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    BSX
    Earnings call· Mar 2025(Q1 FY25)

    BOSTON SCIENTIFIC Q1 FY25 earnings call BSX

    Apr 23, 2025 Source

    Executive summary

    Boston Scientific Q1 FY25 — Strong Organic Growth and EPS Exceed Guidance, Tariffs Offset

    Boston Scientific delivered a strong Q1 FY25, significantly exceeding revenue and EPS guidance, driven by broad-based cardiology strength and global execution. The company raised its full-year outlook, demonstrating resilience by fully offsetting an unexpected $200 million tariff headwind through increased sales and cost efficiencies. Strategic investments in innovation and acquisitions continue to fuel long-term growth, despite some segment-specific supply chain challenges.

    Highlights

    5

    • Total company organic sales grew 18%, exceeding guidance of 14-16%.

    • Adjusted EPS of $0.75 grew 34%, exceeding guidance of $0.66-$0.68.

    • Full-year organic growth guidance raised from 10-12% to 12-14%.

    • Full-year adjusted EPS guidance raised to $2.87-$2.94 (14-17% growth), absorbing $200M tariff impact.

    • Electrophysiology sales grew 145%, establishing Boston Scientific as the #2 global player in EP.

    Concerns

    4

    • $200 million tariff headwind expected for 2025, primarily in H2.

    • Foreign exchange was an unfavorable $49 million headwind in Q1 FY25.

    • Urology experiencing some supply chain issues impacting back orders.

    • Cardiac Rhythm Management (CRM) sales grew 1%, slightly below market, expected to continue for most of 2025.

    Guidance & targets

    16
    CategoryTargetConfidence
    Organic revenue growth
    13%-15%
    high materiality
    High
    Adjusted EPS
    $0.71-$0.73
    high materiality
    High
    Organic revenue growth
    12%-14%
    high materiality
    High
    Reported revenue growth
    15%-17%
    high materiality
    High
    Operational revenue growth
    15.5%-17.5%
    high materiality
    High
    Adjusted EPS
    $2.87-$2.94
    high materiality
    High
    Free cash flow
    in excess of $3 billion
    medium materiality
    High
    Adjusted gross margin
    roughly in line with 2024
    medium materiality
    High
    Adjusted operating margin expansion
    50 to 75 basis points
    medium materiality
    High
    Adjusted below the line expenses
    approximately $425 million
    low materiality
    High
    Operational tax rate
    approximately 13.5%
    low materiality
    High
    Adjusted tax rate
    approximately 12.5%
    low materiality
    High
    WATCHMAN U.S. label update
    first-line alternative to OACs in post-ablation patients
    high materiality
    Medium
    CHAMPION AF data readout
    data readout
    high materiality
    High
    Empower leadless pacemaker FDA approval
    FDA approval
    high materiality
    High
    FARAPOINT U.S. FDA approval
    U.S. FDA approval
    high materiality
    High

    Segment performance

    14
    SegmentRevenueYoYQoQMargin
    Urology
    Growth driven by core stone franchise. U.S. clearance for Asurys expected H2 '25. Integration of Axonics progressing well. Experiencing some supply chain issues impacting back orders.
    Asurys fluid management case completed in Chile
    		—25% operational, 4% organic——
    Endoscopy
    Balanced growth regionally and across portfolio. Sustained double-digit performance in clinically differentiated platforms.
    AXIOS platform: double-digit growthOverStitch: double-digit growthMANTIS Clip: double-digit growth
    		—6% operational and organic——
    Neuromodulation
    Improving growth in DBS with Cartesia leads and Illumina 3D programming. Robust demand for Intracept due to long-term efficacy data.
    Brain franchise: mid-single-digit growthPain franchise: high single-digit growthIntracept: strong double-digit growth
    		—7%——
    Cardiology
    Overall strong performance across the segment.
    		—31%——
    Interventional Cardiology Therapies
    Driven by imaging and AGENT DCB, with strong reorder rates and new account openings for DCB.
    Imaging franchise: double-digit growthAGENT DCB: strong momentum
    		—9%——
    WATCHMAN
    Reflecting robust market growth and increased market share. Full conversion to WATCHMAN FLEX PRO completed in U.S.
    Market share: increasedConcomitant uptake: over half of U.S. EP implanting customers performing at least one concomitant procedure
    		—24%——
    Cardiac Rhythm Management (CRM)
    Expanded Conduction System Pacing with next-gen lead delivery catheters. Empower leadless pacemaker FDA approval anticipated H2 '25.
    Diagnostics franchise: high single-digit growthLUX-Dx: double-digit growthLow-voltage business: high single-digit growthHigh-voltage business: low single-digit decline
    		—1%——
    Electrophysiology (EP)
    Fantastic performance globally, driven by PFA leadership. CHAMPION clinical trial demonstrated FARAPULSE superiority over cryoablation. Completed enrollment in AVANT GUARD trial, initiated ELEVATE-PF trial.
    Global market position: #2 playerFARAPULSE: high commercial demand, strong sales, rapid new account openings
    		—145%——
    Peripheral Interventions
    Overall strong performance.
    		—16% operational, 7% organic——
    Interventional Oncology & Embolization
    Driven by broad offering of embolization devices and cancer therapy technologies. FDA approval to expand FRONTIER trial for TheraSphere in glioblastoma.
    		—double-digits——
    Vascular franchise
    Received FDA clearance of IVL system for above-the-knee indication.
    		—mid-single-digit arterial, double-digit venous——
    U.S. (Regional)
    Crossed 1-year mark of FARAPULSE launch and 10-year anniversary of WATCHMAN approval.
    Double-digit growth in 5 of 8 business units
    		—31% operational——
    Europe, Middle East, Africa (Regional)
    Above-market growth led by EP and double-digit growth in anchor technologies (complex PCI, TheraSphere, AXIOS, Rezûm).
    		—8% operational——
    Asia Pacific (Regional)
    Led by double-digit growth in Japan with strong FARAPULSE uptake. China delivered high single-digit growth off tough comp, anticipates double-digit growth despite VBP impacts.
    		—11% operational——

    Operational metrics

    33
    Adjusted gross margin
    71.5%170 bps improvement vs Q1 FY24
    Q1 FY25

    Primarily driven by favorable product mix.

    Adjusted operating margin
    28.9%
    Q1 FY25

    Favorable to expectations due to strong gross margin performance and timing of internal investments.

    GAAP operating margin
    19.8%
    Q1 FY25
    Adjusted interest and other expenses
    $106M
    Q1 FY25
    Adjusted tax rate
    9.8%
    Q1 FY25

    Includes favorable discrete tax items related to stock compensation accounting.

    Operational tax rate
    13.6%
    Q1 FY25
    Fully diluted weighted average shares outstanding
    1.493B
    Q1 FY25
    Operating activities cash flow
    $541M
    Q1 FY25
    Net capital expenditures
    $187M
    Q1 FY25
    Cash on hand
    $725M
    March 31, 2025
    Legal reserve
    $316M
    March 31, 2025
    Foreign exchange headwind
    $49M
    Q1 FY25

    Unfavorable versus expectations.

    Foreign exchange headwind
    50 bps
    FY25

    Approximate headwind for full year 2025, based on current rates.

    Foreign exchange headwind (EPS)
    $0.04-$0.05
    FY25

    Approximate headwind for full year 2025 adjusted EPS.

    Foreign exchange benefit (EPS offset)
    $0.01
    FY25

    Benefit used to offset tariff headwind.

    Organic revenue growth impact from 1 less selling day
    200 bps
    Q1 FY25

    Impacted growth by approximately 200 basis points.

    Operational revenue growth
    22.2%vs Q1 2024
    Q1 FY25

    Excludes foreign exchange headwind.

    Sales impact from closed acquisitions
    400 bps
    Q1 FY25

    Contribution to revenue growth.

    Full year 2025 operational growth
    15.5%-17.5%
    FY25

    Excluding approximate 50 basis point headwind from foreign exchange.

    Full year 2025 contribution from closed acquisitions
    350 bps
    FY25

    Contribution to revenue growth.

    Second quarter 2025 reported revenue growth
    17.5%-19.5%
    Q2 FY25

    With a neutral impact from foreign exchange.

    Second quarter 2025 contribution from closed acquisitions
    450 bps
    Q2 FY25

    Contribution to revenue growth.

    U.S. operational growth
    31%
    Q1 FY25

    With double-digit growth in 5 of 8 business units.

    Europe, Middle East, Africa operational growth
    8%
    Q1 FY25
    Asia Pacific operational growth
    11%
    Q1 FY25

    Led by double-digit growth in Japan.

    China growth
    high single-digitoff 42% growth comp in Q1 FY24
    Q1 FY25

    Anticipates double-digit growth despite ongoing VBP pricing impacts.

    Concomitant WATCHMAN procedure uptake
    over half
    Q1 FY25

    Performing at least one concomitant procedure.

    FARAPULSE market position in Japan
    #1
    Q1 FY25

    Clear #1 leader in PFA despite being the third approval.

    S-ICD total product refresh
    Denali
    starting 2026

    Will launch starting with high power in 2026, covering tachy and brady portfolio.

    Hypertension patient population
    half of U.S. adults
    current

    Majority not adequately controlled on medications alone.

    Hypertension healthcare costs
    $150B
    annual

    Per year in the U.S. due to uncontrolled hypertension.

    Cardiovascular disease globally
    half
    current

    Accounts for half of all cardiovascular disease globally.

    Tax rate headwind
    200-300 bps
    2026

    Potential upward headwind due to sunsetting of TCJA from 2017.

    Industry KPIs

    4
    MetricValueDetails
    Tariff impact$200MUSD
    FCF conversion leverage guidancein excess of $3BUSD
    Segment franchise organic growth18%%
    Pivotal trial clinical evidence milestonessuperior effectiveness

    Product announcements

    6
    ProductTypeDetails
    Asurys fluid management systemmilestone
    Cartesia leads (DBS)launch
    WATCHMAN FLEX PROmilestone
    Next-gen lead delivery catheters (Conduction System Pacing)launch
    FARAWAVE NAV and FARAVIEWlaunch
    IVL system for above-the-knee indicationmilestone

    Deals & partnerships

    3
    SoniVieAcquisition of a clinical stage differentiated ultrasound-based renal denervation technology company.

    Acquisition of a company developing ultrasound-based renal denervation technology. Expected to close in Q2 2025.

    Intera OncologyAcquisition of a company.

    Acquisition expected to close in Q2 2025, complementing the interventional oncology business.

    Bolt MedicalAcquisition of a company.

    Acquisition closed earlier this month, complements existing interventional cardiology and peripheral portfolios. Enables entry into IVL space.

    Risks & headwinds

    6
    Tariff headwind2025, mostly H2

    $200 million for 2025

    Mitigation: Offset by increased revenue, targeted discretionary spend reductions, and $0.01 FX benefit.

    Unfavorable foreign exchangeQ1 FY25

    $49 million in Q1 FY25

    Supply chain issues impacting back orders2025

    impacting some specific categories within urology

    Mitigation: Expected to improve but be a bit of a headwind for 2025.

    Ongoing VBP pricing impacts in China2025

    impacting PI portfolio, ICTx, and endo

    Mitigation: Innovation and local partnerships proving beneficial; anticipate double-digit growth despite pressure.

    CRM performance slightly below marketmost of 2025

    1% growth in Q1 FY25

    Mitigation: Future momentum expected from Empower leadless pacemaker (H2 '25 approval) and Denali S-ICD/tachy/brady portfolio refresh (2026).

    Potential tax rate headwind from sunsetting of TCJA2026

    200 to 300 basis point upward headwind

    Mitigation: Optimistic about potential legislative developments in Washington.

    What to watch in Q2 FY25

    5

    SoniVie acquisition close

    Q2 FY25
    Currentagreement announced, pending close
    Targetclosed

    Why it matters

    Confirms entry into the renal denervation market with a differentiated ultrasound technology.

    We look forward to closing this acquisition, which we expect in Q2 this year.

    Q&A highlights

    7

    How will the $200M tariff impact be offset, and what is the flexibility for manufacturing changes? What about FX tailwinds for next year?

    The $200M tariff headwind for 2025 (mostly H2) will be offset by increased revenue guidance (12-14%), targeted discretionary spend reductions, and a $0.01 FX benefit. No immediate plans to move manufacturing, as significant investments have been made in existing facilities. Did not comment on 2026 FX tailwinds.

    “the revenue and the FX kind of offsets half and then the discretionary spend reductions offset the other half. So we're really pleased that we're able to continue the momentum of the company and drive the raise in the revenue guidance range and the raise in the adjusted EPS guidance range.”

    asked by Robbie Marcus · answered by Daniel Brennan

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance Highlights

    Boston Scientific reported Q1 FY25 operational sales growth of 22% and organic sales growth of 18%, significantly surpassing guidance. Adjusted EPS reached $0.75, a 34% increase, also exceeding expectations. This strong performance was attributed to the company's category leadership strategy, innovation, and global execution, particularly within its cardiology portfolio.

    02

    Full-Year Outlook and Tariff Mitigation

    The company raised its full-year organic growth guidance to 12-14% and adjusted EPS to $2.87-$2.94, representing 14-17% growth. This revised outlook incorporates an estimated $200 million tariff headwind🌐 for 2025, which management plans to offset through increased sales, targeted discretionary spending reductions, and a $0.01 FX benefit. The tariff impact🌐 is expected to be minimal in Q2, with most of the impact in the second half of the year.

    03

    Cardiology Segment Strength

    Cardiology delivered a "fantastic quarter" with 31% sales growth. Interventional Cardiology Therapies grew 9%, driven by imaging and the AGENT DCB technology. WATCHMAN grew 24%, benefiting from robust market growth and increased market share due to strong concomitant procedure uptake. Electrophysiology sales surged by 145%, establishing Boston Scientific as the #2 global player in EP, fueled by high commercial demand for FARAPULSE and positive clinical trial results.

    04

    MedSurg Business Dynamics

    The MedSurg segment (Urology, Endoscopy, Neuromodulation, Peripheral Interventions) saw varied performance. Endoscopy maintained consistent growth, while Neuromodulation showed improving trends with the Relievant acquisition becoming organic. Urology faced some supply chain issues impacting back orders. Peripheral Interventions grew 16% operationally and 7% organically, with double-digit growth in Interventional Oncology & Embolization.

    05

    Strategic Investments and Pipeline

    Boston Scientific continues to invest in its innovative portfolio, including the upcoming U.S. clearance for Asurys fluid management system in H2 '25, the expected FDA approval of Empower leadless pacemaker in H2 '25, and the FARAPOINT U.S. FDA approval by year-end '25. The company also highlighted the acquisition of SoniVie for renal denervation and Bolt Medical for IVL technology, reinforcing its tuck-in M&A strategy and leveraging its venture fund.

    06

    Leadership Transition

    CFO Dan Brennan announced his retirement after 30 years, to be succeeded by Jon Monson, current SVP of Investor Relations, at the end of June 2025. Lauren Tengler will return to Investor Relations to succeed Jon Monson. The company expressed gratitude for Dan Brennan's leadership and contributions to financial performance and culture.

    AI-generated summary of the company’s earnings call. Not investment advice.