Peter Chickering

Peter Chickering inquired about the Q1 2026 guidance, noting that the hospital segment's proportion of full-year EBITDA seemed lower than usual, and asked for the quantification of DPP received in Q4 2025.

Answer

Saum Sutaria, Chairman and Chief Executive Officer, clarified that USPI's Q1 guidance is 22% of its full-year guidance. Sun Park, Executive Vice President and Chief Financial Officer, explained that the $40 million one-time benefit in Q1 skews total rates, otherwise Q1 percentages are standard. Ms. Park also stated that Q4 2025 DPP was $315 million.

Peter Chickering asked about the first quarter 2026 guidance, noting that 24% of full-year EBITDA is lower than normal, particularly for the hospital segment. He questioned if this was due to fundamental factors like flu or lower surgical demand, or the $40 million prior period DPP, and also requested the Q4 2025 DPP amount.

Answer

CEO Saum Sutaria clarified that USPI's Q1 2026 guidance is 22% of its full-year guidance. For the hospital segment, the Q1 percentage is skewed by a $40 million one-time benefit, but otherwise, it reflects standard annual Q1 percentages. EVP and CFO Sun Park confirmed that the DPP received in Q4 2025 was $315 million.

Peter Chickering questioned the international business's top-line growth drivers (M&A vs. organic) and margin trends, the rationale behind the projected slowing rate of improvement for the IKC segment in 2026, and the modeling assumptions for new patient starts in 2026, particularly regarding payer mix.

Answer

Joel Ackerman, CFO and Treasurer, indicated that international business growth is typically split evenly between M&A and organic contributions, with margins expected to continue improving. He explained that the IKC segment's improvement rate is naturally slowing as the business matures, with $20 million annual operating income growth being a comfortable target. Javier Rodriguez, CEO, stated no dramatic change is expected in new patient starts for 2026, with the commercial mix remaining similar to previous years, aside from the impact of HIX changes.

Peter Chickering with Deutsche Bank asked for insights into the international business's top-line growth drivers, distinguishing between M&A and organic contributions, its margin trajectory, and questioned the rationale behind the projected slowing rate of improvement for Integrated Kidney Care (IKC) operating income in 2026, despite significant past gains. He also inquired about new patient starts for 2026 and their expected payer mix.

Answer

CFO Joel Ackerman indicated that international business growth, both top and bottom line, is expected to be split evenly between M&A and organic contributions, with margins anticipated to improve through leverage. He explained the IKC's slowing improvement rate in 2026 as a natural maturation process, with less opportunity for dramatic margin increases as the business scales, making $20 million annual growth a comfortable expectation. CEO Javier Rodriguez stated no dramatic change is expected in new patient starts for 2026, maintaining a similar commercial mix as previous years, with the caveat of changes related to HIX plans.

Peter Chickering inquired about the proposed reimbursement for AF ablation in Ambulatory Surgical Centers (ASCs) for next year, asking what proportion of AF ablations could shift to ASCs and how this increased capacity might fuel additional market growth.

Answer

Chairman and CEO Mike Mahoney noted strong interest in ASCs in states without certificate of need, such as Arizona and Florida, which he believes will help address hospital backlogs for Therapulse. He anticipates an increasing trend in 2026 and over the LRP, estimating that 40% of U.S. AF ablations are in states not requiring a certificate of need. Mahoney emphasized Boston Scientific's unique position to succeed in this market due to Therapulse's reliability, favorable COGS/gross margin profile, and complementary cardiovascular products. Chief Medical Officer Dr. Ken Stein added that while ASC build-out will be a slow ramp, the Therapulse ecosystem is well-suited for these procedures. Mike Mahoney concluded that the PFA journey is still in early innings, with opportunities for new account openings, deeper physician penetration, and increased Watchman training for electrophysiologists, making ASCs crucial for managing future volume demands.