1 Mike Mahoney President and Chief Executive Officer J.P. Morgan 32 nd Annual Healthcare Conference January 14, 2014 This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
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1
Mike MahoneyPresident and Chief Executive Officer
J.P. Morgan 32nd Annual Healthcare ConferenceJanuary 14, 2014
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
2 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
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.
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
3 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
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 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.
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
4 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
Building a winning foundation
• Building momentum: exceeding plans and expectations
• Competing in large global markets: challenging but opportunities exist
• Delivering meaningful innovation: developing a differentiated pipeline
• Leading globally: fostering a “winning spirit”
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
5 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
Advancing science for life™Mission: We are dedicated to transforming lives through innovative medical solutions that improve the health of patients around the world.
• Caring
• Meaningful Innovation
• High Performance
• Global Collaboration
• Diversity
• Winning Spirit
Values:
™
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
6 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
Interventional Cardiology
$2.18B
Cardiac Rhythm Management
$1.91B
Urology &Women’s Health$500M
Neuromodulation$367M
Electrophysiology $147M Endoscopy
$1.25B
Peripheral Interventions
$774M2012 Revenue by Business Unit
Rhythm Management
Cardiovascular
MedSurg
An industry leader; innovating in large markets
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
7 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
2013 highlights through 3Q
• Established a leaner global operating model
• Raised financial guidance: revenue and adjusted EPS
• Grew faster than the market in 5 of 7 business units*
• Advanced new adjacency pipeline
• Closed acquisition of Bard EP (November 1)
• Strengthened employee engagement
The turnaround is ahead of schedule and building momentum
*Source: BSC estimates
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
8 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
Investor Day Guidance
2013
Q3 Earnings Call Guidance
2013
Investor Day Goals
2014- 2015
Investor Day Goals
2016 – 2017
OperationalRevenue* (2%) to 2% +0.8% to 1.5% Low-single digit Mid-single digit
Adjusted Op. Margin* 18% to 19% Improve by
+100 bps annuallyImprove by
+100 bps annually
AdjustedEPS* $0.64 to $0.70 $0.69 to $0.71 Mid – High
Single digit growthHigh Single – LowDouble digit growth
*Source: BSC estimates. 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.
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
9 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
Portfolio mix improving
2012 Revenue Mix $7.2B*
Adjacencies0.4%
MedSurg / PI40%
IC/CRM58%
EP2%
Adjacencies13%
MedSurg / PI40%EP
4%
IC/CRM43%
2017Estimated Revenue Mix**
Revenue growing and mix shifting into faster growth markets
* Net of $122M of revenue from divested businesses.** Source: BSC estimates
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
10 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
Adjacencies to contribute
meaningfully to growth
EXPANDInto High Growth
Adjacencies
Emerging markets to grow from 8% to 15% of revenue by
2017*
DRIVEGlobal
Expansion
Operating margin** projected to
improve from 19% to 25% by 2017
FUNDThe Journey
to Fuel Growth
New commercial capabilities to help teams deliver plan
DEVELOPKey
Capabilities
STRENGTHENExecution to Grow Share
Core growth to continue to improve
Strategic imperatives
*Growth rates are on a constant currency basis. **Adjusted operating margin.Constant currency growth rates and adjusted operating margin are both non-GAAP financial measures; 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. Source: BSC estimates
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
11 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
Hospitals Helping hospitals reduce re-admissions and costs
Patients Improving outcomes, expanding access and saving lives
Physicians Offering new alternatives to help patients
PayersDemonstrating effectiveness through extensive evidence-based clinical research
Delivering value to multiple stakeholders
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
12 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
Potential WW S-ICD Market: +$750M* 2013:
• Innovation Prix Galien Award Winner
• Strong safety and efficacy data
• Gen 1.5 development complete & launched
• Implant experience ~ 3,000
2014E:
• Expanding globally
• Full supply capability
• Expanding training & trials
Meaningful innovation in CRM
S-ICD becoming the 1st choice** ̶ protection without touching the heart
S-ICD®
*Source: BSC estimates **In indicated population
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
13 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
WW Est. ICD Market: ~$7B*ACUITY™ X4 QUAD LEAD
• Broadest tiered portfolio
• Acuity X4 next gen quad lead: 17 pacing vectors• New Autogen ICD & CRT-D platform• World’s smallest and thinnest devices• Extends longevity advantage
• 2014E Roll-outs and trials
• Q1:14 – EU full launch• Q1:14 – U.S. IDE approval for Acuity X4 quad lead• Mid-2014 – U.S. launch of non-quad “cans”
Meaningful innovation in CRM
AUTOGEN™ X4
New platform leverages BSC advantage of size and longevity*Source: BSC estimates
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
14 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
• First 32-contact & multiple lead platform
• Independent current control
• Engineered for maximum coverage & flexibility
• Designed to deliver therapy more accurately
• 32% Y/Y growth Q3; 20% Y/Y growth YTD Q3**
WW Spinal Cord Stimulation Market ~$1.4B*
PRECISION SPECTRA™
Meaningful innovation in Neuromodulation
Driving share gains and market growth in Spinal Cord Stimulation*Source: BSC estimates. **Growth rates are on a constant currency basis. Constant currency growth rates are non-GAAP financial measures; 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.
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
15
Promus PREMIER™
CUSTOM ARCHITECTURE• U.S. launch Dec. 2013• Enhanced delivery• Premier outcomes
*The Synergy™ stent system is CE Marked in Europe. In the U.S., this device is investigational and not available for sale.J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
16 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
Market expansion with differentiated portfolio
Alair®
Over 350 accounts worldwide
Watchman™
Awaiting U.S. & Brazilapprovals;
approved in China
Lotus™
Expanding in EU;U.S. IDE submission
anticipated H1:14
Rhythmia™
Launching in multiple geographies
Vessix™
Finalizing U.S. IDE clinical program
Deep Brain Stim
IDE trial began 2013; 1M Americans with
Parkinson’s Disease
Significant clinical advances made to accelerate long-term growth Note: In the U.S., the Watchman™ LAA closure device, Lotus™ percutaneous valve, Vercise DBS system, and Vessix™ system are investigational devices and not available for sale.
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
17 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
• Designed to reduce stroke in AF patients**
• Positive FDA panel December 2013
• Most studied LAAC device and only device with long-term clinical evidence
• Launched in 40 countries; >7,000 implants
• FDA approval anticipated 1H 2014
Potential WW LAAC Market: +$500M*
Watchman™: Left Atrial Appendage Closure
Meaningful innovation and a key growth driver
*Source: BSC estimates**In indicated population. The Watchman™ LAA closure device is an investigational device and not available for sale in the U.S.
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
18 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
WW Est. EP Market: +$2.5 Billion*
• Offering a new comprehensive portfolio
Rhythmia: Next gen mapping and navigation
BARD EP: Recording devices and catheters
BSC EP: Therapeutic catheters
• Expanding global commercial capabilities
• Leveraging Rhythm Management synergies
Revitalizing franchise in high growth EP market
Becoming a stronger player in a fast-growing market
*Source: BSC estimates
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
19 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
2013 3Q YTD BSC Revenue
U.S.46%
International39%
2017E
International38%
U.S.47%
U.S.52%
International40%
EmergingMarkets
8%
EmergingMarkets
15%
2013 3Q Highlights
• Global operating units
• BSC emerging markets grew +20% Y/Y*
• BSC BRIC grew ~30% Y/Y*
• New capabilitiesin Emerging Markets
Driving global expansion
BSC Revenue
Emerging Markets becoming a meaningful growth driver
*Source: BSC estimates. Growth rates are on a constant currency basis. Constant currency growth rates are non-GAAP financial measures; 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.
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
20 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
• Deliver revenue commitments per plan
• Improve OI contribution of new adjacencies
• New products with accretive margins
• Value initiatives and restructuring
• Lower SG&A with a focus on CRM
• Reduce corporate infrastructure0%
5%
10%
15%
20%
25%
30%
2012A 2017E
Operating Margin* Expansion
Significant opportunity to improve margins
*Adjusted Operating Margin is non-GAAP and excludes 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.
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
21 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
Capital Allocation
• Targeted balance2: stock buyback and acquisitions
Focus on growth adjacencies
Near-term revenue adds
Return cash to shareholders
• Maintain flexibility
Litigation / tax contingenciesAdjusted FCF1
through 2018
$7.5B+
Q3 2013 Cash on Hand
$0.5B+
Strong Cash Flow
Balanced approach to capital allocation
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.2 – Subject to business development opportunities, market conditions, our stock price, regulatory trading windows, and other factors.
This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.
22 J.P. Morgan 32nd Annual Healthcare Conference – January 14, 2014
Building a winning foundation
• Building momentum: exceeding plans and expectations
• Competing in large global markets: challenging but opportunities exist