Boston Scientific Corporation — 2024 Q1

Yes. First, I want to shout out to early pioneering work by Chris O'Hara, the amazing work by the FARAPULSE team and really the work our team has done over multiple years. This is the most transformational product that I've seen in my career with the company. And Dr. Stein can comment on clinically, but we continue to invest significantly in the current platform and in future products and a significant amount of clinical science to really widen the gap in PFA with our FARAPULSE system.

Yes. Thanks. Thanks, Mike. Thanks, Robbie. Maybe the one thing I'd add, I'd just -- the caution here is against thinking of PFA in general, that every PFA system is very different and I think everyone really needs to be evaluated on its own. So the results you get with PFA are just completely dependent on catheter design, on waveform and on dosing strategy. And as Mike said, what people see when they use FARAPULSE clinically, when people see the data and we've now got published data including randomized clinical trial data, registry data, total data at well over 18,000 patients have reported at this point, and as Mike said, it just has compelling advantages in terms of safety, in terms of efficacy, in terms of ease of use and in terms of efficiency. And that's what you see driving the rapid uptake, both in the U.S. and globally.

Yes. So we outlined at Investor Day the 8% to 10% and our goal to be a very high-performing med tech company. And so we're super pleased with the first quarter results that also led to -- and the business momentum led to the guidance you referred to at 10% to $12. So we're pleased with taking our full year guidance up. We did also receive FARAPULSE earlier than we expected.

Sure. Thanks, Rick. We're very pleased with the results in Europe. We continue to grow above market in Europe and have excellent adoption across most major countries in Europe. And importantly, as you said, we've invested quite a bit in this portfolio and we're excited about the Prime submission that we just recently did in Europe, which will enhance the valve further and provide additional valve sizes as well. So we expect that to go well in Europe.

No, it was over -- it was -- not to interrupt you, Joanne. It was just over the 3-year period. 2024 to 2026 was 150 basis points.

Yes. I think over the 3-year period, all lines will contribute. And I think it's really a great part of the history of the company and the kind of the DNA of the margin expansion story is that at any given point in time, all lines can contribute. So gross margin at that 69.8%, I didn't love that this quarter, but I'm optimistic that, that improves through the year.

Yes. So the results in the U.S., 85% as you mentioned, it was really a mid-quarter launch. So the teams moved pretty quickly to have some impact in the first quarter. And we look forward to good results, obviously, in the second quarter and the rest of the year based on momentum.

I described that, that's NTAP.

I'm sorry.

Yes. And Vijay, I think just important maybe to point out. First off, right, the NTAP applies to inpatient Medicare fee-for-service, which is really a small minority of AF ablations today. Having said that, we still do believe that FARAPULSE can use the proposed NTAP related to one of our customers.

I'll make comments and Dr. Stein. We're pleased with our WATCHMAN performance. We grew globally 19%. But keep in mind, that's coming off of nearly a 30% comp from first quarter 2023. And we still maintain, if not enhance, our strong share position.

Yes. Thanks, Mike. Yes. So Travis, first on the trials, I mean, first of all, this is still a healthy market. This is still a very under-penetrated therapy when you look at patients who were at high risk for stroke and AF who stand to benefit from -- with the WATCHMAN procedure.

Thanks, Danielle. Really appreciate you asking that question. I would say the innovation has already happened. Let me just explain a bit more. We call it ICTx, our interventional cardiology business essentially. And years ago, that was dominated by drug-eluting stents.

Dr. Stein, if you could take that one?

Yes. It's still early in the launch. And I think one thing that I do want to sort of emphasize as you look at how things are playing out in the launch is we're really working with accounts to say don't change a lot of your workflow at the outset. Get used to using FARAPULSE, see how it works in your cases and then start modifying your workflow.

Sure. So we have the NICE approval, excellent trial design by the clinical team and the product is doing extremely well in Japan and we have high hopes for the product has impact in the second half and more in 2025.

Yes. And Chris, and just to remind everyone, right? Our current label indication in the U.S. in-stent restenosis, that comprises approximately 10% of current PCI volume. Internationally, we also see DCBs used and we believe there is a potential use case outside of in-stent restenosis, small vessel disease, bifurcation lesions, potentially even some acute coronary syndrome. And once we launch in the U.S., we are evaluating opportunities to expand the label. And those expanded indications could potentially take us up to 20% of current PCI volume.

Yes. We won't confirm your math. At this point, we're not going to be breaking out FARAPULSE cases, numbers, number of accounts, dollars and so forth yet. If you recall back to the WATCHMAN days, we really waited till it was about close to $1 billion platform before we provided that based on the materiality of the company.

Just maybe really not a whole lot of new color in Japan. But they launched it last year and it was adopted very, very quickly and it's leading to the strong double-digit growth in Japan that we saw in the quarter.

Yes, Matt. Again, I think probably the first new indications we think about looking for would be small vessel bifurcation lesions. Still working through regulatory strategy on that. So not prepared to give you a time line for when we would initiate any of that work.

Thanks, Matt. Probably not too much new commentary here. I think in FARAPULSE overall, it's -- we're developing very strong capabilities to install, support and train doctors and really scale that up in the U.S., given the high demand for it. And we're able -- resource-wise, we put a lot of focus on that as we continue to expand that. And there obviously are a lot of strong relationships we have with those EPs given our WATCHMAN experience and our CRM experience. So it's a lot of resource planning and training and executing every day in the field to open up new accounts.

Yes, Drew. We'll take one more, please.

I want to ask the gross margin commentary, the inventory charges, Dan. Can you quantify the impact in the quarter? And what's the nature of those charges? What's going on? And the other thing I heard was increased mix of capital in the quarter. I think it seems highly likely to be FARAPULSE generator driven, but if there's anything else underneath that comment, I'd welcome the color.

Sure. Thanks for the question, Mike. We're not going to quantify the inventory charges, but it was much more than we're used to in a given quarter, and that's why we called it out and it has an impact.

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