Credit Suisse 26 th Annual Healthcare Conference. Joe Fitzgerald, EVP and President, Rhythm Management

Transcription

1 Credit Suisse 26 th Annual Healthcare Conference Joe Fitzgerald, EVP and President, Rhythm Management 1

2 Safe Harbor for Forward-Looking Statements and Regulatory Disclaimers 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 forwardlooking 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. Market Estimates: Unless noted otherwise, all references to market sizes, market share positions, and market growth rates are BSX internal estimates. Regulatory Disclaimers: Insertable Cardiac Monitor is an investigational device in the United States and not available for sale. Modular CRM, Apama RF Balloon Catheter System, Direct Sense, and Force Sensing technologies are not available for use or sale in the United States. *Non-GAAP measure; for reconciliations of non-gaap financial measures to the most directly comparable GAAP figures, please refer to pages of this document. 2

3 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 E: 3 year organic revenue* CAGR +7% and EPS CAGR % 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 Rigorous and balanced approach to M&A 3

4 Boston Scientific At-A-Glance: 2016 FY16 reported revenue and operational growth* (total company: $8.4B, +12%) Interventional Cardiology $2.3B, +13% Endoscopy $1.4B, +10% Structural Heart $200M+ Urology and Pelvic Health $1.0B, +45% (+14% ex. AMS) Peripheral Interventions $1.0B, +12% Neuromodulation $560M, +12% CRM Rhythm Management Electrophysiology $1.9B, +3% $245M, +5% 4

5 Expanding into Multiple High Growth Adjacencies That Will Approach ~$13B in 2020 BSX 2016 Sales Market 2020E Growth Accelerators IC: TAVR + LAAC $200M+ $5B LOTUS Edge - TAVR ACURATE - TAVR WATCHMAN global expansion PI Drug Eluting ~$25M $2B Eluvia - DES Ranger DCB Critical Limb Ischemia (CLI) RM Diagnostics --- $1B Heart Failure ICM Endo new markets ~$50M $2B Pathology Infection Endo-luminal surgery Uro/PH new markets ~$50M $2B Visualization Cancer Overactive bladder Neuromod - Brain ~$25M $1B Vercise Brain Other indications ~$0.3B ~$13B

6 Rhythm Management = CRM + EP + Diagnostics: A Growing Market with Continued Innovation CRM EP Diagnostics ICD/CRT-D Pacemaker Rhythmia Other Ablation Solutions HeartLogic ICM & Other Diagnostics CRM EP ICM Total RM 2016 Market Size $9.3B $4.3B $0.6B $14B+ 5 yr CAGR ( ) flat % +8-10% +3-5% 6

7 CRM Next Gen: RESONATE HV Devices 4 Key Feature Sets to Drive Global Share Gains 1 ENDURALIFE Battery Technology 2 MRI Conditional Labeling U.S. Approval late Sept 17 3 SmartCRT Therapy 4 (including MultiSite Pacing) HeartLogic Heart Failure Diagnostics First and only company with ENDURALIFE & HeartLogic technologies 7

8 Sensitivity (%) RESONATE Feature #4) HeartLogic : Improving Heart Failure Management BSX s Solution: HeartLogic Unexplained Alert Rate per patient year (HeartLogic) * The first and only heart failure diagnostic that has been validated for detecting early indications of worsening heart failure Multiple sensor inputs without an additional implant, helping clinicians move from reactive treatment to proactive care HeartLogic Results 2 : 70% sensitivity in detecting HF events 34 Days median time to HF event Only 1.47 unexplained alerts per patient year 8

9 Insertable Cardiac Monitor (ICM): Entering a New ~$750M Adjacency in 2019 Diagnostic-only device platform designed for cardiac monitoring and extensible to other diseases Arrhythmia Management (Syncope and AF) Insertable Monitor Implant Tools Unique device design Algorithms to detect atrial arrhythmia, pause, bradycardia and Tachycardia System differentiation: seamless patient interface and back-end monitoring Multiple commercial synergies with core CRM global teams FDA and CE mark expected H1:2019 Mobile Handset with Patient Interface & Connectivity Bridge 9

10 Differentiate with Modular CRM (mcrm ) EMBLEM MRI S-ICD and Related Systems EMBLEM MRI S-ICD mcrm and Related Systems >29,000 implants $750M market opportunity Growing Clinical evidence: U.S. post-approval demonstrates continued positive outcomes 3 : 66.6% Primary Prevention, Low EF Patients 98.7% success in acute conversion of VT/VF arrhythmias Complication-free rate of 96.2% at 30 days UNTOUCHED: Primary prevention penetration PRAETORIAN: TV-ICD/S-ICD Head-to-head MADIT S-ICD: Potential indication expansion Physician 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

11 RHYTHMIA Mapping System: Winning Placements and Share Gains Setting the Standard in High Definition Mapping Active in >30 countries, with More Slated to Launch Over the Next Two Years 5x faster MAPPING 4 Exponentially more data 25x the DATA POINTS 5 See detail never seen before 0.01mV NOISE THRESHOLD 6 More accurate & complete mapping >19,000 Worldwide CASES >50 Peer-Reviewed JOURNAL ARTICLES 11

12 # of AF Procedures (Thousands) RF Balloon Technology Expands Treatment Options The Apama RF Balloon Catheter System delivers differentiated single shot therapy to address a $500M opportunity growing to >$1B in 5 years Global Ablation Procedure Mix Other SVT 27% VT 8% Atrial Flutter 17% AF Procedure Mix 11% CAGR Year Atrial Fibrillation (AF) 48% Single Shot Point RF Single shot, multi-electrode RF balloon based technology designed to treat atrial fibrillation patients Built-in cameras allow for real-time visualization of electrode tissue contact Designed to allow customization of energy delivery around circumference of balloon Streamlined procedure via integrated pacing and sensing electrodes that eliminate need for separate diagnostic catheter CE mark Q4:18E U.S. IDE enrollment early 2019E 12

13 RF Balloon Technology Overview 13

14 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 Europe limited market release Q4:17 Full commercialization Q1:18E U.S. launch mid-18e 14

15 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 catheterto-tissue Currently in design verification and validation testing with RHYTHMIA HDx integration CE Mark H1:19E U.S. approval timeline pending FDA feedback 15

16 Rhythm Management: Innovative Products Targeting Large Markets While Improving Profitability 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 unique mapping system, full portfolio of catheters, recent investments in single shot Afib therapies RHYTHMIA HDx & Force Sensing expected to accelerate share gains Apama RF Balloon CE mark Q4:18E; begin U.S. IDE trial enrollment early 2019E 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 adj. operating margin improvement

17 Rhythm Management References 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 2. 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, Heart Rhythm May 11. pii: S (17) doi: /j.hrthm [Epub ahead of print] 4. 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 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 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 Electrophysiology Nov

18 Supplemental Non-GAAP Disclosures Revenue Growth 2017E (Low) 2017E (High) Revenue growth, as reported 7% 8% 12% 1% 3% Less: Impact of foreign currency fluctuations 0% 1% 0% -7% -3% Operational Revenue Growth 7% 7% 12% 8% 6% Less: Impact of significant acquisitions 1% 1% 2% 3% 2% Organic Revenue Growth 6% 6% 10% 5% 4% Organic Revenue CAGR E 7% Adjusted Free Cash Flow ( in billions) 2018E-2020E 2020E* 2019E* 2018E* 2017E* Operating Cash Flow, estimated GAAP $ - $ - $ - $ - $ - Plus: Proceeds on disposals of property, plant and equipment Less: Purchases of property, plant and equipment Free Cash Flow Plus: Special Adjustments Adjusted Free Cash Flow $ 6.6 $ 2.4 $ 2.2 $ 2.0 $ Approximate CAGR of 10% year over year: 10% 10% 10% * - Components of the reconciliation of operating cash flow, as reported are not currently available. 18

19 Supplemental Non-GAAP Disclosures Earnings Per Diluted Share 2017E (Low) 2017E (High) GAAP net income (loss) per share $ 0.71 $ 0.75 $ 0.25 $ (0.18) $ (0.09) Non-GAAP adjustments a 0.93 Adjusted net income (loss) per share $ 1.24 $ 1.27 $ 1.11 $ 0.93 $ 0.84 Less: Impact of foreign currency fluctuations in 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 Adjusted net income (loss) per share, excluding FX $ 1.03 $ 0.84 Adjusted EPS growth from prior year 20% 11% 15% Adjusted EPS growth from prior year, excluding FX 26% 23% 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. 19

20 Supplemental Non-GAAP Disclosures Less: FX Less: Revenue Growth (%) Interventional Cardiology As Reported 12% Impact -1% Opertional* 13% Acquisitions 0% Organic 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 operational growth rates 2016 Adjusted Operating Margin 2020E Operating margin, as reported 23% Less: Non GAAP adjustments -5% Adjusted operating margin 28% 20

21 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 restructuringrelated 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 restructuringand 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. 21