BOSTON SCIENTIFIC CORP Q1 FY2025 earnings call

• Q1 2025 delivered excellent results with total company operational sales and organic sales exceeding guidance ranges. - Regionally, U.S. grew 31%, Europe 8%, Asia Pacific 11%. - Business units: Urology, Endoscopy, Neuromodulation, Cardiology, EP, Peripheral Interventions had respective highlights. - Opened new sites in U.S., increased manufacturing capacity. - Announced acquisition of SoniVie expected to close in Q2 2025. - Completed acquisition of Bolt Medical and received FDA clearance for IVL system.

In Q1 2025, total company operational sales grew 22% and organic sales grew 18%. Regionally, the U.S. grew 31% operationally with double-digit growth in 5 of 8 business units. Europe, Middle East and Africa grew 8% operationally. Asia Pacific grew 11% operationally. Business unit-wise: Urology sales grew 25% operationally and 4% organically. Endoscopy sales grew 6% both operationally and organically. Neuromodulation sales grew 7%. Cardiology sales grew 31%, with Interventional Cardiology Therapies up 9%, WATCHMAN up 24%. Electrophysiology sales grew 145%. Peripheral interventions grew 16% operationally and 7% organically. Revenue contribution details: Cardiology, EP, and Peripheral Interventions were key growth drivers.

• Second quarter 2025 organic growth guided 13%-15%, full year organic growth raised to 12%-14%. - Second quarter adjusted EPS guidance $0.71-$0.73, full year adjusted EPS $2.87-$2.94 (14%-17% growth). - Anticipate $200 million impact from tariffs, expect to offset through sales upside and discretionary spending cuts. - Full year adjusted gross margin roughly in line with 2024, but expect 50-75 basis points of adjusted operating margin expansion.

• Tariffs pose a $200 million headwind in 2025, with most impact in the second half. - Potential supply chain disruptions in certain categories, impacting some business units. - Regulatory uncertainties related to acquisitions and new product approvals.

Q: Congrats on a fantastic quarter. Just on tariffs here, it's really impressive. You're able to offset it. It looks like about $0.11 or so by my math, for half year, how do we think about the ability as you move through the rest of the year to maybe move around some of the manufacturing?

A: Sure, Robbie. Just to be clear. So as you said, we have a $200 million tariff headwind for 2025 based on the fact that we capitalized tariffs, as you would expect. Q2 doesn't have much in the way of incremental tariffs from the recent announced tariffs. So it's mostly a second half challenge. So what we're doing is effectively offsetting that with the increase in the revenue performance. So you saw us raise our revenue range to 12 to 14. We do have some targeted discretionary spend reductions travel meetings. Actually, we have some programs going there, and we're just looking to accelerate those programs to deliver more savings. And then we do get $0.01 of FX benefit. So the way I look at it is the revenue and the FX kind of offsets half and then the discretionary spend reductions offset the other half. So we're really pleased that we're able to continue the momentum of the company and drive the raise in the revenue guidance range and the raise in the adjusted EPS guidance range. Relative to moving manufacturing around, we're not making any decisions now relative to moving infrastructure or anything around moving manufacturing around the globe. As Mike mentioned, we just made some significant investments, both in Minnesota and in Georgia and significant capacity and bricks and mortar there. So we have a long-standing, very well-optimized supply chain around the globe and not looking to make any changes to that as we sit here today.

Q: Congrats on a really strong quarter. And of course, congratulations to Dan and John. Thanks for all your help over the years, and I'll miss working with you. So Mike, you mentioned that you're now #2 in EP. And so the market shares look very different in the U.S. and outside the U.S. with the U.S. being much higher. So my questions are, Mike. One, do you think you can overtake J&J to become #1 in EP? And second, what will it take for the OUS share to catch up to the U.S. share?

A: Sure. We have just excellent momentum broadly around the globe in EP. So I won't speculate as to when we might -- we certainly aim to be #1 in that business. It will take a few years to potentially reach that goal, but it's clearly what our aim is. And it's supported based on the clinical science, the breadth and depth of our PFA leadership position that we have and the significant investment that we're making in it around the world. So in terms of -- the U.S. is doing extremely well. Europe has also had excellent growth despite lapping 1-year comps with their FARAPULSE launch already, which shows you the durability and enthusiasm despite competitive entrants, the European business grew significantly quickly in the first quarter of '25. And we're really still early days, very early China. So China represents a plus $1 billion market, and it's an area that we're making significant investments in clinical and mapping and capabilities in China. So I think you'll see ongoing impact benefit for us throughout the year in '25 in China and a much bigger impact in '26 in China. And our Japan team, it really did -- has done an amazing job with launching FARAPULSE. And we're a clear #1 leader in PFA [indiscernible] the third approval in Japan. So very impressed with the execution in Japan and in the U.S. and in Europe, and our China team is really building the blocks now to do the exact same thing in China. So our aim is to continue our leadership in PFA, you've seen mass adoption to PFA usage, and we have a lot of momentum.