35 th Annual JP Morgan

Healthcare Conference
Mike Mahoney
Chairman & CEO
JANUARY

10,

2017

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 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.

Our Mission and Values

Boston Scientific is 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

What to Expect from Us

Company pride living BSX values

Transforming patients lives through meaningful innovation and a WINNING SPIRIT

Consistently delivering on and exceeding financial commitments1,2

Beating Investor Day and long range plan targets
YTD Q3:16: 9% organic growth, +170bps adj. OM, 27% adj. EPS growth ex. FX

Driving category leadership and expanding globally

Gaining share globally while building scale & new capabilities in emerging markets

Enhancing long term growth profile, investing to lead in faster growth markets4
Diversifying into large, high-growth markets with differentiated product portfolio

Building shareholder value: More to come in 2017-2018 and beyond1,2

2017: MSD rev. growth + OM expansion = double digit adj. EPS growth
Beyond 2017: Accelerating revenue growth & significant OM improvement potential

See slide 20 for footnotes.

4

Boston Scientific At-A-Glance Q3:16 YTD

YTD operational revenue and growth2 as of 9/30/2016 (total company: $6.7B, +13%)

Interventional
Cardiology

Endoscopy

$1.9B, +13%

$1.1B, +10%

Structural Heart
FY16E $200M+

Urology and
Pelvic Health
$773M, +14%1
(growth ex. AMS)

Peripheral
Interventions

Neuromodulation

$815M, +13%

$407M, +11%

Rhythm Management
CRM, Heart Failure Management, Electrophysiology
$1.5B, +2%
See slide 20 for footnotes.
5

$192M, +5%

Delivering High Performance

Operational
Revenue Growth1,3

Adj. Operating Margin2

Adj. EPS Growth2

Includes foreign exchange impact

Organic revenue growth

Operational revenue growth

Excludes foreign exchange impact

(~$0.10 in 2015, ~$0.05 in 2016E)

24%

24.3%

$8.4B

23%

12%

15%

22.3%

$7.5B
$7.4B
6%

9%
$7.1B

4%

11%

20.2%

8%

17.8%**

18.9%
11%

5%

2%

2012
-3%

2013

-2%

2014

2015 2016E*

2012

2013

2014

2015

2016E*

2012

2013

2014

2015

2016E*

**Adjusted for estimated impact of Medical Device

Tax (~100bps), based on actual 2013 impact

$7.2B

Sales growth
acceleration
See slide 20 for footnotes.
6

18%

~650 bps adj. OM

expansion

*2016E represents guidance midpoint issued on Q3:16 earnings call, 10/26/16

Double-digit adjusted
EPS growth ex-FX

2016 Q3 YTD: Top-Tier Operating Performance

Growing well above market & driving significant margin improvement1,2,3

9% organic & 13% op. revenue growth strong new launches, global share gains
+170bps adj. operating margin improvement and ~25% adj. EPS growth ex. FX

Strengthening global capabilities & emerging markets3

Operational revenue growth +15% in AMEA, +11% EU, +13% U.S., +16% in LACA

+21% in Emerging Markets; new capabilities, partnerships, product launches

Advancing key growth platforms for the future

Emblem S-ICD, Synergy stent, Watchman LAAC device, Lotus valve,
Rhythmia mapping & navigation system, Innova stent, Eluvia DES, Ranger DCB
Precision Novi and Vercise systems, Axios stent, Spyglass DS visualization system,
LithoVue single-use ureteroscope

Enhancing category leadership via M&A and equity investments

Tuck-in acquisitions & portfolio of 20+ strategic equity investments

See slide 20 for footnotes.

7

Strategic Imperatives Align Our Global Execution

STRENGTHEN
Category
Leadership

EXPAND into
High Growth
Adjacencies

DRIVE
Global
Expansion

FUND
the Journey
to Fuel Growth

DEVELOP
Key
Capabilities

Grow faster
than peers in
large global
markets

Accelerate
growth &
diversify into
faster segments

Grow emerging
markets &
scale to 15%
total BSX sales

Increase adj.
operating
margin2 to
~28% in 2020

Lead in a
dynamic
market & build
new global
capabilities

See slide 20 for footnotes.

8

Market Growth Estimates:

Investing into New & Adjacent Faster Growth Segments
'16E
Market
Size4

16E
Market
Growth4

2020E
Market
Size4

16 - 20E
Market
CAGR4

Interventional
Cardio (ex-SH)

$8.3B

1%

$8.6B

0-2%

Complex PCI, PCI Guidance, Heart Failure

Structural Heart

$3.1B

30%

$6.3B

20%

TAVR, LAAC, Mitral Replace & Repair

Peripheral
Interventions

$5.2B

6%

$6.7B

6-8%

Drug-eluting, Oncology, Venous, EM

Cardiac Rhythm
Management

$12.1B

Flat

$12.9B

0-2%

S-ICD/Leadless, Diagnostics, Heart Failure

Electrophysiology

$4.1B

15%

$6.3B

10-15%

Endoscopy

$4.3B

5%

$5.4B

5-6%

Visualization, Pulmonary, Oncology, Infection, EM

Urology &
Pelvic Health

$3.5B

4%

$4.4B

5-7%

Stone, Prostate Health, ER, Globalization

Neuromodulation

$2.5B

10%

$3.6B

8-12%

Pain, DBS Movement Disorders

WW Total

$43B

4-5%

$54B

5-6%

Business

See slide 20 for footnotes.

9

Key Investment Areas, New Markets

Mapping, Navigation, Therapeutic Solutions

Continuing to invest in higher growth segments

Markets +100 - 200bps vs 2015 Investor Day est.

Cardiovascular:
Category Leadership & Growth Drivers

Interventional
Cardiology
Synergy &
Promus Premier
Market-leading
DES platforms

Polaris: IVUS &

Comet FFR

Integrated imaging
platform

Complex PCI

Broadest portfolio
to treat most
complex patients

10

Structural Heart
Lotus Edge

Differentiated, TAVR
platform launching in
the U.S. by YE 2017

Watchman

Peripheral
Interventions
Eluvia DES &
Ranger DCB

Differentiated drugeluting technologies

Zelante DVT

Left atrial
appendage closure
device

Products for
Venous/DVT market;
ATTRACT study read
out Q1:17E

Mitral Valve
Replace & Repair

Interventional
Oncology

Building a portfolio of
replace & repair tools

Embolization & tumor

management

Rhythm Management:
Category Leadership & Growth Drivers

ICD/CRT-D
Resonate

Accolade

Diagnostics

MRI

HeartLogic

Next gen platform

compatible with
HeartLogic + MRI
late 2017 US
launch

Ingevity pacing
lead; full-body MRI
& remote
monitoring

Developing HF
Dx solution:
a composite alert
to reduce
heart failure
hospitalizations

Emblem MRI
S-ICD

Valitude
X4 Quad CRT-P

Implantable
Cardiac Monitor

MRI compatibility,
remote-monitoring
enabled

EnduraLife
Battery
Technology

Industry-leading
longevity

11

Pacemaker

More pacing
vectors; industryleading longevity

Leadless
Pacemaker

Developing
modular system:
single-chamber
pacemaker
with S-ICD
compatibility for ATP

Electrophysiology

2nd gen
Rhythmia HDx
Mapping &
navigation
platform

Atrial Fibrillation
Solutions

Developing
arrhythmia
monitoring device

Navigationenabled, openirrigated, MiFi,

contact sensing
catheters

Strategic
Partnerships

Other EP Solutions

Portfolio of wireless,
cardiac monitoring
products and
services

Recording systems,
diagnostic
catheters, and
accessories

MedSurg:
Category Leadership & Growth Drivers

Neuromodulation
Precision Spectra
Precision Novi

SpyGlass DS
Visualization

Leading SCS
platforms, Illumina
3Dsoftware & nonrechargeable system

Optimizes
pancreatico-biliary
procedural efficiency
& productivity

Vercise PC DBS
System & Cartesia
Directional Lead

Endoluminal
Surgery - Oncology

1st Directional System

for Parkinsons,
dystonia, & tremor
globally; US DBS
launch YE2017E

RF Ablation

Comprehensive
range solutions for
pain management

12

Endoscopy

Endoscopic resection
of lesions in colon,
esophagus or
stomach

Infection Control &

Pathology Services
Solutions for
Ambulatory Surgery
Center market

Urology and
Pelvic Health
Stone Disease &
LithoVue SingleUse Ureteroscope

Leading platform,
next gen technology,
and expanding
globally

Mens Health

Category leadership,
market & geographic
expansion

Womens Health

Expanding portfolio
technologies &
global footprint

Enhancing Long Term Growth Profile:

Investing to Lead into Faster Growth Markets

Estimated Market Growth Rates 4

High Growth Mkt (>7% CAGR): SCS, TAVR, LAAC, EP, DBS, PI Drug Eluting, Venous, HF Diagnostics
Moderate Growth Mkt (4 - 6% CAGR): Endo, Complex PCI, Oncology, UroPH, WH, IC (ex. SH, DES)
Low Growth Mkt (0 - 3% CAGR): Pacer, Defib., DES

2012 Revenue mix:

$7.2B

Low
Growth
46%

High
Growth
7%

Moderate
Growth
47%

See slide 20 for footnotes.

13

2016E Revenue mix:

$8.4B

High
Growth
13%

Low
Growth
37%

Moderate
Growth
50%

2020E Revenue mix

High
Growth
25%

Low
Growth
25%

Moderate
Growth
50%

Driving Global Expansion:

Emerging Markets Focus

---------------- Emerging Markets ---------------Growth highlights

Growth drivers

Global revenue mix & Y/Y

growth Q3:2016 YTD
Operational Revenue3

AMEA
+15%
U.S.
+13%

See slide 20 for footnotes.

14

Global orientation

Portfolio registration,
new launches

Emerging Markets
expected to reach
$1B in revenue in 2016

Talent importer

MedSurg, PI focus

China Q3 YTD +22%

operational revenue3

New R&D and

physician training
capabilities

Emerging markets 12%

of mix as of 9/30/2016
(vs. 7% in 2012)

New Malaysian
manufacturing/
distribution facility

LACA
+16%

Europe
+11%

Emerging Markets
Q3:16 YTD +21%
operational revenue3

ADVANTICS Solutions:
Enhancing Category Leadership
Partners

Capital Financing

Turnkey setup &

equipment
financing
Maintenance &
servicing
financing

Upgrade
facilities

15

Performance
Optimization

Service
Development

Managed Services

Care process
improvement

Patient referral
management

Managed
cathlabs & ORs

Supply chain
optimization

Growth advisory

Materials
management

Disease
Management

Care variation
and
standardization
opportunities
Heart Failure
patient support

Improve
operational
effectiveness

Increase patient
access to
therapies

Share risks and

accountability

Standardize HF
care to improve
outcomes and

reduce costs

A Track-Record of Driving Operating Margin Expansion

AND a Significant Future Opportunity

~28%
~+300bps
25%+
24.3%

Accretive new
products
Reduce SG&A

22.3%

Less adjacency dilution

20.2%

5-10% annual standard

cost improvements

18.9%

Optimize plant network

17.8%*

R&D productivity
AMS benefit
Shared services

2012A

2013A

2014A

2015A

* Adjusted for estimated impact of Medical Device Tax (~100bps), based on actual 2013 impact
** 2016E represents guidance midpoint issued on Q3:16 earnings call, 10/26/16
See slide 20 for footnotes.
16

2016E**

2017E

Adjusted OM2
Improvements

2020E

Cash Flow Outlook, Capital Allocation Priorities

Strong
Cash Flow
Flow
Strong Cash
5
Adjusted FCF
Adjusted
FCF5:: 2014
2014 2019E
2019E

~$1.8B

~$2.0B

2017 2019 Capital

Allocation Priorities

~$2.2B

M&A

Share repurchases

Resolve contingencies/liabilities

~$1.6B
$1.3B

$1.4B
Reserved
contingencies
~$2B
~$4B
M&A and
Share Repurchases

2014A

2015A

See slide 20 for footnotes.

17

2016E*

2017E

2018E

2019E

*2016E represents guidance issued on Q3:16 earnings call, 10/26/16

Disciplined & Balanced Approach to M&A

2011

2012

2013

2014

VC

(Selected)

18

2015

2016
LumenR

Future
Pipeline

Tuck-in
M&A

Peripheral
Vasc.

What to Expect from Us

Company pride living BSX values

Transforming patients lives through meaningful innovation and a WINNING SPIRIT

Consistently delivering on and exceeding financial commitments1,2

Beating Investor Day and long range plan targets
YTD Q3:16: 9% organic growth, +170bps adj. OM, 27% adj. EPS growth ex. FX

Driving category leadership and expanding globally

Gaining share globally while building scale & new capabilities in emerging markets

Enhancing long term growth profile, investing to lead in faster growth markets4
Diversifying into large, high-growth markets with differentiated product portfolio

Building shareholder value: More to come in 2017-2018 and beyond1,2

2017: MSD rev. growth + OM expansion = double digit adj. EPS growth
Beyond 2017: Accelerating revenue growth & significant OM improvement potential

See slide 20 for footnotes.

19

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, adjusted earnings per share , and adjusted earnings per share excluding
changes in foreign currency exchange rates are non-GAAP and exclude goodwill and other intangible
asset impairment charges, acquisition and divestiture-related net charges, litigation-related charges,
restructuring and restructuring-related charges, debt extinguishment charges, pension termination
charges, discrete tax items, amortization expense and/or changes in foreign currency exchange rates.

3.

Operational revenue growth is at constant currency, and excludes divested businesses.

4.

Unless otherwise noted, all references to market sizes, market share positions, and market growth rates
are BSX internal estimates

5.

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
www.bostonscientific.com.

20

Regulatory Disclaimers
Product

Regulatory Disclaimer

Eluvia Drug-Eluting
Vascular Stent System

CE Marked. US: Caution: Investigational Device. Limited by Federal (or

US) law to investigational use only. Not available for sale.

RangerTM Drug-Coated
Balloon

CE Marked. US: Caution: Investigational Device. Limited by Federal (or

US) law to investigational use only. Not available for sale.

Lotus Valve System

CE Marked. US: Caution: Investigational Device. Limited by Federal (or

US) law to investigational use only. Not available for sale.

Tachy MRI

CE Marked. Not available for use or sale in the U.S.

Rechargeable Vercise
Deep Brain Stimulation
System

CE Marked. US: Caution: Investigational Device. Limited by Federal (or

US) law to investigational use only. Not available for sale.

Insertable Cardiac Monitor

HeartLogicTM/Cardiac
Diagnostics & Monitoring
Leadless Pacemaker
RESONATETM
Mitral Valve Technologies

Next Gen LAAC

Next Gen Ablation
21

Devices under development. Not available for use or sale worldwide.

Acronyms Used

22

Acronym

Definition

TAVR

Transcatheter Aortic Valve Replacement

LAAC

Left Atrial Appendage Closure

DES

Drug-Eluting Stents

DCB

Drug-coated Balloon

WH

Womens Health

ER

Erectile Restoration

DBS

Deep Brain Stimulation

EU

Europe

LACA

Latin America, Canada

EM

Emerging Markets

Appendix A: Non-GAAP Reconciliations

Revenue Growth Rate

Revenue growth rate, as reported
Less: I mpact of foreign currency fluctuations
Operational revenue growth rate
Less: I mpact of AMS acquisition
Organic revenue growth rate

Adjusted Operating Margin

Operating margin, as reported
Less: Non GAAP adjustments
Adjusted operating margin

Adjusted EPS, excluding FX

EPS, as reported
Less: Non GAAP adjustments
Adjusted EPS
Less: I mpact of foreign currency fluctuations
Adjusted EPS, excluding FX

23

Nine Months Ended

09/30/16
13%
0%
13%
4%
9%
Nine Months Ended
Basis Points Change
09/30/16
09/30/15
5.0%
-1.0%
-19.3%
-23.6%
24.3%

22.6%

Nine Months Ended

09/30/16
09/30/15
0.16
(0.07)
(0.65)
(0.74)
0.81
0.67
(0.04)
0.00
0.85

0.67

170

% Change

27%

Appendix A: Non-GAAP Reconciliations

Nine Months Ended September 30, 2016
Revenue Growth (%)

As Reported

I nterv entional Cardiology

Peripheral I nterv entions
Cardiac Rhythm Management
Electrophysiology
Endoscopy
Urology & Pelv ic Health
Neuromodulation

Less: FX Impact
12%
12%
1%
4%
10%
60%
9%

-1%
-1%
-1%
-1%
0%
-1%
-2%

Constant Currency

Less: AMS
Acquisiton

13%
13%
2%
5%
10%
61%
11%

Organic
0%
0%
0%
0%
0%
47%
0%

13%
13%
2%
5%
10%
14%
11%

Nine Months Ended September 30, 2016

Revenue (in millions)
I nterv entional Cardiology
Peripheral I nterv entions
Cardiac Rhythm Management
Electrophysiology
Endoscopy
Urology & Pelv ic Health
Neuromodulation

24

As Reported
1,695
757
1,378
179
1,060
731
395

Less: FX Impact
(175)
(58)
(103)
(13)
(88)
(42)
(12)

Constant Currency
1,870
815
1,481
192
1,148
773
407

Less: AMS
Acquisiton

Organic
0
0
0
0
0
226
0

1,870
815
1,481
192
1,148
547
407

Appendix A: Non-GAAP Reconciliations

Full Year 2016 Estimate
FY 2016 EPS Guidance

(Low)

Estimated GAAP EPS

Estimated acquisition and div estiture-related net charges
Estimated restructuring and restructuring-related charges
Estimated amortization expense
Litigation-related charges
Estimated Adjusted EPS
Less: Estimated I mpact of Foreign Currency Fluctuations
Estimated Adjusted EPS, excluding FX

25

(Low)
$0.34
0.07
0.07
0.34
0.29
$1.11

(High)

17%
-6%
23%

19%
-6%
25%

Revenue Growth - FY 2013

1%
-7%
8%
3%
5%

Revenue Growth - FY 2014

Revene growth, as reported
Less: Impact of foreign currency fluctuations
Operational Revenue Growth
Less: Impact of Bard & Bayer Acquisitions
Organic Revenue

(High)
$0.32
0.07
0.07
0.34
0.29
$1.09

Revenue Growth - FY 2015

Revene growth, as reported
Less: Impact of foreign currency fluctuations
Operational Revenue Growth
Less: Impact of Bayer & AMS Acquisitions
Organic Revenue

Estimated Growth

4%
-2%
6%
2%
4%

Revene growth, as reported

Less: Impact of foreign currency fluctuations
Operational Revenue Growth

-1%
-3%
2%

Revenue Growth - FY 2012

Revene growth, as reported
Less: Impact of foreign currency fluctuations
Operational Revenue Growth

-5%
-2%
-3%

Appendix A: Non-GAAP Reconciliations

Adjusted Operating Margin - FY 2015
Operating margin, as reported
Less: Non GAAP adjustments
Adjusted operating margin

-4.4%
-26.7%
22.3%

Adjusted Operating Margin - FY 2014

Operating margin, as reported
Less: Non GAAP adjustments
Adjusted operating margin

-4.1%
-24.3%
20.2%

Adjusted Operating Margin - FY 2013

Operating margin, as reported
Less: Non GAAP adjustments
Adjusted operating margin

1.7%
-17.2%
18.9%

Adjusted Operating Margin - FY 2013

Operating margin, as reported
Less: Non GAAP adjustments
Adjusted operating margin
Less: Estimated impact of Medical Dev ice Tax

26

-53.4%
-72.2%
18.8%
1.0%
17.8%

Appendix A: Non-GAAP Reconciliations

Nine Months Ended September 30, 2016

Regional Revenue Growth Rates

AMEA
EU
U.S.
LACA
Emerging Markets
China

Reported
17%
10%
13%
2%
8%
16%

Adjusted Free Cash Flow ( in millions )

Operating Cash Flow, as reported
Less: Capex
Free Cash Flow
Plus: Restructuring Payments
Plus: Contingent Payments
Plus: Special Tax Refunds/Credits
Plus: Legal Settlements
Plus: Other
Adjusted Free Cash Flow

27

Less: Impact of
Foreign Currency
Fluctuations
2%
-1%
0%
-14%
-13%
-6%

FY 2015
$

FY 2014
600

(248)

Constant Currency
15%
11%
13%
16%
21%
22%

1,269
(259)

352

1,010

95

115

57

103

(74)

(72)

799

57

136

49

1,366

1,261