The Boston Scientific Fourth Quarter 2023 Earnings Call has begun and all participants will be in listen-only mode. After the presentation, there will be a Q&A session. The call will last approximately one hour and will include comments on Q4 and full year performance, as well as the outlook for the business and 2024 guidance. The call will also feature the company's Chief Medical Officer. The company has posted a press release and reconciliations of non-GAAP measures on their website. The call will cover operational and organic revenue growth, and relevant acquisitions and divestitures will be excluded from organic growth.

The company has recently divested its Endoscopy Pathology business and is in the process of acquiring Axonics, Inc. The company's financial and operating highlights can be found on their Investor Relations website. The call contains forward-looking statements about the company's growth, product approvals, acquisitions, and financial performance. The company's 2023 results were strong, exceeding their goals. This success is attributed to innovation, clinical evidence, commercial execution, and the dedication of their global teams.

In the fourth quarter of 2023, the company saw significant growth in operational sales, exceeding their guidance range. This was driven by their category leadership strategy and focus on innovation. Adjusted EPS also saw strong growth, exceeding expectations. Looking ahead to 2024, the company expects continued healthy procedure volumes and organic growth. They also have a positive outlook for adjusted EPS and are committed to improving operating margins despite potential challenges.

In this paragraph, the speaker discusses the financial results for 2023 and 2024. The US, Europe, Middle East and Africa, Asia Pacific, and Latin America all showed strong growth, with particular strength in the Watchman, EP, Endo, and Uro business units. The speaker also highlights the growth in Japan and China, with expectations for continued growth in the future. The Urology business unit had an excellent quarter and full year, driven by growth in Stone Management and Prosthetic Urology.

In 2023, the company had a successful direct-to-patient campaign for erectile dysfunction and saw double-digit growth in their Prosthetic Urology franchise. They also announced the acquisition of Axonics, a medical technology company, to expand their portfolio in urology. Endoscopy sales were strong, with double-digit growth in all regions. Neuromodulation sales also grew, driven by the Vercise Genus portfolio and innovative Image Guided Programming. The Pain franchise was flat in the fourth quarter, but the company expects improvement with recent launches and strong data.

The company is excited about the potential of their Relievant Medsystems acquisition, which expands their Pain portfolio to include a novel Intracept system for chronic low back pain. Peripheral Interventions sales were strong, with growth in both arterial and venous procedures. The Interventional Oncology franchise also performed well, with a focus on expanding clinical evidence. The company is currently enrolling patients in a trial to assess the use of TheraSphere in combination with immunotherapy for treating primary liver cancer. In Cardiology, both operational and organic sales grew 14% in the fourth quarter and for the full year, with Interventional Cardiology Therapies sales growing 10% in both periods.

The Coronary Therapies franchise had strong growth in the fourth quarter and full year, driven by international regions and the Imaging franchise. The AGENT Drug-Coated Balloon performed well in Japan and is expected to be approved in the US in the first half of 2024. The Structural Heart Valves franchise also had double-digit growth, led by ACURATE Neo2 in Europe, but the approval of ACURATE Prime in the US has been delayed due to a review of the data. WATCHMAN sales also had strong growth, with over 400,000 patients treated globally and the launch of WATCHMAN FLX Pro.

The company is expanding its clinical evidence for its technology and is pleased with the pace of enrollment in its post-market HEAL-LAA trial. They are also looking forward to initiating a new trial later this year. In terms of sales, their Cardiac Rhythm Management and Diagnostics franchises saw growth, while their Core CRM is expected to perform in line with the market in 2024. In Electrophysiology, sales grew significantly in both the fourth quarter and on a full year basis, with US sales driven by the POLARx launch and international growth fueled by improved FARAPULSE console supply. The company has now treated over 40,000 patients globally with the FARAPULSE technology and has received FDA approval, allowing them to enter the US market immediately. They are also investing in clinical trials to study new indications for their technology.

In the fourth quarter of 2023, the FARAPULSE platform was presented as a first-line treatment for Persistent AF and real-world data from the MANIFEST-17K registry showed a strong safety profile. The company expects FARAPULSE to be approved in Japan and China in the second half of the year. The company's global team achieved 12% organic sales growth and 20% adjusted EPS growth in 2023. The company remains focused on driving differentiated performance and achieving their long-range plan goals, including an average sales growth of 8-10% over the next three years. In the fourth quarter, the company saw a 14.9% reported revenue growth, with 14.5% operational growth and 13.6% organic growth, exceeding their guidance range of 8-10%.

In the fourth quarter of 2023, the company's adjusted earnings per share grew by 24%, exceeding their guidance range. Full year consolidated revenue also saw strong growth, with a 12.3% increase, despite an 80 basis point headwind from foreign exchange. The company's adjusted gross margin for the year was 70.7%, in line with expectations, and their adjusted operating margin improved by 70 basis points. In 2024, the company expects a mixed benefit from new launches, with some headwinds from foreign exchange and investments in manufacturing capacity. However, they anticipate expanding their adjusted operating margin by another 30-50 basis points. On a GAAP basis, the company's operating margin for the fourth quarter was 15.7%, resulting in a full year reported operating margin of 16.5%.

In the fourth quarter, adjusted interest and other expenses were $79 million, resulting in a full year total of $331 million. The tax rate for the quarter was 10%, and 11.2% for the full year, with an operational tax rate of 14.6% for the quarter and 13.9% for the full year. Fully diluted weighted average shares outstanding ended at 1,477 million shares in Q4 and 1,464 million shares for the full year. Free cash flow for the quarter was $718 million, and for the full year was $1.8 billion. For 2024, the company expects free cash flow to be over $2 billion. The company plans to fund the Axonics acquisition with a mix of cash and new debt. The top capital allocation priority is strategic M&A, followed by share repurchases. The legal reserve was $377 million as of December 31st. The company expects reported revenue growth for 2024 to be in the range of 8.5% to 9.5%.

The company expects operational revenue growth of 9-10% for full year 2024, with 8-9% organic revenue growth. First quarter 2024 reported revenue growth is expected to be 7.5-9.5%, with operational growth of 8.5-10.5% and organic growth of 7-9%. Adjusted below the line expenses for 2024 are forecasted to be $330 million, with an operational tax rate of 14% and adjusted tax rate of 13%. If current tax legislation is passed, there may be a tailwind of 100 basis points to the operational tax rate. Adjusted earnings per share for 2024 are expected to be $2.23-$2.27, with a $0.04 headwind from foreign exchange. First quarter adjusted earnings per share are expected to be $0.50-$0.52. More details can be found on the investor relations website.

The speaker is proud of the company's performance in 2023 and looks forward to executing on their 2024 guidance. They mention a key part of their talent strategy and announce a personnel change. The Q&A session is then opened up for questions from the audience. The first question is about the company's two biggest product drivers, WATCHMAN and FARAPULSE, and how they factor into the guidance for this year and their expected phasing throughout the year.

In response to a question about the timing of hospitals and formulary approvals for their products, Michael Mahoney, CEO of Boston Scientific, highlighted the strong performance of their WATCHMAN platform and its potential for continued growth in 2024. He also expressed excitement about the recent approval of their FARAPULSE platform and expects it to have a significant impact on their business in the coming year. Mahoney mentioned their experience in successfully rolling out products in Europe and their team's readiness to do the same with FARAPULSE.

The speaker discusses the company's plans to disrupt the EP market with their new PFA platform, FARAPULSE. They are investing in their installation team and aiming for approvals in China and Japan in the second half of 2024. They also mention other high-profile cardiology companies, such as POLARx and AGENT.

The speaker discusses the global impact of AFib and the strength of clinical trial data for FARAPULSE, leading to quick FDA approval. They anticipate approvals in Japan and China in the second half of 2025. The speaker also mentions the underserved patient population in these markets. A question is asked about manufacturing capacity for FARAPULSE and expectations for the EP business this year. The speaker clarifies that there may have been an issue with the larger size of ACURATE Neo2, but it does not affect the other sizes in Europe and the US.

Dan is proud of FARAPULSE's global supply chain team and their work over the past 18 months to prepare for the US launch and expansion into Europe and Asia. Supply is not expected to be an issue due to the team's capabilities and investments. ACURATE Neo2 is performing well in Europe and the Prime trial is on track for 2025. However, the full readout of the ACURATE IDE study will determine the path forward, and approval for ACURATE Neo2 will likely not be received until the end of 2024. A question was asked about the 8-9% guidance, which may have been impacted by the launch of FARAPULSE in the second half of the year.

Danielle Antalffy asks a follow-up question about ACURATE Neo2 and its impact on the company's guidance for 2024. Michael Mahoney responds that they are sticking to their long-term sales growth guidance regardless of what happens with ACURATE Neo2's timing.

The speaker discusses the long-term growth potential of the company and addresses the departure of a colleague. They reaffirm their commitment to their financial goals and provide an update on the approval of a product in Europe. They also welcome a new member to the team. A question is asked about the interim data for the TAVR product.

The speaker asks about the international cardiac ablation market, noting that Boston had a strong fourth quarter with 40% growth. They ask if this is due to the promise of PFA or pricing dynamics, and if it could translate to PFA launches in the US. They also mention the potential for PFA to drive market expansion in the US, as discussed in their Investor Day.

The speakers discuss the factors contributing to the growth of atrial fibrillation ablation, including the widespread prevalence of the condition and the increasing recognition of the effectiveness and safety of ablation technologies. They also mention the potential impact of FARAPULSE, a newer and more efficient ablation technology. The following question shifts the focus to TAVR and its strong performance.

The speaker clarifies that their company has never set a specific market share goal for TAVR in the US, but they have always been confident in their ability to disrupt the market based on their success in Europe. However, they are disappointed that their product will not be launched in 2024 as planned and will have to wait for full-year data before submitting to the FDA. The trial is still ongoing.

The company does not expect recent news to affect their organic growth targets of 8-10% over the next three years. They have been growing faster than their peers and are committed to their financial targets. They hope that a new product will drive growth, but it depends on data in the fourth quarter of 2024. The company remains focused on tuck-in M&A and plans to continue being active in this area in 2024 and beyond.

The speaker congratulates Michael Mahoney on an outstanding fourth quarter. They then discuss the acquisition of Axonics and how the company has a strong distribution network and a history of gaining market share. They also mention the potential for faster growth in the OAB market and the team's success in expanding the market through direct-to-patient marketing. The speaker sees this acquisition as a significant opportunity for the company.

The speaker discusses the company's plans to potentially expand into international markets and the positive fit of their product in the Urology industry. They also mention their confidence in the team's ability to take the company to the next level. In response to a question about gross margin, the speaker assures that they have accounted for potential cost increases from current events in their guidance and that the impact on gross margin is minimal.

The company expects to face challenges in contributing to margin expansion goals in 2024, but has a strong track record of managing P&L lines to drive margin growth. Inflation and favorable product mix are expected to be tailwinds, while foreign exchange and investments in manufacturing capacity will be headwinds. The company remains committed to achieving 150 basis points of gross margin growth over three years, with a focus on reaching 72% by 2026.

The speaker discusses the long-term goal of achieving 30% growth by 2026. They thank the audience for their interest in Boston Scientific and invite them to reach out with any further questions. The operator provides details for accessing the recording of the conference.

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