investor day february 12, 2013 - investor...

1 Boston Scientific Investor Day Presentation, Feb 12, 2013. †Refer to appendix to this presentation for certain regulatory and financial disclosures.

Investor Day

February 12, 2013

™


This presentation contains forward-looking statements within the meaning of

Section 27A of the Securities Act of 1933 and Section 21E of the Securities

Exchange Act of 1934. Forward-looking statements may be identified by words like

“anticipate,” “expect,” “project,” “believe,” “plan,” “estimate,” “intend” and

similar words. These forward-looking statements are based on our beliefs,

assumptions and estimates using information available to us at the time and are

not intended to be guarantees of future events or performance. If our underlying

assumptions turn out to be incorrect, or if certain risks or uncertainties

materialize, actual results could differ materially from the expectations and

projections expressed or implied by our forward-looking statements. Factors that

may cause such differences can be found in our most recent Form 10-K and Forms

10-Q filed or to be filed with the Securities and Exchange Commission under the

headings “Risk Factors” and “Safe Harbor for Forward-Looking Statements.”

Accordingly, you are cautioned not to place undue reliance on any of our forward-

looking statements. We disclaim any intention or obligation to publicly update or

revise any forward-looking statements to reflect any change in our expectations or

in events, conditions, or circumstances on which they may be based, or that may

affect the likelihood that actual results will differ from those contained in the

forward-looking statements.

Safe Harbor For Forward-Looking Statements


This presentation includes products that have not been approved

or cleared by the U.S. Food and Drug Administration and

are not available for sale in the U.S.

All future product approval and launch dates are based on estimates

of completion of regulatory submissions, review and/or approval or

clearance, as well as other business considerations.

For reconciliations of non-GAAP financial measures used in these

presentations to the most directly comparable GAAP figures, please

refer to the Investor Relations section of our website at

www.bostonscientific.com.

Disclaimers

http://www.bostonscientific.com/


Agenda

9:00am Welcome

Jeff Capello

9:05am Strategy and Vision

Mike Mahoney

9:30am Global Business Reviews

Mike Phalen (MedSurg: Endoscopy, Urology/Women’s Health and Neuromodulation)

Joe Fitzgerald (CRVG, Cardiac Rhythm Management and Electrophysiology)

Jeff Mirviss (Peripheral Interventions)

Kevin Ballinger (Interventional Cardiology)

11:05am Break

11:25am Clinical

Keith Dawkins, M.D.

11:45am Finance

Jeff Capello

12:10pm Closing Remarks

Mike Mahoney

12:15pm Q&A

All Presenters + Ken Stein, M.D.

1:15pm Lunch


Mike Mahoney President and CEO


Focused on Turning Around Performance in 2013…

A turnaround in markets that are challenging but improving

Making significant changes to improve execution and performance

A clear strategy to accelerate revenue and earnings growth

Delivering strong cash flow and balanced capital allocation strategy

Advancing science for lifeTM – committed leadership team

…and Driving Consistent Revenue and Adjusted Earnings Growth


IC

PI

CRM

EP Endo Uro/WH

NM

(-0.5%)

10+%

6% 5% 12%

1%

4%

IC

PI

CRM

EP

Endo Uro/WH

NM

Adjacencies

(4%)

6% (-3%)

4% 10%

(5%)

4%

30+%

CRV Business Units MedSurg Business Units % YoY Market Growth Adjacencies**

…Declining Markets and Share Loss in Largest Businesses

Since Investor Day 2010 BSC Has Experienced…

2010

Market

Size†

Market

Growth†

BSC

Revenue†

BSC

Growth†*

$30B+ 3% $7.8B (5%)

2012

Market

Size†

Market

Growth†

BSC

Revenue†

BSC

Growth†*

$30B+ (1%) $7.2B (3%)

Source: BSC Internal Estimates *Growth in constant currency. For reconciliations of non-GAAP financial measures to the most directly comparable GAAP figures, please refer to the Investor

Relations section of our website at www.bostonscientific.com

** Severe Asthma, Left Atrial Appendage Closure (LAAC), Transcatheter Aortic Valve Repair (TAVR), Deep Brain Stimulation (DBS) and Hypertension



Tailwinds

Demographics

(e.g. aging population,

comorbidities)

Emerging Markets growth

New treatments for: Hypertension, Transaortic Valve, Left

Atrial Appendage and Asthma

Convergence of device and

informatics; increasing patient

awareness

Increasing scale of Accountable

Care Organization model

Headwinds

Significantly stronger economic

buyer, increased pricing pressure

Medical device tax

Economic conditions in Europe,

Middle East, Africa (EMEA)

Local competitors in Emerging

Markets

Increasing scale of Accountable

Care Organization model

Market Changes…

…are Driving both New Challenges and Global Opportunities


ICD Battery Longevity

Alair ®

S-ICD© LOTUS™

Renal Ablation

Increase Patient

Access to Therapy

Reduce Healthcare Costs

Improve Patient Outcomes

SYNERGY™

…Aligning Incentives Between our Customers and BSC

Boston Scientific Platforms Drive Unique Value…


PI

CRM

EP

Endo

Uro/WH NM

Adjacencies

PI

CRM

EP

Endo Uro/WH

NM

Adjacencies

PI

CRM

EP

Endo

Uro/WH NM

Adjacencies

(3%) (4%)

5%

30+%

12%

4% 2% 6%

(2%) (2%)

5%

30+%

12%

5% 5% 7%

30+%

5%

(1%)

(1%)

11%

5%

5% 8%

IC IC

IC

CRV Business Units MedSurg Business Units Adjacencies

…while MedSurg, PI and Adjacencies Grow

Market Projections

CRM/IC Markets to Stabilize and Improve…

2013E

Market

Size†

Market

Growth†

$33B 1+%

2015E

Market

Size†

Market

Growth†

$35B 2+%

2017E

Market

Size†

Market

Growth†

$40B 4+%

Source: BSC Internal Estimates


Operational

Revenue*

Adjusted

OI*

Adjusted

EPS*

Adjusted

FCF*

2014 – 2015E †

• Low-single digit

• Improve by 100 bps

annually

2013E†

• (2%) to 2%

• 18% to 19% (19+% excluding Med Device tax)

• $0.64 to $0.70 (Includes $0.04 of Med Device tax

impact)

Projected to Return to Growth in H2 2013…

…Followed by Consistent Revenue and Adjusted Earnings Growth Source: BSC Internal Estimates

2016 – 2017E†

• Mid-single digit

• Improve by over

100 bps annually

*All numbers are Non-GAAP and exclude goodwill and other intangible asset impairment charges, acquisition and divestiture- related net credits, litigation, and

restructuring-related charges, discrete tax items and amortization expense. For reconciliations of non-GAAP financial measures to the most directly comparable

GAAP figures, please refer to the Investor Relations section of our website at www.bostonscientific.com.

• Mid-high single digit

growth

• Strong cash flow

• High-single to low

double digit growth

• Strong cash flow • Strong cash flow


2012 Percent of Revenue†

Adjacencies

6%

Adjacencies

13%

2015E Percent of Revenue†

2017E Percent of Revenue†

MedSurg/PI

40% EP

4%

IC/CRM

43%

MedSurg/PI

42%

IC/CRM

49%

EP

3%

Adjacencies

0.4%

MedSurg/PI

40%

IC/CRM

58%

EP

2%


…and ~60% of our Business in Higher Growth Markets

More Balanced Portfolio: IC/CRM Returning to Growth…


Creating a global operating model

New Asia-Pacific leadership and Emerging Markets infrastructure

Strengthening sales model in the U.S. and EMEA

Stronger corporate sales organization

R&D alignment to improve productivity

Leaner organization to improve speed

…to Drive Growth and Improve Global Execution

Operational Changes Being Made...


STRENGTHEN

Execution to

Grow Share

EXPAND

into High Growth

Adjacencies

DRIVE

Global

Expansion

FUND

the Journey

to Fuel Growth

DEVELOP

Key

Capabilities

Our People: Engagement, Development, Retention

Our Values: Caring, Meaningful Innovation, High Performance, Global Collaboration, Diversity, Winning Spirit

Boston Scientific – Advancing science for lifeTM

Strategic Imperatives


We are Strengthening our CRV Pipeline…

S-ICD®

EpicTM Iliac SES

SynergyTM

Next Gen ICD/CRT-D System

Promus

PREMIERTM

iLab® Polaris

CrossBoss® and Stingray® CTO System

Rhythm Management Interventional Cardiology Peripheral Interventions

IntellaTip MiFi™

Constellation CE

OffRoad™

Rubicon™

18/35

…with Meaningful Innovation to Gain Share


…Expanding Share and Global Reach

Differentiated Pipeline in MedSurg…

Genesys

HTA®

Ablation

Endoscopic Bronchial Ultrasound

Endoscopy Urology / Women’s Health Neuromodulation

StarFireTM

Laser Obtryx®IITM

WallFlex® Transhepatic

NEXT GENERATION

Precision SPECTRATM


Hypertension Severe Asthma

Left Atrial Appendage

EP / Atrial Fibrillation

Deep Brain Stimulation

Expanding into New Adjacencies…

Transcatheter Aortic Valve

Replacement

2017E

Market†

$700M

2017E

Revenue † Goal

$50M+

2017E

Market†

$2,600M

2017E

Revenue † Goal

$150M+

2017E

Market†

$4,300M

2017E

Revenue † Goal

$350M+

2017E

Market†

$1,500M

2017E

Revenue † Goal

$200M+

2017E

Market†

$400M

2017E

Revenue † Goal

$200M+

2017E

Market†

$500M

2017E

Revenue † Goal

$200M+

…Accelerating Our Growth and Leveraging Our Capabilities Source: BSC Internal Estimates


2012A 2017E Total Company

Revenue†

Total Company

Revenue†

Aligned globally for growth

More balanced global portfolio

Building new capabilities in

Emerging Markets

Brazil, Russia, India and China

(BRIC) growing +30%

BRIC 4%

International

41%

U.S.

53%

International

43%

BRIC 10%

International

41%

U.S.

50%

International

40%

Driving Global Expansion…

…to Accelerate Growth and Establish New Capabilities Source: BSC Internal Estimates


Gross margin expansion

Transitioned to self-manufactured stents

Manufacturing Value Improvement Programs (VIPs)

Strategic pricing

Continued focus on productivity initiatives

Delivering on restructuring program

R&D productivity

Corporate function and SG&A initiatives

…to Help Drive Profitability

Funding the Journey to Fuel Growth…


Estimate through 2017†

Adjusted Free Cash

Flow†1

$6.5B+

Q4 2012 Cash on Hand†

$0.2B

$6.7B+

Expected Future Capacity for:

Acquisitions:

Growth adjacencies

Near-term revenue contribution

Stock repurchases under new $1B program

Risk contingencies

Legal & tax

…Continued Strong Free Cash Flow

Improved Profitability to Drive…


1 - Adjusted Free Cash Flow excludes any potential amounts related to acquisition-, divestiture- and litigation-related items, significant tax audit settlements and restructuring and

restructuring-related items. For reconciliations of our non-GAAP financial measures, please refer to the Investor Relations section of our website at www.bostonscientific.com.



Boston Scientific:

Advancing science for life

Boston Scientific is dedicated to transforming lives through innovative

medical solutions that improve the health of patients around the world.

• Caring

• Meaningful Innovation

• High Performance

• Global Collaboration

• Diversity

• Winning Spirit

Mission:

Values:

™


Agenda

9:00am Welcome

Jeff Capello


Mike Mahoney






11:05am Break

11:25am Clinical

Keith Dawkins, M.D.

11:45am Finance

Jeff Capello


Mike Mahoney

12:15pm Q&A


1:15pm Lunch


Mike Phalen MedSurg Endoscopy

Urology/Women’s Health

Neuromodulation


MedSurg Divisions Extending Global Leadership…

BSC

2012

Revenue†

2012

Growth†*

$2.1B 6%

WW Market

2012

Size†

2012

Growth†

2012-2017

CAGR†

$6.1B 3% 6%

Endoscopy

Urology/Women’s Health

Neuromodulation

• Core market product innovation

• Accelerated globalization

• Expansion into high growth markets

…and Well Positioned in Strong Markets

Strategic Growth Drivers

Source: BSC Internal Estimates *Growth in constant currency. For reconciliations of non-GAAP financial measures to the most directly comparable GAAP figures, please refer to the

Investor Relations section of our website at www.bostonscientific.com


World Leader in Endoscopy…

…Positioned to Extend Leadership and Accelerate Growth

• Portfolio balance and velocity

• Global execution

• Strong commercial value proposition

• Diversify into high growth markets

WW Market

2012

Size†

2012

Growth†

2012-2017

CAGR†

$2.5B 4% 6%

BSC

2012

Revenue†

2012

Growth†*

U.S. Market

Position

$1.2B 7% #1





14% of adults are affected by

gallstone disease

Pancreatico-Biliary Disease

7% of adults over age 65 require enteral feeding support

Nutritional Support

20%

of all newly diagnosed cancers

are GI cancers

GI Cancers

~10% of all asthma patients have

severe symptoms

Asthma & Pulmonary

Disease

10% mortality rate with Upper and Lower

GI bleeds

GI Bleeding

Source: World Health Organization (WHO) & CURE Group

Source: BSC market research Source: Internal BSC estimates Source: World Health Organization (WHO) statistics

Source: OSU CCC & Cancer Journal For Clinicians

...with a Broad Range of Market Leading Devices

Treating Diverse Diseases…



2012A 2013E 2017E

Core Markets Realizing Consistent Growth…

$470M

~$2.5B

~$3.5B

New Markets

Core Markets

6% CAGR

• Bronchial Thermoplasty

• Lung Cancer

• GI Cancers

• Pancreatic

• GI Bleeding

• Core Pulmonary

$2.4B

4%

$2.5B

4%

$3.0B

5% $130M

$140M

4%

CAGR

30%

CAGR

…and New Markets Providing Fast Growing Opportunities Source: BSC Estimates

† † †


An Innovative Product Pipeline…

Asthma & Pulmonary

Disease

GI Cancers

Pancreatico-Biliary Disease

Nutritional Support

GI Bleeding

GI Tissue Acquisition New Metal Stent Applications

Improved Stenting

Pancreatic Therapies Access Therapeutic EUS Digital Imaging

Clipping & Hemostasis

Low Profile IR Access

Endoscopic Bronchial Ultrasound

Bronchial Thermoplasty Airway Stents

…Strengthens Share and Expands the Market

Energy Based Therapies Banding

Enteral Access


• Safe outpatient procedure

• Only device to treat severe asthma

• Proven RF technology

• FDA and CE Mark approved

…Innovative Treatment for Severe Asthma

• Published excellent 5-year safety data (RISA)1

• 84% reduction in ER visits2

• 32% reduction in asthma attacks2

• Reduce use of oral steroids

Benefits

Summary

Alair® Bronchial Thermoplasty System…

Source: 1 - Pavord et al., AJRCCM 2007; Pavord et al.,AJRCCM 2011; 2 - Pavord et. al. BMC Pulmonary Medicine 2011


~70 million people with asthma

~50 million

adults with asthma

~2.5 million target

patients

~$20B+ prevalent opportunity

~$1B annual opportunity

Source: BSC Estimates

~70%

are adults

~3-7% severe, not well-controlled

$7,500+ device revenue per patient

~5% penetration / year

…with Upside Opportunities

Alair® System Represents a Potential Market of ~$1B…


Alair® Bronchial Thermoplasty System…

2012 Reimbursement Milestones 2013 Reimbursement Plan

Payer engagement plan

Manuscript sent to >100 US payers

Engage Medical Directors

Review data with Medical Societies

Securing treatment guidelines

Obtain official society support

Technology Assessment Group plan

Manuscript sent to key groups

Updated assessment opinions

…Focused Coding, Coverage and Payment Strategy

Over 240 centers and >18 countries

AIR2 trial 5-year data mid-2013

publication goal

Over 500 physicians trained

Category 1 CPT codes


Alair® System Establishes a New Growth Market…

$11M

$200M+

2012A†

2013E† 2017E

†

$20-30M


Revenue† Goals

• CPT I Code Jan 1 ‘13

• Five year safety &

efficacy data H1

• Positive coverage by

major U.S. payer(s) by H2

• 400+ centers WW

Key Milestones*

• Positive reimbursement

• Hospital penetration

• Awareness and demand


Alair® Bronchial

Thermoplasty System

…Increasing Momentum and Execution Note: * Clinical dates and Regulatory approvals are based on company projections


A Leader in Spinal Cord Stimulation (SCS)…

Strate

• Drive to leadership in U.S. SCS

• Expand international footprint

• Build global Deep Brain Stimulation franchise

• Leverage technology in adjacencies

…with Opportunities to Leverage Proprietary Technology

BSC

2012

Revenue†

2012

Growth†*

U.S. Market

Position

$ 367M 9% #2

WW SCS Market

2012

Size†

2012

Growth†

2012-2017

CAGR†

$1.4B 6% 6%





50 million U.S. adults

live with chronic pain

Chronic Pain (SCS) Parkinson’s Disease (DBS)

1 million U.S. adults affected by

Parkinson’s Disease

…Large Underpenetrated Opportunities

Current Markets…



2012A 2013E 2017E

Neuromodulation Markets…

~$2.0B

7%

~$1.8B

~$2.7B

New Markets

Core Markets

• Parkinson’s / Movement Disorders (DBS)

• Migraine (ONS)

• Chronic Pain (SCS)

~$1.4B

6%

~$0.3B

~$1.5B

6%

~$0.4B

~$0.7B

6+%

CAGR

10+%

CAGR

8% CAGR

…are Consistent High Growth Markets

~$1.9B


† † †


Innovative Product Pipeline…

SCS

Chronic Pain

DBS

Parkinson's / Movement Disorders

Only System with MICC*

Superior Programming & Visualization

Innovative Lead Designs

Advanced Programming

More Targeted Stimulation

Next Gen Platform

Only System with MICC* and 32

contacts

*MICC = Multiple Independent Current Control

Semi-Automated Lead Fixation

Next Gen Platform

…Multiple Innovation Opportunities Focused on Real Needs

fiXate™

Tissue

Band

Clik™

Anchor


• Designed for maximum coverage and flexibility

• Designed to deliver therapy more accurately

• Provides customized stimulation

Benefits

• First 32-contact lead system

• Multiple lead configurations

• Independent current control

• CE Mark approved

Summary

NEXT GENERATION

Precision SPECTRATM

…Strengthening Pain Leadership Position

Next Gen SCS Platform Precision SPECTRA™…


Entry into Deep Brain Stimulation…

Revenue † Goals

• Complete EU VANTAGE

study for Parkinson’s

Disease (PD) (2013)

• Begin U.S. pivotal study

for PD (2013)

Key Milestones*

• Build clinical data

supporting differentiation

• Enhance offering

• Expand indications


…Building a Global DBS Franchise Starting with Parkinson’s

<$5M

$50M+

2013E† 2017E†

Source: BSC Internal Estimates Note: * Clinical dates and Regulatory approvals are based on company projections


Strong Urology Business…

…and Leadership Opportunities in Women’s Health

Strategic growth drivers

• Innovative pipeline

• International expansion

• Broaden product portfolio

BSC

2012

Revenue†

2012

Growth†*

U.S. Market

Position

Uro $360M 6% Uro #1

WH $140M (10%) WH #2

WW Market

2012

Size†

2012

Growth†

2012-2017

CAGR†

$950M 5% 5%

$930M (11%) 4%

1% (3%) Uro/WH 2012 Growth Uro/WH 2012 Growth





Treating Problematic Diseases…

50% U.S. men over the

age of 50 are

affected by BPH

20% Pre-menopausal

women in

developed world

Abnormal Uterine

Bleeding

Urology Women’s Health

American Journal of Managed

Care. 2006 Apr; 12 (5 Suppl)

11% U.S. risk of

prolapse surgery

by age 80

Pelvic Organ

Prolapse

Olsen AL, Smith VJ, Bergstrom

JO, Colling JC, Clark AL (1997)

Obstet Gynecol 89(4)

Rosenbaum, SP., Fried, M., et

al. Journal of Minimally Invasive

Gynecology (2005) 12.

15M U.S. women live

with urinary

incontinence

Stress Urinary

Incontinence

Wu, Jennifer et al. Obstet and

Gynecol. Vol 114, No 6, December

2009

Enlarged Prostate

9% U.S. population

affected by

kidney

stone disease

Stone Disease

Scales, Charles D., et. al.

European Urology, 62 (2012.

…with an Innovative Product Portfolio Source: BSC Internal Estimates


• Access/Visualization • Prostate BPH

• Stone Management

• Pelvic Floor • Endometrial

Ablation

4% CAGR

2012A 2013E 2017E

$2.3B

~$2.3B

~$3B

New Markets

Core Markets

$1.8B

$550M

$1.9B

$570M

$700M

4%

CAGR

~4%

CAGR

Consistent Growth in Urology Markets…

…while Pelvic Floor Stabilizes and Returns to Growth

(3%)

1% 5%


† † †


Pelvic Organ

Prolapse

Stress Urinary

Incontinence

Enlarged Prostate

Stone Disease

An Innovative Product Pipeline…

…Strengthens Share and Expands the Market

Access Retrieval Next Gen Guidewires Scope Distribution

Bipolar Resection Starfire™ Laser New BPH Therapies

Obtryx® II Pathfinder RP™ Pathfinder TOT™

Uphold LITE™ Upsylon™ Y-Mesh Next Gen Abdominal Meshes

New SUI Therapies

Capio® SLIM


Significant International Opportunity…

0 10 20 30 40

U.S.

EMEA

Japan

Asia-Pac

LatAm

9%

5%

20%

30%

• Register products

• Build and train commercial teams

5%

…will Drive Future Growth

• Strengthen international Key

Opinion Leader (KOL) relationships

• Develop region-specific products


2012 Urology & Women’s Health Regional Sales†

U.S.

72%

EMEA

11%

Japan

10%

LatAm 2%

AP 3%

2012 Urology & Women’s Health Regional Market Growth Rates


MedSurg Divisions Well Positioned…

• Leadership businesses growing faster than market

• Solid core market growth

• Strong global expansion

• Expanding into high growth adjacencies

• Important revenue contributor to Boston Scientific

Neuromodulation

Urology/Women’s Heath

Endoscopy

…to Grow Faster than Market and Extend Leadership


Joe Fitzgerald Cardiac Rhythm Management


CRV Divisions Represent…

Interventional

Cardiology

Peripheral

Interventions

Cardiac Rhythm

Management

• Capitalize on breadth of portfolio

• Commercial execution

• Accelerate globalization

• Execute in high growth adjacencies

Electrophysiology

BSC

2012

Revenue†

2012

Growth†*

$5.0B (7%)

WW Market

2012

Size†

2012

Growth†

2012-2017

CAGR†

$25.0B (1%) 2%

…Sustained Leadership in Cardiovascular Markets





Growth drivers

• Renewed CRM portfolio

• Comprehensive offering to EP customer

• Industry-leading longevity

• Unsurpassed lead reliability

• Reinvigoration of the EP business

BSC

2012

Revenue†

2012

Growth†*

Market

Position

CRM $1.9B (7%) #3

EP $147M 1% #4

WW Market

2012

Size†

2012

Growth†

2012-2017

CAGR†

$10.5B (5%) (2%)

$2.5B 10% 11%

A World Leader in Cardiac Rhythm Management…

…Positioned to Grow Faster than the Market and Gain Share





Cardiovascular Disease Prevalence…

>1 million indicated in the U.S.

Sudden Cardiac Arrest

>5 million with HF in U.S.

Heart Failure

>2 million indicated in the U.S.

Bradycardia

CAGRs are for 2012-2017

>5 million AFib patients in U.S.

Stroke Prevention

>5 million AFib patients in U.S.

Electrophysiology

Pacemaker ICD CRT

& Beyond Afib

VT / SVT’s LAAC

CHD Source: Hurst’s the Heart, edition 12e BY & SCA Source: Internal estimates HF Source: Yancy, C., Circulation AHA 4/7/08 (online before print)

…Continues to Grow and is the #1 Cause of Death Globally Source: BSC Internal Estimates


2012A 2013E 2017E

Core CRM Market Expected to Stabilize and Improve…

~$13.0B

~$14.4B

~$13.0B

(2%) CAGR

• Pacer (2%)

• Defib (2%)

– S-ICD

10+% CAGR

• LAAC

$10.5B (5%)

$10.2B (3%)

$9.6B (0%)

$2.5B $2.8B $4.3B

2% CAGR

$500M

New Markets

Core Markets

…EP and LAAC Provide Significant Growth Opportunity

• EP


† † †


Rhythm Management Strategy is Focused…

…on Providing the EP a Comprehensive Set of Solutions

Comprehensive EP Product Offering

S-ICD®

System WATCHMAN®

Rhythmia

Medical

Next Gen

ICD/CRT-D

System

Patient Management

Next Gen Stim /

Ablation

Therapies


RELIANCE® 4-FRONT

Current Offense: Platforms and Leads…

• Industry-Leading Battery

• Shock Reduction

• Multiple Tiers

• Protected DF-4

INCEPTA®–ENERGEN®–PUNCTUA®

• RF Telemetry

• LATITUDE® Enabled

• MRI Conditional

• MV Blended Sensor

• RELIANCE Reliability

• Implant Experience

• 8Fr Compatible

• Solid Electrical Performance

• MRI Conditional Design

• Standard 6Fr size

• Passive / Active Fixation

• Near Zero Lead Tip Heating ADVANTIO®–INGENIO®–INVIVE®

“Progeny” Family (High Voltage)

“Ingenio” Family (Low Voltage)

…Include a Renewal of CRM Portfolio in Last 12 Months

INGEVITY™


… Our Commitment to Market Leadership and Innovation

Blazer® OI

A-Fib

WATCHMAN®

High Voltage

Low Voltage

EP

LAAC

INGENIO® 2.0

WATCHMAN® 2.0

NG3 Non Quad Quad-pole

System MRI ICD Multi-Sensor

HF Mgmt.

Low Voltage on

LATITUDE® INGENIO® MRI AMT

S-ICD® System

2.0

Rhythmia™ IntellaTip MiFi™

Open-Irrigated

Next Generation

IntellaTip™ Catheters

Low Voltage on

LATITUDE®

Patient Management

Next Gen

LATITUDE

LATITUDE™

Consult

WATCHMAN® Indication Expansion

WATCHMAN® 2.0 Indication Expansion

Next Gen

Programmer

S-ICD® System

1.5

Rhythm Management Product Pipeline Reinforces…


Proven Longevity and Lead Reliability…

… Serve as the Foundation for Our High Voltage Platforms

• Longevity 2x Competitive Devices

• Key for reducing treatment cost

• Unmatched Quality with RELIANCE®

• No Spliced Conductors

CRT-D

8.95 years

ICD DR

11.3 years

ICD VR

13 years

98.9% Boston Scientific

RELIANCE® G

St. Jude Durata®

Data not available at this time

Survival Probability at 8 Years in Product Performance Report

Industry Leading Lead Reliability Industry Leading Longevity


96.8% Medtronic Sprint

Quatro Secure®


S-ICD® Device Technology Provides…

~$10.5B WW CRM Market

~$6.5B WW Defib Market

~$3.5B WW ICD Market

~$2.5B

~60%

High voltage segment

~55% Core ICD segment

~70% De novo and eligible replacements

~30% Patients best suited for S-ICD $750M+

annual opportunity

Source: BSC Estimates

…an Opportunity to take Share and Expand the Market

(excludes CRT-D segment of the market)


$25M - $45M

$250M+

2012A 2013E 2017E

~$10M

World’s First and Only Subcutaneous ICD…

Revenue† Goals

• FDA & CE mark approved

• 2013 launch expansion

• Gen 2 development

Key Milestones*

• Expand market

• Gain share

• Create preference with

referrers / patients


…to Drive CRM Growth and Add to BSC Brand Perception Source: BSC Internal Estimates

† † †

Note: * Clinical dates and Regulatory approvals are based on company projections


• More detailed sensitivity

• Designed for faster diagnostics

• Open architecture for catheter selection

Benefits

• Multiple Electrode Simultaneous Mapping (64 pole)

• 3D Image and Catheter Guidance

• Points ablated are auto-tracked and recorded

Summary

Innovative Rhythmia Medical Technology…

Truly Differentiated and Novel Mapping System

…Provides BSC with a Novel Mapping and Navigation System


Innovative Rhythmia Medical Technology…

…Provides BSC with a Novel Mapping and Navigation System



Rhythmia Medical’s Differentiated Technology…

$5M+

2013E 2017E

$125M+

Revenue† Goals

• Projected approval dates

• CE Mark: 2013

• FDA: 2013

• Full launch expected: 2014

Key Milestones*

• Exploit differentiation

• Grow market

• Customer training

• Expand sales capabilities


…to Drive Growth in our EP Business

† †



WATCHMAN® Device LAAC Technology…

• Permanent closure of left atrial appendage

• Demonstrated stroke risk reduction vs. Warfarin

• Potential to avoid the burden of lifelong OAT

• Option for patients unwilling/unable to take OAT

• Supported by strong body of evidence

Benefits

• Catheter delivered, self-expanding nitinol frame

• Five device sizes allow for precise fit within ostium

• Repositionable and retrievable

• Average procedure takes 35-60 minutes

Summary

…Provides Access to a New Growth Market


LAAC is a Strategic Opportunity…

…and Significant Adjacency to the Cardiovascular Market

~10 million patients with AF

~5 million CHADS score >1

~1.5 million target patients

~75 thousand procedures per year

~50%

with CHADS score > 1

~3-5% Annual prevalence penetration

~$0.5B market opportunity by 2017

~30% Unable/unwilling to take OAT




WATCHMAN ® Device Technology…

$20M -$30M

2012A 2013E 2017E

~$15M

$200M+

Revenue† Goals

• Full EU Launch: 2011

• Projected FDA approval

2013 / 2014

Key Milestones*

• Strong clinical science

• Broad reimbursement

• Indication expansion

• Next generation implant


…Provides a Significant Growth Opportunity

† † †



Rhythm Management Business…

• A world leader in Rhythm Management

• $13B market to grow at 2% CAGR to over $14B

• Global 2012 revenues of $2.1 Billion

• Refreshed Tachy & Brady platforms with S-ICD

• Strong portfolio will drive above market growth

• Renewed Portfolio and Differentiated Technology for the EP Customer

• Industry-leading Longevity and Lead Reliability

• Reinvigoration of the EP Business

…Positioned to Grow Faster than the Market and Gain Share



Jeff Mirviss Peripheral Interventions


World Leader in Peripheral Interventions…

g Eluting Technologies

• Crossing Technologies

• Embolization Technologies

Key Strategic Growth Drivers

… Positioned to Win in Strong Markets

BSC

2012

Revenue†

2012

Growth†*

Market

Position

$774M 8% #1

WW Market

2012

Size†

2012

Growth†

2012-2017

CAGR†

$4.1B 4% 5%

Strategic growth drivers • Renal denervation

• Drug eluting technologies

• Crossing solutions

• Embolization technologies





Peripheral Artery

Disease

Interventional

Oncology

Resistant

Hypertension

Source: Norgren L, Hiatt WR, Dormandy JA, et al. Inter-

Society Consensus for the Management of Peripheral Arterial

Disease (TASC II). J Vasc Surg 2007; 45 Suppl S:S5.

Over 27 Million

people worldwide have peripheral artery disease

Over 700,000 people worldwide are diagnosed with liver

cancer each year

Over 10 Million people worldwide have

medically refractory hypertension

Source: American Cancer Society,

http://www.cancer.org/cancer/livercancer/detailedguid

e/liver-cancer-what-is-key-statistics Source: Kearney et al. Lancet 2005;365:217-23

Note: Market sizes and 2012-2017 CAGRs reflect BSC

internal estimates

…that are Underserved and Growing Globally

Focusing On Novel Solutions to Disease States…


http://www.cancer.org/cancer/livercancer/detailedguide/liver-cancer-what-is-key-statistics














2012A 2013E 2017E

50+%

CAGR

5%

CAGR

~$4B

~$7B

New Markets

Core Markets

• Hypertension

• Stents

• Drug-Eluting

Technology (DE)

• Chronic Total

Occlusions (CTO)

• Additional Segments

$4.1B 4%

$4.3B 5%

$5.2B 6%

$60M $90M

$1.5B

10% CAGR

Consistently Strong Core Markets…

…with Faster Growth in Hypertension Adjacency Source: BSC Internal Estimates

† † †


Stents

Core & Crossing

Technologies

Drug-Eluting Technology

Interventional Oncology

Epic® Iliac SES InnovaTM SFA SES Cobalt-Chromium Iliac BES

NG 0.018” Balloon

Drug Eluting Stent RangerTM Drug-Coated Balloon

TruePathTM CTO Device

Crossing Wires & Catheters

Peripheral Atherectomy

Interlock® Peripheral Coils ExpelTM Drainage Catheter DirexionTM Microcatheter

…Adding New Solutions in All Key Segments

Global Core Product Pipeline Innovation Continues…

OffRoadTM Re-Entry Catheter


Vessix™ System Enables Earlier Entry…

• Familiar platform

• Short procedure time

• Reduced patient discomfort

• Enhanced patient safety and efficacy

Benefits

Smarter – Over-the-wire balloon with RF electrodes

– Confirmation of electrode apposition and automatic deactivation

– Bi-polar energy delivery

Faster – 30-second treatment time; electrodes deliver energy simultaneously

– One, maximum two placements required per artery

Summary

…with a Highly Differentiated Renal Denervation Platform


~950 million

adults with hypertension

~93 million

adults are resistant

~20 million

target patients

~925 thousand

procedures

~10% are resistant

~21% are stage II

~5% penetration / year

~$2.25B – 2.75B

Annual WW Opportunity

Source: BSC internal estimates

…and Offers Promise for Expansion to New Populations

New Treatment Option for the Most Difficult Patients…



New Market Opportunity for Existing Customers…

< $20M

2013E 2017E

$200M+

Revenue † Goals

• CE Mark approved

• Full EMEA launch in CE Mark

countries expected in 2013

• U.S. IDE trial expected to

begin late 2013 / 1H 2014

Key Milestones*

• Full integration of Vessix

• Global commercialization


…that Leverages BSC Global Resources

† †



BSC Peripheral Interventions Business…

• Worldwide leader

• Large and fast growing global market

• Increasing procedure volumes

• Balanced investments in R&D

• Renal denervation

• Drug eluting technologies

• Crossing solutions

• Embolization technologies

…Positioned to Win in Strong Markets



Kevin Ballinger Interventional Cardiology

73 Boston Scientific Investor Day Presentation, Feb 12, 2013. This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.

Interventional Cardiology

CARDIOLOGY


Key Strategic Growth Drivers

Boston Scientific

2012

Revenue†

2012

Growth†*

Market

Position

$2.2B (11%) #2 DES

#1 Other IC

WW Core Cardiology Market

2012

Size†

2012

Growth†

2012-2017

CAGR†

$7.8B (4%) (2%)

rs

• Differentiated product portfolio

• Transformative technologies

• Global markets

• Value-creating partnership programs


IC Positioned for Long Term Growth with…

…a Plan to Regain #1 WW Share Position Source: BSC Internal Estimates *Growth in constant currency. For reconciliations of non-GAAP financial measures to the most directly comparable GAAP figures, please refer to the



BSC Positioned to be the Preferred Partner…

…Providing Unique Value for Key Stakeholders

• Solutions for complex coronary disease

• Access to innovative technology

• Training and education programs

For Physicians…

• Economic savings programs

• Access to emerging therapies

• Lower total costs of care

• Premium service and support

For Payers and Administrators…

• Improved clinical outcomes

• Improved quality of life

For Patients…


~4M Patients undergo

PCI worldwide annually

Coronary Artery

Disease

Structural Heart

Disease (SH)

Coronary Chronic

Total Occlusion

>15% Patients with CTOs are not treated with

PCI today

Source: BSC Internal Estimates Source: Circulation 209:119:480-486 Source: Grantham, et al, Am Coll Cardiol Intv

2009;2:479–86; BSC Internal estimates

Large Important Cardiology Market...

~3% Adults worldwide 65+

with Aortic Stenosis

…with Potential for Growth in SH and Complex Interventions Source: BSC Internal Estimates


2012A 2013E 2017E

$5.9B $5.5B

$4.3B

$1.9B $2.0B

$2.7B


+ Cardiology capacity in China

anticipated to double by 20171

+ India market growing >15%

annually2

+ PCI3 penetration growing in

LatAm4

+ Platform innovation

+ ASP5 declines moderate

+ CAD incidence & prevalence

− U.S. PCI volume pressure

− EU austerity measures

~$7.8B

~$7.0B

Core Cardiology: (2%) WW CAGR

Core Cardiology Markets Expected to Stabilize…

Emerging Markets

Mature Markets

…with Emerging Markets Creating New Opportunities 1. China Healthcare Statistics Yearbook 2. Industry data, Internal Estimates 3. Percutaneous Coronary Interventions 4. Industry data 5. Average selling price

† † †

(4%) (4%)

(1%)

~$7.5B


BSC’s Unmatched Commitment to IC…

Complex PCI Future Growth Opportunities

DES Core IVUS Specialty Coronary

CTO LAAC

HTN

(RD) TAVR FFR

BSC

ABT

MDT

STJ

…Broadest and Deepest IC Product Portfolio Source: BSC Internal Estimates

Standard PCI


Promus PREMIER™ Everolimus-Eluting PtCr Stent…

• Excellent deliverability

• Strength and flexibility where it matters

• Designed for outstanding clinical outcomes

• Fracture resistance

Benefits

• Only DES with customized stent architecture

• Enhanced delivery system

• Highly flexible and conformable

• Leading drug and polymer combination

Summary

…Customized for PREMIER Outcomes


SYNERGY™ Bioabsorbable Polymer Stent…

• Designed to improve long-term safety

• Potential reduction in DAPT1 duration

• Outstanding deliverability

Benefits

• Ultra-thin bioabsorbable polymer

• Synchronous polymer absorption and drug elution

• Enhanced PtCr stent platform and delivery system

Summary

…Bioabsorbable Redefined Note 1: Dual Anti-Platlet Therapy

81 Boston Scientific Investor Day Presentation, Feb 12, 2013. This presentation may include products that have not been approved or cleared by FDA and are not available for sale in the United States.

Unmatched DES Offering…

…Serving Multiple Customer Segments


Coronary Stents

Core Coronary Technology

Imaging

Interventional Cardiology Product Pipeline…

Guide Extension

iLab® Polaris

Structural Heart

Promus PREMIER™

Lotus™

Omega™ SYNERGY™ Next Gen SYNERGY™

Super 1.2

OptiCross™

CrossBoss® Stingray® Agent™ DCB

FFR NG OptiCross™

Adjunctive Devices

Next Gen Lotus™

Valve

…Delivering Differentiating Innovation


Complex Coronary Disease Portfolio…

Option 2

…Broadest Offering in Interventional Cardiology

Access

Assess

Treat

Convey® 5Fr Guide Catheter

Guide Extension

Catheter

iLab®

Next Gen FFR

CrossBoss® and Stingray® CTO

System

Super 1.2 Catheter

Emerge™

PTCA Catheter

Flextome® Cutting Balloon®

Rotablator®

Agent™ Drug-

Coated Balloon

Catheter OptiCross™

Imaging Catheter



2012A 2013E 2017E

~$8.7B

~$9.6B

$7.8B $7.5B

$7.0B

$0.9B $1.2B

$2.6B 24%

CAGR

(2%)

CAGR

• Structural Heart

(TAVR)

• Drug-Eluting Stents

• Bare Metal Stents

• PTCA

• VA and CTO

• Imaging

• Complex Coronary

Interventions

New Markets

Core Markets

2% WW CAGR

† † †

…to be Propelled by Structural Heart Therapies

Overall Cardiology Growth…


Highly Differentiated Lotus™ Valve…

2013E† 2017E†

< $10M

$150M+

Revenue † Goals

• REPRISE I complete

• REPRISE II enrolling

• CE Mark expected

2H 2013

• U.S. IDE 2014

Key Milestones*

• Development milestones

• Clinical programs

• Reimbursement expansion


…Designed to Deliver Clinically Important Improvements Source: BSC Internal Estimates



Interventional Cardiology Positioned…

• Differentiated product portfolio

• Transformative technologies

• Global markets

• Value-creating partnership programs

…for Sustained Leadership


• Unmatched portfolio in standard and complex PCI

• Near and mid-term pipeline to regain WW leadership

• Uniquely positioned to lead in key growth segments

• Investments in Emerging Markets to yield growth


Agenda

9:00am Welcome

Jeff Capello


Mike Mahoney






11:05am Break

11:25am Clinical

Keith Dawkins, M.D.

11:45am Finance

Jeff Capello


Mike Mahoney

12:15pm Q&A


1:15pm Lunch


Keith Dawkins, M.D. Global Chief Medical Officer


• Clinical transformation

• Expanding global clinical footprint

– China clinical hub

– Latin America clinical hub

– BSC physician lead teams (Asia-Pacific, China, India)

• Increasing investment in investigator-sponsored research (ISR)

148,868 patients under planned

investigation in 122 BSC Clinical Trials

Global Clinical Strategy Focused…

…to Deliver Evidence Based Outcomes


SYNERGY

Everolimus

PLGA

Ultrathin Abluminal,

Bioerodable Polymer

Element Stent

• Element stent platform

• Bioerodable PLGA polymer is only applied to the abluminal surface of the stent

• Abluminal delivery of everolimus

• Maximum abluminal coating thickness 4μm

• Drug and polymer gone ~ 3 months

• Enhanced stent geometry

• Reduced stent profile

• Laser-cut hypotube

Next Generation SYNERGYTM Drug Eluting Stent…

…Designed with Highly Differentiated Characteristics


First Human Use Trial. 291 patients. PROMUS Element vs.

SYNERGY vs. SYNERGY Half-Dose (1:1:1). Primary

Endpoint: 6 month Late Loss + Composite Safety @ 30 days

Quantitative Angiography. 100 Patient Registry, 10-15 sites

(Australia, Japan, New Zealand, Singapore).

Primary Endpoint: 9 month in-stent Late Loss

China regulatory approval trial (SFDA). 400 patients, up to

15 sites. PROMUS Element vs. SYNERGY (1:1) Primary

Endpoint: 9 month Late Loss

Prospective, Multi-center, Global, double-blind RCT: 3

months vs. 12 months DAPT. 9000 patients.

Primary Endpoint: Cardiac Death/ MI

Global IDE Trial. 1684 patients, 150 sites, 19 countries .

PROMUS Element Plus vs. SYNERGY (1:1) single-blind

trial. Primary Endpoint: 12 month TLF

EVOLVE FHU

EVOLVE II

EVOLVE II QCA

EVOLVE China

EVOLVE DAPT

Global SYNERGYTM Clinical Trial Designed…

…to Support Clinical and Economic Value


SYNERGY™ (BSC) BVS (ABT)

Acute Performance +++ +

Strut Thickness Thin (79µm) Thick (150µm)

Radial Strength +++ +

Fracture Resistance +++ +

Visualization +++ +

Ability to Post-Dilate +++ -

Full Matrix +++ -

Low Drug Load +++ +

Low Polymer Load +++ +

Short Time to Polymer

Dissolution +++ +

Low Particulates +++ +

Normal Vessel Function ? +

Shorter DAPT ? -

SYNERGY™ Stent Drug Eluting Stent…

…Well Positioned versus the Competition


Differentiating Features

• Pre-loaded Valve

• Minimal Valve Prep

• 18F Delivery System

• 23mm & 27mm Diameter

• Simple, Intuitive Handle

• Early Valve Function

• Accurate Placement

• Repositionable

• True Retrievability

• Replace valve (upsize, downsize) with ease

• Negligible Aortic Regurgitation

Deploy Retrieve

Release

Next Generation LotusTM TAVR Device…

…Developed with Highly Differentiated Product Features


88 years old man. Severe aortic stenosis NYHA Class III

Heart failure. Multiple Co-morbidities. euroSCORE 27.1%

LotusTM Valve Retrievability


Eccentric Annulus + Concentric Valve =

Paravalvular Regurgitation Lotus Valve Adaptive™ Seal

mitigates Aortic Regurgitation

Paravalvular Regurgitation Determines Early and Late TAVI Mortality

Boston Scientific’s LotusTM Valve Design…

…Mitigates Aortic Regurgitation


Pre CE-Mark Feasibility Trial 11 patients, 3 Sites (AU), 23mm valve.

Primary Endpoint: Clinical Procedural Success (Acute Device performance without in-hospital MACCE)

REPRISE I

REPRISE II

REPRISE III Pivotal IDE Trial

(Details TBD)

CE-Mark Trial 120 pts, 14 Sites (AU, FR, D, UK), 23 + 27mm valves.

Primary Endpoint: Device Performance (Δ Mean valve Gradient) + Safety Endpoint (30D)

REPRISE IIE REPRISE II Extension Trial

130 pts, 9 Sites (CH, D, DK, F, I, NL, SP), 23 + 27mm

valves. Primary Endpoint: Safety Performance Safety Endpoint (30D)

Lotus™ Valve Global Clinical Strategy Designed…

…to Support Clinical and Economic Value


972M

1,560M

26.4%

29.2%

400

800

1200

1600

25

26

27

28

29

30

2000 2025

Glo

bal P

revale

nce (

%)

Tota

l Hyperte

nsiv

e P

opula

tion (M

)

Year

Global Burden of Hypertension…

…is Significant and Growing Source: Kearney PM: Lancet 2005;365:217–223


150 patient, prospective, single cohort,

International, multi-center trial at 25 centers in

Europe/Australia/NZ. Enrollment complete: 1H ‘13

Worldwide regulatory approval trial in key

geographies including U.S./Europe/Japan/Canada

Enrollment start date: late ‘13/1H ‘14

500 patients in Europe to support safety, efficacy

and reimbursement. Enrollment start date: 2H ‘13

REDUCE - HTN

European Post

Market Study

IDE Trial

Vessix Renal Denervation Global Clinical Trial Strategy…

Additional clinical research activity aimed at indication expansion

and new disease states

…Designed to Support Clinical and Economic Value


Vessix™ Renal Denervation System Interim Analysis…

-50

-45

-40

-35

-30

-25

-20

-15

-10

-5

0

Systolic Systolic Systolic Systolic

Two weeks FU(n=13)

1 MONTH FU(n=13)

3 MONTHS FU(n=13)

6 MONTHS FU(n=6)

Ch

an

ge

in

Blo

od

Pre

ssu

re

(mm

Hg

)

…Provides Encouraging Early Results Source: Margolis JR: TCT 2012


Medtronic

Symplicity™

St. Jude

EnligHTN™

Covidien (Maya)

OneShot™

ReCor Medical

Paradise™

Boston Scientific

Vessix™

Energy RF RF RF Ultrasound RF (Bi-polar)

Catheter

Design

Catheter with

single

electrode

Basket with

four electrodes

Balloon with

helical

electrode and

irrigation

Balloon with

centered

transducer

Balloon with four

to eight

electrode pairs

Guidewire No No 0.014” No 0.014” or 0.018”

Placements (#) Six to eight Two One Three One

Ablation Time 2 min. 6 min. 2 min. 30 sec. 30 sec.

Total Ablation

Time 24 – 32 min. 24 min. 4 min. 3 min. 60 sec.

Ablation Time Longest Shortest

Vessix™ Renal Denervation System…

…Expected to be a Market Leader


• AF: most common sustained cardiac arrhythmia

• Patients in AF have a five-fold increase in stroke

• Stroke rates in AF increase with age

• Use of warfarin treatment decreases with age

• All anticoagulants cause bleeding

• Newer agents long-term safety/efficacy uncertain

• 4000 patient-years of data

Left Atrial Appendage Occlusion with WATCHMAN®…

…a Proven Therapeutic Alternative to Anticoagulant Therapy


Majo

r B

leedin

g R

isk p

er

year

(%)

Warfarin Dabigatran

150mgs

Dabigatran

110mgs

p=0.31

p=0.003

Dabigatran vs. Warfarin in Patients with Atrial Fibrillation

(RE-LY Study)

Bleeding Still Occurs with Newer Anticoagulants…

…Increasing the Risk to Patients Source: Connolly SJ: N Engl J Med. 2009;361:1139-1151


• Effective for ventricular arrhythmias

• Provides brady pacing

• Provides ATP for monomorphic VT

• Provides diagnostics and familiar implant technique

• Effective defibrillation for VF

• No risk of vascular injury

• Low risk of systemic infection

• Preserves venous access

• Avoids risks associated with leads

• Fluoroscopy not required

Transvenous (TV) ICDs The S-ICD® System

Unique Subcutaneous S-ICD® System…

…Provides Significant Benefit to the Patient


Initiate US Post-approval observational registry with 5 year

follow-up (1616 pts. at 100 US centers. Expect first

enrollment 1Q13, expect full enrollment 2Q14)

Expand the ongoing PRAETORIAN ISR – randomized head-

to-head comparison of S-ICD vs. TV-ICD with 4 year follow-

up (802 pts. at 20 international centers. Expect full

enrollment mid 2014)

Continue enrollment in EFFORTLESS – European

observational registry with 5 year follow-up (1000 pts. at

50 International centers. Expect full enrollment 1Q14)

US Post-approval

observational registry

EFFORTLESS

PRAETORIAN ISR

S-ICD® System Global Clinical Trial Strategy…



MADIT-RIT

Supports the Deliberate Design Features of the S-ICD

• Improved ICD programming reduced the risk of inappropriate therapy by 76-

79%, and the risk of death by 44-55% vs. conventional programming in 1500

primary prevention ICD patients

• Supports the design strategy of delayed intervention and intervention only at

rapid heart rates that is fundamental to the S-ICD and questions the

importance of antitachycardia pacing for primary prevention patients


112 moderate to severe patients. 11 centers in 4 countries.

BT vs. medical management (1:1). Primary Endpoint: Exacerbations in year

following treatment. BT follow-up for 5 years for safety.

34 severe patients. 8 sites in 3 countries. BT vs. medical management

(1:1). Primary Endpoint: Safety to 12 months. Secondary: Change in

medication use. BT follow-up for 5 years for safety.

288 moderate to severe patients. 30 sites in 6 countries. BT vs. sham (2:1).

Primary Endpoint: AQLQ* over 12 months. Other Key Endpoints:

Exacerbations, Healthcare Utilization, Days Off Work. BT follow-up to 5

years for long-term persistence of effectiveness and additional safety.

AIR

RISA

AIR2

Registry Prospective data collection in commercially treated patients in EU. Will

capture additional safety and effectiveness outcomes in real world setting.

ISRs Studies evaluating mechanism of action and predictors of response.

PAS2 300 severe patients in US and Canada. Single arm. Primary endpoint:

Reduction in severe exacerbations. Follow-up for 5 years.

*AQLQ = Asthma Quality of Life Questionnaire

Enrolling

Bronchial Thermoplasty Global Clinical Trial Strategy…



Vercise™ Deep Brain Stimulation System Clinical Trials…

First Human Use Trial for DBS for Parkinson’s

Disease. 40 patients, 6 EU countries. Primary

Endpoint: Improvement in motor function at 6 mos.

US IDE Trial for DBS for Parkinson’s Disease.

Study launch in 2013.

VANTAGE

INTREPID



Agenda

9:00am Welcome

Jeff Capello


Mike Mahoney



Joe Fitzgerald (CRVG: Cardiac Rhythm Management and Electrophysiology)



11:05am Break

11:25am Clinical

Keith Dawkins, M.D.

11:45am Finance

Jeff Capello


Mike Mahoney

12:15pm Q&A


1:15pm Lunch


Jeff Capello Chief Financial Officer


WW Business Unit Sales ($M)† Sales

Growth†*

Market

Growth†*

BSC vs.

Market

IC 2,179 -11% -4%

CRM 1,908 -7% -5%

EP 147 1% 10%

PI 774 8% 4%

Endo 1,252 7% 4%

Uro/WH 500 1% -3%

Neuromodulation 367 9% 6%

WW Operational Sales 7,127 -3% -1%

…Demonstrate Need for Improved Performance

2012 Sales Results…




FY 2012†*

Sales

Operational sales growth*

$7,249M (3%)

Adj. Gross Margin*

% of sales

$4,913M 68%

Adj. SG&A *

% of sales

$2,511M 35%

Adj. R&D* % of sales

$889M 12%

Adj.Operating income*

% of sales

$1,360M 19%

Adjusted EPS* $0.66

2012 Financial Performance…

…Preserved Earnings Despite Challenging End Markets Source: BSC Internal Estimates

*All numbers are Non-GAAP and exclude goodwill and other intangible asset impairment charges, acquisition and divestiture-

related net credits, litigation, and restructuring-related charges, discrete tax items and amortization expense. For

reconciliations of non-GAAP financial measures to the most directly comparable GAAP figures, please refer to the Investor

Relations section of our website at www.bostonscientific.com.


2013 Guidance…

Low†* High†*

Sales Growth (operational) -2% +2%

Adj. Gross Margin % 68% 68%

Adj. SG&A % 36% 35%

Adj. R&D % 12% 12%

Tax Rate (operational) 13% 11%

Adj. EPS $0.64 $0.70

Adj. Free Cash Flow $1,100M $1,200M

…Maintains Earnings while Producing Strong Free Cash Flow Source: BSC Internal Estimates

Includes $0.04 EPS

Impact of Med Device Tax

*All numbers are Non-GAAP and exclude goodwill and other intangible asset impairment charges, acquisition and divestiture- related

net credits, litigation, and restructuring-related charges, discrete tax items and amortization expense. For reconciliations of non-GAAP

financial measures to the most directly comparable GAAP figures, please refer to the Investor Relations section of our website at



2012 Served Market †

$30B -1%

2017E Served Market †

$40B +4%

MedSurg ~18% CRV

~78%

MedSurg ~19%

CRV ~66%

Percent of Market Revenue

CRV Mkt Share

MedSurg Mkt Share

BSC’s Portfolio Transformation…

MedSurg Mkt Share

CRV Mkt Share

Adjacencies ~4%

Adjacencies ~15%

…is Well Underway Source: BSC Internal Estimates

Percent of Market Revenue


Large End Markets Expected to Stabilize…

CRV

MedSurg

2012A

Growth†

2013E

Growth†

2014-2015E

Growth†

2016-2017E

Growth†

IC (4%) (4%) (2%) (1%)

CRM (5%) (3%) (2%) (1%)

EP 10% 12% 12% 11%

PI 4% 5% 5% 5%

Endo 4% 4% 5% 5%

Uro/WH (3%) 2% 5% 5%

Neuromodulation 6% 6% 7% 8%

Core Market Total (1%) 0% 2% 2%

Adjacencies 30%+ 30%+ 30%+ 30%+

Total Served Market (1%) 1%+ 2%+ 4%+

…with Growth Accelerating from Adjacencies Source: BSC Internal Estimates


2012 BRIC Revenue†

2017E BRIC Revenue†

BRIC ~4%

BRIC ~10%

Drive Global Expansion…

Strengthening

commercial

presence

Experienced

leadership teams

Building new

capabilities

Driving utilization

…with Execution in BRIC Critical to Long Term Growth Source: BSC Internal Estimates


Improving Gross Margins…

2017E

72%

Divestiture Standard

Improvements

6%

Core

Volume/Mix Acquisitions Pricing

(5%)

2012A

68%

1% 1%

1%

Key Initiatives

• Execute pricing plan

• Improve product mix

• New product costs

• Value Improvement

Programs

• Plant network optimization

• Scale of businesses

…Through Disciplined Execution and Focus Source: BSC Internal Estimates


Strategy Targets

Processes Capabilities

Pricing strategy aligned with business strategy

Strategy is anchored in rigorous analysis

Value based pricing approach

Multi-element Pricing Approach…

Clearly defined decision rights

Standardized price negotiation process

Salesforce has incentives based on profit

Disciplined compliance process

Year-over-year price change goal

Salesforce has clear price targets

Net price realization tracked

Salesforce has the right tools and training

Closed loop system for learning

Leverage global best practices

…to Attack Global Opportunity


Reduce Product Cost by 6% Annually

• Value Improvement Programs

• Partner with vendors

• Plant Network Optimization

Improve Product Gross Margin Portfolio Health

• Focus on low gross margin products

• Invest in design enhancements

• Discontinue low profit products

New Products with Accretive Gross Margin

• Target new product gross margins

• Leverage technologies and materials

• Select site of manufacturing

Reduce ‘Other Cost of Sales’ by 5% Annually

• Apply ‘Lean Business Process’

• Sample work in progress

…to Drive Margin Improvement

Gross Margin Improvement Imperatives…


Improvement in Adjusted Operating Expenses…

2017E Productivity

Initiatives

Volume Growth

Initiatives

Med Device

Tax

2012A†

% of Sales

Economics

49%

47%

1%

3% (8%)

(4%)

6%

SG&A 35%

R&D 12%

Royalties

SG&A 33%

2%

R&D 12%

Royalties

2%

….from Targeted Productivity Initiatives Source: BSC Internal Estimates

Note: Adjusted Operating Expenses are Non-GAAP and exclude goodwill and other intangible asset impairment charges, acquisition and divestiture- related

net credits, litigation, and restructuring-related charges, discrete tax items and amortization expense. For reconciliations of non-GAAP financial measures to the

most directly comparable GAAP figures, please refer to the Investor Relations section of our website at www.bostonscientific.com.


Key areas include:

• Finance

• I/S

• HR

• Legal

• Clinical Trials

• Product Development

• Quality

• Customer Service

Key partners:

…due to Emerging Markets Initiative

Global Functional Benefit…


2007

Low Cost

High Cost

2012

Low Cost

High Cost

2017E

Low Cost

High Cost


Culture of Continuous Improvement…

…to Drive Operating Discipline

Leveraging Our Lean Business Process

Methodology

Training Our Employees and Engaging Our

Leaders

Recognizing Success Globally

Continuous Improvement:

80% leadership trained

Lean Methodologies:

7,500 employees trained


30% Faster • Integration of business, technical and quality

• Improved portfolio process

• Greater emphasis on speed to market & cost

• Application of lean business process

• Driving best practices

Key Enablers and Improvements

Improving R&D Speed and Efficiency while…

…Investing More in New Technology Source: BSC Internal Estimates

Improving Speed to Market

2012 2013 2014 2015

Tim

e to

Mark

et

510K PMA


2017E† 2012A†

Adjusted Operating Margin Expansion Opportunity…

19%

Opex† Gross Margin†

% of Sales

25% 4%

2%

…Expected to Yield 600 bps over 5 Years Source: BSC Internal Estimates

Note: Adjusted Operating Margin is Non-GAAP and exclude goodwill and other intangible asset impairment charges, acquisition and divestiture- related net

credits, litigation, and restructuring-related charges, discrete tax items and amortization expense. For reconciliations of non-GAAP financial measures to the

most directly comparable GAAP figures, please refer to the Investor Relations section of our website at www.bostonscientific.com.


Cash Conversion

= 166 Days

Inventory DIOH: 140

Customers DSO: 61 Vendors DPO: 35

…Drive Free Cash Flow

Incremental Working Capital Opportunities…

• Reduce safety stock

• Re-evaluate strategic buffers

• Consignment optimization tool

• Re-negotiate terms

• Increase discounts

• EDI technology

• Factoring programs

• Improved collection tools

$160M Opportunity from 5 Days Improvement †


Estimate through 2017†

Adjusted Free Cash

Flow†1

$6.5B+

Q4 2012 Cash on Hand†

$0.2B

$6.7B+

Expected Future Capacity for:

Acquisitions:

Growth adjacencies

Near-term revenue contribution

Stock repurchases under new $1B program

Risk contingencies:

Legal & tax

…Continued Strong Free Cash Flow

Improved Profitability will Drive…


1 - Adjusted Free Cash Flow excludes any potential amounts related to acquisition-, divestiture- and litigation-related items, significant tax audit settlements and restructuring and

restructuring-related items. For reconciliations of our non-GAAP financial measures, please refer to the Investor Relations section of our website at www.bostonscientific.com.



Operational

Revenue*

Adjusted

OI*

Adjusted

EPS*

Adjusted

FCF*

2014 – 2015E †

• Low-single digit

• Improve by 100 bps

annually

2013E†

• (2%) to 2%

• 18% to 19% (19+% excluding Med Device tax)

• $0.64 to $0.70 (Includes $0.04 of Med Device tax

impact)

Projected to Return to Growth in H2 2013…

…Followed by Consistent Revenue and Adjusted Earnings Growth Source: BSC Internal Estimates

2016 – 2017E†

• Mid-single digit

• Improve by over

100 bps annually

*All numbers are Non-GAAP and exclude goodwill and other intangible asset impairment charges, acquisition and divestiture- related net credits, litigation, and

restructuring-related charges, discrete tax items and amortization expense. For reconciliations of non-GAAP financial measures to the most directly comparable

GAAP figures, please refer to the Investor Relations section of our website at www.bostonscientific.com.

• Mid-high single digit

growth

• Strong cash flow

• High-single to low

double digit growth

• Strong cash flow • Strong cash flow


Agenda

9:00am Welcome

Jeff Capello


Mike Mahoney






11:05am Break

11:25am Clinical

Keith Dawkins, M.D.

11:45am Finance

Jeff Capello


Mike Mahoney

12:15pm Q&A


1:15pm Lunch


Focused on Turning Around Performance in 2013…

A turnaround in markets that are challenging but improving

Making significant changes to improve execution and performance

A clear strategy to accelerate revenue and earnings growth

Delivering strong cash flow and balanced capital allocation strategy

Advancing science for lifeTM – committed leadership team

…and Driving Consistent Revenue and Adjusted Earnings Growth


Agenda

9:00am Welcome

Jeff Capello


Mike Mahoney






11:05am Break

11:25am Clinical

Keith Dawkins, M.D.

11:45am Finance

Jeff Capello


Mike Mahoney

12:15pm Q&A


1:15pm Lunch


Q&A


Thank You


Appendix


Regulatory Disclosures CRM

WATCHMAN® Left Atrial Appendage Closure Device CE Marked.

In the U.S., this is an investigational device and not available for use or sale.

ADVANTIO® – INGENIO® – INVIVE® pacemakers MRI

Compatibility

CE Marked.

In the U.S., these are investigational devices and not available for use or sale.

RELIANCE® 4-FRONT lead

CE Marked.


INGEVITY™ pacing leads Worldwide, this is an investigational device and not available for use or sale.

Next Gen ICD/CRT-D System Device under development. Not available for use or sale worldwide.

IntellaTip MiFi™ Open Irrigated Catheter Worldwide, this is an investigational device and not available for use or sale.

Blazer® OI A-Fib Catheter

CE Marked.

In the U.S., these are investigational devices and not available for use or sale.

Rhythmia™ Medical Mapping System Device under development. Not available for use or sale worldwide.

Interventional Cardiology

Synergy™ bioabsorbable polymer drug-eluting stent CE Marked.

In the US, this device is investigational and is not available for use or sale.

Promus PREMIER™ Everolimus-Eluting PtCr Stent

Worldwide, this device is investigational and is not available for use or sale.

Note – CE mark is expected any time. Once it is CE mark, the caution can change to:

CE Marked.

In the US, this device is investigational and is not available for use or sale.

Lotus™ Aortic Valve System This is an investigational device worldwide and is not available for use or sale.

iLab® Polaris Device under development. Not available for use or sale worldwide.

OptiCross™ Imaging Catheter Device under development. Not available for use or sale worldwide.

Guidezilla™Guide Extension Catheter Device under development. Not available for use or sale worldwide.

Agent™Drug Coated Balloon Catheter Device under development. Not available for use or sale worldwide.

Neuromodulation

GUIDE™ DBS programming system Device under development. Not available for use or sale worldwide.

Peripheral Interventions

Vessix™ Renal Denervation System CE Marked.

In the U.S., this device is not available for use or sale.

Innova™ SFA Stent CE Marked.


Cobalt-Chromium Iliac BES CE Marked.

In the U.S., this device is not available for use or sale.

Ranger™ Drug-Coated Balloon Device under development. Not available for use or sale worldwide.

OffRoadTM Re-Entry Catheter CE Marked.


Direxion™ Microcatheter Device under development. Not available for use or sale worldwide.

Expel™ Device under development. Not available for use or sale worldwide.


Financial Disclosures

Market Represent Boston Scientific’s served markets. Identified growth markets CAGRS are for 2012-2017.

Operational Revenue and Growth Represents revenue on a constant currency basis excluding divested businesses.

Adjusted Gross Margins Represents gross margins excluding restructuring related costs.

Adjusted Operating Expense, Adjusted Operating Income and Adjusted EPS These results exclude acquisition and divestiture- related net charges, litigation, and restructuring-related

charges, discrete tax items and amortization expense.

Adjusted Free Cash Flow Excludes any potential amounts related to acquisition-, divestiture- and litigation-related items, significant tax

audit settlements and restructuring and restructuring-related items.

Non-GAAP Financial Measures For reconciliations of non-GAAP financial measures used in these presentations to the most directly

comparable GAAP figures, please refer to the Investor Relations section of our website at



investor day february 12, 2013 - investor...

Documents