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    BSX
    Earnings call· Jun 2026(Q2 FY26)

    BOSTON SCIENTIFIC Q2 FY26 earnings call BSX

    Jul 29, 2026 Source

    Executive summary

    Boston Scientific Q2 FY26 — Guidance Cut on WATCHMAN and EP Headwinds, Restructuring for 2028+ Growth

    Boston Scientific delivered solid Q2 FY26 results, exceeding EPS guidance due to tax benefits and meeting organic revenue targets. However, the company significantly lowered its full-year guidance for both revenue and EPS, primarily driven by unexpected slowdowns in the WATCHMAN and U.S. Electrophysiology markets. Management announced a restructuring program aimed at $500 million in run-rate savings by 2029 to reinvest in growth drivers and return to strong EPS growth by 2028, acknowledging a challenging 2027.

    Highlights

    5

    • Total company organic sales grew 7% versus guidance of 5% to 7%.

    • Adjusted EPS of $0.86 grew 15% and exceeded the high end of guidance ($0.82-$0.84).

    • Neuromodulation sales grew 12% with double-digit growth in both pain and brain.

    • Interventional Cardiology and Vascular Therapies grew 12%, with Interventional Cardiology growing 15%.

    • Interventional Oncology and Embolization business grew 12%.

    Concerns

    5

    • Full year 2026 organic revenue guidance updated to 5-6% (from previous higher range).

    • Full year 2026 adjusted EPS guidance updated to $3.28-$3.32 (from previous higher range).

    • WATCHMAN global growth outlook updated to flat to low single digits for full year, with mid- to high single-digit decline in H2 2026.

    • EP global growth outlook updated to flat for H2 2026, with U.S. Q3 sales declining mid-single digits sequentially.

    • Urology growth expected to be flat to low single digits for full year.

    Guidance & targets

    19
    CategoryTargetConfidence
    Full year 2026 organic revenue growth
    5% to 6%
    high materiality
    High
    Full year 2026 adjusted EPS
    $3.28 to $3.32
    high materiality
    High
    Q3 2026 organic revenue growth
    3% to 5%
    medium materiality
    High
    Q3 2026 adjusted EPS
    $0.80 to $0.82
    medium materiality
    High
    Full year 2026 Urology growth
    flat to low single digits
    medium materiality
    High
    Full year 2026 global WATCHMAN growth
    flat to low single digits
    high materiality
    High
    H2 2026 global WATCHMAN growth
    declining mid- to high single digits
    high materiality
    High
    H2 2026 global EP growth
    flat
    high materiality
    High
    Full year 2026 U.S. EP growth
    flat to low single digits
    medium materiality
    High
    Full year 2026 CRM growth
    flat
    medium materiality
    High
    Full year 2026 reported revenue growth
    5.5% to 6.5%
    high materiality
    High
    Full year 2026 adjusted gross margin
    below full year 2025
    medium materiality
    High
    Full year 2026 adjusted operating margin expansion
    0 to 25 basis points
    medium materiality
    High
    Full year 2026 adjusted below the line expense
    approximately $485 million
    low materiality
    High
    Full year 2026 adjusted tax rate
    approximately 11.5%
    low materiality
    High
    Full year 2026 free cash flow
    approximately $3.8 billion
    medium materiality
    High
    Full year 2026 weighted average shares outstanding
    approximately $1.475 billion
    low materiality
    High
    2027 EPS growth
    limited
    high materiality
    High
    2028+ EPS growth
    strong
    high materiality
    High

    Segment performance

    14
    SegmentRevenueYoYQoQMargin
    U.S.
    Operational growth driven by Interventional Cardiology and Vascular Therapies (ICVT), Interventional Oncology, and Neuromodulation.
    		—6%——
    Europe, Middle East, Africa (EMEA)
    Operational growth driven by EP Vascular and Neuromodulation.
    		—4%——
    Asia Pac
    Operational growth led by double-digit growth in Japan, China, and Korea.
    		—11%——
    Neuromodulation
    Strong performance across the portfolio, including contribution from Nalu. Enabled by differentiated products like Cartesia leads, Alumina programming, and DBS patient controller.
    Pain growth: double-digitBrain growth: double-digit
    		—12%——
    Urology
    Fell short of expectations, driven by sacral neuromodulation recovery taking longer than anticipated. Stone management continues to see pressure with key portfolio gaps.
    		—1%——
    Endoscopy
    Strong results across the business with better-than-anticipated performance from Axios.
    		—7%——
    Interventional Cardiology and Vascular Therapies (ICVT)
    Strong growth, expected to be the strongest growth driver for Boston Scientific in the coming years.
    		—12%——
    Interventional Cardiology
    Driven by continued strength in DCB, Imaging, and Complex PCI.
    Coronary therapies growth: double-digit
    		—15%——
    Vascular Therapies
    Driven by broader adoption of Varithena and drug-eluting portfolio. Strong reception for SEISMIQ IVL launch.
    		—8%——
    Interventional Oncology and Embolization
    Strong global growth with broad offering of innovative technologies.
    		—12%——
    Cardiac Rhythm Management (CRM)
    Seeing competitive pressure with some portfolio gaps.
    Low-voltage business growth: high single-digit declineHigh-voltage business growth: mid-single-digit decline
    		—-2%——
    Diagnostics
    Continued strength across the broad diagnostic portfolio.
    		—low double digits——
    WATCHMAN
    Overall market slowdown driven by clinical evidence impacting referral patterns and inefficiencies in operationalizing concomitant and standalone procedures.
    International growth: 18%U.S. growth: 3%
    		—4%——
    Electrophysiology (EP)
    Growth driven by innovative portfolio, OPAL mapping expansion, catheter utilization, and FARAPOINT launch momentum. U.S. market impacted by competitive share movement and high PFA penetration.
    U.S. growth: 3%International growth: 23%
    		—9%——

    Operational metrics

    23
    Total company organic sales growth
    7.0%vs. guide 5-7%
    Q2 FY26

    Met the high end of guidance.

    Total company reported growth
    7.5%vs. Q2 FY25
    Q2 FY26

    Consolidated revenue of $5.44 billion.

    Foreign exchange tailwind
    50 bps
    Q2 FY26

    In line with expectations.

    Adjusted gross margin
    70.3%+80 bps YoY
    Q2 FY26

    Increased versus the second quarter of 2025.

    Adjusted operating margin
    28.4%+70 bps YoY
    Q2 FY26

    In line with expectations and represented expansion versus Q2 2025.

    GAAP operating margin
    21.6%
    Q2 FY26

    Reported on a GAAP basis.

    Product liability charge
    $75 million
    Q2 FY26

    Related to certain product liability cases, included in GAAP operating margin.

    AIBA tariffs refund
    $80 million
    Q2 FY26

    Recognition of refunds on previously paid AIBA tariffs, substantially all expected refunds. Included in GAAP operating margin.

    Adjusted interest and other expenses
    $120 million
    Q2 FY26

    Slightly unfavorable to expectations driven by FX volatility and unhedged currencies.

    Adjusted tax rate
    10.4%
    Q2 FY26

    Better than expected, includes favorable discrete tax items.

    Adjusted EPS
    $0.86+15% YoY
    Q2 FY26

    Exceeded the high end of the guidance range of $0.82 to $0.84, primarily driven by favorable tax results. (Transcription note: Transcript stated '$0.06' which is an ASR error, corrected to '$0.86' based on context.)

    Weighted average shares outstanding
    1.475 billion
    Q2 FY26

    Reflecting the repurchase of shares under the accelerated share repurchase agreement.

    Operating activities cash flow
    $1.475 billion
    Q2 FY26

    Cash flow from operating activities.

    Net capital expenditures
    $184 million
    Q2 FY26

    Used in free cash flow calculation.

    Cash on hand
    $539 million
    as of June 30, 2026

    Balance at quarter end.

    Gross debt leverage ratio
    2.0x
    as of June 30, 2026

    Leverage ratio at quarter end.

    Restructuring program savings
    $500 million
    exiting 2029

    Aimed to deliver run rate savings. Will position the company for meaningful operating margin expansion and strong adjusted EPS growth in 2028 and beyond.

    WATCHMAN concomitant procedures as % of U.S. total
    1/3
    Q2 FY26

    Swift adoption of concomitant procedures.

    WATCHMAN concomitant procedures growth
    >60%YoY
    Q2 FY26

    Strong growth in concomitant procedures.

    WATCHMAN standalone procedures decline
    low teensYoY
    Q2 FY26

    Decline versus Q2 2025, contributing to overall market slowdown.

    U.S. PFA market share
    80%
    current

    PFA market has accelerated, limiting ability to offset competitive pressures.

    Business units (ex-WATCHMAN & EP) growth
    6%
    H2 2026

    Consistent with historical performance, expected to improve in future years.

    Weighted Average Market Growth Rate (WAMGR)
    7% to 8%
    current

    Estimated current WAMGR, ticked down by about 1 point due to LAAC market slowdown.

    Industry KPIs

    8
    MetricValueDetails
    Tariff impact$80 millionUSD
    New product launch rampStrong reception
    Procedure volume growth>60%%
    FCF conversion leverage guidance2.0x
    Segment franchise organic growth7.0%%
    Sales force commercial capacity buildNew clinical and sales reps
    Indicated addressable patient population>$25 billionUSD
    Pivotal trial clinical evidence milestonesData presented

    Product announcements

    2
    ProductTypeDetails
    Rivoslaunch
    TruSelectlaunch

    Deals & partnerships

    2
    PenumbraAcquisition of a highly differentiated and complementary portfolio.

    Anticipated to strengthen long-term growth profile through innovative portfolio and strong strategic fit within Cardiovascular business.

    MirusInvestment with exclusive option to acquire TAVR business.$1.5 billion

    Investment includes an exclusive option to acquire Mirus's TAVR business. The SIEGEL Valve is currently enrolling in the STAR clinical trial. Acquisition contingent on achievement of certain clinical and regulatory milestones.

    Risks & headwinds

    6
    WATCHMAN market slowdownQ2 FY26 and H2 FY26

    U.S. growth 3%, standalone procedures declined low teens YoY. H2 2026 global growth declining mid- to high single digits.

    Mitigation: Driving greater clinical understanding through expanded physician education and evidence dissemination; strategically investing in commercial organization; accelerating direct-to-patient investments.

    EP competitive pressure in U.S.Q2 FY26, H2 FY26, H1 FY27

    U.S. growth 3%. H2 2026 global growth flat. Q3 U.S. sales expected to decline mid-single digits sequentially.

    Mitigation: Adjusting market share assumptions for a realistic outlook; focusing on bringing leading PFA ecosystem to more physicians; new product introductions (FARAWAVE Ultra, ICE market entry in H2 2027, FARAFLEX in 2028).

    Urology portfolio gaps and recovery delaysFY26

    Urology sales grew 1% in Q2 FY26. Full year growth expected flat to low single digits.

    Mitigation: Aiming to fill key portfolio gaps in stone management over the next 3 quarters; addressing commercial capabilities in sacral neuromodulation with new clinical and sales reps.

    CRM competitive pressure and portfolio gapsQ2 FY26

    Cardiac Rhythm Management sales declined 2% in Q2 FY26 (low-voltage high single digits, high-voltage mid-single digits).

    Mitigation: Expected progress against portfolio gaps with Precedent (new defib platform) to be launched in H2 2027.

    Penumbra acquisition dilution2026

    Expected to be slightly dilutive to op margins and EPS.

    Mitigation: Restructuring program to drive cost efficiencies and reinvestment in growth areas to return to strong EPS growth in 2028 and beyond.

    Limited EPS growth in 2027FY27

    Limited EPS growth and challenging operating margins.

    Mitigation: Comprehensive company-wide restructuring program to deliver run rate savings; continued investment in highest priority growth opportunities; expectation for strong adjusted EPS growth in 2028 and beyond.

    What to watch in Q3 FY26

    5

    WATCHMAN U.S. standalone procedure growth

    next quarter
    Currentlow teens decline YoY
    TargetImprovement from current trends

    Why it matters

    Key driver of overall WATCHMAN performance and guidance, reflecting market adoption beyond concomitant procedures.

    Our outlook does not anticipate any improvement in stand-alone procedure growth trends in the second half.

    Q&A highlights

    8

    How conservative is the updated guidance for EP and WATCHMAN, and what are early thoughts on 2027 organic growth?

    Management stated that 75% of the business is growing 6%, but EP and WATCHMAN, which had hyper-growth in 2024-2025, are now pressured. The guidance reduction is primarily driven by these two areas. For WATCHMAN, H2 declines are based on current trends, assuming no market improvement despite efforts. For EP, competitive pressures in the U.S. were underestimated. For 2027, the company aims to improve on H2 2026 guidance, assuming WATCHMAN market trends continue, and expects EP to rebound in H2 2027.

    “So 75% of the business kind of growing 6%, and we aim for that to improve in the future. The challenge, as you know, has been in the two areas, EP and WATCHMAN that had hyper growth unusually differentiated growth in '24 and '25, and now we expect more pressure in '26 and '27.”

    asked by Robbie Marcus · answered by Michael Mahoney

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 Performance Highlights

    Boston Scientific reported Q2 FY26 consolidated revenue of $5.44 billion, representing 7.5% reported growth, with organic revenue growth of 7.0%, meeting the high end of their guidance. Adjusted EPS was $0.86, exceeding the high end of the guidance range, primarily due to favorable tax items. Adjusted gross margin increased by 80 basis points to 70.3%, and adjusted operating margin expanded by 70 basis points to 28.4%.

    02

    Guidance Revision Drivers

    The company significantly revised its full-year 2026 guidance downwards, attributing the change primarily to unexpected market dynamics in WATCHMAN and U.S. Electrophysiology (EP). WATCHMAN's U.S. market slowed sharply due to compounding clinical evidence impacting referral patterns, while EP faced greater-than-anticipated competitive share movement in the U.S. market. Management acknowledged that this was not the planned outcome and takes responsibility for the reduction.

    03

    WATCHMAN Market Dynamics

    WATCHMAN grew 4% globally, with U.S. growth at 3% and international growth at 18%. Concomitant procedures grew over 60% and now represent one-third of U.S. WATCHMAN procedures. However, standalone procedures saw low-teens declines versus Q2 2025. The slowdown is linked to clinical evidence impacting referral patterns and inefficiencies in operationalizing both concomitant and standalone procedures. Management does not anticipate improved WATCHMAN growth in 2027 based on current trends.

    04

    Electrophysiology (EP) Performance

    EP sales grew 9% globally, with 3% growth in the U.S. and 23% internationally. While the FARAPOINT launch showed momentum, competitive pressures in the U.S. led to share loss, and PFA now constitutes 80-85% of the U.S. AFib market, limiting offset opportunities. The company expects U.S. EP performance to improve in H2 2027 after the introduction of FARAWAVE Ultra and entry into the ICE market, with further improvement in 2028 with FARAFLEX.

    05

    Restructuring Program

    Boston Scientific announced a restructuring program targeting approximately $500 million in run-rate savings by the end of 2029. These savings are expected to materialize primarily in SG&A and later in COGS, with over half realized by the end of 2027. The program aims to drive sustainable cost efficiencies and strategically reinvest in growth areas to support a return to strong adjusted EPS growth in 2028 and beyond, while maintaining discipline on spending.

    06

    Future Growth Catalysts

    Despite near-term challenges, management expressed confidence in long-term growth, citing strong performance in 75% of its business (Interventional Cardiology, Neuromodulation, IOE, Vascular) which grew approximately 6%. The company anticipates significant improvement in 2028 and beyond, driven by seven new meaningful launches in markets exceeding $25 billion TAM, including IVL hypertension, Penumbra integration, new EP platforms (FARAWAVE Ultra, FARAFLEX, ICE), and the potential acquisition of Mirus TAVR assets.

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