Boston Scientific (NYSE:BSX) reported first-quarter financial results on Wednesday. The transcript from the company’s first-quarter earnings call has been provided below.
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The full earnings call is available at https://event.choruscall.com/mediaframe/webcast.html?webcastid=KDcxdk7a
Summary
Boston Scientific reported a solid Q1 2026 with organic sales growth of 9.4%, matching their guidance range.
The company adjusted its full-year guidance to reflect anticipated challenges, forecasting organic growth between 6.5% and 8%.
Key growth drivers included the US market with 11% growth and Asia-Pacific with 12% growth, while EMEA faced challenges due to product discontinuations.
Strategic focus areas included enhancing the EP and Watchman portfolios, addressing commercial challenges in Urology, and progressing with the Penumbra acquisition.
Management emphasized the need for increased commercial investments and strategic product launches to address market dynamics and maintain leadership positions.
Full Transcript
OPERATOR
Good morning and welcome to the Boston Scientific first quarter 2026 earnings call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero on your telephone keypad. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press Star then two. Please note this event is being recorded. I would now like to turn the conference over to Lauren Tengler, Vice President, Investor Relations. Please go ahead.
Lauren Tengler (Vice President, Investor Relations)
Thank you, Bailey and thanks to everyone for joining us. With me today are Mike Mahoney, Chairman and Chief Executive Officer John Monson, Executive Vice President and Chief Financial Officer. During the Q and A session, Mike and John will be joined by our Chief Medical Officer, Dr. Ken Stein. We issued a press release earlier this morning announcing our Q1 2026 results, which included reconciliations of the non GAAP measures used in this release. The release, as well as reconciliations of non GAAP measures used in today’s call can be found on the Investor Relations section of the website. Please note that on the call, operational revenue excludes the impact of foreign currency fluctuations and organic revenue further excludes certain acquisitions and divestitures for which there is less than a full period of comparable net sales. Guidance excludes the previously announced agreement to acquire penumbra, which is expected to close in 2026, subject to customary closing conditions. For more information, please Refer to the Q1 financial and operating Highlights deck which may be found in the Investor Relations section of our website. On this call, all references to sales and revenue are organic and relative growth is compared to the same quarter in prior year. Unless otherwise specified. This call contains forward looking statements regarding, among other things, our financial performance, business plans and product performance and development. These statements are based on our current beliefs using information available to us as of today’s date, and are not intended to be guarantees of future events or performance. If our underlying assumptions turn out to be incorrect or certain risks or uncertainties materialize, actual results could vary materially from those projected by the forward looking statements. Factors that may cause such differences are discussed in our periodic reports and other filings with the sec, including the Risk Factors section of our most recent annual report on Form 10K. Boston Scientific disclaims any intention or obligation to update these forward looking statements except as required by law. In addition, this call does not constitute an offer to sell or the solicitation of any offer to buy any securities or solicitation of any vote or approval in connection with a proposed transaction with Penumbra. Boston Scientific has filed this SEC a registration statement on Form S4 containing a proxy statement of Penumbra and a Prospectus of Boston Scientific 16’s important information about Penumbra, Boston Scientific, the proposed transaction and related matters. At this point, I’ll turn it over to Mike.
Mike Mahoney (Chairman and Chief Executive Officer)
Thanks Lauren and thank you to everyone for joining us today. First quarter represented a solid quarter for Boston Scientific with total company organic sales growth of 9.4% versus our guidance range of 8.5 to 10%. First quarter adjusted EPS of $0.8 grew 6% achieving a high end of our guidance range of 78 to $0.8 and Q1 adjusted operating margin was 28%. Turning to our outlook, 2026 has proven to be a more challenging year than we initially expected. To that end, we are guiding to organic growth of 5 to 7% for second quarter and reducing our full year guidance to 6.5 to 8% reflecting unanticipated headwinds and changing business patterns that I will cover in more detail in skull. Our second quarter 26 adjusted EPS guide is 82 to 84 cents and we now expect our full year adjusted eps to be 334 to 341 representing growth of 9 to 11%. I and our company does not take this change lightly as I and Boston Scientific take great pride in ourselves and consistently executing against the guidance and goals we provide. Importantly, we remain convicted in the future of Boston Scientific. We have a strong global team committed to high performance and we continue to invest in key new and existing markets which we believe will enable us to deliver on our fundamental goal of driving differentiated performance over the lrp. I’ll now provide some additional highlights of our first quarter along with some comments on our outlook regionally and on an operational basis. The US grew 11% with double digit growth in five out of our eight business units. Europe, Middle East, Africa grew 1%. Operationally growth in the quarter driven by faripulse, coronary and vascular therapies in Neuromod offset by the discontinuation of Accurate and Polarx largely impacting the EMEA region. Last year we did announce our intent to discontinue Polarex cryo catheter but have accelerated that timing given some recent safety events and the availability of non thermal ablation technologies. As we look forward, we expect that growth in demand will continue to improve with the annualization of The Acura discontinuation in 2Q and ongoing momentum from farifulse, Watchman and other key products. Asia PAC delivered a strong quarter and grew 12% operationally, led by double digit growth in a number of countries including Japan and China. First quarter growth in Japan was led by our differentiated PFA ecosystem with Opal, Fairview and Farrell Falls as well as strong reception of Watchman Flex Pro. Within the quarter we’re pleased to have received PMDA approval for the de novo indication of our Coronary Drug Coded Blue Aged dcb, expanding the patient population eligible for this differentiated technology. China also delivered strong growth inclusive of the impact from the DVP led by our Interventional Cardiology portfolio, particularly our imaging technologies. We are making consistent progress against our therapulse goals in a competitive market in China and received NMPA approval within the quarter for Opal HDX mapping system with Fairview further building out the PFA platform. Now some commentary on our business units. I’ll start with Urology. Urology did have a difficult quarter in Q1 as sales grew 1% organically, falling short of our expectations, driven primarily by by the Stone Management and Sacral Neuromodulation businesses. Within Stone, Underperformance was driven by China VBP as well as some key product gaps in the core Stone portfolio. We expect the recent FDA approval for insurance to unlock value within our Stone Smart ecosystem alongside Lithiview Elite and we also anticipate launching additional new products in 2026 including that slim eureidoscope later this year. Our Sacral neuromodulation business continues to see impact on commercial model disruption and importantly within first quarter we have hired and trained a significant number of new sales and clinical reps. We do anticipate improvement in this pelvic health franchise throughout the year as the SNM commercial organization capabilities stabilize along with the addition of Ecoin to build nerve stem. With the closure of LENC Technologies in April, we expect our urology performance to improve throughout the year. However, we now expect our full year Euro growth to be low to mid single digits in 2026. Endoscopy sales grew 7% organically with strong results across the business and better than anticipated performance from Axios as we were able to ramp supply and available product sizes. As we look to the second quarter we will continue to see some impact from Axios while also navigating other transient supply chain disruptions in endoscopy. Importantly, we expect improvement in the second half of 2026 as the underlying business is very strong and we anticipate resolution of the supply chain issues. Neuromodulation had a strong quarter with organic sales growing 15% with our comprehensive portfolio growing low double digits excluding the impact from Aleph. Our paint business grew mid teens inclusive of a strong quarter for Mallow. As I mentioned which closed at the end of January. Intracept continues to perform well supported by compelling five year data demonstrating the long term efficacy and cost effectiveness of this treatment for chronic low back pain. In dbs we saw continued adoption of the Cartesia X leads and accelerating uptake of the Illumina 3D programming algorithm in the US cardiovascular delivered organic sales growth of 11% within those businesses. We’ll start with ICVT. Interventional Cardiology vascular therapies grew organic sales 8% this business grew 9% organically driven by double digit growth in our coronary therapies franchise with strength in agent and ongoing momentum with our imaging portfolio and earlier this year we completed enrollment in our fracture trial studying the seismic IVL device in coronary arteries with data to be presented at euro PCR on May 19th. We continue to expect launch in the US in the first half of 2017. Our vascular therapies business had a nice quarter growing 7% organically driven by double digit growth in TCAR and Darothena and this is offset by large VBP impact on the arterial business in China which is expected to annualize in second quarter. We expanded our launch with our seismic peripheral IVL for above the knee with positive physical feedback on performance. We expect to ramp our manufacturing supply chain over the course of the year and continue to anticipate launching our below the knee indication in the second half. In first quarter positive data from hypy was presented at ECC evaluating ECOs plus anticoagulation versus anticoagulation alone, providing new clinical evidence that can help physicians make more informed treatment decisions for patients with acute pulmonary embolism. We remain excited about the opportunity to add Penumbra team and highly differentiated portfolios at Boston Scientific. We anticipate that the deal will close in 2H26, subject to the Penumbra shareholder vote on May 6 and the receipt of the remaining regulatory clearances. Our interventional oncology business had a nice quarter with organic sales growing 15% driven by our broad offering of cancer therapy technologies. Within the quarter we received FDA clearance of any day dosing and initiate a limited market release. Any day dosing is enabled by the TheraSphere 360 Y90 management platform, allowing physicians to schedule treatments on more days of the week and offering more streamlined ordering and operational efficiencies. Cardiac rhythm management sales declined 3% in the quarter. Our Low voltage business saw some impact in the quarter as we navigated our physician advisory and came up against a tough Comp within our first quarter 2025 change outs. On the high voltage side, we saw some impact from the Middle east conflict impacting this particular business. In first quarter our diagnostic franchise grew low double digits with continued strength across our broad diagnostic portfolio and overall we anticipate that our CRM business will return to growth in the second quarter and expect low single digit growth of the year supported by our full launch of of the aloof row in second quarter within the US turning to watchman watchman grew 19% organically in first quarter which was below our expectations with pressure on volumes in the US as the quarter progressed. We believe this reflects the annualization of the initial concomitant adoption tailwind and a softening in standalone Watchman cases driven by hospital capacity related procedure prioritization evolving reimbursement dynamics Importantly, we remain focused on expanding physician and patient education within the approximately 5 million patient indicated population. Today we expect data from Champion to support a return to 20% marker growth over the LRP in late March. Camping data was presented as a late breaker ATC with the trial achieving all primary and secondary endpoints, reinforcing the safety and efficacy of Watchmen and highlighting the high burden of clinically relevant bleeding on oral anticoagulation. As a next step, in addition to submitting for a label update, we are working with medical societies to support consideration of changes to LAAT guidelines using the totality of Watson clinical evidence ahead of any update to the national coverage determination. We also have additional data being presented at HRS this weekend and championed post ablation analysis which will provide further insights on this patient population across the globe. The results from Champion provide important evidence to support the expansion of the patient population eligible for Watchman over time in large markets including the US, Japan, China and Europe for full year 26. We now expect global Watchman growth to be mid teens with low to mid teens in the US in the US while concomitant demand continues to strengthen, we anticipate overall Watchman growth to decelerate with tougher comps and expect standalone Watchman procedures to improve over the course of the year as it takes time for the totality of this clinical evidence to translate into clinical practice. We remain very confident in the long term outlook of the business supported by great clinical evidence, market development and new product innovation. Turning to EP, organic sales grew 22%, 18% in the US and 30% internationally. International growth was driven by our innovative portfolio including our expanded OPAL mapping footprint and catheter utilization with strong double digit PFA growth in Europe in a highly competitive environment supported by the launch of Fairpoint. US Growth is driven by continued expansion of Opal strong catheter utilization in Fairpoint, our PFA focal point catheter which is performing ahead of our expectations and has moved into full launch. Looking ahead, we now expect our global EP business to grow approximately 10% in 2026 and within the US we are updating our full year expected growth to be in the mid single digit range with continued strength internationally at 20% inclusive of full year impact of approximately $35 million from the discontinuation of Polarex. This outlook is a change from previous commentary but we feel it’s prudent and reflects ongoing competitive dynamics offset by strength in our evolving therapulse PFA catheter and mapping portfolio. We are highly confident in our ability to maintain our leadership position in PFA both in the US and internationally through investment in commercial capabilities, ongoing clinical evidence, our expanding mapping footprint and an impressive next generation catheter launches including our fairway of ultra in 1H27 and this weekend avant garde we study Therapulse, a new patient population of drug naive persistent AF patients will be presented as a late breaker at HRS. Additionally we will see data from our first in human elevate PS study studying Faripulse, which is our large focal mapping of blade catheter for more complex arrhythmias. We anticipate initiating our IDE later this year and continue to expect launching ferraflex in the US in 2028. So in closing, I’d like to share again my confidence in our team and the future of Boston Scientific. While this year has proven to be more challenging than we anticipated, we believe Boston Scientific is competing in the right markets with a wander of approximately 8%. We continue to be uniquely positioned to drive differentiated top line growth. We will continue to do this through strategic internal innovation, clinical evidence, external VC and M and A investments, along with our disciplined approach to expanding operating margins, all of which have resulted in our track record of delivering double digit adjusted EPS growth. I’m very grateful to our talented team of global employees who work every day to advance science for life and am confident in the sustainability of our top tier financial performance. With that, I’ll hand it over to John. Thanks Mike.
John Monson (Executive Vice President and Chief Financial Officer)
First quarter consolidated revenue of $5,203,000,000 represents 11.6% reported growth versus first quarter 2025 and includes a 220 basis point tailwind from foreign exchange which was in line with our expectations. Excluding this $104 million foreign exchange tailwind, operational revenue growth was 9.4% in the quarter. Organic revenue growth was also 9.4% in line with our first quarter guidance range of 8.5% to 10% Q1 2026 adjusted earnings per share of $0.80 grew 6% versus 2025, achieving the high end of our guidance range of 78 to $0.80. Results include an approximate $0.01 headwind from FX. Adjusted gross margin for the first quarter for the first quarter was 70.5% which represents a 100 basis point decline versus the first quarter of 2025, primarily driven by tariffs as well as inventory charges related to the discontinuation of our Polarx cryoablation system. We now Expect full year 2026 adjusted gross margin to be slightly below full year 2025, largely driven by lower than expected product mix benefit and incremental investments in our global supply chain and quality systems. First quarter adjusted operating margin was 28.0%. We continue to expect full year 2026 adjusted operating margin expansion of 50 to 75 basis points driven by OPEX leverage as we drive strong spend controls and continue to implement efficiency initiatives and optimize our organizational structure on a GAAP basis. First quarter operating margin was 21.2%. Moving to below the line first quarter adjusted interest and other expenses totaled $112 million in line with expectations and our adjusted tax rate for the first quarter was 11.7% which was in line with expectations and includes a benefit from stock compensation accounting. Fully diluted weighted average shares outstanding ended at 1,495,000,000 shares in the first quarter and free cash flow for the first quarter was $170,000,000 with $348,000,000 from operating activities less $177,000,000 in net capital expenditures. We now expect full year 2026 free cash flow to be approximately $4,000,000,000. As of March 31, 2026, we had cash on hand of $1,453,000,000 and our gross debt leverage ratio was 1.8 times. Our top capital allocation priority remains strategic tuck in M and A followed by share repurchase. In alignment with this strategy, we recently closed the acquisition of Valencia Technologies, which complements our urology business, and we expect our announced acquisition of Penumbra to close in the second half of 2026. In addition, as previously disclosed, our Board of Directors recently approved an additional $4 billion under our existing share repurchase program bringing our total authorization to $5 billion. While we have been restricted from being in the market, we intend to repurchase approximately $2 billion of our shares and during the second quarter, subject to market conditions and applicable securities laws, I’ll now walk through guidance for Q2 and full year 2026 we now expect full year 2026 reported revenue growth to be in a range of 7.0% to 8.5% versus 2025, excluding an approximate 50 basis point tailwind from foreign exchange. Based on current rates, we Expect full year 2026 operational and organic growth to be in a range of 6.5% to 8.0%. We expect second quarter 2026 reported revenue growth to be in a range of 5.5% to 7.5% versus second quarter 2025, excluding an approximate 50 basis point tailwind from foreign exchange. Based on current rates, we expect second quarter 2026 operational and organic growth to be in a range of 5.0% to 7.0%. We continue to expect full year 2026 adjusted below the line expense to be approximately $440 million and under current legislation, including enacted laws and issued guidance, we now expect a full year 2026 adjusted tax rate of approximately 12.0%. We now expect full year 2026 adjusted earnings per share to be in a range of $3.34 to $3.41, representing growth of 9% to 11% versus 2025, including an approximate 4 cent headwind from foreign exchange. We expect second quarter adjusted earnings per share to be in a range of $0.82 to $0.84. In closing, we recognize that revising our guidance is a significant decision and not one that we made lightly. We believe our updated guidance appropriately reflects the unanticipated headwinds and we remain highly focused on executing Our full year 2026 guidance of 6.5% to 8% organic revenue growth, 50 to 75 basis points of adjusted operating margin expansion and 9% to 11% adjusted earnings per share growth. For more information, please check our Investor relations website for Q1 2026 financial and operational highlights, which outlines more details on first quarter results and 2026 guidance. And with that, I’ll turn it back to Lauren, who will moderate the Q and A.
Lauren Tengler (Vice President, Investor Relations)
Thanks, John Bailey. Let’s open it up for questions for the next 35 minutes or so. In order for us to take as many questions as possible, please limit yourself to one question. Bailey, please go ahead.
OPERATOR
We will now begin the question and answer session to ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please Press Star Then 2. Again, please limit yourself to only one question at this time. We will pause momentarily to assemble our roster. Our first question comes from Robby Marcus with JP Morgan. Please go ahead.
Robby Marcus (Equity Analyst)
Oh, great. Good morning and thanks for taking the question. I wanted to ask whether Mike or John came two, three months ago, got on the fourth quarter call and provided the guidance and I think a lot of people were expecting a lowering today based on some of the third party data we’ve seen. So it’s not that surprising. But I guess the question is really what happened during first quarter that, you know, really prompted it? When did you realize it and what gives you the confidence, given there’s going to be some deceleration throughout the year, that the LRP is still valid and that growth can improve in 2027 here. Thanks a lot. Yeah, thanks, Robbie.
Mike Mahoney (Chairman and Chief Executive Officer)
Good morning. I would say in the first quarter overall we’re pleased with that result. You know, the 9.4% growth and on track for our margin and EPS, you know, essentially what we saw. There’s really three main contributors to the takedown of the guide, which is not my happiest moment and very disappointed in that as we’re a company that consistently delivers on our commitments. So this is a guide down that we quite frankly are not proud of. But we think it’s the right thing to do and best reflects the current environment and allows us to proper, prudent guide to do. We can talk about the future of the company, but speak about the takedown particularly. It’s really focused on the three areas, primarily ep, Watchmen and urology. And if you start with Watchmen, we saw very, very excellent growth. As you know, in 2025 we grew almost 30%. We saw really strong consistent volume trends in January. So there was no signal to any Watchman weakness until we really saw the early days of kind of early to mid February. We started to see declining Watchman volume for the first time. And as we did the analysis on that, we can talk more about it. Essentially it is a strong increase in concomitant growth and a deceleration of standalone Watchman and go through all those details now. That’s the first primary one. So we see a declining Watchman trend growth throughout fourth quarter or first quarter and therefore in our guide we think it’s prudent to assume that in that guidance range we can talk more about the rationale and reasons for that. The second primary reason is ep. Our EP business had a very nice first quarter. We are absolutely confident that we will remain the PFA market leaders in the US and globally in 26. And we have a very rich cadence. Just an R and D review last week with the team, the launches the next two and a half years, that’s very impressive. But that being the case, even though the market’s strong, we did lose a bit more share than we anticipated. So again, what we did is in this guide anticipated greater share erosion than we’re particularly seeing and still allows us to be the market share leader in PFA where we’re guiding globally to approximately 10% NEP. And the last reason making up is urology, which I mentioned that difficult quarter, first quarter, you know, Neuromod had a real tough year a couple years ago. Now business growing double digit. I’m not saying Euro is going to return a double digit right away, but right now we’re suffering in our core stone business and in the sacral neuromodulation area. We have very active execution plans in place to fix sacral neuromodulation which we believe will be better as the quarters go on. And then of course we have some key product launches that will impact that business and help it quite a bit in 2027, but essentially going to be a below market year. So those are the three contributors overall to the guide down that were all done very objectively. We think it’s prudent and we think it’s the best guide to provide, to give shareholders confidence and to set up the business the right way. As you look forward in the lrp, we’re not going to make a comment on the LRP top line growth at this point. We feel that we’ll be under some slight pressure. Clearly given the 2026 guidelines, we will update that more in the future when we go through our STRAT plan process. We are comfortable with the 150 basis points of margin improvement in LRP and we’re comfortable with delivering double digit GDPS growth through the lrp. And I guess lastly, the long answer I’m giving you is we compete in a 8% WAM year market. We almost always grow at or above this WAM year. And this setup for 26 would show us at market at the high end of our guide or below that landmark. This is not Boston Scientific, it’s not what we do. And in 27. We have a number of key product launches. We’ll have far easier comps than we do this year. And we’re very bullish about 27 and 28. We can detail that more, but sorry for the long response. Hopefully that helped a little bit.
OPERATOR
Our next question will come from Joanne Winch with Citi. Please go ahead.
Joanne Winch (Equity Analyst)
Thank you for taking the question and Mike, I think you just summarized what everybody needed to hear and that answer. Can you sort of walk us through a little bit how you’re thinking about the quarters over the next couple of quarters, particularly for EP, watchmen and €? I’m sort of trying to think about to the gist of Ravi’s question. How do we get from first quarter to fourth quarter and then the jumping off point into 2020? And I just want to make sure those are somewhat set up appropriately. Thank you.
Mike Mahoney (Chairman and Chief Executive Officer)
I’ll take a shot and John, you can clean up if I’m a mess here. So we think second quarter is our toughest quarter of the year. We had a nice first quarter. Second quarter we have very challenging dollar sequential quarterly growth comps on a dollar basis in particular with EP and Watchman. So that’s our toughest quarter. There’s and so we also think with some of the impacts of some transient trends in Endo and some other areas that will be fixed for the second half of the year. So we think second quarter is our toughest quarter. That’s the guide 5 to 7 and the full year guide as you know is 6.5 to 8%. John, do you want to touch on any sequencing more?
John Monson (Executive Vice President and Chief Financial Officer)
Yeah, thanks Joanne. So maybe stepping through Watchman and Nepal so you heard Mike mention in his prepared remarks, we expect Global EP to grow mid teens for the year. So that would imply Joann low double digit growth for the rest of the year for our Global Watchman business. So that’s how you should think of Watchman for the rest of the year. Global EP at 10% for the year implies mid to high single digit growth for the rest of the year. So if you then think of the rest of the business as mid single digit growth, that’s about where we landed in the first quarter. Expect to see some acceleration there within urology CRM to pick up. So that’s how you should expect the phasing as we go through the year. I’d say relatively consistent, slight uptick in the second half. They call it roughly 7% as we see Euro and CRM drive better growth as we move through the year.
OPERATOR
Our next question comes from Larry Beagleson with Wells Fargo, please go ahead.
Larry Beagleson (Equity Analyst)
Good morning. Thanks for taking the question. I guess on EP just maybe a little bit more color on the market and share assumptions, how they’ve changed. Where is this share pressure coming from, Mike? And on US ep, you know, sales have been flattish for the past three or four quarters. Should we expect relatively flat US EP sales for, you know, for the rest of the year and what does that mean for 2027? I think people are trying to understand, you know, when you can get back to market growth in ep. Thank you. Yeah, I think John gave some of those numbers. For episodes for the year, we expect global to be approximately 10%. In the US particularly we expect mid single digit growth for the US business which implies a flat 2q to 4q flat to low single digit and international about 20%. So call it flat to low single digit US mid single digit for the year. Okay. And then so that’s the story there. What’s different about it from our previous commentaries where we said we were a grow at market? We’re disappointed, we’re disappointed to bring that guy’s level down. But we think it’s appropriate. We aim to be and we have high confidence that we’ll maintain PFA leadership in the US internationally, globally in 26 and throughout this LRP. And we are very excited about the product launches that we have. In particular three big ones coming up. 27 are third generation ferrupules, differentiates platform and we think a very disruptive Fairflex platform all in the next two and a half years. But today we are seeing increased competition. You know, there’s three other large players in the marketplace. We’ve made commentary before. Medtronic continues to be a solid competitor. JJ is enhancing their footprint in PFA and Abbott is early stages of launch in the U.S. in Europe, we really proud of our European performance where all three of those companies are performing. And we continue to grow at a 20% plus clip where we quite frankly have a quite advanced mapping capability and platform and doing very well there. So we did expect a little bit more share erosion than we had anticipated in the past in previous guide. But we think this is the perfect guide to do and allows us to continue that PFA market leadership while we’re bringing that platform forward. And importantly our mappers, which we’ve made a massive investment over the past two and a half years, continue to get stronger and stronger every quarter. We continue to install more and more Opal mapping platforms, our mappers get more sophisticated and we continue to add new catheters to the mix along with Fairpoint, which we recently launched. So we’ll continue to grow the mapping platform, continue to invest in that commercial capabilities. You’ll see more direct investments in Watchmen in particular. So we’ll invest both commercially and marketing, both our Watchman and our EP businesses. But we’re confident we’ll maintain PFA leadership. But we are going to see a bit more share than we anticipated earlier in the year.
OPERATOR
Our next question comes from Rick Wise with Stifel. Please go ahead.
Rick Wise
Good morning and thanks for taking the question I was hoping you would. Mike, talk a little bit more about the Watchman outlook in more detail. I mean, Champion data obviously was excellent, but perhaps there was more controversy about the data and the reaction to the data than I expected and perhaps than you expected. How are you addressing some of the concerns that you were left with? How are you changing the narrative about the risks of Watchmen and maybe how specifically are you going to tackle the growth rate factors that impacted this quarter? Thank you very much. Yeah, I’ll ask Ken to add commentary here. You know, first on some of the factors. And first of all, we’re very proud that we essentially created this category leading in clinical science, created the concomitant category and this category grew 30% last year. And we’re expecting mixed teens growth this year. And we’re seeing evolving practice patterns as this product continues to evolve with great clinical data and changing practice patterns. So with that extraordinary growth in AF ablations and Watchmen, we are seeing some practice pattern changes that I highlighted that we saw really become more acute in February. We’re seeing terrific concomitant demand. Bottom line. We are seeing pressure in kind of the standalone Watchman implant business, which historically has not been a challenge for us. Those challenges with a standalone Watchman area are a bit multifactorial. You’re seeing a bit more switch to the EP from the interventional cardiologist. The interventional cardiologist is less exposed to the concomitant procedure. They’ve got more structural art procedures to do and there’s a reimbursement cut in that area. But you’re seeing strengthening amongst EP physician group. So those are some of the trends that have really moved it just recently more towards a bit more towards ep, a bit more towards concomitant and less on standalone. And that’s also our customers are also adapting to operational workflow. They’re adding new labs, they’re moving to ASCS because they’ve experienced multi year growth of call it 25 in watchman multi year growth of 20, 25% in ablations. So there’s a significant demand and pull, plus the approval of new structural heart procedures. So the hospitals themselves are investing in labs Ticket concomitant AFIB are money winners for hospitals. So they’re making the investments, but they’re also moving through their own workflow challenges. We’ve seen a consistent backlog for Watchmen, which I guess which is good and high demand obviously for afib. So what are we doing to make it better? We’re doing a lot right now to make it better. The most impactful thing quickly is commercial investments. We are putting more focused commercial investments directly at the Watchman business. Today we have a lot of strength because the same territory rep in many cases is serving both the EP customer EP and Watchman, where we’re going to augment them with additional focus on Watchman specifically and put a little more emphasis and focus directly at that interventional cardiology call point. And we’ll be making quite a bit of marketing investments to really highlight the outstanding data that we believe the first study of its kind that met its primary endpoints and championed that detail. So commercial investments, Medicare investments, marketing investments, physician activation investments, all to leverage Champion. It’s also important to note. And then Ken can talk. I’m sorry, too much coffee. Today, 25% of all watchmen procedures are concomitant. We do expect that to grow to 50% over the LRP. So that view hasn’t changed. What we’ve seen is an offset a bit in standalone Watchman procedures.
Mike Mahoney (Chairman and Chief Executive Officer)
Ken, you want to talk more about?
Ken Stein (Chief Medical Officer)
I don’t have too much to add, Mike. Again, I think the first thing I’d say, Ulrich, in terms of questions, it just takes time to disseminate data and to educate physicians on the results of things like Champion. And of course, we were not able to get out and pre promote ahead of the data release and ahead of the publication in the New England Journal of Medicine. Having said that, the trial gets all of its primary safety and efficacy and endpoints and all of the important secondary endpoints. We do still anticipate that we will get updates to labeling, updates to guidelines, and eventually an updated national coverage determination. It just takes time for that to play through. And then I think the other thing, just to reiterate what Mike said in parallel with that, we see the opportunity to continue to improve some of the operational efficiencies that are required just to unlock more operational capacity for handling these procedures. We see hospitals building out more labs dedicated to these procedures. The move of simple ablations to ASCs will further unlock capacity and again just a high level Mike state not only see a very large opportunity for continued growth in concomitant procedures and maybe the one statistic I’d add to what Mike said just to remind everyone, roughly 50% of lesions for afib in the US today are done in patients who are at high risk of stroke, who have a chance that score of 3 or higher and who are potentially candidates for concomitant procedure.
OPERATOR
Our next question comes from David Roman with Goldman Sachs. Please go ahead.
David Roman (Equity Analyst)
Thank you. Good morning everybody. I wanted maybe just to toggle over to the other 70 plus percent of the business that’s non EP and watchmen and appreciate some of the dynamics that you walked through on the call. But maybe you could unpack a little bit for us in more detail. Kind of where you see that cohort of the business going, some of the specific product launches that you expect to see in 26 and 27 that we should be watching and the extent to which that piece of the business can get back toward kind of an 8%
Mike Mahoney (Chairman and Chief Executive Officer)
growth level where it was called before the accurate discontinuation. Sure. Thank you for the question Dave. The area that’s not getting the spotlight on it is this ICVT Interventional Cardiology Vascular Therapies group which again has that one timer with accurate which will anniversary thankfully in May which will help that business. But that business is execution at a very high level. Very high level driving a double digit growth in China despite ebp very global business agent is continuing in our imaging. Businesses in particular continue to exceed our internal expectations which is terrific and we’re excited about the seismic launch that’s really been in the small scale thus far within our peripheral vascular business. It’s been very well received by physicians and that fracture trial will read out a PCR in a month or so and we expect to have that coronary approval as we enter 2027. And we’re focused right now on building up the manufacturing supply chain to enable a meaningful launch for seismic for both coronary and below the knee and above the knee applications in 27. So they also have a number of kind of singles then doubles key product launches in vascular to continue to widen that portfolio out. The interventional oncology business grew mid teens and I talked about a key workflow launch that they additionally had along with some second M&A that they’re executing on. And hopefully the shareholder vote goes positive for us with Penumbra on May 7. We’re really excited about that team, which is extremely talented and brings a really differentiated portfolio in gaps that we have across Boston Scientific in that category. So particularly in combination standalone without Penumbra, that business is doing extremely well in the future, ideally with Penumbra. That’s a very unique, powerful growth driver for the company over this LRP period. And I think a lot of the discussion will still be on launch of mep, but much more will pivot to that area given the launches and momentum in that area. Lastly, I would just try to summarize Med Surge overall. Similar to ep, we have some challenges right now in urology. We’re not happy with a 1% growth in the quarter. We have clear line of sight to how we’re going to adjust and fix that. That business will improve in 2026, but not the level that we expect our business to perform at. And we’d be highly disappointed if we weren’t closer to market growth for that business in 2027. Endoscopy is doing well. They’ve got a nice set of product launches coming over the next nine months and our Neuromod business is growing double digit. So overall Med Surg is a tick lighter in 26 than we anticipate and we say that business will improve as the kind of quarters move on. In 26 we’ll have a stronger 27.
OPERATOR
Our next question comes from Travis Steed with Bank of America. Please go ahead.
Travis Steed (Equity Analyst)
Hey everybody. On the Wamgur, I think there was a slight change to the Wamgur from 9 to 8. Wanted to touch on that. And on the LRP was the message more we’re not achieving a 10% or was it more we’ll kind of wait and see how it all plays out because thinking about 27, you sound pretty bullish on 27. No headlines, you have product launches. So just kind of curious on the wanger drivers. I think we’re pretty clear at the investor day that we were at 8% moving to 9% over the LRP. So that’s, I believe that was the message on the Wanger. So we call it 8% moving towards 9 because we’re in the right high growth markets. So I think that’s consistent. Lrp, lrp.
Mike Mahoney (Chairman and Chief Executive Officer)
Oh and lrp, I mentioned it in the previous commentary. So what we are confident in giving you now is we’re confident in our ability to continue to have the discipline to improve margins of that 150 basis points. We’re confident in our ability to execute double digit EPS over this LRP period. And on the sales side, obviously with a guide at 6.5 to 8, that puts pressure on the 10% plus guide we gave at LRP. So, you know, I would say that’s likely an upside scenario at this point. But it’s premature for us to give you a LRP organic revenue growth number at this point and let us work through our strategic plan and launch cadence and we’ll update that over the course of this year. Great, thank you.
OPERATOR
Our next question comes from Josh Jennings with TD Cowan. Please go ahead.
Josh Jennings
Hi, good morning. Thanks for taking the questions. I just wanted to touch on the EPS guidance revision. I think some may be concerned that with a deceleration in high margin products, US EP franchise and Watchman franchise that there may be incremental pressure there. But any more details you can share just on any offsets or the impact on profitability with the revised outlook for US EP and, and Watchman. Thanks for taking the question.
John Monson (Executive Vice President and Chief Financial Officer)
Yeah, thanks, Josh. So we will see less mix benefit than what we expected at the start of the year. So that’s why we expect our gross margins now will be slightly lower than 2025. But what we’re doing is really driving leverage across opex. So most immediately we put in much more restrictive spend controls across the company. So what we’re doing is we’re reducing spend that isn’t correlated to revenue generation or that isn’t pointed at our key product pipeline programs that we have in place. You know, we also had more broadly a number of org structure optimization initiatives in place that includes scaling our centralized shared services. We’ve got a number of AI automation other initiatives already in place, Josh, that drive cost efficiency and productivity. And so we’re looking at those for what we can accelerate. And then as it relates to the R and D portfolio, we’re looking across each of the businesses there, ensuring that we’re appropriately fueling and appropriately focusing on the most impactful programs. But then those that are less impactful, we’re looking at how we can trim those. So we’ve got a number of initiatives, Josh, focused on how do we drive our OPEX toward the most impactful areas of the business and toward revenue generation and then everything else we’re squeezing.
OPERATOR
Our next question comes from Marie Thibault with btig. Please go ahead.
Marie Thibault (Equity Analyst)
Good morning. Thanks for taking the question. I wanted to double back to urology. I think you mentioned, you know, you have some active execution plans in place for improving the sacral neuromodulation business. Can you just dive a little deeper into That I know that that’s something you’ve been focused on for a couple quarters. Maybe it’s going a little bit slower than hoped. So if you can just give us an update on how that is going. Thank you.
Mike Mahoney (Chairman and Chief Executive Officer)
Yeah, it’s definitely gone slower than we anticipated. We had. We just had too much. Commercial turnover is the bottom line over the course. Take it over the course of the last six to nine months and we certainly learned from that. We made adjustments to it. But at this point in time, we feel we have the right leadership structure in place from region managers on up that are so key to driving a business like this. We have quite a bit of turnover at the manager level, clinical rep level and territory level. And so a lot of learnings from that as we look forward to Penumbra. But I would say on the management side, that’s all been filled up on the region managers, which is important. And we’ve had nearly 100 people that have been hired in our various stages of training, both clinical reps and territory reps, to really strengthen that commercial team, which is really needed not only for case coverage, but also to drive the appropriate patient activation events and pull through to appropriate procedures, which is really part of the business and an area that Axonix did really well. So we’re also leveraging a lot of the internal capabilities from Watchman and others. But it’s primarily been a commercial design disruption issue that has lingered farther than we wanted it to. But at this point in time, we have made the appropriate hires, the appropriate training, the appropriate investment, and we are confident that we’ll see an improvement in that business as the quarters progress.
OPERATOR
Our next question comes from Vijay Kumar with Evercore. Please go ahead.
Vijay Kumar (Equity Analyst)
Hi, Mike. Thank you for taking my question. I had one question on this buyback. Generally, when we see companies announced large deals like Penumbra $15 billion deal, we generally see buybacks being suspended. So my question is, is the 2 billion buyback in Turkey, is that signaling anything on the deal in. John, I think you mentioned you have one and a half billion of cash on hand. How are you funding this $2 billion buyback? Are you going to raise any debt? Why now? Thank you. Thanks, B.J. so we intend to. The two billion. We’ve got one and a half on the balance sheet now and we project our cash over the second quarter. We’ll fund that through cash on hand. We’ve been restricted from trading. We will be restricted at least through the Penumbra shareholder vote on May 6. But as soon as we’re not Restricted. We intend to repurchase 2 billion shares. $2 billion worth of shares, as I had mentioned. And why now? As we look at the stock price, we look forward at the outlook for the company, that we have our confidence in the company, the pipeline, we think that’s a great use of our capital.
John Monson (Executive Vice President and Chief Financial Officer)
Our next question comes from Matthew o’ Brien with Piper Sandler. Please go ahead.
OPERATOR
Good morning. Thanks for taking the question. Was hoping to talk a little bit about Penumbra. I know the vote’s coming up here in just a few weeks. Just curious about Boston’s, you know, comfort
Mike Mahoney (Chairman and Chief Executive Officer)
adding additional cash to that transaction if required. Just given the pullback in your stock and the degradation and the value of the overall transaction. If that were to be the case, would you still be committed to the deal at the current or at the previous valuation if a higher cash component is required? Thanks. Yeah, I would just comment on numbers. In general, we’ve gotten to know their leadership team extremely well. We really focused on the witty spirit of the, you know, the momentum of the ITBT team we have and the potential addition to Penumbra we think is a very, very powerful business in combination over time. We said many, many times that we essentially plan to run Penumbra as a business unit consistent in how we do Boston Scientific Global presidents keeping their strong commercial team intact, keeping their R and D pipeline. So we have a very solid way to maintain and enhance the number of momentum post closing. We had the shareholder vote on May 7th. We’re hopeful and confident that that will be approved as planned.
OPERATOR
Our last question will come from Matt Taylor with Jefferies. Please go ahead.
Matt Taylor (Equity Analyst)
Hi, thank you for taking the question. I just wanted to follow up on some of the comments that you made about the outlook for Watchman and NPFA was hoping for more clarity on Watchman in terms of how stand alone was growing. You mentioned it was decelerating. Was it actually declining in Q1? And what’s the outlook for standalone this year and next? Yeah, we’re not going to call up a specific number for outlook on concomitant specific and standalone a little bit. I think we gave pretty good guide as to what we see as appropriate guidance for the full year on Watchman, which is global mid teens, US low to mid single digits international. Sorry, my bad. I was thinking low to mid teens for US watchmen and international plus 20 mid teens growth globally. So that’s our outlook, which is obviously a slower outlook than what we saw in first quarter, but it reflects what I mentioned earlier on overcoming some very very strong comps overcoming some efficiency issues that we see that I highlighted before and more of a trend towards stronger and stronger concomitant and a less a less strong weakening trend in standalone. Now over time we aim to try to improve that based on the champion results, the investments we’re making. But as I mentioned you have concomitant strengthening standalone, currently less strong.
Mike Mahoney (Chairman and Chief Executive Officer)
Thank you for joining us today. We appreciate your interest in Boston Scientific. If we were unable to get to your question or you have any follow ups, please don’t hesitate to reach out to the investor relations team before you disconnect. Bailey will give you all of the pertinent details for the replay. Thank you everyone.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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