annuli • Complex hemodynamic conditions • Horizontal aorta Timelines on Track for LOTUS Edge™: Q4 Return to EU Market & U.S. PMA Submission
We are implementing solutions to fully address the manufacturing issue • LOTUS Edge™ Valve System expected to launch in Europe Q4:17 • U.S. PMA submission for LOTUS Edge Valve System also expected Q4:17 • Anticipated U.S. launch mid-2018, depending on regulatory review cycle times
Mode of Failure of early pin release is 100% on-line confirmatory test to ensure understood and the root cause verified product quality at the highest levels Highlights of Outstanding Clinical Data at PCR
EUROPCR 2017
Boston's Heart Boston Scientific EuroPCR 2017: Lotus Valve Wins in Lotus Heart Valve TAVI device Has Face-Off Trial with Beats Medtronic’s Superior Efficacy Boston Scientific Heart Valve Beats Rival Medtronic CoreValve in Clinical to CoreValve Out Medtronic’s in Study Trial at One Year
Boston Scientific's Newest TAVR Valve Shows Lowest Pacemaker Rate Yet Right Valve for the Right Patient
Bicuspid Workhorse Cases - RBBB Complex Transapical Calcium Either Platform Small Sinuses Stiff Heart Basal Septal Low PM Risk Bulge Coronary Failed Height SAVR/TAVR Concern Tortuous Low Volume Anatomy Operator
RBBB = Right Bundle Branch Block, PM = Pacemaker Reprise III Trial Design and Methods: 1st Global Head-To-Head TAVR Pivotal Study
Severe aortic stenosis; extreme or high operative risk; transfemoral access Heart Team assessment Case Review Committee confirmation Randomised 2:1 (Lotus : CoreValve): 55 centres, 912 patients Neurologist examination‡
Lotus Valve (23, 25 & 27mm) CoreValve (26, 29 & 31mm) Mechanically expanded Commercially available Repositioning/retrieval in final position Self-expanding Seal to minimise paravalvular leak CoreValve Classic / CoreValve Evolut R Neurologist examination‡ • Clinical & Echocardiographic f/u: Discharge or 7d, 30d, 6m, annually 1-5y • Primary Safety Endpoint (30 days): Composite of all-cause death, stroke, major vascular complications, life- threatening/major bleed, & stage 2/3 acute kidney injury • Primary Effectiveness Endpoint (1 year): Composite of all-cause death, disabling stroke & moderate or greater paravalvular leak (core lab assessment) • Independent Analyses: Clinical Events Committee, Core Labs, Independent Data Validation ‡ Performed by a neurologist, neurology fellow, neurology physician assistant, or neurology nurse practitioner. LOTUS™ Valve Primary Effectiveness Endpoint: Superiority at 1 Year to Corevalve Platform
All-cause Mortality or 25 Disabling Stroke
20 CoreValve Lotus 17.9%
Similar 15 13.2%
10 P = 0.06 5
0
25 Disabling Stroke Lotus better Lotus CoreValve 20 Lotus 15 Valve Thrombosis (1y) 1.5% 0.0% 0.03 P = 0.02 10 Pacemaker (30d) 35.5% 19.6% <0.001 7.3% [no prior pacemaker] 5 * Composite of all-cause death, stroke, life-threatening/major bleed, major 3.6% vascular complications & stage 2/3 AKI (Implanted)
0 CoreValve better CoreValve N=607 Lotus & N=305 CoreValve (Intent-to-Treat) 0 30 90 180 270 365 Days
† Composite of all-cause death, disabling stroke & moderate or greater paravalvular leak (PVL, core lab assessment) † Moderate or greater PVL (core lab assessment)
Major or Disabling Stroke to 1 Year TAVR Clinical Trials
15 High/Extreme Risk Intermediate Risk
10 7.8 7.1 5.8 5.1 5.1 5.0 5 4.3
% Patients Patients % 3.6 2.9 2.3 2.2
0 PARTNER 1B PARTNER 1A CoreValve Ext. CoreValve REPRISE III REPRISE III REPRISE EVOLUT R1 PARTNER PARTNER SURTAVI2 Risk High Risk CoreValve LOTUS II/II EXT 2A XT 2 S3i* LOTUS N=179 N=348 N=489 N=390 N=297 N=587 N=249 N=198 N=1011 N=953 N=879 LOTUS Edge™ Valve System: Low PVL, Predictable, Precise
Designed for Complete Control
UNMATCHED FREEDOM FROM PVL1 The unique Adaptive Seal™ conforms to patient anatomies, minimizing PVL
PREDICTABLE RESULTS1 Full valve assessment before final release allows confidence in procedural outcomes
PRECISE DELIVERY & DEPLOYMENT1 Simplify TAVR with a fully repositionable device LOTUS Edge™ Valve System: Designed to Reduce Permanent Pacemakers
LOTUS Edge™ + Improved Implant Techniques Continue to Reduce PPM Rates*
30 Day PPM Rates of LOTUS Valve LOTUS DEPTH NEW Platform EDGE™ GUARD™ DEPLOYMENT TECHNIQUE LOTUS™ Valve 35% 30.0% LOTUS™ Valve 30% w/ Depth 25% Guard™ + + LOWER 20% 18.0% LOTUS Edge™ PPMValve 15% RATE*9.5% 10% FLEXIBLE DESIGNED TO HIGHER 5% DELIVERY REDUCE LVOT IMPLANT 0% 2 CATHETER INTERACTION RESPOND1 RESPOND Ext. LOTUS Edge 3 (N=1014) (N=50) Feasibility (N=21)
*Based on commercial experience of LOTUS Valve System w/Depth Guard. LVOT = Left Ventricular Outflow Tract ACURATE neoTM TF Valve System: Intuitive, Predictable, Low PPM
Simplifying TAVI
EASY STEP-BY-STEP IMPLEMENTATION Controlled, step-by-step implantation
STABLE AND PREDICTABLE VALVE RELEASE Unique top-down deployment guarantees maximum stability during valve positioning and a jump-less and predictable behavior during final release
INTUITIVE POSITIONING FOR OPTIMAL OUTCOMES Intuitive valve positioning that translates into better performance and optimal patient outcomes ACURATE neo TF Valve System: Simplifying TAVI
Clink image to download animation from BOX
File name: ACURATE_neo_TF_JAN_2017 Play without sound – Ian to narrate ACURATE neo™ SAVI TF Registry at PCR 2017: Excellent Outcomes, Very Low PPM Rates
SAVI TF 1000: Prospective, single arm, multicenter post-market study of 1,000 patients at 25 centers with the ACURATE neo™ Valve
All-Cause Mortality & Stroke PVL
Permanent pacemaker implanted 30 Day (N=994) 1 Year (N=983) among all patients 8.2% 10.0%
Moellmann, EuroPCR 2017. Integrated U.S. Clinical Trial Strategy
Immediate Clinical Priorities Supporting Evidence LOTUS Edge U.S. Extreme & High Risk indication LOTUS Edge U.S. LOTUS Edge U.S. Bicuspid Valve indication Bicuspid Valve Nested Registry
ACURATE neo TF AS U.S. SCOPE I EU (Enrolling) Extreme & High Risk indication RCT ACURATE vs Sapien 3
SCOPE II EU Next Steps RCT ACURATE vs Evolut R/Pro LOTUS Edge U.S. Int & Low Risk indication LOTUS Edge & ACURATE AS ACURATE neo TF AS U.S. Int & Low Risk Trial Designs TBD Int & Low Risk indication Investing for Structural Heart Leadership: Expanding the ACURATE Platform Footprint
Leveraging our existing LOTUS infrastructure to expand the ACURATE neo valve platform through increased field support, geographic expansion and next generation products
Commercial Expansion Portfolio Expansion
Leverage LOTUSTM Commercial Footprint ACURATE neoTM AS Valve System Design Objectives • 3X the number of field support by end of 2017 • Same stent, valve and delivery system • Expand into majority of LOTUS countries by end of • Modified skirt material to reduce PVL 2018 • CE Mark trial in progress; 2018 expected EU launch • Invest in U.S. and Japan approval trials Investing for Global Structural Heart Leadership
Boston Scientific will build upon our Interventional Cardiology leadership with a strong pipeline of technology and clinical science
2017 2018 2019 2020+
LOTUS Edge LOTUS Edge Indication Expansion Trials ACURATE neo AS (EU Launch) (U.S. Launch) (Intermediate / Low Risk) (U.S. / Japan Launch) ACURATE TA LP ACURATE neo AS LOTUS Edge 21 / 29mm LOTUS Next Gen (EU Launch) (U.S. IDE Filing) (U.S. Launch) (Global Launch)
ACURATE neo AS LOTUS Edge WATCHMAN FLX (Begin Japan Approval Trial) (Japan Launch) (U.S. Launch)
ACURATE neo AS WATCHMAN Mitral / Tricuspid Offerings (EU Launch) (Japan Approval)
WATCHMAN FLX (EU Launch) Future Investments in Mitral and Tricuspid Therapies Will Add to Long-Term Growth
Boston Scientific Has Made Several Strategic Mitral Market Investments
Mitral Market Overview Investment Strategy
• $3B potential new market opportunity • “Disciplined and Committed” by 2025 • Intend to assemble portfolio of solutions • Highly complementary to existing • Rigorous approach to M&A to avoid portfolio overpaying for early technologies • Market will adopt “toolbox” approach • Will move aggressively as technologies • Technology still very early stage are proven in the clinic
Over 50 Start Up Companies at Various Stages – Too Early to Establish “Winners” IC Category Leadership via Breadth of Portfolio References
Slide 28 (Major or Disabling Stroke to 1 Year):
1. KM estimate
2. Bayesian rate. PARTNER 1B: Leon, NEJM 2010. PARTNER 1A: Smith, NEJM 2011. CoreValve Ext. Risk: Popma, JACC 2014. REPRISE III: Feldman, PCR 2017. REPRISE II/II EXT: Meredith, PCR LV 2014. CoreValve High Risk: Adams, NEJM 2014. EVOLUT R: Popma, TCT 2016. PARTNER 2A XT: Leon, NEJM 2016. PARTNER 2 S3i: Thourani, Lancet 2016. SURTAVI: Reardon, NEJM 2017.
Slide 29 (LOTUS Edge Valve System):
1. As published to date. Results from different studies are not directly comparable. Information provided for educational purpose only. 1) Ganesh,M. Portico CE Mark Trial 1 Yr Outcomes. TCT 2014 2) Leon, M. PARTNER II Inoperable Cohort. ACC 2013 3) Thourani, V.H. et. al. SAPIEN 3 Intermediate-Risk. The Lancet, April 3 2016. www.thelancet.com 4) Brecker,S. ADVANCE Study. 3Yr. euroPCR 2015. 5) Ganesh,M. Evolut R CE Mark Trial 1 Yr Outcomes. TCT 2015 6) Meredith,I. REPRISE II EXT 1 Yr. PCR LV 2015
Slide 30 (LOTUS Edge Valve System):
1. V Falk, M.D., MD, PCR 2016 2. D.Blackman MD. PCR 2017 3. D. Walters, MD. ACC 2017
Financial Outlook
Dan Brennan Executive Vice President & CFO Consistent Execution & Meaningful Opportunity
Proven track record of achieving financial goals Executing well on the three pillars of our financial objectives
Consistent, Differentiated Top tier adjusted durable revenue adjusted operating earnings growth growth margin* expansion • 7% organic • On track for 25%+ in • Continue to target revenue* CAGR 2017 (+650 bps since double-digit 2015-2017E 2013) adjusted EPS* • 6%-8% organic • Long term goal of growth revenue* CAGR 28% in 2020 goal for 2018-2020 • Opportunity beyond 2020 to 30%+
Additional opportunity in 2017+ • Significantly improved Balance Sheet and capital deployment flexibility • Compelling and achievable long range strategic plan • Well positioned for profitable growth and success
What We Said: May 2015 Goals
May 2015 May 2015 Investor Day Investor Day Guidance Guidance 2015 2015 Actual 2016 2016 Actual
Organic revenue* +3% to 5% +5% +3% to 6% +10%
Operational +5% to 8% +8% +5% to +9% +12% revenue*
Adjusted Improve by 24.1% 22.0% to 22.5% 22.3% operating margin* 150 bps annually (+180 bps)
Double digit $0.93 $1.11 Adjusted EPS* $0.88 to $0.92 growth +11% +20% ex-FX
Strong Strong $1.6B Adjusted FCF* $1.4B cash flow cash flow +18% 2017 Guidance: Continued Execution
Measure FY 2017 vs. FY 2016A
As Reported Revenue ($M) $8,800 to $8,900 +5% to +6%
+6% to +7% Operational Growth* w/ 70 bps contribution from Endochoice
Adjusted Gross Margin* 72% to 72.5% flat to +50 bps
Adjusted SG&A % of Sales* 35% to 36% -110 bps to -10 bps
Adjusted R&D % of Sales* 10% to 11% -90 bps to +10 bps
Adjusted Operating Margin* 25% to 26% +90 bps to +190 bps
Adjusted Tax Rate* 12.5% to 13% +10 bps to +60 bps
Adjusted EPS* $1.22 to $1.26 +10% to 13%
Adjusted EPS ex. FX* $1.30 to $1.34 +17% to 20%
GAAP EPS $0.81 to $0.86 Continued Focus on Margin Expansion
Compelling opportunity beyond 2020 for 30%+ adjusted operating margin* ~28%
25.5%+
24.1% 22.3%
20.2% 18.9% 17.8%***
2012A 2013A 2014A 2015A 2016 2017E** 2020E
** Midpoint of guidance issued April 27, 2017 ***Adjusted for estimated impact of Medical Device Tax (~100bps), based on actual 2013 impact Key Drivers for Margin Expansion 2017-2020
Adjusted Operating 1. SG&A Optimization: Project Scorpion Margin *: 2017E, 2020E − Targeting ~33% of sales by 2020 (35.5% in 2017) • Facilities consolidation & globalization of Distribution and Customer Service ~+300bps • End-to-end business process streamlining and automation ~28% • Optimization and expansion of global shared services 25.5%+ • Global indirect sourcing leverage • LEAN culture & organizational design /agility 2. Adjacency Leverage: Project Lynx − Launches & commercial scale of key products • Examples: TAVR, DBS, Peripheral DES and DCB − Dilution declines, providing reinvestment opportunity 3. R&D Efficiencies: Project Raptor
2017E** 2020E − Targeting <10% of sales by 2020 (10.5% in 2017) ** Midpoint of guidance issued April 27, 2017 − Geographic mix, efficiencies and leverage Prior SG&A Initiatives Paying Off + More to Come
Adjusted SG&A Rate*: 2014 – 2017E, 2020E SG&A Improvement Initiatives • Global Facilities − Constantly optimizing global facilities footprint • Distribution and Customer Service 37.9% 37.4% − Driving global distribution and customer service efficiencies • End-to-End Business Process Streamlining and Automation 36.1% − Harmonize order-to-cash process in each region 35.5% − Implement robotic process automation (RPA) ~33% • Global Business Services and Indirect Sourcing ~31% − Expand footprint in Asia to create more capacity for functions − Implement automation and fully globalize purchasing policies • LEAN Culture and Organizational Design/Agility − Train administrative functions on LEAN business practices
Benchmark − Review spans and layers with specific targets 2014 2015 2016 2017E** 2020E ***
** 2017E represents guidance midpoint *** Benchmark calculated as FY2016 average of BCR, EW, ABT/STJ and MDT Strong Cash Flow Outlook + Reduced Calls on Cash with Resolution of Contingencies
Cumulative Adjusted Free Cash Flow*: Strong Adjusted Free Cash Flow*: Capital Allocation Priorities 2016 – 2020E
Reserved Contingencies** ~$2.4B M&A Returning Cash to Shareholders ~$2.2B
10% ~$2.0B 17% ~$1.8B $1.6B 83% 90%
2015A-2017E: $4.8B 2018E-2020E: ~$6.6B 2016 2017E 2018E 2019E 2020E
** Based on adjusted free cash flow. Refer to non-GAAP reconciliations. Disciplined & Balanced Approach to M&A
2011 - 2012 - 2013 - 2014 - 2015 - 2016 - 2017
LumenR Pipeline
Peripheral Vasc. Tuck-in M&A
• Overactive bladder Venture Portfolio of • Mitral repair / replace 30+ Companies • HF Diagnostic / Therapeutic • Micro stimulation Portfolio • Venous • Benign Prostatic Hyperplasia (BPH) in Selected Spaces: • Electrophysiology • Autonomic Modulation Therapy (AMT) Consistent, Strong Financial Performance & Outlook
Guidance 2015-2017E Goals Goals 2018E-2020E 2017E CAGR 2018E 2019 & 2020E CAGR
Organic Revenue* +5-6% +7% +5-7% +6-8% +6-8%
Operational +6%-7% +10% -- Est. additional 100bps -- +7-9% Revenue*
Adjusted ~175 bps ~50+bps ~100 bps 25%-26% 28% in 2020 Op. Margin* Improvement annually improvement improvement
($0.08) ($0.05) $0.00 Est. FX Impact Headwind Headwind Neutral
EPS Growth 10%-13% +15% ------Double digit goal ------
Free Cash Flow*/Growth $1.75B +12% +10% +10% +10% Drilling Down into Key Drivers of EPS
Goals Goals Goals 2018E 2019E 2020E Foreign Exchange – Neutral Neutral EPS Impact
SG&A Optimization
Adjacency Leverage Neutral
R&D productivity Neutral Neutral
Adjusted OM* ~50+bps ~100bps ~28% improvement improvement
Interest/Other (BTL) ~$300M
Ability to Deploy Free Cash Flow* Neutral Consistent Execution & Meaningful Opportunity
Proven track record of achieving financial goals Executing well on the three pillars of our financial objectives
Consistent, Differentiated Top tier adjusted durable revenue adjusted operating earnings growth growth margin* expansion • 7% organic • On track for 25%+ in • Continue to target revenue* CAGR 2017 (+650 bps since double-digit 2015-2017E 2013) adjusted EPS* • 6%-8% organic • Long term goal of growth revenue* CAGR 28% in 2020 goal for 2018-2020 • Opportunity beyond 2020 to 30%+
Additional opportunity in 2017+ • Significantly improved Balance Sheet and capital deployment flexibility • Compelling and achievable long range strategic plan • Well positioned for profitable growth and success
References
* Non-GAAP measure; for reconciliations of non-GAAP financial measures to the most directly comparable GAAP figures, please refer to Appendix A of this document
Q&A Wrap Up Mike Mahoney Chairman & CEO What to Expect from BSX
1. Living BSX values • Transforming patients’ lives through meaningful innovation and a “WINNING SPIRIT” 2. Driving category leadership and expanding globally • Gaining share globally: Portfolio innovation & compelling economic value drivers • Emerging markets: Building scale & new capabilities to increase patient access 3. Enhancing long term outlook: entering into multiple large & high growth markets • Diversifying into large high-growth markets with differentiated portfolio & capabilities • Multiple launches into $13B of new market opportunities 4. Consistently delivering revenue and EPS growth in top tier of peer group • 2015-2017E: 3 year organic revenue* CAGR +7% and EPS CAGR +12% • 2018E-2020E: 3 year organic revenue* CAGR +6-8% and EPS CAGR +DD 5. Building shareholder value with disciplined capital allocation strategy: more to come • Strong free cash flow* generation: estimated $6.5B+ cumulative in years 2018-2020 • Rigorous and balanced approach to M&A Closing Video Thank you Appendix A Supplemental Non-GAAP Disclosures Supplemental Non-GAAP Disclosures
Earnings Per Diluted Share 2017E** 2016 2015 2014 2013 2012 2011 GAAP net income (loss) per share $ 0.83 $ 0.25 $ (0.18) $ (0.09) $ (0.09) $ (2.89) $ 0.29 Non-GAAP adjustments 0.41 0.86 1.11 a 0.93 b 0.82 c 3.55 d 0.38 Adjusted net income (loss) per share $ 1.24 $ 1.11 $ 0.93 $ 0.84 $ 0.73 $ 0.66 $ 0.67 Less: Impact of foreign currency fluctuations in 2016 0.06 - Adjusted net income (loss) per share, excluding FX $ 1.17 $ 0.93
Adjusted net income (loss) per share $ 0.93 $ 0.84 Less: Impact of foreign currency fluctuations in 2015 0.10 - Adjusted net income (loss) per share, excluding FX $ 1.03 $ 0.84
Adjusted EPS growth from prior year 20% 11% 15% 11% -2% Adjusted EPS growth from prior year, excluding FX 26% 23% Adjusted EPS CAGR 2015-2017E 15%
**This is the midpoint of guidance issued April 27, 2017. a - Assumes dilution of 21.5 million shares for the year ended December 31, 2015 for all or a portion of these non-GAAP adjustments. b - Assumes dilution of 23.7 million shares for the year ended December 31, 2014 for all or a portion of these non-GAAP adjustments. c - Assumes dilution of 19.5 million shares for the year ended December 31, 2013 for all or a portion of these non-GAAP adjustments. d - Assumes dilution of 7.7 million shares for the year ended December 31, 2012 for all or a portion of these non-GAAP adjustments. Supplemental Non-GAAP Disclosures
2015-2017E Revenue Growth (CAGR) Q1 2017 2016 2015 2014 2013 2012 Revenue growth, as reported 9% 10% 12% 1% 3% -1% -5%
Less: Impact of foreign currency fluctuations -1% 0% 0% -7% -3% -3% -2% Operational Revenue Growth 10% 10% 12% 8% 6% 2% -3% Less: Impact of significant acquisitions 3% 1% 2% 3% 2% Organic Revenue Growth 7% 9% 10% 5% 4%
Adjusted Operating Margin 2020E 2017E 2016 2015 2014 2013 2012 Operating margin, as reported 23% 18.5% 5.3% -4.4% -4.1% 1.7% -53.4% Less: Non GAAP adjustments -5% -7.0% -18.8% -26.7% -24.3% -17.2% -72.2% Adjusted operating margin 28% 25.5% * 24.1% 22.3% 20.2% 18.9% 18.8% Less: Estimated impact of Medical Device Tax 1.0% Adjusted operating margin 17.8%
Growth in basis points (bps) year over year (2015-2016) 180 Growth in basis points (bps) year over year (2013-2017E) 650+ Growth in basis points (bps) year over year (2012-2016) 630
*This is the midpoint of guidance issued April 27, 2017.
Adjusted SG&A Rate 2016 2015 2014 SG&A Rate, reported 37.0% 38.4% 39.3% Less: Non GAAP Adjustments 0.9% 1.0% 1.4% SG&A Rate - Adjusted 36.1% 37.4% 37.9% Supplemental Non-GAAP Disclosures
Adjusted Free Cash Flow ( in millions) 2016 2015 2014 Operating Cash Flow, as reported $ 972 $ 600 $ 1,269 Plus: Proceeds on disposals of property, plant and equipment 29 - - Less: Purchases of property, plant and equipment 376 247 259 Free Cash Flow 625 353 1,010 Plus: Restructuring Payments 82 95 112 Plus: Contingent Payments 57 57 103 Plus: Special Tax Refunds/Credits (74) (74) (72) Plus: Legal Settlements 896 799 57 Plus: Other 21 136 49 Adjusted Free Cash Flow $ 1,607 $ 1,366 $ 1,259
Growth 18%
Adjusted Free Cash Flow ( in billions) 2020E* 2019E* 2018E* 2017E Operating Cash Flow, estimated GAAP $ - $ - $ - $ 0.400 Plus: Proceeds on disposals of property, plant and equipment - - - $ - Less: Purchases of property, plant and equipment - - - $ 0.300 Free Cash Flow - - - $ 0.100 Plus: Special Adjustments - - - $ 1.650 Adjusted Free Cash Flow $ 2.4 $ 2.2 $ 2.0 $ 1.750
Approximate CAGR growth of 10% year over year: 10% 10% 10% Approximate CAGR growth 2015-2017E: 12%
*- Components of the reconciliation of operating cash flow, as reported are not currently available. Supplemental Non-GAAP Disclosures
2016 Less: FX Constant Less: Revenue Growth (%) As Reported Impact Currency Acquisitions Organic Interventional Cardiology 12% -1% 13% 0% 13% Peripheral Interventions 12% 0% 12% 0% 12% Cardiovascular 12% 0% 12% 0% 12% Cardiac Rhythm Management 2% -1% 3% 0% 3% Electrophysiology 4% -1% 5% 0% 5% Rhythm Management 3% 0% 3% 0% 3% Endoscopy 10% 0% 10% 1% 9% Urology & Pelvic Health 45% 0% 45% 31% 14% Neuromodulation 11% -1% 12% 0% 12% MedSurg 20% 0% 20% 9% 11%
*based on previously reported constant currency growth rates
Interventional Cardiology - DES Revenue Growth 2016 Revenue growth, as reported 12% Less: Impact of foreign currency fluctuations 0% Operational Revenue Growth 12% Supplemental Non-GAAP Disclosures
Emerging Markets Revenue (in millions) 2013 Revenue, as reported $ 589 Less: Impact of foreign currency fluctuations (36) Operational Revenue $ 625
Emerging Markets Revenue (in millions) 2017E Estimated Revenue, reported $ 900 Less: Impact of foreign currency fluctuations - Estimated Operational Revenue $ 900
Emerging Markets Revenue (in billions) 2020E Estimated Revenue, reported $ 1.4 Less: Impact of foreign currency fluctuations - Estimated Operational Revenue $ 1.4
Emerging Market Revenue CAGR 2017E-2020E 15% Supplemental Non-GAAP Disclosures
The following is an explanation of the adjustments that management excluded from GAAP measures to calculate the following forward-looking non- GAAP financial measures:
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 in conjunction with any forward looking information presented within.