Ladies and gentlemen, thank you for standing by, and welcome to the Boston Scientific Q1 2019 earnings call. At this time, all participants are on a listen-only mode. Later, we will conduct a question and answer session. Instructions will be given at that time. If you should require offline assistance, you may depress star then zero. As a reminder, today's call is being recorded. I will now turn the call over to your host, Susan Lisa. Please go ahead.
Thank you, Kevin. Good morning, everyone. Thanks for joining us. With me on today's call are Mike Mahoney, Chairman and Chief Executive Officer. Dan Brennan, Executive Vice President and Chief Financial Officer. We issued a press release earlier this morning announcing our Q1 2019 results, which included reconciliations of the non-GAAP measures used in the release. We've posted a copy of that release, as well as reconciliations of the non-GAAP measures used in today's call to the investor relations section of our website under the heading Financials and Filings. The duration of this morning's call will be approximately an hour. Mike will provide strategic and revenue highlights of Q1 '19. Dan will review the financials for the quarter. Then provide Q2 '19 and full year 2019 guidance. Then we'll take your questions.
During today's Q&A session, Mike and Dan will be joined by our Chief Medical Officers, Dr. Ian Meredith and Dr. Ken Stein. Before we begin, I'd like to remind everyone that on the call, operational revenue excludes the impact of foreign currency fluctuation. Organic revenue further excludes the impact of certain acquisitions, including NxThera, Claret, and Augmenix in the relevant periods for which there are no prior period related net sales. Note, this call contains forward-looking statements within the meaning of federal securities laws, which may be identified by words like anticipate, expect, believe, estimate, and other similar words.
They include, among other things, statements about our growth and market share, new product approvals and launches, clinical trials, cost savings and growth opportunities, our cash flow and expected use, our financial performance, including sales, margins, earnings, and other Q2 and full year 2019 guidance, as well as our tax rates, R&D spend, and other expenses. Actual results may differ materially from those discussed in the forward-looking statements. Factors that may cause such differences include those described in the Risk Factors section of our most recent 10-K and subsequent 10-Qs filed with the SEC. These statements speak only as of today's date. We disclaim any intention or obligation to update them. At this point, I'll turn it over to Mike for his comments.
Thank you, Susie. Good morning, everyone. Boston Scientific continues to grow above market, improve our profitability, invest for the long term to address unmet patient needs, and deliver differentiated financial performance. In the first quarter, our team delivered 7.8% operational revenue growth and 6.3% organic growth with another quarter of balance across our businesses and geographic regions. In addition, we leveraged our first quarter revenue growth to deliver 7% adjusted EPS growth to $0.35 within our guidance range, despite a $0.01 charge related to the mesh market withdrawal while generating $437 million in adjusted free cash flow. We have high visibility to high single-digit organic growth for 2019, even with recent unforeseen regulatory headwinds this year related to paclitaxel, transvaginal mesh, and sterilization in Men's Health.
While we work diligently to offset these issues, the cumulative effect makes delivering on the high end or beating our original full-year 2019 revenue guidance of 7%-8.5% organic growth a lower probability. As a result, we're lowering the top end of our growth guidance range by 50 basis points, and our full-year 2019 operational revenue growth guidance is now 8%-9%, and organic revenue growth guidance is now 7%-8%. We're pulling up the bottom of our full-year adjusted EPS guidance from a range of $1.53-$1.58 to a range of $1.54-$1.58, which represents a 10%-13% year-over-year growth, excluding the benefit of the 2018 IRS settlement.
With this 2019 growth outlook, we're excited for the rest of the year and our plans to build upon our global strengths and drive sustainable long-term revenue gains, double-digit EPS growth, and to continue our momentum in 2020 and beyond. Although we're proud of our results this quarter, we're disappointed that our first quarter operational growth of 7.8% and organic of 6.3% were 70 basis points below our guidance range, or approximately $15 million shortfall, with $5 million of that related to the mesh. I'll briefly address where we had some revenue softness in the quarter versus our plans as well as our plans to accelerate growth from here. First, although our PI business had strong growth this quarter at 11% organic, we did feel the impact of the paclitaxel concerns, particularly in the second half of the first quarter after the release of the FDA's advisory letter.
While the ELUVIA launch in Japan remains on track, we do expect slower adoption of ELUVIA to persist in the U.S. and Europe in second quarter and potentially throughout the second half. The June FDA advisory committee panel meeting will be a key next data point, and we'll continue our dialogue with FDA on ELUVIA's unique design characteristics, which include controlled local release of low-dose paclitaxel from a safe and proven polymer, as well as clinical superiority data. However, we are assuming ongoing headwinds and cutting half our ELUVIA revenue expectations for 2019 to reflect the current landscape. In UroPH, we plan to overcome some of the recent headwinds. We delivered a decent quarter for our urology pelvic health business at 14% operational and 5% organic growth, despite two unanticipated events.
In the first quarter, we're impacted by an unexpected Illinois state-mandated shutdown of a third-party sterilizer used for our Men's Health product lines. Fortunately, the U.S. situation has been resolved, and we did receive FDA approval in late March to conduct sterilization of these products at our own in-house facilities. We do expect softness in global supply during the second quarter, and we will return to full supply by the end of the second quarter. Regarding transvaginal mesh for organ prolapse, last week's news will result in a full-year 2019 negative impact of $30 million to global revenue and a $0.02 charge to adjusted EPS. A portion of this was booked in first quarter, including the $5 million sales reserve and related inventory write-offs for nearly a $0.01 impact to adjusted EPS.
The mesh market withdrawal represents a 30 basis point drag to both first quarter and full year 2019 organic growth. Lastly, we did see some softness in our U.S. SCS business versus our internal plans. Global Neuromod delivered a strong quarter with 12% organic growth, and we believe SCS remains a very strong and under-penetrated market. In the second half of this year, we're excited to release new clinical data on WaveWriter and launch additional enhancements to both SCS and DBS platforms. I'll now provide some additional highlights from the quarter and our full 2019 outlook. Recently, we delivered strong and balanced operational growth with Asia Pac up 10%, Europe up 8%, and the U.S. up 7%. Emerging markets revenue grew 22% operationally, led once again by strong China growth.
We also delivered balanced organic growth across all our businesses, 7% in both Med-Surg and cardiovascular, 6% in rhythm and neuro. Turning to some of the businesses, we delivered 8% organic growth in endoscopy, which is broad-based and fueled by infection prevention performance, as well as excellent results in our biliary portfolio, driven by the AXIOS stent and the recent launch of SpyGlass DS II. In addition, the quarter reflects strong early launch results from Orise Gel, a key component of our endoluminal surgery portfolio, and our new Jagwire Revolution guidewire. For the balance of the year, we expect continued strength in endoscopy sales due to the ongoing ramp of these new product launches, as well as the OrcaPod single-use valve. Importantly, we remain on track for a year-end 2019 launch of our EXALT Model D single-use duodenoscope, which is used in ERCP procedures.
We believe that EXALT Model D can help meet a significant unmet need for hospitals and patients. Two weeks ago, the U.S. FDA issued a safety communication regarding scope reprocessing. Preliminary results of the FDA report indicated higher than expected levels of contamination, up to 5.4% of samples tested positive for organisms of high concern, such as E. coli and multi-drug resistant pathogens. The FDA also stated that there continues to be a need for improvement of the safety of reprocessed duodenoscopes, and noted that in addition to its March 2018 warning letters to reusable scope manufacturers, the agency continues to encourage the development of new technology and design features. The EXALT Model D single-use scope has been designed to address this exact issue by eliminating scope disinfection challenges completely. This platform represents a significant opportunity in 2020 and beyond.
As mentioned, Urology and Pelvic Health grew 14% operationally and 5% organically in the first quarter and reflects an approximate 200 basis point negative impact from mesh sales reserves recorded in the first quarter. LithoVue led sales in our core stone portfolio, and importantly, the urology acquisitions of Augmenix and NxThera are both executing to plan. Rezūm results were reinforced by publication of four-year trial data with a low of 4.4% surgical retreatment rate and no new adverse events noted between years three and four, as well as initiation of a Rezūm specific CPT code for physician reimbursement on January 1st. As mentioned, we expect softer UroPH revenue in the second quarter given the Sterigenics sterilization impact and the remaining $25 million expected negative revenue impact in Q2 through Q4 due to the global removal of mesh products for pelvic organ prolapse.
We do expect UroPH revenue growth to be accretive to the company average in the second half and full year 2019 as core growth remains robust, the Sterigenics sterilization matter is resolved, and recent acquisitions of NxThera and Augmenix anniversary and become organic as of May and October respectively. Rhythm and Neuro grew 6% in the quarter, led by 12% growth in Neuromod, 10% in EP, and 3% in cardiac rhythm management, which are all organic. The 12% Neuromodulation revenue growth was driven by continued gains in the U.S. by our WaveWriter spinal cord stimulation and Vercise deep brain stimulation platforms. Global SCS sales were up 7% as WaveWriter's unique ability to offer combination waveform therapies, both with paresthesia and sub-perception, continues to resonate with physicians and patients.
We look forward to improved growth with upcoming new product enhancements and the presentation of updated one-year real-world data on WaveWriter at INS later this quarter. In DBS, we anticipate continued Vercise momentum as we roll out the Cartesia directional lead in the U.S. and expect MRI labeling in the second half. Global cardiac rhythm management sales grew above market at 3% organic, led by mid-single-digit growth in Defib sales against a double-digit comparison, reflecting ongoing uptake of our Resonate platform and its HeartLogic heart failure alert, as well as strong growth of EMBLEM S-ICD. Our device replacement cycle is also tracking to expectations, and we're now the number two global share player in the high voltage market. Pacer sales did decline mid-single digits, which is a significant improvement compared to 2018 trends, which were low double-digit declines.
We anticipate a modest pacer headwind for full year 2019, and importantly, we aim to more than offset this with continued global penetration of our Defib portfolio in both CRT-D and ICD, resulting in another year of above-market worldwide CRM growth. EP sales grew 10% organic in the quarter, led by the RHYTHMIA HDx mapping and navigation platform, as well as uptake of our DirectSense catheter in Europe and enthusiasm for RHYTHMIA's LUMIPOINT software. In the AFib single shot market, we are excited about the progress made by both our Cryo and our balloon programs. We're working to secure CE mark approval for these technologies and begin U.S. IDE enrollments by year-end 2019, pending completion of program deliverables and discussions with FDA. Last month, we presented a compelling Apama data set, AF-FICIENT 1, demonstrating excellent balloon performance, no adverse events, and attractive procedure times.
Turning to the cardiovascular group, they grew 7% organic in the first quarter 2019. Peripheral interventions grew 11% organic in the quarter, led by the ELUVIA DES launch in the U.S. and double-digit growth in interventional oncology and arterial. We're also excited about the anticipated upcoming FDA approval and launch of the VICI Venous Stent, which comes from the Veniti acquisition of last August. Despite the paclitaxel headwind, we also expect our PI business will deliver full-year 2019 organic growth that's well accretive to the company's overall growth rate. To update you on the BTG acquisition, we remain on track for mid-year closing, having received shareholder approval in February, and we're excited for the opportunity to expand our PI and interventional oncology portfolio. Last week, BTG reported results for the first 12 months ended March 31st.
Oncology and vascular sales grew 15%-17%, in line with BTG's guidance. Specialty Pharma sales grew double digits ahead of guidance, and royalty revenue is broadly flat versus the prior year period, reflecting the launch of U.S. generic competition for Zytiga. Our interventional cardiology business grew 6% operationally and 5% organically in the quarter. Growth in Q1 was led by strong structural heart results and mid-teens growth in complex PCI products, offset by softness in drug-eluting stents. We expect overall interventional cardiology growth to accelerate from first quarter on due to strong growth in complex coronary products, easing DES comps, the launch of Promus ELITE and U.S. approval of LOTUS Edge, and the continued momentum in structural heart with our broader portfolio capabilities and scale. WATCHMAN had another excellent quarter as we continue to increase utilization and to expand WATCHMAN's international footprint.
We're pleased with the March European launch of next-gen WATCHMAN FLX. We also received Japan approval of WATCHMAN during the quarter. We remain on track for reimbursement approval and commercial launch in Japan during the third quarter for WATCHMAN. Our ACURATE TAVR valve platform is the fastest-growing valve in Europe and delivered nearly 30% growth in the quarter. We plan to begin enrollment in our U.S. IDE for ACURATE neo2 around mid-year, with similar European launch timing. We also began a controlled commercial launch of LOTUS Edge in Europe late in the first quarter and also enrolling patients in the REPRISE IV intermediate-risk study and also received FDA approval last night for LOTUS.
We will begin a controlled U.S. launch immediately, and we believe LOTUS Edge is a differentiated valve that will be sought after by physicians and operators, both as a workhorse valve as well as a valve that can be counted on to provide superior outcomes in complex cases such as heavily calcified native valves and bicuspid valves. Finally, the SENTINEL cerebral embolic protection device continues to build excellent momentum. We're now in more than 200 accounts with SENTINEL, where usage rates exceed 60%, and we believe that protected TAVR is an emerging standard of care. The combined strength of WATCHMAN, ACURATE, LOTUS Edge, and SENTINEL position us well to deliver on our guidance for $700 million-$725 million in structural heart revenue in 2019. To close, I'd like to share again my enthusiasm for our outlook in 2019 and beyond.
We believe that Boston Scientific continues to be uniquely positioned to drive shareholder value due to our long-term growth profile, meaningful opportunity to improve margins, track record of recording double-digit adjusted EPS growth, and our improving ability to deploy capital. We're looking forward to discussing this outlook and our exciting technology pipeline at our Investor Day, which will be June 26th in New York. I really want to thank again our employees once again for their winning spirit and their ongoing commitment to advancing science for life. Dan will now provide a detailed review of our financials.
Thanks, Mike. First quarter consolidated revenue of $2.493 billion represents 4.8% reported revenue growth and 7.8% growth on an operational basis, which excludes the impact of foreign currency fluctuations. Our reported revenue reflects a $73 million headwind from foreign exchange, slightly unfavorable to the $60 million-$65 million headwind expected at the time of guidance. Sales from the NxThera, Claret, and Augmenix acquisitions contributed 150 basis points, roughly in line with our expectations at the time of guidance, resulting in 6.3% organic revenue growth for the quarter. This 6.3% includes a negative 30 basis point impact from the mesh market withdrawal. Q1 adjusted EPS of $0.35 grew 7% over the prior year and was within our guidance range. While there were several puts and takes to the P&L in the quarter, on balance they net to zero, resulting in that $0.35 EPS number.
To summarize quickly, we had $0.02 in charges related to the mesh withdrawal and an investment impairment. They were basically offset by the $0.02 net litigation benefit. While the costs of the make-whole call related to the February bond offering were offset by a lower tax rate. None of these items was included in the Q1 2019 guidance. The FX impact on adjusted earnings per share was immaterial as expected at the time of guidance. Adjusted gross margin for the quarter was 71.4%, below our guidance range of 72%-73%. This represents a 90-basis-point decline over the prior year, driven by product mix, particularly lighter sales in Men's Health, neuromodulation, and coronary drug-eluting stents, as well as mesh-related inventory reserves and unfavorable manufacturing variances.
Adjusted SG&A expenses were $855 million, or 34.3% of sales in the quarter, down 120 basis points year-over-year, outperforming our guidance range of 35%-36%. The favorable result in SG&A was due to a combination of the operating expense reductions from ongoing optimization initiatives, as well as an approximate net $25 million non-recurring litigation-related benefit in the quarter, including a portion of the Edwards litigation settlement. Adjusted research and development expenses were $271 million in the first quarter, or 10.9% of sales, at the high end of our range and up slightly year-over-year due to additional mesh accruals related to the mesh withdrawal. Royalty expense was 0.6% of sales, roughly flat versus the prior year. As a result, Q1 2019 adjusted operating margin of 25.6% increased 30 basis points year-over-year, near the midpoint of our guidance range of 25%-26%.
If you normalize for the SG&A benefit from litigation, adjusted operating margin would've been approximately 24.6%, then normalizing for the 40-basis-point negative impact from the mesh withdrawal places us back at the low end of our range. We are reiterating our full-year adjusted operating margin guidance of 26%-26.5%, which represents a 50-100 basis point improvement over the 2018 rate of 25.5%. I'll move below the line to interest and other expense. Adjusted interest expense for the quarter was $83 million. This is a $22 million increase from Q1 2018, largely due to exercising the make-whole call to retire early our 2020 notes, given the favorable market conditions for our February public bond offering.
Our average interest expense rate was 4.7% in Q1 2019, compared to 4.1% in Q1 2018, reflects the offering, which totaled $4.3 billion aggregate principal amount of senior notes, the proceeds from which will, in part, be used to finance a portion of the proposed BTG acquisition. We remain committed to our BTG de-levering goals, targeting $1 billion in debt repayment within 18 months post-deal closing and a leverage ratio of two and a half times debt to EBITDA within two years. Adjusted other expense was $28 million in the quarter includes a minor investment impairment related to one of our venture holdings. The remainder of adjusted other consists of dilution from our equity method investments and exchange losses related to our hedging program.
Our tax rate for the first quarter was 7.1% on a GAAP basis and 6.9% on an adjusted basis, below our guidance range of approximately 11% for the quarter, due to a higher than expected benefit from stock compensation accounting in the quarter, as well as a reduction in our estimated annual effective tax rate, which I will discuss as part of full-year guidance. Adjusted free cash flow for the quarter was $437 million, compared to $283 million in Q1 of last year. In the quarter, we used cash primarily to fund the closing of the Millipede acquisition. We continue to expect full-year adjusted free cash flow to be $2.2 billion. We believe we're approaching the resolution of mesh litigation, with over 95% of all known claims now settled or in the final stages of settlement.
Our total legal reserve, of which mesh is included, was $699 million as of March 31st, 2019. In the quarter, the known claim count was essentially flat at 53,000, we made cash payments of $2 million into the qualified settlement fund still anticipate full-year payments into the fund to total $250 million, which would resolve all significant existing contingencies. As a reminder, this liability is released from our balance sheet as payments are made out of the qualified settlement fund to plaintiffs. Capital expenditures for the first quarter 2019 were $63 million, we continue to expect capital expenditures to be in the range of $375 million-$400 million for the year as we build capacity, integrate acquisitions, and position the company for continued growth. We ended Q1 with 1,408,000,000 fully diluted weighted average shares outstanding.
I'll now walk through guidance for Q2 and full year 2019. As a reminder, the guidance I'm providing does not include the proposed BTG acquisition, which has not yet closed. For the full year, we expect 2019 reported revenue to be in the range of approximately 7%-8%, with year-over-year growth of 7%-8% on an organic basis and an additional 110 basis points contribution from the NxThera, Claret, and Augmenix acquisitions. Given our Q1 result and Q2 guidance, which I will discuss shortly, we fully recognize the implied acceleration in second-half organic revenue growth to deliver on our full-year guidance. There are several significant drivers of this acceleration, including multiple anticipated key product launches, such as LOTUS Edge, which we received approval for last night, and VICI in the U.S., ELUVIA and WATCHMAN in Japan, and EXALT Model D globally. We have continued momentum in our core.
We'll have enhanced supply in the Men's Health and our SENTINEL products. We anniversary some of our 2018 acquisitions, which thus turn organic in 2019. We have the April anniversary of the 2018 price cuts in Japan, and also the normalization of selling days in the first half versus the second half of the year also has a meaningful impact. While we expect FX to be a $110 million-$120 million headwind to revenue for the full year 2019, we continue to expect FX to be neutral to EPS for the year due to our hedging program. There's no change to our expectations for adjusted gross margin as a percentage of sales to be in the range of 72%-73% for the full year.
We expect a positive mix shift as Men's Health supply stabilizes, SCS and DBS trends improve with new data and products, and coronary DES faces easier comps. In addition, we'll continue to execute on our ongoing standard cost reductions and also expect a positive full-year FX impact to adjusted gross margin of 50 basis points. We continue to expect full-year adjusted SG&A to be in the range of 34.5%-35% of sales, a 40-90 basis point improvement versus full-year 2018, but increasing slightly from Q1 due to the non-recurring litigation benefit in Q1. There's also no change to expectations for full-year adjusted R&D spend to be in a range of 10.5%-11%, and the full-year royalty rate to remain at less than 1% of sales for 2019.
These target metrics imply a full-year 2019 adjusted operating margin in a range of 26%-26.5%, unchanged from prior guidance, up 50-100 basis points versus 2018, consistent with the improvement goals we outlined last September, and positioning us well to deliver on our long-term goal of 30%+ adjusted operating margin. We now expect our full-year 2019 adjusted tax rate to be approximately 10%. This assumes an operational tax rate of approximately 11% before an approximate 100 basis points of benefit from the accounting standard for stock compensation, of which a significant portion was already recognized in Q1. This compares to our original full-year 2019 tax rate guidance of 12% after stock comp.
The 200 basis point improvement in our full-year adjusted tax rate reflects roughly 100 basis points of benefit from our current year geographic mix of profits and another 100 basis points of benefit resulting from refined estimates following recently released proposed U.S. Treasury regulations implementing tax reform. We now expect below-the-line expenses, which include interest payments, dilution from our venture capital portfolio, and costs associated with our hedging program, to be approximately $325 million to $350 million for the year, a slight increase from prior guidance, primarily due to the earlier-than-expected refinancing of the 2020 bonds in February to take advantage of favorable market conditions and a minor investment impairment, both recorded in Q1. Note that along with other relevant aspects of the P&L, we will update our below-the-line expense guidance after we close the BTG acquisition, as interest expense related to the acquisition is currently excluded from adjusted results.
We also expect a fully diluted weighted average share count of approximately 1,409,000,000 shares for Q2 2019, and 1,410,000,000 shares for the full year 2019. As Mike discussed, we are raising the low end of our full-year 2019 adjusted earnings per share guidance to $1.54 and maintaining the high end of $1.58. The go-forward impact of reducing our ELUVIA forecast by 50% basically offsets the Q2 to Q4 tax rate benefit, minus $0.02 for ELUVIA, plus $0.02 for tax. We have plans to offset the $0.01 resulting from the lost mesh revenue in Q2 to Q4. This $1.54 to $1.58 range represents 10% to 13% adjusted earnings growth, excluding the 2018 net tax benefit of $0.07 in the base. On a GAAP basis, we expect EPS to be in a range of $1.09 to $1.13.
While there are a lot of moving parts and some noise in the quarter, our trajectory and targets for 2019 remain strong. 7% to 8% organic revenue growth, 50 to 100 basis points of margin expansion, and double-digit adjusted earnings per share growth at all points in our guidance range. Turning to Q2 2019, we expect reported revenue growth to be in a range of approximately 5% to 7%. This represents year-over-year organic growth in a range of 6% to 7%, with an additional 140 basis point operational growth contribution from NxThera, Claret, and Augmenix. Note that the NxThera acquisition anniversary is in April, and therefore, revenue from May and June is included in organic guidance. We expect the foreign exchange head impact on Q2 revenue to be a $45 million to $50 million headwind.
For the second quarter, adjusted earnings per share is expected to be in a range of $0.37 to $0.39 per share, representing 6% to 12% growth, excluding the Q2 2018 net tax benefit of $0.06 in the base, and we do not expect any adjusted EPS impact from foreign exchange. GAAP EPS for the second quarter is expected to be in a range of $0.23 to $0.25 per share. Please check our investor relations website for Q1 2019 financial and operational highlights, which outlines Q1 results as well as Q2 and full-year 2019 guidance, including P&L line item guidance. With that, I'll turn it back over to Susie, who will moderate the Q&A.
Thanks, Dan. Kevin, let's open it up to questions for the next 30 minutes or so. Please limit yourself to one question and one related follow-up. Kevin, please go ahead.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star then one on your touchtone phone. You will hear a tone indicating that you are in queue. You may remove yourself from queue at any time by pressing the pound key. Once again, please press star then one. First questions from the line of Bob Hopkins, Bank of America. Please go ahead.
Well, thank you and good morning. Just one housekeeping item to start. Just to clarify, was there a selling day difference in Q1?
There was a slight selling day difference. We had it included in our forecast, but there was a slight selling day difference if you look at it. We did mention that as part of the acceleration into the second half, because there's a difference there where there's about a day fewer in the first half and a day more in the second half. It's a reason for the acceleration going first half to second half. There was one in Q1, but we didn't mention it.
Okay. Thank you for that. More importantly, just on the Q1 growth rate, it was a little lower than your guidance. I think you called out stents and Men's Health and Neuromod were the kind of the primary culprits, if you will. I'm just wondering if you could give a little more color on these issues and whether or not these issues impacting growth in Q1 are temporary or lasting. Just a little more color on those three, please.
Sure. Good morning, Bob.
Morning.
We obviously don't take this slight revenue miss in the first quarter lightly. I think it's the first time we've missed in close to a decade, we pride ourselves on delivering the commitments and very excited about the future. Specific to a couple of those comments, one, interventional cardiology, you're seeing that strong diversification with structural heart and complex coronary growing well, DES has been softer for us. We do anticipate some improvement in DES as you look at the second half of the year, in particular, based on improved comps for drug-eluting stents, as well as new product portfolio with a product called ELITE, as well as really just the ongoing diversification of high growth markets for that basket in cardiology overall. You obviously have the Lotus approval. The second one was paclitaxel.
We're seeing some usage in the U.S., some IDNs are not using it based on the upcoming panel. We saw some softness there. We took that revenue down for the full year as highlighted. To date, the Japan launch is right on track. You mentioned Men's Health. That issue has been resolved, that supply issue, we'll be back to full supply, call it in mid-June. That'll be strong for the second half of the year. The other one is spinal cord stim. We did grow nicely at 12% Neuromod. We do feel like the market was a bit lighter in first quarter than we anticipated, overall, we see that as a strong growth market going forward and we continue to take share. There were clearly some one-time events in the first quarter.
Dan mentioned the selling days impact as well. We have full confidence in the second quarter guidance and the 7%-8% organic for the full year, and we'll be a stronger company at the end of the year heading into 2020.
Thank you. Next question's from the line of David Lewis, Morgan Stanley. Please go ahead.
Good morning. Mike and Dan, I just want to start with the forward outlook here. I think 2019 guidance is pretty consistent with our view. It's the second quarter, a lot of conversation this morning on second half. Just if you think about the second quarter, how risk-adjusted is the second quarter and what factors sort of provide the confidence given ELUVIA and mesh get a little worse into the second quarter, pretty significant momentum step up just into 2Q. One, what is your confidence in the second quarter? What are factors that drive that? 2019 guidance, broadly, is the reflection of the reduction simply ELUVIA and mesh, or does it also reflect kind of a slower start to the year? I had a quick follow-up.
Just on the second one, in terms of the full year guidance, it's simply, I said in the words carefully. If you look at our history, we typically are in the higher end of the range, if not be on revenue. Of course, you guys track all that stuff. We essentially lowered it to 7%-8% because we didn't feel the high end of the guidance or beating the 8.5% was as feasible as it was 4 months ago. That's why we felt it was prudent to reduce the guidance at the top end from 7%-8%, so we can kind of carry on our tradition. The reasons for that were stated, and we're confident in that second half acceleration per Bob's earlier question. In terms of second quarter, we obviously have some visibility here.
It's near the end of April. We spent a lot of time on our second quarter guidance because we don't plan on making this a habit, and we plan on continuing a longer streak of hitting our guidance commitments. Specific to second quarter, we do have good momentum across the regions. Our emerging markets are very strong. Dan mentioned there is a little bit of selling day favorability in second quarter as well, but more importantly, the launches. We finally got FDA approval for Lotus, which we're excited about. ELUVIA is beginning to sell in Japan, FLX in Europe, this VICI stent we have for PI. We just have very good momentum with ACURATE and SENTINEL. As I mentioned, also the DES comps.
We spent a lot of time on second quarter, as you could imagine, and on the full year guidance even more than normal to ensure that we have the right confidence and conviction. At the end of the year, we still believe that 7% to 8% organic and 8% to 9% operational double-digit EPS is very good and sets us up for a bright future.
Thank you. Next question's from the line of Rick Wise, Stifel. Please go ahead.
Good morning. Hi, Mike. Turning to Lotus, talk to us a little bit about the Lotus launch from two angles. I think if I remember correctly, there were 60 original pivotal U.S. sites. Is that where you start? Is that what you're targeting? Talk a little bit about how you're going to address the U.S. market.
Ask a separate related question. When might we see some more data on LOTUS Edge that specifically addresses where the technology is now? Last, just on SENTINEL, you said you're in 200 accounts. Is this the place you start with LOTUS? Again, any color on the launch would be great. Thank you so much.
Sure. Thanks, Rick. I'll have Ian jump in on some of the data questions in a few minutes. We're really excited about getting LOTUS over the goal line here with the FDA and the LOTUS Edge. LOTUS Edge is a terrific platform. We have begun our launch in Europe, essentially we'll be primarily initially focused on many of the customers that have been involved in our clinical trials. They have more experience with LOTUS, and LOTUS Edge is a lower profile delivery system. Obviously we would spend quite a bit of time with those customers who have been part of the REPRISE studies and are part of the current intermediate-risk study. Those represent a significant slice of the TAVR market. That'll be our focus, and then we'll expand out from there. We want to obviously do this very well.
We think this is a unique product, we want to have great outcomes. We'll initiate there, and then we'll expand to the large centers beyond that. Our clinical team and sales force is obviously excited to bring this on. SENTINEL's doing very well. Quite frankly, our operations and manufacturing team have done a great job of increasing supply. We bought a smaller startup company, we are significantly increasing the supply capacity, which has really been the limiter so far because the demand of SENTINEL is quite high. We'll continue to grow SENTINEL, likely at a faster rate in the second half, given increased supply, and launch it a little bit more outside the U.S.
As we've talked about in the past, we have to win with the clinical benefits of our TAVR as a standalone platform with the safety and efficacy of it. We have all the other components surrounding LOTUS, which are compelling, like the Safari wire, like SENTINEL, and our other products that meet the needs for interventional cardiologists. Really excited about getting LOTUS approved. Ian, if you're on unmute, maybe you could provide some views on the upcoming data.
Thanks very much, Mike, and thanks, Rick, for the question. As you alluded to, we have the REPRISE IV study, which is the intermediate-risk study, 896 patients. That trial is now underway in the U.S., and that will provide very important data as to the safety and efficacy of the LOTUS Edge platform in intermediate-risk patients. That trial should recruit pretty quickly. It's a single arm study. There is a nested registry within that for 100 patients with bicuspid valve disease. We very much look forward to those results. That'll probably be mid-next year. As well as that, we have the RESPOND EDGE trial, which will be 200 patients in 16 sites in Europe. That trial's just getting underway. We have the REPRISE III nested registry, which was the U.S. initial experience with LOTUS Edge, which is underway and continues to recruit.
We should have, towards the end of the year and next year, significant body of data confirming the safety and efficacy that we've actually seen from the original LOTUS Edge 30-day data from the REPRISE EDGE and BIM C trials, of course, which showed, as you know, very good results on low pacemaker rates.
Next question's from the line of Bruce Nudell, SunTrust. Please go ahead.
Good morning. Thanks for taking the question. I guess for Mike and Ian, I attended the CRT panel meeting in, I think, February or January. The paclitaxel peripheral vascular arguments really didn't seem to have a coherent mechanism of action. I was just wondering what your thoughts about that might be. Secondly, is the product family forever tainted irrespective of the merits of the meta-analysis that really caused this whole thing? I have follow-up.
Mike, are you happy if I take that one?
Sure.
Yeah. Thanks, Bruce. I think it's an important question. It's disappointing to say the least. paclitaxel's had a pretty stellar 25-year history since its approval, and as you know from the TAXUS data, we have an extraordinary body of data there in the coronary circulation where there were more than 5,000 patients in randomized trials, 36,000 patients in registries. There was never an all-cause mortality signal at five, and even in the SIRTAX trial out to 10 years. There was from time to time a signal for cardiovascular mortality related to stent thrombosis, the overall mortality, and suggesting a non-cardiac cause just wasn't there, and there doesn't seem to be a plausible explanation. It is disappointing, but we will work very assiduously alongside the FDA and Viva and NAMSA to make sure that we thoroughly analyze this signal in the available trials.
We still have considerable confidence in paclitaxel as a anti-restenotic agent. I think we should point out that ELUVIA is, in a sense, a very differentiated product here. It's a controlled focal release at a dose 1/20th that has been used in other DCB products. We have faith in this, and we will work alongside the FDA, NAMSA, and Viva to elucidate this.
I guess my follow-up's on WATCHMAN. Clearly, the product has continued very strong momentum given the guidance. Could you just talk about the commercial factors, either reimbursement or marketing initiatives? Just kind of the state of play and what it will take to really unlock the potential of what I think is a huge product opportunity.
Sure. Yeah, just again, just to reinforce Ian's point, we think ELUVIA is a superior platform, and we think it's different than the class. We're making the case on that. Obviously we're supporting the industry in the whole paclitaxel theme with the upcoming panel. We spent a lot on this platform. We feel like it's a unique device for all the characteristics that Ian says. We'll be pushing our point in that regard. On WATCHMAN, it continues to do extremely well. In the U.S., we're increasing utilization rates. It's less about opening up new centers now in the U.S. because so many have been opened up. It's more about increasing utilization. It's driving great outcomes. It's increasing physician awareness through our digital efforts, and through working with the WATCHMAN coordinators at the hospitals.
We're continuing to see WATCHMAN utilization expand with our commercial organization, our clinical organization. Then in Europe, you're seeing WATCHMAN FLX be launched, which we're really excited about to gain share. Not as big a market in Europe. Also a lot of progress in China. We're really excited about the launch, which will impact the second half in Japan. Ken, do you want to maybe speak to some of the clinical efforts with WATCHMAN to expand the market, the OPTION trial?
Thanks, Mike. I think that's important to mention, Bruce. If you talk about what unlocks it, I think the next step that unlocks it is indication expansion. We are launching a trial called OPTION. It is a 1,600 patient randomized trial at roughly 100 centers globally. The trial is in patients following atrial fibrillation ablation who have indications for stroke prevention and will be randomized to WATCHMAN or NOAC. This would change the indication in that this would be the first trial where WATCHMAN would be used in patients who are explicitly candidates for either an oral anticoagulant or the WATCHMAN device.
Thanks, Bruce.
Next question's from the line of Jason Mills, Canaccord Genuity. Please go ahead.
Hi, Mike, thanks for taking the question. With respect to the organic growth profile you laid out and the acceleration that you're anticipating through the end of the year, the tenets of that premise seem like they would continue into the first half of next year. I can appreciate that you're not ready to give guidance for next year yet. As we digest that, coupled with the metrics you laid out with respect to BTG, I assume your expectations for the organic growth that BTG will generate haven't changed given their strong results recently. It seems like it's setting up that this could accelerate further in the first half of next year. What I'm getting at is as we look at a forward 15 to 18 months, can you give us any color?
Were you willing to give us any color as it relates to just beyond that end of this year? It seems like it could accelerate further.
I want to give first quarter of 2020 and second quarter of 2020 guidance, but Dan he will not let me at this point, especially after our little miss here on sales in the first quarter. Dan laid out in his script clearly why we are confident in the second half momentum through the product launches that he rattled off, the anniversary of the M&A activities. Another significant opportunity for us in the second half is Japan will return to strong growth in the second half because of new product launches and less pricing cuts than we've experienced in the past. The supply challenges are significantly better for some of those key products. Dan also mentioned the selling days. That's the second half acceleration. I'm not going to comment really much beyond that in 2020.
What you will see is a full year benefit in 2020 of many of these different product launches that are happening kind of in different quarters throughout the year in 2019. Our goal will be continuing to be a top-tier revenue grower in the future to deliver double-digit EPS growth. We are excited about BTG. They put up really nice results, very consistent with our thesis when we acquired the company. We look forward to closing that likely in the late June, July timeframe.
Next question's from the line of Larry Biegelsen, Wells Fargo. Please go ahead.
Hey, guys. Thanks for taking the question. I'll ask both of mine up front. On ELUVIA, I can understand the 50% cut implied in the guidance. Look, and hopefully the panel will go well. The question I have, I guess, is if things don't go as well as expected, what's your ability to offset a further reduction in ELUVIA if things don't go well. Just secondly, I heard your comment on SCS and your business in the market, you are the second company to report a meaningful deceleration in SCS growth. Could you just put a little bit more meat on the bone kind of around what's going on in the market and why you're confident that we won't see a further deceleration in SCS, which you kindly gave in the slides today, grew about 7% year-over-year in Q1.
Thanks for taking the questions, guys.
Yeah. ELUVIA is an important growth driver for PI. We clearly aren't giving up on it because we think it's a uniquely good product that helps patients. We're seeing many customers in the U.S. continue to use it. Some have not, but many are. In Japan, we're launching essentially right now. We remain optimistic but also smart. That's why you saw us take down the guidance for ELUVIA in terms of that impact. There's also many growth drivers within PI business on its own. For example, this new VICI stent will be launching likely in the second quarter once it is FDA approved, and the full impact of BTG and all the synergies that come with that, both revenue and cost.
We clearly want ELUVIA to do very well, but there's many growth drivers within PI and across the company that give us confidence for the second half full year guidance that we gave as well as the outlook for 2020. The second question is on SCS. It was a bit softer than we anticipated in the first quarter. This has traditionally been a strong double-digit growth market, and we believe that will be the case, although first quarter was a bit softer. We haven't seen any thematic reasons why SCS should be a bit softer this quarter given the unmet patient demand that we see out there. One potential possibility where there's kind of fewer large product launches from BSC and our competitors over the past six months.
I think you're going to see a ramping up of that clearly from us in the second half of this year with new enhancements to WaveWriter and some more clinical data. We don't really have a great response other than we feel like it's a long term, at minimum high single-digit growth, but more likely double-digit growth market given the unmet patient need. Importantly, there's just a lot of innovation in this space, which I think will continue to excite patients to want to act.
Thank you. Next question is from the line of Vijay Kumar, Evercore, please go ahead.
Hey, guys. Thanks for taking my question. Mike, maybe just on Larry's question, if I think about the first half versus second half, right? I guess, Sterigenics improves the sterilization plant closure. Do we know what the impact of that in Q1 was? I guess specifically, if the AdCom goes bad, is there a chance that maybe ELUVIA needs to be cut again for the back half?
Well, we gave guidance assuming bad things. We gave what we felt very conservative. We built in our model very conservative growth for ELUVIA based on the paclitaxel panel. It wouldn't be responsible for us to do otherwise. As I mentioned, we are seeing the launch in Japan. We're seeing customers use it today, but we've assumed far less than planned ELUVIA sales in our second quarter and full year guidance.
Thank you.
Yeah, we're not going to quantify the specifics of the sterilization issue in Men's Health from the quarter.
Thank you. Next question is from Matt Taylor, UBS. Please go ahead.
Hi, thanks for taking the question. I just wanted to follow up on the earlier question on the LOTUS launch, it's sort of a two-part thing, but wanted to understand how we should think about the pace of launch in Europe and the U.S. You did hit the timelines for the timing of launch in each region. I just wanted to make sure that you were still sort of on track with where you thought you'd be in the beginning of the year. Can you characterize how the SENTINEL supply could improve through the year? It sounds like where you can sell it, you're seeing good uptake.
Yeah. Consistent with previous comments on Lotus, we're selling our ACURATE valve extremely well in Europe, we're also selling Lotus. You're going to see the mix likely be higher with the ACURATE valve versus Lotus in Europe given the momentum that we have there. There are many customers who want Lotus in Europe. We'll be able to sell it in both places. In terms of a mix, which we likely won't break out, it will be quite a bit higher in the U.S. versus Europe. That's why this FDA's approval is important for us. It's kind of on schedule per our commitment, but you'll see greater weighting in the U.S. SENTINEL is simply just that ops team has done a great job of enhancing supply because we've been more limited in our ability to open up new centers.
As this quarter goes on and second half, we'll open up new centers and supply them with it. We'll be able to expand it more in Europe and other countries which quite frankly haven't had the benefit of using it given some supply capacity. Our ops team did nothing wrong. It's simply we bought a small company and now they're significantly increasing the capacity for it.
Thank you. Next question is from the line of Chris Pasquale, Guggenheim. Please go ahead. Okay, that question dropped. Next question from the line of Danielle Antalffy. One moment please. Danielle Antalffy, SVB Leerink, please go ahead.
Hey, guys. Good morning. Thanks so much for taking the question.
Sure.
Just a quick question, a follow-up on some of the TAVR conversation we've been having. Can you talk about what you're seeing now that you've relaunched Lotus from a pricing perspective in Europe and what you expect to see in the U.S.? Now it's going from a two-player market to a three-player market, potentially soon to a four-player market here in the U.S. Would just love to get your high-level thoughts and any color you can give on how you plan to price LOTUS Edge here in the U.S. relative to some of your competitors. Thanks so much.
Yeah. We're probably not going to give as much as you want on the question. I think, in the U.S., we're very confident in the capabilities of a Lotus valve. This is not a low-tier segment offering. You'll see Lotus priced at competitive rates with the market in the U.S.
Just to follow up on that, is it priced competitively in Europe as well, or is it priced at a discount?
Well, we won't provide much thought there. Now with LOTUS, we offer two different valves in Europe, they're both uniquely good. It provides us some contracting capabilities along with SENTINEL, which are helpful. At the end of the day, the valve does need to stand alone in terms of its clinical efficacy, safety, and the benefits. Doctors typically aren't going to choose a TAVI valve just because it costs less money. We're delivering very good outcomes with ACURATE. You've seen a lot of the clinical data there and also LOTUS. Pricing obviously is important, but it's a different environment than drug-eluting stents.
Thank you. Next question is from the line of Matthew O'Brien, Piper Jaffray. Please go ahead.
Good morning. Thanks for taking the questions. Two of them real quick here. In the past, you said in the TAVR market, you thought you could get to 20% share, then you kind of backed off that with the LOTUS withdrawal. Now you have SENTINEL, which is pretty differentiated. As you think about where your share can go over time with this triple threat now, would you like to revisit where you think the share can get to? Specifically, do you think you can get to 20%? The second question is just on RANGER as we think about the launch next year with all the paclitaxel commentary. Just how should we think about that launch now? Should we dial back our expectations for it? Thanks so much.
Yeah. Ranger is a smaller revenue contributor historically in Europe. Ranger will I think the panel will certainly have an influence on the potential for Ranger. Again, I think our PI business is blessed with many growth drivers across the board and then also with BTG closing. We wouldn't comment on share. Right now we basically have 0 in the U.S., so it's all upside. With the indication expansions and we've seen clinical data and the size of this market and the uniqueness of Lotus and our breadth of commercial coverage, we feel like we can do a nice job in this area, but we're not going to provide a share goal publicly.
All right. With that, we'd like to conclude the call. Thanks for joining us today. We appreciate your interest in BSX. Before you disconnect, Kevin will give you all the pertinent details for the replay.
Thank you. Ladies and gentlemen, this conf call will be available for replay, that's starting today at 10:30 A.M. Eastern Time and will run through May 8th, midnight. You may dial the AT&T Executive Playback service by dialing 1-800-475-6701 with the access code 465105. International calls may dial area code 320-365-3844 with the access code 465105. That does conclude your conference. We do thank you for joining. You may now disconnect.