J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

Transcription

1 J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016 Mike Mahoney President and Chief Executive Officer

2 Safe harbor for forward-looking statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 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 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

3 Disclaimers This presentation includes products that have not been approved or cleared by the U.S. Food and Drug Administration and are not available for sale in the U.S. In the U.S., the Eluvia Peripheral Stent, Lotus Valve System, Ingevity Pacing Lead, Acuity X4 CRT Lead, Vercise DBS system, and MRI-safe defibrillators are investigational devices and not available for sale. In the U.S., the Watchman FLX device, Emblem MRI S-ICD device, Ranger Paclitaxel- Coated PTA Balloon Catheter, implantable loop recorder, and leadless pacemaker system are not available for sale. All future product approval and launch dates are based on estimates of completion of regulatory submissions, review and approval or clearance, as well as other business considerations. For reconciliations of non-gaap financial measures used in these presentations to the most directly comparable GAAP figures, please refer to the addendum to this presentation and the Investor Relations section of our website at Footnotes referenced in this presentation can be found on slide Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

4 BSX: What to expect from us Consistently delivering on and exceeding financial goals 1,2 Strong culture fostering a WINNING SPIRIT 2015 Q3 YTD: 5% organic growth, +250bps adj. OM, ~20% adj. EPS growth ex FX Transforming patients lives and leading in large global markets Entering faster growth segments, driving category leadership Building emerging markets scale and capabilities Launching innovative new product cycle in 2016 Driving consistent organic revenue growth with a long runway Leading globally: More to come in and beyond Launching into large, high growth markets with meaningful innovation Creating value: MSD rev. growth + adj. OM expansion = DD adj. EPS growth ex FX 4 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016 See slide 20 for footnotes

5 Boston Scientific at-a-glance YTD operational revenue and growth as of 9/30/15 3 Interventional Cardiology $1.7B, +7% YTD Endoscopy $1.0B, +6% YTD Structural Heart $75-100M FY15 revenue goal Urology and Pelvic Health $479M, +21% YTD Peripheral Interventions $723M, +15% YTD Neuromodulation $369M, +8% YTD Rhythm Management CRM, Heart Failure Management, Electrophysiology CRM $1.5B, +1% YTD EP $182M, +9% YTD 5 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016 See slide 20 for footnote

6 Strong execution: Performance since 2012 Operational Revenue Growth 1,3 Adj. Operating Margin 2 Adj. EPS Growth 2 Organic revenue growth Includes foreign exchange impact Operational revenue growth $7.5B 22.5% Excludes foreign exchange impact (~$0.08 in 2015E) 18% 15% $7.1B $7.4B 6% 4% 8% 4.5% 17.8% ** 18.9% 20.2% 11% 8% 2% E -3% $7.2B * * * E **Adjusted for estimated impact of Medical Device Tax (~100bps), based on actual 2013 impact E -2% Sales growth acceleration ~500 bps adj. OM expansion Double-digit adj. EPS growth ex FX 6 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016 See slide 20 for footnotes *2015E represents guidance midpoint issued on Q3:15 earnings call, 10/28/15

7 2015 Q3 YTD: Strong operating performance Growing above market and driving margin improvement 1,2,3 5% organic and 7% operational revenue growth +250bps adj. operating margin improvement & ~20% adj. EPS growth ex FX Strengthening emerging markets 3 +11% operational rev. growth and new capabilities, partnerships, product launches Advancing key growth platforms for the future Emblem S-ICD, Synergy, Watchman, Lotus, Rhythmia, Innova, Eluvia, Precision Novi, Spyglass DS product lines Enhancing category leadership via M&A and equity investments AMS Male Urology portfolio, CeloNova interventional oncology Equity investments in multiple companies 7 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016 See slide 20 for footnotes

8 Strategic imperatives align execution STRENGTHEN EXPAND into DRIVE FUND DEVELOP execution to High Growth Global the Journey Key grow share Adjacencies Expansion to Fuel Growth Capabilities Preferred category leader gaining share in large global segments Accelerate growth & diversify into faster segments Grow emerging markets +500bps as % total sales Adjusted operating margin target of 25%+ by 2017 New commercial capabilities to lead in dynamic markets 8 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

9 Market outlook and investment focus Business Estimated market* Size 2015 Growth Growth Investing in Faster Growth Segments Endoscopy $3B 4% 4-6% Visualization, pulmonary therapies, endo ultrasound Urology and Pelvic Health $3B 4% 4-6% Stone, BPH, ED, visualization, international Neuromodulation $2B 5% 5-7% Severe pain, Parkinson's, OAB, international CRM $10B 2% 0-2% S-ICD & leadless solutions, HF diagnostic solutions Electrophysiology $3B 14% 10-15% Atrial fibrillation, mapping & navigation Peripheral $4B 4% 4-6% Drug-eluting SFA, atherectomy, oncology, liver cancer IC (ex SH) $8B 1% 0-3% Complex PCI, FFR, & bioresorbable technologies Structural Heart $1.8B 35% 15-20% TAVR, LAAC, mitral WW Total ~$35B ~3-4% ~3-6% 9 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016 * Market size and growth rates at constant currency and are BSX internal estimates

10 Cardiovascular growth drivers: 2016 & beyond Interventional Cardiology Structural Heart Peripheral Interventions Synergy & Promus Premier Leading DES platforms Lotus Edge Differentiated, 2 nd generation TAVR platform Eluvia DES & Ranger DCB Differentiated drug-eluting technologies Polaris : IVUS & Comet FFR Integrated imaging platform Watchman and 2 nd Gen Watchman FLX Left atrial appendage closure device Atherectomy, DVT & Thrombectomy clinically differentiated products Complex PCI Broadest portfolio to treat most complex patients Mitral Valve Technologies Interventional Oncology embolization & tumor management 10 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

11 CRM growth drivers: 2016 & beyond ICD/CRT-D Subcutaneous-ICD Pacemaker Autogen Platform X4 Quad CRT-D MINI & MRI-safe Emblem S-ICD Smaller, longer lasting, LATITUDE remote monitoring-enabled Accolade MRI Ingevity pacing lead Full-body MRI scans & remote monitoring EnduraLife Cost effective; Replacement cycle Improves in Emblem MRI S-ICD MRI-Safe H2:2016E Future development: leadless pacemaker Valitude X4 Quad CRT-P More pacing vectors, Industry leading longevity Latitude Remote Monitoring Improved compliance and clinical outcomes Clinical Programs Market development, expanded indications Leadless Pacemaker Single-chamber pacemaker, plus S-ICD compatibility 11 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

12 Rhythm Management growth drivers: 2016 & beyond Diagnostics Electrophysiology Loop Recorder Active project to develop an arrhythmia monitoring device Rhythmia Mapping & navigation platform; frequent software iterations HeartLogic HF solution for in-patient, readmissions and chronic disease management Atrial Fib Solutions Portfolio of navigationenabled, open-irrigated, and MiFi therapeutic catheters Strategic Partnerships Portfolio of wireless, cardiac monitoring products and services Other EP Solutions Recording systems Diagnostic catheters Accessories 12 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

13 MedSurg growth drivers: 2016 & beyond Neuromodulation Endoscopy Urology and Pelvic Health Precision Spectra Leading SCS platform Illumina 3D software SpyGlass DS Visualization Malignant & benign tumors LithoVue Single-use, disposable ureteroscope visualization platform Precision Novi Enter primary cell / non-rechargeable market Xlumena EUS-guided devices provide minimally invasive to surgery Stone Disease Leading platform & expanding globally Vercise DBS Parkinson s, dystonia, essential tremor indications in EU New Therapies Pulmonary: asthma, cancer BPH, Erectile Dysfunction, Male SUI Category leadership, market & geographic expansion 13 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

14 Innovation beyond products: ADVANTICS Drive operational excellence in cardiovascular and GI labs Improve utilization, patient experience and staff engagement Reduce supply chain costs and ensure product availability 67% Reduction in supply chain costs* 18% Increase in productivity* 20% Average reduction in lab turnover* 80% Triple patient readiness from 30%* Improve quality and standardize care for chronic cardiovascular diseases Reduce readmission rates and penalties Improve patient experience and engagement Optimize length of stay and site of care 43% 50% Increase in % Reduction in of patients HF 30-day treated to readmissions * guidelines* Powered by 14 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016 * These are real results from ADVANTICS programs. Results may vary.

15 Driving global expansion Global revenue mix Emerging Markets YTD Growth highlights Growth drivers Operational Revenue 3,4,5 AMEA 20% (+7% YTD) Europe 22% (+7% YTD) LACA 6% (+6% YTD) U.S. 52% (+8% YTD) EM +11% operational revenue 3 Q3 YTD China +20% operational revenue 3 Q3 YTD Est. EM $1B in 2016 Est. EM 12% of mix in 2016 (vs. 8% in 2012) Strong team Expanded distribution Product registrations R&D & training centers China JV (Frankenman) 15 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016 See slide 20 for footnotes

16 Significant adjusted operating margin 2 expansion: Estimated +700bps from %+ ~+150bps 22.5% ~+100bps Reduce SG&A 17.8% 18.9% 20.2% Accretive new products 5-10% annual standard cost improvements Optimize plant networks AMS benefit R&D productivity Reduce adjacency dilution Outsourcing/ offshoring Lean business initiatives *Adjusted for estimated impact of Medical Device Tax (~100bps), based on actual 2013 impact **2015E represents guidance midpoint issued on Q3:15 earnings call, 10/28/15 16 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016 See slide 20 for footnote AMS benefit 2012A* 2013A 2014A 2015E** Gross Margin Operating Expenses 2017E

17 Adjusted OM expansion opportunities beyond % 25%+ ~+200 to 300bps ~+150bps Accretive new products 22.5% ~+100bps Accretive new products 5-10% annual standard cost improvements Optimize plant networks Reduce SG&A R&D productivity Reduce adjacency dilution Outsourcing/ offshoring Lean business initiatives 5-10% annual standard cost improvements Optimize plant networks Reduce SG&A and adjacency dilution R&D productivity AMS benefit AMS benefit AMS benefit Outsourcing/ offshoring 2015E* Gross Margin Operating Expense Reductions 2017E Operating Margin Improvements 2020E 17 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016 *2015E represents guidance midpoint issued on Q3:15 earnings call, 10/28/15

18 Cash flow outlook, capital allocation priorities Strong Cash Flow Adjusted FCF 6 : E 2016 Capital Allocation Priorities $1.26B $1.3B+ ~$1.5B 1. Debt repayment 2. M&A in adjacent, high-growth markets 2014A 2015E* 2016E 3. Maintain flexibility Litigation / tax contingencies 18 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016 See slide 20 for footnote *2015E represents guidance issued on Q3:15 earnings call, 10/28/15

19 BSX: What to expect from us Consistently delivering on and exceeding financial goals 1,2 Strong culture fostering a WINNING SPIRIT 2015 Q3 YTD: 5% organic growth, +250bps adj. OM, ~20% adj. EPS growth ex FX Transforming patients lives and leading in large global markets Entering faster growth segments, driving category leadership Building emerging markets scale and capabilities Launching innovative new product cycle in 2016 Driving consistent organic revenue growth with a long runway Leading globally: More to come in and beyond Launching into large, high growth markets with meaningful innovation Creating value: MSD rev. growth + adj. OM expansion = DD adj. EPS growth ex FX 19 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016 See slide 20 for footnotes

20 Footnotes 1: Organic revenue growth excludes the impact of sales from divested businesses, changes in foreign currency exchange rates and sales from the acquisitions of the interventional business of Bayer AG and the American Medical Systems male urology portfolio over the prior year period. 2: Adjusted operating margin, and adjusted earnings per share are non-gaap and exclude goodwill and other intangible asset impairment charges, acquisition and divestiture-related net charges, litigationrelated charges, restructuring and restructuring-related charges, pension termination charges, discrete tax items and amortization expense. 3: Operational revenue growth is at constant currency, and excludes divested businesses. 4: Percent of revenue shown on a constant currency basis. 5: LACA = Latin America and Canada; AMEA = Asia, Middle East, and Africa 6: Adjusted Free Cash Flow excludes any potential amounts related to acquisition-, divestiture- and litigation-related items, significant tax audit settlements and restructuring and restructuring-related items. For reconciliations of non-gaap financial measures to the most directly comparable GAAP figures, please refer to the addendum to this presentation and the Investor Relations section of our website at 20 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

21 Supplemental Non-GAAP Disclosures Nine Months Ended September 30, Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

22 Supplemental Non-GAAP Disclosures Nine Months Ended September 30, Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

23 Supplemental Non-GAAP Disclosures Twelve Months Ended December 31, 2014, 2013, & Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

24 Supplemental Non-GAAP Disclosures Twelve Months Ended December 31, 2012, Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

25 Supplemental Non-GAAP Disclosures Twelve Months Ended December 31, 2014, Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

26 Supplemental Non-GAAP Disclosures YTD September 30, Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

27 Supplemental Non-GAAP Disclosures YTD December 31, Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

28 Supplemental Non-GAAP Disclosures Twelve Months Ended December 31, 2017 Estimate 28 Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016

29 Supplemental Non-GAAP Disclosures Twelve Months Ended December 31, Boston Scientific J.P. Morgan 34 th Annual Healthcare Conference January 12, 2016