BOSTON SCIENTIFIC CORP Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 Performance: Operational sales grew 23% in Q4 and 18.5% full year; organic sales grew 20% in Q4 and 16% full year. Adjusted EPS $0.70 in Q4 (26% growth) and $2.51 full year (22% growth).
• Innovation and Execution: Driven by FerraPulse approval and adoption, global business unit growth, and portfolio diversification. 2024 saw surpassing financial goals with broad diversified product portfolio.
• Acquisitions: Bolt Medical acquisition expected in first half 2025, Entera acquisition expected in first half 2025. Bolt's IVL technology synergistic with existing cardiology portfolio.
• Business Unit Highlights: Urology, Endoscopy, Neuromodulation, Cardiology, EP, and Purple Interventions each had specific growth drivers and operational highlights, e.g., FerraPulse's over $1B revenue in 2024 for EP.

Segment Performance

• Urology: Fourth quarter grew 8%, full year 9%; operational fourth quarter 20%, full year 13%. Driven by prosthetic urology, stone management, and Axonics integration. Full year organic growth fueled by prosthetic urology, stone management, and LithaView portfolio.
• Endoscopy: Fourth quarter organic 8%, full year organic 7%; full year operational 9%, organic 8%. Driven by endoluminal surgery, single use imaging, and Axios platform. Positive reimbursement wins for ESG weight loss Procedure.
• Neuromodulation: Fourth quarter operational 12%, organic 5%; full year operational 14%, organic 3%. Brain franchise mid-single digits, pain franchise mid-single to low single digits. Expect improvement in 2025 with new Cartigia X and HX leads and Intercept momentum.
• Cardiology: Fourth quarter 32%, full year 25%. Interventional cardiology 10% fourth quarter, 11% full year. Structural heart valves double digits full year, low single digits fourth quarter. Watchmen 20% fourth quarter, 19% full year. Cardiac Rhythm Management 3% quarter and full year. Diagnostics double digits full year.
• Electrophysiology (EP): Fourth quarter 172%, full year 139%. FerraPulse over $1B revenue in 2024. Expect AF market growth with FerraPulse and acquisitions like Cortex.
• Purple Interventions: Fourth quarter operational 22%, organic 12%; full year operational 15%, organic 11%. Interventional oncology and embolization double digits full year. Entera acquisition expected in first half 2025. Vascular: high single-digit arterial, mid single-digit venous.

Guidance

• 2025 Outlook: Organic growth expected in range of 10% to 12%. Full-year adjusted EPS forecasted at $2.80 to $2.87, representing 12% to 14% growth versus 2024. First quarter 2025 adjusted EPS guide is $0.66 to $0.68.
• Margin Expansion: Expect adjusted operating margin expansion of 50 to 75 basis points in 2025. Anticipate full-year adjusted gross margin to improve from 2024's 70.3%.
• Foreign Exchange: Anticipate headwinds from foreign exchange fluctuations, but manageable and factored into guidance ranges.

Risks

• Macro Risks: Foreign exchange fluctuations, tariffs, and policy changes affecting the medical devices sector, including uncertainties in regulatory approvals and label expansions.
• Competition: Potential competition in PFA and other segments, as well as lower cost competitors affecting some businesses.
• Regulatory: Uncertainties in regulatory approvals and label expansions for products like FerraPulse in persistent AF indication.

Question and Answer

Q: Robert Marcus on PFA and Watchmen growth A: Daniel Brennan talks about momentum in FerraPulse and Watchmen, noting Watchmen's reimbursement impact and FerraPulse's over $1B revenue in 2024 and growth expectations in 2025 Q: Lawrence Biegelsen on long-term growth and EPS A: Michael Mahoney on outgrowing markets and double-digit EPS goals, stating the company seeks to outgrow end markets and has a strong track record of double-digit adjusted EPS growth Q: Frederick Wise on upside, risks, and PFA competition A: Michael Mahoney on tailwinds like FerraPulse momentum and Asia growth, and risks like PFA competition and China VBP challenges Q: Joanne Wuensch on margins and cash flow A: Daniel Brennan on margin expansion strategy with gross margin improvement, SG&A leverage, and cash flow management, noting 71% free cash flow conversion in 2024 and capital allocation on M&A and share repurchases Q: David Roman on EP business and mapping A: Kenneth Stein on open platform strategy, FerraPulse's persistent AF potential, and mapping usage, stating OPAL platform is optimized for FerraPulse and they aim to maintain an open platform Q: Travis Steed on M&A strategy A: Michael Mahoney on investing for long-term growth via M&A, VC, and R&D, emphasizing the goal to increase weighted average market growth (WAMGR) Q: Patrick Wood on Endoscopy ESG A: Michael Mahoney on ESG investment and long-term growth, stating ESG is a significant driver for Endo with clinical trial support and reimbursement wins Q: Danielle Antalffy on underperforming areas A: Michael Mahoney on improving Neuromod, US CRM, and addressing lower cost competition, noting plans to enhance Neuromod and launch Leadless pacemaker in 2025 Q: Michael Polark on TAVR update A: Michael Mahoney on ongoing discussions and Europe performance, noting launch of Prime in Europe but no US update yet Q: Vijay Kumar on mapping percentage A: Michael Mahoney and Kenneth Stein on open platform strategy, mapping usage in different regions, and investment in OPAL platform for FerraPulse Q: Peter Chickering on China and Japan markets A: Michael Mahoney, Daniel Brennan on price cuts in China and Japan being built into guidance, and operating margin improvement despite price cuts Q: Joshua Jennings on policy risks A: Michael Mahoney on manageable macro risks, stating guidance factors in tariffs and policy changes, and Med Tech's relative stability to major policy changes Q: Marie Thibault on Entera acquisition A: Michael Mahoney on Purple Interventions growth, Entera acquisition's role in expanding interventional oncology offerings, and robotics portfolio as a growth driver