BSX JPM Jan 14 2019/media/... · • Single Shot for Pulmonary Vein Isolation Neuromodulation $0.9B +13% +8-10% • Expanding pain treatment continuum Superion™for Lumbar Spinal

Mike Mahoney

Chairman and Chief Executive Officer

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.

2

Regulatory disclaimers

Product Regulatory Disclaimer

WATCHMAN FLX™ CE Marked. U.S.: Caution: Investigational Device. Limited by Federal (or U.S.) law to investigational use only. Not available for sale.

ACURATE neo2™ Self-Expanding Valve Platform Pending CE Mark. U.S.: Caution: Investigational Device. Limited by Federal (or U.S.) law to investigational use only. Not available for sale.

Millipede Mitral Repair Technology Device under development. Not available for use or sale worldwide.

LOTUS Mantra™ Valve System Device under development. Not available for use or sale worldwide.

EXALT™ Model D Pending CE Mark. Not available for sale outside of the U.S.

SpyGlass™ Discover Device under development. Not available for use or sale worldwide.

EXALT™ Model B Device under development. Not available for use or sale worldwide.

EXALT™ Model Bx Device under development. Not available for use or sale worldwide.

EXALT™ Model TG Device under development. Not available for use or sale worldwide.

SpyGlass™ DS III Device under development. Not available for use or sale worldwide.

PEG Scope Device under development. Not available for use or sale worldwide.

iNod™ Ultrasound Guided Needle Device under development. Not available for use or sale worldwide.

3

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:

This presentation contains non-GAAP measures (denoted with *) in talking about our company’s performance. The reconciliations of those non-GAAP measures to their most

comparable GAAP measures are contained within this document including appendices attached to the end of this presentation.

Revenue Growth:

All growth rates are operational unless otherwise noted. Operational growth rates are non-GAAP measures that exclude the impact of foreign currency fluctuations. Organic growth

rates are non-GAAP measures that exclude the impact of foreign currency fluctuations and the sales from the acquisitions of the electrophysiology business of C.R. Bard Inc., the

Interventional Division of Bayer AG, the American Medical Systems male urology portfolio, EndoChoice Holdings, Inc., Symetis SA, NxThera, Inc., Claret Medical, Inc., Augmenix, Inc.,

Vertiflex, Inc. and BTG plc (BTG) in the periods for which there are no prior period related sales. Organic revenue growth also excludes the impact of the divestiture of our global

embolic microspheres portfolio, a transaction entered into in connection with obtaining the antitrust clearances required to complete the BTG transaction.

Medical Devices:

We have three historic reportable segments comprised of Medical Surgical (MedSurg), Rhythm and Neuro, and Cardiovascular, which represent an aggregation of our operating

segments that generates revenues from the sale of medical devices (Medical Devices). As part of our BTG acquisition, which closed on August 19, 2019, we acquired an

Interventional Medicine business, which is now included in our Peripheral Interventions’ operating segment's 2019 revenues from August 19, 2019 through December 31, 2019.

Specialty Pharmaceuticals:

As part of our BTG acquisition, which closed on August 19, 2019, we acquired a Specialty Pharmaceuticals business (Spec Pharma). Subsequent to acquisition, Spec Pharma is a

stand-alone operating segment presented alongside our Medical Device reportable segments. Spec Pharma net sales are substantially U.S. based. Our chief operating decision

maker (CODM) reviews financial information of our globally managed Spec Pharma operating segment at the worldwide level without further disaggregation into regional results. As

such, Spec Pharma net sales are presented globally, and our Medical Devices reportable segments regional net sales results do not include Spec Pharma.

Emerging Markets:

We define Emerging Markets as the 20 countries that we believe have strong growth potential based on their economic conditions, healthcare sectors and our global capabilities in

our Medical Devices business. Periodically, we assess our list of Emerging Markets; effective January 1, 2019, we updated our list of Emerging Market countries. Our current list is

comprised of the following countries: Argentina, Brazil, Chile, China, Colombia, Czech Republic, India, Indonesia, Malaysia, Mexico, Philippines, Poland, Russia, Saudi Arabia, Slovakia,

South Africa, South Korea, Thailand, Turkey and Vietnam. The revision had an immaterial impact on prior year sales.

4

Our Mission and Values

Boston Scientific is dedicated to

transforming lives through innovative

medical solutions that improve the

health of patients around the world.

CaringMeaningful

Innovation

High

Performance

Global

Collaboration

Diversity &

Inclusion

Winning

Spirit

5

What to expect from BSX 2020+

1. Highly engaged and driven team – patient-centric,

motivated and innovative global culture

2. Continued execution of category leadership strategy

and portfolio diversification into higher growth,

adjacent markets

3. Compelling and differentiated pipeline driven by

meaningful innovation

4. Commitment to corporate social responsibility and

sustainable business models

6

5. Consistent, high performance to deliver shareholder value;

long term financial goals for 6-9% organic revenue growth

and margin expansion to drive double-digit adj EPS growth

Category leadership driving growth2019 revenue1 $10.7B, 11.1% op* growth, 7.3% organic* growth

Neuromodulation

Electrophysiology

Cardiac Rhythm Management

$329M, +7%

Interventional Cardiology(incl. Structural Heart)

Structural Heart

Peripheral Interventions(incl. IM, excl. Spec Pharma)

$2.8B, +11%, +10%

$1.4B, +19%, +8%

High end of

$700-725M guidance2

$1.9B, +1%

Endoscopy Urology & Pelvic Health

$1.9B, +9%

$873M, +13%, +7%

$1.4B, +15%, +8%

+Spec Pharma $81M 7Growth rates listed are operational*, organic*Endo, CRM and EP operational and organic growth rates are equivalent

Strong, balanced growth in every region Emerging Markets remain a key growth driver 2020+

Driving global expansion

Building scale and capabilities

8

$6.1B, +10%

$2.3B, +9%

$1.9B, +12%

$0.4B, +7%

US

LACA

APAC

EMEA

2019

Revenue1t

$1.25B, +19%

2019 2020E 2021E 2022E

+15%

2

t Excludes Spec PharmaGrowth rates are operational*

Driving market share, entering new high growth segments and expanding geographic reach

2013 2014 2015 2016 2017 2018 2019 2020E-

2022E

12011 2012

(1%)

6%

7%

6-9%

Organic* CAGR

Organic* CAGR

Organic* CAGR

Est Organic* CAGR

Track record of delivering high performance:

Organic revenue growth

9

Consistent double digit adjusted EPS* growth’15-’19E CAGR: 14%

Delivering on adjusted operatingmargin* expansion goals

$0.67 $0.66 $0.73

$0.84 $0.93

$1.11

$1.26

$1.47

$1.55-

$1.58

+DD%

Y/Y

2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020E

- 2022E

19.2% 18.8% 18.9%

20.2%

22.3%

24.1%

25.0%25.5%

26-

26.25%

+50-100

bps Y/Y

2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020E

- 2022E

Track record of delivering high performance:

Operating margin improvement and EPS growth

Adj. operating margin* goal Adj. EPS* growth goal

3 4 3

+11-13%

5

+17%

+13%

+20%

+11%+15%

+10%(2%)(3%)

10

BSX portfolio revenue mix

High growth markets (≥8% CAGR):

IC (Structural Heart), RM (EP), PI (Drug Eluting, Venous,

Therapeutic Oncology), NM, Endo (TIPs, Endoluminal

Surgery), UroPH (Prostate Health)

Moderate growth markets (3-7% CAGR):

Endo (Core), PI (Core Arterial + Core Oncology), UroPH

(Core), IC (Complex PCI), RM (ICM)

Low growth markets (<3% CAGR):

RM (Pacers, Defibrillators), IC (DES)

Served

Market

Growth

Consistent portfolio diversification into

higher growth markets

2012 2016 2019 2022E

~45% ~35% ~30% ~20%

~45% ~50% ~45% ~45%

~35%

~25%

~15%

~10%

$11B

$8B

$7B

(~1%) ~4% ~5% ~6%

11

1

Excludes Spec Pharma

Internal adjusted R&D* % of

revenue at the high end of peers

Multiple sources of innovation

drive compelling pipeline

12

~$1.0B~$1.2B

2017 2019E 2021E

10.5-11%

• Active venture capital portfolio

– 40+ investments in mixed stages

of opportunity

– 5 of 12 most recently closed deals

from VC portfolio

• Employee engagement

– “Imagine If” program

• Multiple incubators + spin outs +

strategic partnerships

6

Tsinghua University

Disciplined and balanced

approach to M&AStrategic investments &

partnerships

• Tuck-ins across multiple

businesses

• Strong integration track record

• Healthy pipeline augmented by

VC portfolio

EXALT™ D single-useduodenoscope

LithoVue™ single-useureteroscope

HeartLogic™ HeartFailure Alert

WaveWriter™

Spinal Cord Stimulator Vercise™ Deep Brain Stimulator

~10.5%

10.8%

Large and compelling high growth markets

across the portfolio

13

2019 BSX Sales1

Operational* Growth

Mkt Growth2019 – 2022 CAGR

Key Products / New Markets

Interventional

Cardiology$2.8B+11%

+6%

• LAAC Global Expansion (WATCHMAN™)

• TAVR (ACURATE neo™, LOTUS Edge™)

and Embolic Protection (Sentinel™)

• Mitral Repair Technologies

Peripheral

Interventions$1.4B+19%

+6%• Therapeutic Oncology

• Venous Stenting & Pulmonary Embolism

• Drug-eluting (ELUVIA™ DES, Ranger™ DCB)

Rhythm

Management (CRM + EP)

$2.3B+2%

+4%• HeartLogic™ Heart Failure Alert

• Mapping and Navigation (RHYTHMIA™)

• Single Shot for Pulmonary Vein Isolation

Neuromodulation$0.9B+13%

+8-10%• Expanding pain treatment continuum

Superion™ for Lumbar Spinal Stenosis

• DBS for Parkinson’s Disease and Tremor

Endoscopy$1.9B+9%

+5%• Pancreaticobiliary Disease

• Infection Prevention and Pathology

• Therapeutic Imagingt

Urology &

Pelvic Health$1.4B+15%

+6%• LithoVue™ Flexible Ureteroscope, StoneSmart™

• SpaceOAR™ Hydrogel

• MIT benign prostatic hyperplasia (BPH)

$10.7B ~6%t Therapeutic Imaging excluded from Market/CAGR

Excludes BTG Spec Pharma

2020E 2021E 2022E+

Strong product pipeline

supports top tier growth

Coronary Therapies

• SYNERGY XD, 48 mm, MEGATRON – U.S.

• SYNERGY XD – Japan

• Comet II pressure wire

Structural Heart

• WATCHMAN FLX (LAAC) – U.S.

• ACURATE neo2 (TAVR) – EU

• LOTUS Edge (TAVR) – Japan

Peripheral Interventions

• Ranger DCB SFA – U.S.

• OptiCross 35 IVUS Catheter

• AngioJet Clothunter

CRM/EP

• POLARx (Cryo Single Shot) – EU

• LUX-Dx ICM – U.S.

• Ingevity+ Pacing Lead – U.S.

• DIRECTSENSE – U.S.

• Force-Sensing Catheter – EU

• LUMINIZE (RF Single Shot) – EU

• 3300 Programmer

Neuromodulation

• DBS next gen visualization platform

Endoscopy

• Exalt Model D single-use scope – U.S.

• SpyGlass Discover single-use scope

• ORISE ProKnife

• Resolution 360 Ultra hemostasis clip

Urology/Pelvic Health

• Tria Ureteral Stents – U.S. & EU

• SpaceOAR & Rezūm – Int’l expansion

• SpaceOAR Vue Hydrogel

Coronary Therapies

• AVVIGO Guidance System

• ROTAWIRE Drive - US and Japan

Structural Heart

• ACURATE neo2 – U.S.

• WATCHMAN FLX (LAAC) – China


• Ranger DCB SFA – Japan

• Interventional Oncology Coils

• Athletis PTA Balloon

• CLI Catheter

CRM/EP

• RHYTHMIA 5.0

• Ingevity+ Pacing Lead – EU

Neuromodulation

• SCS/DBS next gen systems

Endoscopy

• Single-use scope platform expansion

• AXIOS expanded indications – U.S.


• LithoVue Ureteroscope next gen

• AMS 700 IPP enhancements

• Core Stone enhancements

Coronary Therapies• NG Atherectomy System

• SYNERGY XD – China

Structural Heart

• Millipede Mitral Valve Repair – EU

• LOTUS Mantra – U.S. & EU

• ACURATE neo2 – Japan

• ACURATE PRIME – expanded sizes U.S. & EU


• SAVAL DES BTK

CRM/EP

• Resonate 2.0

• POLARx (Cryo Single Shot) – U.S.

• LUMINIZE (RF Single Shot) – U.S.

• Empower leadless pacing/mCRM – U.S.

• Force-Sensing Catheter – U.S.

• Next gen CRM pulse generator

Neuromodulation

• SCS indication expansion

Endoscopy

• Single-use scope platform expansion

• Endoluminal surgery toolkit expansion


• StoneSmart expansion

• Rezūm enhancements

14

Key portfolio growth drivers 2020+

Selected product spotlights

Structural Heart

Single-useScopes

BTGVenous &

InterventionalOncology

15

1) Structural Heart

Differentiated portfolio stands out in $6B market

LOTUS Edge™ TAVR150 US accounts open by Q2:20

Mantra 29mm clinical trial H2:20E

Prevent

Stroke

Match Aortic

Valve to Need

Prevent

Vascular

Complications

SAFARI2™ Pre-Shaped

GuidewireiSLEEVE™ Expandable Introducer Sheath

SENTINEL™ Cerebral

Protection SystemPROTECTED TAVR

trial launch H1:20E

Cornerstone Repair of

Mitral Annulus

MILLIPEDE TMVr

Initiated feasibility study

ACURATE neo2™ TAVRCE Mark mid-2020E

FDA Approval YE 2021E

WATCHMAN™ LAACWATCHMAN FLX US H2:20E

CHAMPION AF trial (H2H DOAC) launch 2020E

BSX Structural Heart revenue $900M to $1B in 2020E

16

Estimated Global

LAAC Market Size

2018~$400M

2023E~$1B

2025E+$2B+

WATCHMAN

Expanding clinical investments: CHAMPION-AF

Penetration into

high-bleed risk NVAF patient

population

Penetration into

low-to-moderate-bleed risk

NVAF patient population

CHAMPION-AF Study

A randomized, controlled trial

studying WATCHMAN FLX vs.

DOACs

Lower bleeding risk patients with

non-vascular atrial fibrillation

(NVAF)

Expecting ~2,000 NVAF patients

and ~150 sites

Anticipate to begin enrolling in

H2:2020

Co-Chairmen: Dr. Marty Leon and

Dr. Ken Ellenbogen

Principal Investigators: Dr. Shephal

Doshi and Dr. Saibal Kar

Estimated Global LAAC Market Size

17

2) BTG: Venous & Interventional Oncology

Strong strategic fit, high growth adjacencies

Access to BTG IM high growth adjacenciesSignificant operational &commercial synergies

• Engaging customers as a newly

combined entity with complementary

portfolio

• Expect ~$175M in synergies by year 3

- Integration on plan

- Leveraging BSX global footprint

- Est. 80% synergies by end of year 2

2019 Global Revenue Distribution

Cryo, MicrowaveTherapy

Y90 Radiotherapyfor Liver Cancer

Thrombolysis

Treatment

Vena Cava

Filter

18

Interventional Oncology

2018 Market: $1.6B

’19-’22 CAGR: ~8%

Venous Disease

2018 Market: $1.4B

’19-’22 CAGR: ~8%

Category Leader in Cancer Therapeutics Scaled Player

Future indications:

Prostate CancerBrain CancerLung Cancer

DVT, PE, SVI

3) Single-use endoscopes: $2B+ market opportunityReduce infection, enhance efficiency, and improve availability

Exalt™ Model D

Duodenoscope

1.5M ERCPs

SpyGlass™ Discover

Choledochoscope

40K procedures

Exalt™ Model B

Bronchoscope

3M procedures

iNod™ Ultrasound

Guided Needle

150K procedures US

Exalt™ Model Bx

2M procedures

Exalt™ Model TG

Therapeutic

Gastroscope

800K procedures

SpyGlass™ DS III

Cholangioscope

150K procedures

PEG Scope

Gastroscope for

PEG Placement

530k procedures

COMPREHENSIVE SINGLE-USE THERAPEUTIC IMAGING PORTFOLIOEXALT MODEL D

Favorable market conditions

Proven commercial channel

Market leading device portfolio

19

Capital structure facilitates growth strategy

Compelling adj. free cash flow*: 10% CAGR 2019E-2022E

Strong cash flow generation outlook

20

~$2.1B~$2.3B

~$2.5B~$2.8B

2019E 2020E 2021E 2022E

• Closed $4B BTG acquisition

August 2019

• Expect to repay $1.6B debt

over 16 months post-BTG

close

• Targeting BBB+ credit ratings

• Flexibility to return cash to

shareholders post debt

paydownDebt-to-

EBITDA~3.3x ~2.6x

3

Long-term

goal ~2.25x- - - - - -

+10%

2019E

Goals

2020E-2022E

Organic Revenue* +7.3%1 +6-9% CAGR

Operational Revenue* +11.1%1 TBD

Adj. Operating Margin* +50-75bps3 Y/Y +50-100 bpsImprovement annually

Adj. Tax Rate* ~9%3 ~11%7

Less ~100bps stock comp benefit

Adj. EPS* Growth 11%-13%ex. 2018 IRS settlement3,5

Double-digit growth

Adj. Free Cash Flow*/Growth $2.1B3 +10% CAGR

Consistent top tier financial performance & outlook

21

35KEmployees

PEOPLE

Ongoing commitment to Corporate Social Responsibility

22

99.9%Gender pay

equityt

55 Awareness &

Education Events

Progress on 10/20/40D&I goals

PLANET

47%greenhouse

gas emissionst

95% of solid

waste diverted from landfillst

30%water

consumptiont

$1B+ Invested in R&D

PRACTICES

114 Active Clinical

Trials

87 Product

launches

Newsweek

2020 Most Responsible

Company

t 2018 figure, greenhouse gas emissions and water consumption compared to 2009 manufacturing operations baseline.

46%Green Real Estate

Ranked

28th

40KVolunteer

hours

Carbon Neutral in Costa Rica

Acronym Reference Guide

Afib Atrial Fibrillation

BPH Benign Prostatic Hyperplasia

CRM Cardiac Rhythm Management

DBS Deep Brain Stimulation

DCB Drug Coated Balloon

DES Drug-eluting Stent

DVT Deep Vein Thrombosis

Endo Endoscopy

EP Electrophysiology

ERCP Endoscopic Retrograde Cholangiopancreatography

EUS Endoscopic Ultrasound

GI Gastrointestinal

IC Interventional Cardiology

ICM Insertable Cardiac Monitor

IM Interventional Medicine

IO Interventional Oncology

MIT Minimally Invasive Techniques

NM Neuromodulation

NVAF Non-valvular Atrial Fibrillation

PCI Percutaneous Coronary Intervention

PE Pulmonary Embolism

PI Peripheral Interventions

RF Radiofrequency

RM Rhythm Management

SCS Spinal Cord Stimulation

SVI Superficial Venous Insufficiency

TAVR Transcatheter Aortic Valve Replacement

TIPs Therapeutic Imaging Platforms

TMVr Transcatheter Mitral Valve Repair

UroPH Urology & Pelvic Health

24

*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.

1Based on preliminary, unaudited sales results issued January 14, 2020

2Based on preliminary, unaudited internal estimates

3Based on 2019 guidance issued October 23, 2019

4Full year 2018 adjusted earnings per share of $1.47 and 17% growth includes a $0.07 net tax benefit. This net benefit includes the second quarter $0.06 benefit from settling the IRS Stipulation of Settled Issues for the 2001 through 2010 tax years offset by a fourth quarter $0.05 charge for our previously

announced tax reinvestment strategy. In addition, the net benefit includes a $0.06 benefit in the fourth quarter for the settlement with the IRS of our 2011 through 2013 tax years.

52019E adjusted EPS growth excluding the 2018 net tax benefit $0.07 in the base, as described above in Reference No. 4

6Based on midpoint of 2019 guidance issued October 23, 2019 and preliminary, unaudited sales results issued January 14, 2020

7Estimated tax rate is operational and excludes discrete tax items, such as the benefit related to adoption of ASU 2016-09

References

25

Supplemental Non-GAAP Disclosures

26

FY 2019 Divisional Revenue Growth1 (unaudited) compared to FY

2018 Reported Basis

Less: Impact of

Foreign

Currency

Fluctuations

Operational

Basis

Less: Impact

of Recent

Acquisitions /

Divestitures

Organic

Basis

Endoscopy 8% -2% 9% 0% 9%

Urology & Pelvic Health 13% -1% 15% 6% 8%

MedSurg 10% -2% 11% 3% 9%

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

Electrophysiology 6% -2% 7% 0% 7%

Neuromodulation 12% -1% 13% 6% 7%

Rhythm and Neuro 3% -2% 5% 2% 3%

Interventional Cardiology 9% -2% 11% 1% 10%

Peripheral Interventions 17% -2% 19% 11% 8%

Cardiovascular 11% -2% 14% 4% 9%

Medical Devices 8% -2% 10% 3% 7%

Specialty Pharmaceuticals n/a n/a n/a n/a n/a

Net Sales 9% -2% 11.1% 4% 7.3%

FY 2019 Revenue Growth1 (unaudited) compared to FY 2018 Reported Basis

Less: Impact of

Foreign

Currency

Fluctuations

Operational

Basis

Rhythm Management (CRM & EP) 0% -2% 2%


27

FY 2019 Regional Revenue Growth1 (unaudited ) compared to FY

2018 Reported Basis

Less: Impact of

Foreign

Currency

Fluctuations

Operational

Basis

U.S. 10% 0% 10%

EMEA (Europe, Middle East and Africa) 4% -5% 9%

APAC (Asia-Pacific) 10% -2% 12%

LACA (Latin America and Canada) 3% -4% 7%

International 6% -4% 10%

Medical Devices (a) 8% -2% 10%

Specialty Pharmaceuticals (b) n/a n/a n/a

Net Sales 9% -2% 11%

Emerging Markets214% -5% 19%

(a) We have three historical reportable segments comprised of Medical Surgical (MedSurg), Rhythm and Neuro, and Cardiovascular, which

represent an aggregation of our operating segments that generates revenues from the sale of medical devices (Medical Devices). As part of our

acquisition of BTG on August 19, 2019, we acquired an Interventional Medicine business, which is now included in our Peripheral Interventions

operating segment's 2019 revenues from August 19, 2019 through December 31, 2019.

(b) As part of our acquisition of BTG on August 19, 2019, we acquired a specialty pharmaceuticals business (Specialty Pharmaceuticals).

Subsequent to acquisition, Specialty Pharmaceuticals is now a stand-alone operating segment presented alongside our Medical Device reportable

segments. Specialty Pharmaceuticals net sales are substantially U.S. based. Our chief operating decision maker (CODM) reviews financial

information of our globally managed Specialty Pharmaceuticals operating segment at the worldwide level without further disaggregation into

regional results. As such, Specialty Pharmaceuticals net sales are presented globally, and our Medical Devices reportable segments regional

net sales results do not include Specialty Pharmaceuticals.


28

Revenue Growth 2019 1 2018 2017 2016 2015 2014 2013 2012 2011

Revenue growth, as reported 9% 9% 8% 12% 1% 3% -1% -5% -2%

Less: Impact of foreign currency fluctuations -2% 1% 0% 0% -7% -3% -2% -2% 3%

Operational Revenue Growth 11% 8% 8% 12% 8% 6% 1% -3% -5%

Less: Impact of certain acquisitions and divestitures 4% 1% 1% 2% 3% 2% -1% 0% -3%

Organic Revenue Growth 7% 7% 7% 10% 5% 4% 2% -3% -2%

Organic revenue growth (2011-2013) -1%

Organic revenue growth (2014-2016) 6%

Organic revenue growth (2017-20191) 7.0%

Adjusted R&D Margin 2019E3 2017

R&D Margin, as reported 11.0%

Less: Non-GAAP adjustments 0.2%

Adjusted R&D Margin 10.5-11% 10.8%

Adjusted R&D Margin is a non-GAAP measure that excludes the impact of acquisition and divestiture and restructuring related

charges or credits.

Adjusted Operating Margin 2019E 3 2018 2017 2016 2015 2014 2013 2012 2011

Operating Margin, as reported 15.3% 14.2% 5.3% -3.8% -4.1% 1.7% -53.4% 11.9%

Less: Non-GAAP adjustments -10.2% -10.8% -18.8% -26.1% -24.3% -17.2% -72.2% -7.3%

Adjusted Operating Margin 26 - 26.25% 25.5% 25.0% 24.1% 22.3% 20.2% 18.9% 18.8% 19.2%

Growth in basis points (bps) year over year (2018-20193) 50-75

Adjusted operating margin, adjusted earnings per share and their related growth rates are non-GAAP measures that exclude the impacts of certain charges (credits) which may include medical device regulation charges,

amortization expense, goodwill and intangible asset impairment charges, acquisition/divestiture-related net charges and credits, restructuring and restructuring-related net charges and credits, litigation related net

charges and credits, pension termination charges, certain debt extinguishment net charges and credits, certain investment impairment charges, certain tax restructuring transaction net charges and credits and/or certain

discrete tax items.


29

Earnings Per Diluted Share 2019E3,5 2018 4 2017 2016 2015 2014 2013 2012 2011 2010

GAAP net income (loss) per share $0.72 - $0.75 1.19$ 0.08$ 0.25$ (0.18)$ (0.09)$ (0.09)$ (2.89)$ 0.29$ (0.70)$

Non-GAAP adjustments 0.83 0.28 1.18 0.86 1.11 (a) 0.93 (b) 0.82 (c) 3.55 (d) 0.38 1.39 (e)

Adjusted net income (loss) per share $1.55 - $1.58 1.47$ 1.26$ 1.11$ 0.93$ 0.84$ 0.73$ 0.66$ 0.67$ 0.69$

Adjusted net income (loss) per share 1.47$

Less: Impact of 2018 net tax benefit 4 0.07

Adjusted net income (loss) per share, excluding 2018 net tax benefit 1.40$

Adjusted EPS growth from prior year 11-13% 17% 13% 20% 11% 15% 10% -2% -3%

Adjusted EPS CAGR 2015-2019E6 14%

(a) Assumes dilution of 21.5 million shares for the year ended December 31, 2015.

(b) Assumes dilution of 23.7 million shares for the year ended December 31, 2014.

(c) Assumes dilution of 19.5 million shares for the year ended December 31, 2013.

(d) Assumes dilution of 7.7 million shares for the year ended December 31, 2012.

(e) Assumes dilution of 10.0 million shares for the year ended December 31, 2010.


30

Tax Rate 2019E3 2018 2017

Tax Rate, GAAP basis 1% -18% 89%

Less: Non-GAAP adjustments -8% -24% 78%

Tax Rate, Adjusted 9% 7% 11%

Adjusted Tax Rates are non-GAAP measures that exclude the impacts of certain charges (credits) which may include medical

device regulation charges, amortization expense, intangible asset impairment charges, acquisition/divestiture-related net

charges and credits, restructuring and restructuring-related net charges and credits, litigation related net charges and credits,

certain investment impairment charges and/or certain discrete tax items.

Adjusted Free Cash Flow ( in billions) 2019E32018 2017 2016

Operating cash flow, reported 0.3$ 1.4$ 1.2$

Less: Purchases of property, plant and equipment 0.3 0.3 0.4

Add: Proceed on disposals of property, plant and equipment - - -

Free Cash Flow, as reported -$ 1.1$ 0.8$

Plus: Special Adjustments 2.1 0.6 0.8

Adjusted Free Cash Flow 2.1$ 2.1$ 1.7$ 1.6$

Adjusted free cash flow and its related growth rate are non-GAAP measures that exclude from free cash flow the cash component of certain charges (credits) that are also

excluded from adjusted net income as well as any cash tax benefits of such charges. In addition, we exclude tax settlements payments and refunds that relate to prior

periods. Free cash flow is a non-GAAP measure that excludes net purchases of property, plant and equipment from cash provided by (used for) operating activities on a

GAAP basis. The GAAP measure that is most directly comparable to adjusted free cash flow and free cash flow is cash provided by (used for) operating activities on a GAAP

basis.


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 and Adjusted Earnings (Loss) Per Share: Excludes from GAAP operating margin and GAAP net income (loss) the impacts of forecasted medical

device regulation charges, 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 medical device regulation charges, 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 medical device regulation charges, capital expenditures and excludes the

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

2020E+ Operational Revenue and related growth rates: Excludes from GAAP revenue and related growth rates the forecasted impact of foreign currency fluctuations.

2020E+ Organic Revenue and related growth rates: Excludes from GAAP revenue and related growth rates the forecasted impact of foreign currency fluctuations and the

forecasted impact of proposed and future acquisitions and divestitures with no comparable sales in the period.

Please refer to our Safe Harbor for forward-looking statements disclosure in conjunction with any forward looking information presented within.

31

Documents

BSX JPM Jan 14 2019/media/... · • Single Shot for Pulmonary Vein Isolation Neuromodulation $0.9B +13% +8-10% • Expanding pain treatment continuum Superion™for Lumbar Spinal