Citi's Global Health Care Conference February 25, 2013 1 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
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 forwardlooking 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 Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
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. All future product approval and launch dates are based on estimates of completion of regulatory submissions, review and/or 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 Investor Relations section of our website at www.bostonscientific.com. 3 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
Focused on Turning Around Performance in 2013 A turnaround in markets that are challenging but improving Making significant changes to improve execution and performance A clear strategy to accelerate revenue and earnings growth Delivering strong cash flow and balanced capital allocation strategy Advancing science for life TM committed leadership team and Driving Consistent Revenue and Adjusted Earnings Growth 4 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
Market Changes Headwinds Significantly stronger economic buyer, increased pricing pressure Tailwinds Demographics (e.g. aging population, comorbidities) Medical device tax Emerging Markets growth Economic conditions in Europe, Middle East, Africa (EMEA) Local competitors in Emerging Markets New treatments for: Hypertension, Transaortic Valve, Left Atrial Appendage and Asthma Convergence of device and informatics; increasing patient awareness Increasing scale of Accountable Care Organization model Increasing scale of Accountable Care Organization model are Driving both New Challenges and Global Opportunities 5 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
Boston Scientific Platforms Drive Unique Value Improve Patient Outcomes Alair Renal Ablation Reduce Healthcare Costs ICD Battery Longevity SYNERGY Increase Patient Access to Therapy LOTUS Aligning Incentives Between our Customers and BSC S-ICD 6 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
BSC s Portfolio Transformation 2012 Served Market $30B -1% Percent of Market Revenue Served Market $40B +4% Percent of Market Revenue CRV ~78% MedSurg ~18% CRV ~66% MedSurg ~19% CRV Mkt Share MedSurg Mkt Share Adjacencies ~4% CRV Mkt Share MedSurg Mkt Share Adjacencies ~15% is Well Underway Source: BSC Internal Estimates 7 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
Large End Markets Expected to Stabilize 2012A Growth 2013E Growth 2014-2015E Growth 2016- Growth IC (4%) (4%) (2%) (1%) CRV CRM (5%) (3%) (2%) (1%) EP 10% 12% 12% 11% PI 4% 5% 5% 5% Endo 4% 4% 5% 5% MedSurg Uro/WH (3%) 2% 5% 5% Neuromodulation 6% 6% 7% 8% Core Market Total (1%) 0% 2% 2% Adjacencies 30%+ 30%+ 30%+ 30%+ Total Served Market (1%) 1%+ 2%+ 4%+ with Growth Accelerating from Adjacencies Source: BSC Internal Estimates 8 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
More Balanced Portfolio: IC/CRM Returning to Growth 2012 Percent of Revenue 2015E Percent of Revenue Percent of Revenue IC/CRM 58% IC/CRM 49% IC/CRM 43% EP 2% Adjacencies 0.4% MedSurg/PI 40% EP 3% Adjacencies 6% MedSurg/PI 42% EP 4% Adjacencies 13% MedSurg/PI 40% and ~60% of our Business in Higher Growth Markets 9 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures. Source: BSC Internal Estimates
Operational Changes Being Made... Creating a global operating model New Asia-Pacific leadership and Emerging Markets infrastructure Strengthening sales model in the U.S. and EMEA Stronger corporate sales organization R&D alignment to improve productivity Leaner organization to improve speed to Drive Growth and Improve Global Execution 10 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
Boston Scientific Advancing science for life TM Strategic Imperatives STRENGTHEN Execution to Grow Share EXPAND into High Growth Adjacencies DRIVE Global Expansion FUND the Journey to Fuel Growth DEVELOP Key Capabilities Our People: Engagement, Development, Retention Our Values: Caring, Meaningful Innovation, High Performance, Global Collaboration, Diversity, Winning Spirit 11 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
We are Strengthening our CRV Pipeline Rhythm Management Interventional Cardiology Peripheral Interventions S-ICD Synergy TM ilab Polaris Epic TM Iliac SES OffRoad IntellaTip MiFi Constellation CE Promus PREMIER TM Rubicon 18/35 Next Gen ICD/CRT-D System CrossBoss and Stingray CTO System with Meaningful Innovation to Gain Share 12 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
BSC s Unmatched Commitment to IC Standard PCI Complex PCI Future Growth Opportunities DES Core IVUS Specialty Coronary CTO LAAC HTN (RD) TAVR FFR BSC ABT MDT STJ Broadest and Deepest IC Product Portfolio 13 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures. Source: BSC Internal Estimates
Rhythm Management Strategy is Focused Comprehensive EP Product Offering WATCHMAN Rhythmia Medical S-ICD System Next Gen Stim / Ablation Therapies Next Gen ICD/CRT-D System Patient Management on Providing the EP a Comprehensive Set of Solutions 14 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
Differentiated Pipeline in MedSurg Endoscopy Urology / Women s Health Neuromodulation Genesys HTA Ablation WallFlex Transhepatic NEXT GENERATION Precision SPECTRA TM Endoscopic Bronchial Ultrasound StarFire TM Laser Obtryx II TM Expanding Share and Global Reach 15 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
Expanding into New Adjacencies Severe Asthma Hypertension Market $400M Revenue Goal $200M+ Market $1,500M Revenue Goal $200M+ Left Atrial Appendage Market $500M Revenue Goal $200M+ Transcatheter Aortic Valve Replacement Market $2,600M Revenue Goal $150M+ EP / Atrial Fibrillation Deep Brain Stimulation Market $4,300M Revenue Goal $350M+ Market $700M Revenue Goal $50M+ Accelerating Our Growth and Leveraging Our Capabilities 16 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures. Source: BSC Internal Estimates
Driving Global Expansion U.S. 53% 2012A Total Company Revenue BRIC 4% Total Company Revenue U.S. 50% BRIC 10% Aligned globally for growth More balanced global portfolio Building new capabilities in Emerging Markets International 43% International 40% Brazil, Russia, India and China (BRIC) growing +30% International 41% International 41% to Accelerate Growth and Establish New Capabilities 17 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures. Source: BSC Internal Estimates
Funding the Journey to Fuel Growth Gross margin expansion Transitioned to self-manufactured stents Manufacturing Value Improvement Programs (VIPs) Strategic pricing Continued focus on productivity initiatives Delivering on restructuring program R&D productivity Corporate function and SG&A initiatives to Help Drive Profitability 18 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
Adjusted Operating Margin Expansion Opportunity % of Sales 19% 4% 2% 25% 2012A Gross Margin Opex Note: Adjusted Operating Margin is Non-GAAP and exclude goodwill and other intangible asset impairment charges, acquisition and divestiture- related net credits, litigation, and restructuring-related charges, discrete tax items and amortization expense. For reconciliations of non-gaap financial measures to the most directly comparable GAAP figures, please refer to the Investor Relations section of our website at www.bostonscientific.com. Expected to Yield 600 bps over 5 Years 19 Boston Scientific Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures. Source: BSC Internal Estimates
Improved Profitability to Drive $6.7B+ Expected Future Capacity for: $6.5B+ Acquisitions: Growth adjacencies Near-term revenue contribution Stock repurchases under new $1B program Risk contingencies $0.2B Legal & tax Q4 2012 Cash on Hand Adjusted Free Cash Flow 1 Estimate through 2017 1 - 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 our non-gaap financial measures, please refer to the Investor Relations section of our website at www.bostonscientific.com. Continued Strong Free Cash Flow 20 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures. Source: BSC Internal Estimates
Projected to Return to Growth in H2 2013 2013E 2014 2015E 2016 Operational Revenue* (2%) to 2% Low-single digit Mid-single digit Adjusted OI* 18% to 19% (19+% excluding Med Device tax) Improve by 100 bps annually Improve by over 100 bps annually Adjusted EPS* $0.64 to $0.70 (Includes $0.04 of Med Device tax impact) Mid-high single digit growth High-single to low double digit growth Adjusted FCF* Strong cash flow Strong cash flow Strong cash flow *All numbers are Non-GAAP and exclude goodwill and other intangible asset impairment charges, acquisition and divestiture- related net credits, litigation, and restructuring-related charges, discrete tax items and amortization expense. For reconciliations of non-gaap financial measures to the most directly comparable GAAP figures, please refer to the Investor Relations section of our website at www.bostonscientific.com. Followed by Consistent Revenue and Adjusted Earnings Growth 21 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures. Source: BSC Internal Estimates
Q&A 22 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
Thank You 23 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
Appendix 24 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
Regulatory Disclosures WATCHMAN Left Atrial Appendage Closure Device ADVANTIO INGENIO INVIVE pacemakers MRI Compatibility CRM CE Marked. In the U.S., this is an investigational device and not available for use or sale. CE Marked. In the U.S., these are investigational devices and not available for use or sale. RELIANCE 4-FRONT lead INGEVITY pacing leads Next Gen ICD/CRT-D System IntellaTip MiFi Open Irrigated Catheter Blazer OI A-Fib Catheter Rhythmia Medical Mapping System Synergy bioabsorbable polymer drug-eluting stent Promus PREMIER Everolimus-Eluting PtCr Stent Lotus Aortic Valve System ilab Polaris OptiCross Imaging Catheter Guidezilla Guide Extension Catheter Agent Drug Coated Balloon Catheter GUIDE DBS programming system Vessix Renal Denervation System Innova SFA Stent CE Marked. In the U.S., this is an investigational device and not available for use or sale. Worldwide, this is an investigational device and not available for use or sale. Device under development. Not available for use or sale worldwide. Worldwide, this is an investigational device and not available for use or sale. CE Marked. In the U.S., these are investigational devices and not available for use or sale. Device under development. Not available for use or sale worldwide. Interventional Cardiology CE Marked. In the US, this device is investigational and is not available for use or sale. Worldwide, this device is investigational and is not available for use or sale. Note CE mark is expected any time. Once it is CE mark, the caution can change to: CE Marked. In the US, this device is investigational and is not available for use or sale. This is an investigational device worldwide and is not available for use or sale. Device under development. Not available for use or sale worldwide. Device under development. Not available for use or sale worldwide. Device under development. Not available for use or sale worldwide. Device under development. Not available for use or sale worldwide. Neuromodulation Device under development. Not available for use or sale worldwide. Peripheral Interventions CE Marked. In the U.S., this device is not available for use or sale. CE Marked. In the U.S., this is an investigational device and not available for use or sale. Cobalt-Chromium Iliac BES CE Marked. In the U.S., this device is not available for use or sale. Ranger Drug-Coated Balloon Device under development. Not available for use or sale worldwide. CE Marked. OffRoad TM Re-Entry Catheter In the U.S., this is an investigational device and not available for use or sale. Direxion Microcatheter Device under development. Not available for use or sale worldwide. Expel Device under development. Not available for use or sale worldwide. 25 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.
Financial Disclosures Market Represent Boston Scientific s served markets. Identified growth markets CAGRS are for 2012-2017. Operational Revenue and Growth Represents revenue on a constant currency basis excluding divested businesses. Adjusted Gross Margins Represents gross margins excluding restructuring related costs. Adjusted Operating Expense, Adjusted Operating Income and Adjusted EPS These results exclude acquisition and divestiture- related net charges, litigation, and restructuring-related charges, discrete tax items and amortization expense. 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. Non-GAAP Financial Measures For reconciliations of non-gaap financial measures used in these presentations to the most directly comparable GAAP figures, please refer to the Investor Relations section of our website at www.bostonscientific.com. 26 Boston Scientific Citi Global Healthcare Conference, Feb 25, 2013. Refer to appendix to this presentation for certain regulatory and financial disclosures.