You guys are all over the place all the time. I'm sure there was some travel involved. We've got Chairman, President, CEO Mike Mahoney and Chief Medical Officer Dr. Kenneth Stein here in Boston with the TD Cowen team. Thank you, guys.
Good morning. Can you hear us?
I think you guys that's coming through nicely. Wanted to kick it off and just ask about, just, you know, you've walked through this on the fourth quarter call at the Investor Day last year, just this 10%+ growth guidance. You issued 10%-11% on the fourth quarter earnings call. It looks very similar to the starting point of 2025, where you guys were at 10%-12%. Maybe just discuss what's different this year compared to last year as you see it, and speak about your confidence about maintaining this, these high double-digit rates of growth despite the challenging two-year stack, three-year stack comps that you're facing.
Yeah, sure. Good morning, everybody. Maybe a few things that remain the same for, especially for the long-term investors. You know, we continue to invest for the long term for Boston Scientific, and we've had good success over many years and plan to continue to do a number of core tenets, because I know we're going to talk about EP and WATCHMAN and lots of things here. But, as the group knows, as we talked about Investor Day, we want to continue to improve our WAMGR as much as we can. And we continue to do that. You've seen the signed announcement at Penumbra and also a number of other venture investments that we've moved to continue to that. The other goal we continue to deliver on is exceeding our the WAMGR in terms of our growth rate.
Also delivering higher end than peer performance in terms of our sales performance, consistent OI margin performance and double-digit EPS. That's consistent with what the guide is for 2026, where we guide a full year 10-11, 50-75 bps, I believe, of margin improvement and double-digit EPS. Again, those figures would all put us above our WAMGR high-end peer group, which is what our aim for. In terms of, you know, comparing to last year, one thing that is a bit different is, I would say, on our guide, the ability to dramatically exceed that guide is not what it was the last two years, because there we had the transformation of PFA, and it was typically to the upside performance, and also the WATCHMAN concomitant.
We're not going to give inter-quarter guidance for first quarter or for full year, but we're comfortable with the guide of 10-11 that we gave. You know, across our businesses, we see, you know, EP we'll talk about, that's about 17% of our revenue, important part of our business, but we have 83% of our business that's also doing extremely well. Other big differences, we have the CHAMPION-AF readout coming up in March. We've tucked in a few nice acquisitions with Nalu Medical and spinal cord stim with Valencia. We announced the Penumbra acquisition, and we have a number of our businesses that are doing very, very well. Our ICTx business, our interventional oncology business, our endoscopy business, our neuromodulation business, our PI business.
We continue to have a consistent, really playbook of investing in our business, driving growth above our WAMGR, and we expect to have a good year.
Thanks for that. Just in recent past or multi-year past, I mean, almost every one of your business units has outpaced its the market that it's levered to. I think that precedent is giving you guys confidence that on average, you know, the majority of your business units will outpace the market growth and you guys can exceed that WAMGR. I mean, is that the formula you already just put on the table just to confirm?
I think it's we've actually executed that. Not every business every quarter, but in totality, we grow faster than our WAMGR. We really invest for the long term. We have such an exciting pipeline that goes out across ICTx, EP, all of our businesses in a very impressive VC portfolio. I think especially for the long-term investor, this formula of continuing to deliver high performance, continue to improve operating margin, continue to improve double GPS, we see strong visibility of that in this three-year LRP.
Right. Maybe just to touch on the operating margin guidance, you know, targeting 50 to 70 basis points for the year, that would keep you on track to potentially exceed your three-year LRP target. Maybe similar type question, just what gives you, your team the confidence and the drivers of the margin progress this year? Anything that different, that's different this year, particularly relating to macro factors?
A lot of macro factors. We feel comfortable with that guide. You know, we still benefit from the strength of the mix enhancement with ICTx continuing to get larger and larger, with divisions like interventional oncology getting larger and larger, the contribution of WATCHMAN, the concomitant, the contribution of EP, it's an overall good mix. We're also investing heavily in our supply chain, our manufacturing, placing a lot of capital across Boston Scientific. We see kinda gross margins in the similar range as 2025, but we expect to deliver that primarily through OpEx and SG&A.
Great. Maybe just to circle back on the top line guidance and also margin guidance. There, you know, a major conflict arose over the weekend in, you know, the Middle East. There's a lot of unknowns. It's very, very early, but anything to call out or investors should consider for Boston's business as we move forward despite there being so many unknowns?
Yeah, a lot of unknowns there. Obviously, we want the safety of all our employees and patients and hospitals and physicians. That business for us, kind of the area that you're talking about is impacted. It's about 1% of our revenue. You know, there could be some disruption depending on how long this plays out, but it's not a significant dollar amount for Boston Scientific.
Understood. Yeah. We hope for the safety of all your team members and everyone over there. Maybe as you prompted this next question with your comments saying we're definitely gonna get into the EP business, but.
Oh, we want you to. We actually love it.
I know. Absolutely. Absolutely. We're, you know, you gave some more detail, your team some more detailed guidance on the EP franchise and PFA this year. Maybe just to start specifically on the expectation that you'll maintain your global leadership-
Yeah
... position in PFA ablation catheters here, despite increasing competition. Can you just help build out some of the assumptions that underpin those expectations?
Yeah. First, very proud of our global team. We've really delivered terrific execution. We weren't a player in this market four years ago. The team globally is doing a great job of executing actually ahead of our plans for last year and really right in line where we thought the market would be as we articulated that at the Investor Day. As I mentioned on the first quarter earnings call, we see the overall market, no one knows exactly, but we see the overall market in 2026, call it 15%-ish. Our goal for 2026, as it will be for years beyond that, is to grow in line or above market like we do with our other businesses. We see that as achievable in 2026.
We're aided by no one knows exactly if it's, but we think 15. We're aided by the continued adoption of PFA, which we think that utilization will continue to tick up. We're also aided by the sweet spot where FARAPULSE plays in about 70% of the procedures. That market's growing faster. We see that market as a high teens, potentially 20% segment where FARAPULSE plays, and the rest of the market growing maybe high single digits to get to about a 15% market growth overall. That's how we see the market. In terms of the split kind of U.S., OUS, we do have more competitors in the U.S.
We absolutely expect to maintain PFA leadership, but we see that U.S. market growing kind of 10+ in 2026 and faster growth OUS to get us to that kind of at or above market growth overall for the year. We're really proud, and Ken can talk more about it, but the key for us is widening the portfolio. We're really excited about this FARAPOINT product that's just been approved and had great feedback that Ken can talk about more. We're kind of leading the league in clinical studies, clinical science. We're really the pacesetter in that area. The portfolio investments we're making, and more importantly, the execution of the team, everything from our Cortex partnership to our next generation FARAPULSE, which is called Ultra, which will allow to launch in the first half of next year.
We think will be a significant upgrade to the existing FARAPULSE in terms of its capabilities, its delivery, its tracking that Ken can articulate. That'll be a really big launch for us next year. We have FARAFLEX and other ICE and other programs. Our focus is to continue to innovate where we're good now with Ultra, replacing that in 2027 and widening the portfolio. The team's doing a great job of really enhancing the footprint of our mappers. Those mappers are being used more now because when you launch FARAPOINT, you widen the indications of the patients you can serve. The really, the global scaling of our mapper team and the ongoing improvement of our Opal Mapping System, combined with a portfolio, combined with a growth market, gives us a lot of confidence in the business.
Excellent. Dr. Stein, anything to add on top?
Yeah, I mean, I think just to maybe repeat what Mike said with a little additional color, right? I think the key is, you know, the FARAWAVE platform right now is still by far and away the most user-friendly, the safest, and the best approach that there is for the more straightforward AF ablations. You know, I think frankly, you know, where we have seen some competition, it's mostly been in the more complicated procedures. You know, for us, that's where moving ahead with additional catheters like FARAPOINT allows us to better compete. It's where getting into the business of AF mapping, so that was our Cortex acquisition, again, allows us to give a completely different way to solve these problems in the more complex procedures.
Then also, I think very important to realize, you know, while the, the catheters themselves are a very big part of the market, there's a lot of other ancillary things that get used. Our transseptal access systems, you know, the market leaders for transseptal access, that will grow at or greater than market. More use of the Opal Mapping System, and also just a commitment to continue to bring out new, better improvements to our catheter platform. As, you know, as Mike said, I mean, we're already on a third generation PFA catheter with FARAWAVE while the competitors are, you know, still just trying to bring out their first. We will have FARAWAVE Ultra. We've got FARAFLEX that's in its first human use. Hope to begin the IDE trial of that imminently.
It's just this continued cadence of improvements to the catheters, to the mapping system, and to the ancillary products that get used during ablation procedures.
Excellent. Just to circle back just on the U.S. market growth assumption, closer maybe in the lower double digits, closer to 10%. Is that? There have been some capacity constraints, just a lot of large numbers. I mean, our understanding is patient queues are very long and there is work being done by many high-volume centers to build out EP labs that we just heard from a couple yesterday on a physician panel. But any just help digging into the U.S. market assumption for 10% plus growth.
Yeah. In the market, we think of the AF's growing faster. We think, as I said, it's closer to upper teens, 20% where FARAPULSE plays.
Great. In the U.S. as well?
Yeah.
Yep. Got it. Sorry.
we see that because you see increased adoption still in terms of PFA utilization.
You still see, believe it or not, new centers opening with PFA. You have ASCs that will continue to impact more materially as time goes on. You're getting really kind of the price normalization, I would say. You're kind of lapping that. We still feel comfortable with the segment that we're playing in, primarily with AF growing, call it upper teens, close to 20%.
Thanks for clarifying. I know our team, we focus on our checks with clinicians trying to hear their forecasts or what they're using currently, what they expect to use throughout this year. You know, we tap into these high-volume academic center electrophysiologists, and my understanding is the majority of AFib cases are done outside of those centers and in maybe community hospitals or soon-to-be ASCs or in some states, ASCs. Any help just thinking about where Boston's or just the FARAPULSE platform share is in that non-academic center bucket? Is that an area where you guys are having outsized success?
Yeah, I'm not gonna give an exact share breakdown, but the point that you made, I think is one that bears repeating. It's a really important one. That is, you know, the best data is that about two-thirds of AF ablations take place in relatively low-volume centers. Even if you look at the third that are in high-volume center, right? That's then a mix between, you know, the academic centers, and I'm an ex-academic, right? When you're an academic center, you sort of have to use a variety of different tools 'cause you gotta train your fellows in how to use all the available tools. When you get outside of the academic setting, right? It is very unusual for folks to adopt more than one or two workhorse platforms.
And our experience here is, you know, if you're only gonna have one or two platforms, it is really hard for FARAPULSE not to be one of those one or two. You know, again, not gonna give an exact number, but I think you can expect, right? That, that we've got an outsized share when you're looking at low-volume centers and even high-volume centers when you're looking at non-academic centers. And as you move out to the ASC, again, I think that's an environment where we're gonna particularly shine based on safety, based on efficiency, and based on just total cost of doing the procedure.
Thank you for that. Just any help thinking about the non-ablation catheter piece of the FARAPULSE overall revenue pie and where you sit at entering 2026 from a market share standpoint? Just is that where you could see some outsized growth because of your underrepresented and non-ablation catheter technologies?
I mean, I break it down, I think by some of the specific technologies. If you look at transseptal access, right? I mean, we are, you know, by far the market leader there. I think, you know, our growth there is gonna track market which is very healthy growth. You know, since we pretty much are the market there, you're not gonna grow faster. We certainly have an opportunity to get increased share the use of mapping with OPAL, with the enhancements that we've brought to OPAL. As you look farther down the line, there's also the opportunity to get into more advanced imaging ancillaries.
You know, whether it's things like ICE catheter, intracardiac echo, or whether it's things, like, you know, the partnership we announced with Siemens in terms of a 4D ICE product. It's a little bit, again, farther out than 2026. Again, come back to your point. You know, it's not just the EP catheter. I think we do have an opportunity, again, to grow at market or faster than market as you look at a lot of these ancillary products.
Great. One last question on the EP business. Well, WATCHMAN is right there too, but just on concomitant and just in that dynamic of non-high volume academic centers having one or two systems. I mean, how big of a deal is it to have WATCHMAN and in terms of helping you secure that number one or two kinda spot in these non-academic centers that are performing AF fibrillation cases and WATCHMAN procedure? Seems pretty big.
Yeah. Well, I mean, I think FARAPULSE is good enough to stand on its own. I think even-
Sure
... we didn't have WATCHMAN.
Absolutely
... you'd be really hard-pressed not to have that as one of your one or two systems. Absolutely right. The opportunity to do concomitant, you know, the fact that WATCHMAN, you know, again, by far the market leader for left atrial appendage closure and the opportunities that we have, right? To again, build a moat around concomitant with things like developing a specific sheath to support concomitant workflow with some of the imaging things that we're doing to help support a concomitant workflow. You know, that absolutely strengthens our position.
Great. Well, we've big milestone for WATCHMAN is coming up this month, at the end of the month at ACC with the CHAMPION trial results being presented. Is any way you're hoping you guys could paint the kind of best case scenario and the next best case scenario with the results? I know you can't share the results, but just in terms of fully opening that that quadrupling of that patient opportunity or TAM, what do clinicians need to see?
Yes.
Should've had the meeting a month from now.
That's right. I mean, I think just for everyone to recognize, right? There are two primary endpoints to the trial. One is an efficacy endpoint, right? The goal here is to show, you know, that WATCHMAN is non-inferior or in other words, you know, provides comparable protection against stroke to latest generation of blood thinners. The other would be a bleeding endpoint, where the goal would really be to prove that WATCHMAN is superior in terms of safety over, you know, preventing clinically important bleeding over the long run. Both are important endpoints. I don't know that one is more important than the other. You know, I would say if we do happen to hit both endpoints, right?
You know, that then changes WATCHMAN from really being something that's restricted to patients, you know, who really can't take blood thinners over the long term and opens it up as a first-line choice and, you know, really, I think, gets to much more of, you know, what, you know, in terms of sort of shared decision-making. It becomes a patient-physician discussion. You know, do you want to do pills? Do you wanna have an invasive procedure? And I think the other thing to, you know, important to be aware of, is, there is, you know, this play between OPTION and CHAMPION-AF.
When you think about that kind of decision-making that I was talking about, again, you know, it's if we hit both endpoints, right, and it becomes, you know, sort of patient's decision, which way do you wanna go? I think it's a lot easier to make that decision of which way you wanna go if you're gonna have an ablation at the same time. It's, you know, it changes it from the why to the why not. And so, you know, we knock wood, hopefully, we will hit those endpoints. I think everyone's gonna know in a couple of weeks.
Excellent. looking forward to that presentation. There have been some concerns around data sets that have been presented in 2025, like OCEAN-AF and CLOSURE-AF, and maybe on the margins, you know, that TAM expansion, you know, going from 5 million patients to 20 million patients indicated if WATCHMAN can move to first line, contracts a little bit.
Yeah.
I mean, maybe we can start with maybe both any thoughts. I know you've reviewed this for us before.
Yeah.
I think publicly, but, lower-risk patients in OCEAN, it seems like, and maybe non-WATCHMAN candidates in CLOSURE potentially from a high level
Yeah.
Maybe you could provide some more details there on your thoughts, your team's thoughts.
Yeah. It's exactly what you said, right? There's a bunch of data that came out. Let me deal with CLOSURE-AF first, right? CLOSURE-AF was a German trial of very high-risk patients that used a very large variety of different devices for left atrial appendage closure, including early generation WATCHMAN, including early generations of some of the competitive products that were out there. I think, you know, the headline on that was it was a negative trial, that the blood thinners did better. I think when you peek under the hood on that, it's actually we found it relatively encouraging because it didn't fail, because it didn't provide adequate stroke protection.
CLOSURE is actually the first, you know, very high-risk patient population where you could prove that even with these legacy devices, left atrial appendage closure provided comparable stroke protection to best available blood thinners. It lost on operative complications. You know, our view on that is that if that trial had been done with WATCHMAN FLX, they would not have had the degree of complications that they saw in the trial. Again, you know, even OCEAN, I'm sorry. Even though CLOSURE headline negative for the field, when you peek under the hood, we actually see a lot of positives in that trial. The other, you know, one that you mentioned is this trial called OCEAN. There were two trials. There was OCEAN. There was a trial also out of Korea called ALONE-AF.
Yes.
Both of which showed, again, very convincingly for the very first time that AF ablation in and of itself reduces the risk of stroke. These were trials of relatively low-risk patients to begin with. Again, just for the, for the non-cardiologists here, right? You know, not everyone with AFib is at risk of stroke. Not everyone with AFib needs any kind of treatment to prevent stroke. We look at a scoring system that's called CHA₂DS₂-VASc. All right. Typically, you think of people, you know, CHA₂DS₂-VASc score of 0 or 1 is very low risk, 2 is kind of moderate risk, 3 or higher is high risk. And 3 and higher are really the patients who are candidates for WATCHMAN today.
All right.
The vast bulk of patients in those two trials had scores of one or two. You know, I think, you know, we really haven't seen any material impact since those trials were published in terms of referrals in for concomitant, you know, WATCHMAN plus ablation. I think it does provide a reason now for patients to have ablation that goes beyond just relief of symptoms.
Appreciate that breakdown. Your team has been, you know, helped investors think through just the timing of a benefit from positive CHAMPION-AF results and, you know, guideline changes, reimbursement decisions, coverage. But it's hard to imagine that positive data won't at least push some patients into the queue within the current indication. How are you guys thinking about that? Or how should investors and analysts think about that dynamic coming out of ACC in the scenario where WATCHMAN does hit both primary endpoints?
Yeah. Should the trial be positive, again, I think there's an immediate impact in just reinforcing the current indication. It will take time for the label to change. Will take time for consensus statements or guidelines to reflect the new data. Will certainly take time in the U.S. for CMS to revise the National Coverage Determination. That's why I think, you know, we've been pretty consistent in all of our conversations around this to say, you know, this is why, you know, assuming a positive CHAMPION-AF, you know, we see that as sustaining the 20% market growth.
In left atrial appendage closure this year and over our long-range plan.
Thank you. Wanted to touch on the Penumbra acquisition. I think it was a little bit of a bigger swing than in years past, but not huge for. Obviously you guys have the capacity, but may have surprised some. You know, Penumbra's been having success as a standalone. Maybe just review how Penumbra can get even better under Boston's roof and review the rationale for that acquisition.
I mentioned when we announced it, you know, with our performance and our ongoing commitment to the high performance and their results, you saw the fourth quarter results. You have two very strong companies combining together. Culturally, we've spent a lot of time with them. They're an excellent company. I think we can help each other. The key will be to retain their commercial team, run them as a standalone business under our cardiovascular group, just like we do our WATCHMAN business, our ICTx business, our CRM and EP business. So we'll be under Joe Fitzgerald. Actually, Penumbra eventually post-close and will go under our ICTx PI vascular business. We'll really retain, like we do all of our companies, global business unit president, retain their commercial team.
Where we can benefit each other is Penumbra is clearly less scaled outside the U.S. than we are. We have a very large business in Europe, Middle East, Africa, all over Asia -Pac. They are under-scaled there just given the market's size and their focus has been more, not totally, but more on the U.S. We have significant capabilities outside the U.S. Also, their business has a variety of stakeholders, you know, with the vascular surgeon, interventional radiologist, interventional cardiologist. We have excellent relationships across those groups, across our businesses. They'll be some accounts where they may not be in, maybe their competitor's in, but we have strong relationships there. I think we'll be able to help Penumbra out in that way. Also, in the supply chain area, as we continue to globalize them.
We're a big footprint in Costa Rica. They're building a plant in Costa Rica. I think on the whole supply chain side. The benefits to Penumbra will be supply chain side, outside the U.S., and helping them with accounts where they may be less strong, given the relationships Boston has. For Boston, it helps us in many ways. You know, I just saw a couple of cases last week. One case didn't require both knee cases. One case did not need anything other than the Penumbra case. Other case required a balloon stent and guide wire, and they actually pulled a competitive product. In that case, in the future, hopefully, that balloon stent guide wire will be Boston Scientific that will complement the Penumbra case. The really the different portfolio. We had...
There were spaces that we didn't play in, neurovascular and VT. The combination of the category leadership portfolio we have across interventional cardiology and vascular combined with Penumbra is just a beautiful solution for customers and for our category leadership strategy. We think there's a lot of synergies in the portfolio, given the uniqueness of what they have in neurovascular, which we don't play in, and also in thrombectomy.
Great. Any updates just in terms of expectations for getting through the regulators and closing?
We'll see. We're in the heat of that now.
Okay. I think the filings came out and, you know, it seems like the time to kind of, you know, interaction to acquisition offer was relatively condensed. My understanding is you've been following many companies over the years and you had some fairly detailed knowledge of Penumbra's portfolio and capabilities. Any comments just on that filing and some of the timing that was shared publicly?
I just think both sides see the strategic fit, which is your first question. If you're Penumbra, they have a great company, you want to grow and thrive in a company that has a similar culture, and that's Boston Scientific. For Boston Scientific, we also wanted to add that capability. It's long been an area that we want to get into in neurovascular and thrombectomy. We're the market leader. I think, you know, obviously you may have read the proxy or not. We knew the company well. They knew us well. We gave them a compelling offer. We know how we're to integrate this right to make sure that both companies remain stronger post-acquisition.
All right. Well, we're running down to the end of the half-hour here. Thank you guys so much for taking all the questions and giving the answers. Great to see you in person.
Good to see you. Thank you.
Have a good rest of the day with your meetings.
Thank you for having us.