The operator introduces the Boston Scientific Third Quarter 2023 Earnings Conference Call and provides instructions for participants. Lauren Tengler, Vice President of Investor Relations, introduces the speakers and mentions the availability of the press release and reconciliations on the company's website. The call will last approximately one hour and will include comments on Q3 performance and guidance for Q4 and full-year 2023. The speakers will be joined by the Chief Medical Officer for the Q&A session. The paragraph also clarifies the definition of operational and organic revenue growth and lists the relevant acquisitions and divestitures excluded from organic growth.

The company has recently divested its endoscopy pathology business and will be consolidating Acotec results on a one quarter lag. The previously announced acquisition of Relievant Medsystems is expected to close in the first half of 2024. The company's financial and operating highlights can be found on their Investor Relations website. The call contains forward-looking statements and any differences in actual results may be due to incorrect assumptions or materializing risks. The company disclaims any intention or obligation to update these statements. The call will be led by Mike Mahoney.

The company is pleased with their excellent results in the third quarter of 2023, with sales growing 11% and adjusted EPS growing 15%. They attribute this success to their category leadership strategy, focus on innovation, and strong commercial execution. They expect continued growth in the fourth quarter and are raising their full-year guidance for organic growth and adjusted EPS. Regionally, the US, Europe, Middle East, and Africa, and Asia Pac all saw strong operational growth, with particular strength in Japan and China.

In the fourth quarter, there was high demand for the company's AGENT DCB, leading to a market leadership position. China saw double-digit growth, driven by the Imaging and Complex PCI portfolio and the Acotec business. The urology and endoscopy units also saw double-digit growth, with strong performance in international markets. The neuromodulation unit had modest growth, with the Brain franchise growing double digits and the pain business growing slightly below expectations.

The company is optimistic about the opportunities in their pain business, including the recent US approval to expand their indication for the WaveWriter Alpha SCS system and the acquisition of Relievant Medsystems. Their peripheral intervention sales grew 8% organically and 13% operationally, with strong performance in their arterial, venous, and interventional oncology franchises. The REAL-PE study showed lower major bleeding rates in patients treated with EKOS compared to a competitive device, providing new evidence for providers. The cardiology group also had a strong quarter, with 11% organic sales growth and a 7% growth in interventional cardiology therapy sales.

In the third quarter, the company saw strong growth in their Structural Heart Valves and Coronary Therapies franchises, driven by successful sales of ACURATE Neo2 and Imaging technologies. They also received clearance for their next-generation AVVIGO+ Guidance System and presented positive results for their AGENT drug-coated balloon. WATCHMAN sales also grew significantly, with the latest generation WATCHMAN FLX Pro receiving FDA approval and enrollment beginning for a post-market study. Cardiac rhythm management and Diagnostics franchises also saw growth in the quarter.

In this paragraph, the company discusses their recent innovations in the cardiac monitoring space, including the launch of the LUX-Dx II and II+ implantable cardiac monitors. They also highlight their strong sales growth in the electrophysiology market, driven by their FARAPULS and POLARx technologies. The company also mentions their focus on generating clinical evidence and achieving important milestones for bringing their PFA technology to the US market. They anticipate the approval of FARAPULSE in the US in the second half of 2024.

The company has seen strong growth in organic sales and adjusted EPS in the first nine months of the year. They aim to be the highest performing large cap med tech company over the next three years and have set financial goals for the 2024-2026 period. Third quarter revenue and adjusted EPS exceeded expectations, with strong operational revenue growth and contributions from acquisitions and divestitures. Adjusted gross margin was slightly lower than expected due to foreign exchange.

The company's Q3 results have led to a slight improvement in adjusted gross margin for full-year 2023. The adjusted operating margin for the quarter and year-to-date has been strong, setting them up to achieve their full-year goal. The GAAP operating margin includes a credit related to IP litigation matters. Interest and other expenses were in line with expectations, and the tax rate was favorable due to certain discreet tax items. Free cash flow for the quarter was $509 million, and adjusted free cash flow was $582 million. The company expects adjusted free cash flow to exceed $2.4 billion for full-year 2023. Their top capital allocation priority is M&A, followed by share purchases to offset dilution. As of September 30, 2023, the company had cash on hand of $952 million and a gross debt leverage of 2.3 times. Guidance for Q4 and full-year 2023 will be discussed.

The company expects strong operational revenue growth of 12% in 2023, with a 100 basis-point headwind from foreign exchange. Organic revenue growth is expected to be 11% excluding acquisitions and divestitures. The fourth quarter of 2023 is projected to have operational revenue growth of 9-11% and adjusted expenses of $340 million. The operational tax rate is expected to be 13.5% and the adjusted tax rate to be 12%. Adjusted earnings per share is expected to be $1.99-$2.02 for the full year and $0.49-$0.52 for the fourth quarter. The company's year-to-date financial performance has been strong, with top-tier growth in revenue, operating margin, and earnings per share.

The speaker is looking forward to continued success in the fourth quarter of 2023, which will help achieve their long-term financial goals. They will be answering questions from the audience, and the first question is about their projected growth and margin expansion for the next three years, as discussed at their Analyst Day event. The speaker clarifies that they aim for 8-10% organic revenue growth and 150 basis points of margin expansion over the next three years, with a goal of reaching 30% in the long-term.

The speaker discusses the positive data presented at the TCT conference, specifically highlighting the results of the AGENT trial which aims to get approval for the first drug-coated balloon for use in coronary in-stent restenosis in the United States. They express their satisfaction with the results and note the potential benefits for interventionalists. The speaker also mentions the success of the drug-coated balloon in Japan where it is already approved.

The speaker discusses the positive results from a recent trial, which showed that a new device was superior to the standard treatment for a certain condition. They also mention another trial that looked at the use of a different device in combination with a common procedure. The speaker acknowledges that this combination may face challenges in terms of reimbursement, but the trial validated the safety and efficacy of the device compared to other treatments. The speaker then moves on to discuss the company's overall performance in the third quarter, noting that most of their businesses grew, except for the neuromod business which only grew by 3%. The speaker is asked about the PDN indication approval and how it will affect the business.

The DBS business is doing well and growing, with double digit growth in the third quarter. However, the SCS business is under pressure due to new competitors and the DPN approval, which is expected to launch in the first quarter of 2024. The company also expects to close the deal with Relievant in 2024, which will give them a strong position in treating pain. The company expects some softness in the fourth quarter but aims to improve in 2024 with the launch of new products. The financial outlook for 2024 may be on the lower end of the 8% to 10% range due to new product launches. Gross margins may also be impacted by foreign exchange.

Dan Brennan and Vijay Kumar discuss the FX impact on gross margins in the third quarter and the outlook for the future. Brennan mentions that the gross margin was lower than expected due to FX, and they may not hit their target for the full year. They also mention a potential FX headwind in 2024 but will provide more information on January 31. Larry Biegelsen asks about the potential long-term impact of GLP-1s on the company's businesses and how investors have reacted to them. Mike Mahoney defers to Dr. Stein for a comment on GLP-1.

Ken Stein, a doctor, acknowledges that the new obesity drugs are promising, but also points out that it will take at least a decade for them to reach peak usage due to cost, convenience, and tolerability issues. He also mentions that even after a decade, only a minority of American patients with obesity will be taking these drugs. He expects limited short-term impact on cardiovascular disease and predicts that the impact on US coronary and peripheral procedure volumes will be minor even at peak usage. He also notes that cardiovascular disease is a global issue and these drugs may not be as accessible outside of the US.

The speaker discusses the potential impact of their products on cardiovascular mortality and events, as well as the increase in other diseases associated with aging. They mention the expected approval of FARAPULSE in the second half of 2024 and the potential for pull-through on ancillary products. The speaker also notes the positive response from EPs to their products.

The company's supply chain team has done a great job in building supply for catheters and capital equipment, leading to an expected increase in installation in the second half of the quarter and into the first quarter of 2024. This improvement in supply capabilities will also benefit the launch in the US. In regards to Q4 guidance, the 8-10% organic revenue growth is an acceleration from previous guidance and is considered a prudent number to close out the year. This will result in 11% organic revenue growth for the year, 80 basis points of margin expansion, and 17-18% EPS at $1.99-$2.02.

During a conference call, a question was asked about the company's strong performance in 2019. The CEO responded by thanking the questioner and then addressed a question about neuromodulation. He explained that there had been new competitors in the field, resulting in a slight decrease in market share. However, with the recent approval of a new indication, the company expects to see improvement in growth in 2024. The CEO also mentioned that the company's US EP sales force is currently being built out for the upcoming launch of FARAPULSE.

The speaker discusses the integration of FARAPULSE and arrhythmia, and how this will enhance the capabilities and demand for arrhythmia once completed in 2024. They mention having a trained and scaled EP sales force and the success of cryo openings. They also mention a next generation FARAWAVE catheter and FARAVIEW software targeted for year-end 2024, which they hope will make the FARAPULSE system more compelling for physicians to use.

The speaker discusses the potential of combining different systems to improve physician workflow and patient outcomes. They also mention the impressive results of the AGENT product for in-stent restenosis compared to other treatments and the potential for further research into other indications.

The operator introduces a question from a Wolfe Research analyst about price-cost dynamics for the company. The analyst asks about the company's pricing strategy and potential changes in the future, as well as areas of cost pressures such as raw materials, freight, and labor. The analyst also asks for an update on the company's inventory status. The company's CFO responds by stating that the company's goal is to achieve flat pricing and discusses the current state of cost pressures, including improvements in freight but continued challenges in other areas such as inflation and supply consistency.

The speaker is optimistic about the future of the company's cost of goods and inventory. They have been building inventory over the past few years and have been successful in getting it in line with historical levels. The company's performance in EMEA and APAC has been strong, and they are confident in the durability of this performance. They attribute this success to a combination of expanding their product offerings and taking market share. The company's team in Europe has a track record of success.

The Middle East and Africa saw a 12% growth last year and are expected to continue growing in double digits through 2023. The European team has been successful in launching new products and taking market share. Asia Pacific also had a strong quarter, with Japan and China performing well. The company's success is attributed to its people and portfolio.

The operator informs the audience that a recording of the conference will be available in one hour by dialing a specific number and using a replay code. The recording will be available until a specific date and time. The conference has now ended and attendees can disconnect.

This summary was generated with AI and may contain some inaccuracies.