BSX Q2 2025: WATCHMAN Growth 28%, Margins Hold Despite $130M Hit
- WATCHMAN Growth & Durability: The strong performance of the WATCHMAN portfolio—with 28% growth, high adoption rates (notably, 60% of EPs performing concomitant procedures), and expanded international approvals—supports its durability and signals continued revenue upside.
- Robust EP Portfolio & Pipeline Expansion: Boston Scientific’s comprehensive electrophysiology offerings, driven by technologies like FerriPulse and its iterative product enhancements (including label expansions into persistent AF), position the company as a leader in a growing market segment.
- ASC Rule Potential for Capacity Expansion: The potential shift of procedures to ambulatory surgical centers (ASCs) is viewed as a net positive, as it could increase capacity and streamline operations in markets where hospitals face capacity constraints, thereby enabling additional procedural volume over time.
- Reimbursement Pressure: Proposed Medicare cuts—such as the 16% reduction to physician fees for LAA—could dampen incentive for procedures like WATCHMAN implants, potentially limiting revenue growth for the business.
- Margin Pressure from Discontinued Products: The discontinuation of the Accurate Valve led to significant charges (up to $130 million in write-downs) and related operational challenges, which could continue to pressure gross margins and overall profitability.
- Uncertainty in ASC Adoption: The transition of procedures from hospitals to ambulatory surgical centers is expected to be gradual and selective. This slow adoption could limit the anticipated capacity benefits and may impact revenue as physicians shift procedures from a concomitant model that currently drives higher volume.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | 23% increase ( ) | The overall revenue grew by approximately 941 million USD to 5,061 million USD, reflecting strong execution across segments building on previous periods’ gains, with ongoing product innovation and acquisitions contributing to robust operational performance. |
Cardiovascular Segment | 27% increase ( ) | With revenue rising from 2,637 million USD to 3,345 million USD, sustained growth in key franchises—including recent launches and technological advancements seen in prior periods—helped drive a higher share of sales through both organic improvements and strategic acquisitions. |
MedSurg Segment | 16% increase ( ) | The segment increased from 1,483 million USD to 1,716 million USD, building upon steady product performance and operational improvements realized in earlier quarters, along with strategic portfolio enhancements that continued to bolster sales. |
U.S. Revenue | 31% increase ( ) | U.S. revenue surged from 2,466 million USD to 3,224 million USD, reflecting strong domestic demand driven by high-performing product lines and market momentum established in previous periods, particularly in cardiology and MedSurg offerings. |
Asia-Pacific Revenue | 18% increase ( ) | Revenue in the Asia-Pacific region climbed from 670 million USD to 790 million USD, supported by an expanding footprint in China and improved commercial execution, while benefiting from a positive foreign currency impact that built on earlier regional growth trends. |
Emerging Markets Revenue | 11% increase ( ) | Growing from 680 million USD to 758 million USD, the increase in Emerging Markets can be attributed to continued strategic expansion and robust performance in China, reflecting an acceleration over previous quarters despite some negative currency headwinds. |
Europe, Middle East & Africa | 7% increase ( ) | With revenue rising from 822 million USD to 878 million USD, the modest growth in the EMEA region underscores steady performance from mature product lines such as electrophysiology and anchor technologies, consistent with prior period trends and strategic market efforts. |
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Margin Impact
Q: Role of Accurate write-down on margins?
A: Management noted a $130M write‐down due to Accurate discontinuation was largely offset by favorable mix, keeping gross margins roughly flat for the year. -
WATCHMAN Growth
Q: How durable is WATCHMAN performance?
A: Management emphasized that WATCHMAN grew 28% this quarter with strong concomitant adoption and plans to broaden its global footprint, indicating robust durability. -
Med Surg Performance
Q: What drove med surg growth this quarter?
A: Endoscopy, Neuromodulation, and steady Urology performance—with improvements like the Axonics integration—delivered solid high single-digit growth. -
OpEx Management
Q: How will OpEx trends support margin expansion?
A: By reinvesting in R&D and commercial efforts, management expects to achieve a 75–100bps operating margin expansion while carefully controlling expenses. -
Market & Tax
Q: How do market growth and tax changes impact margins?
A: Strategic investments are bolstering growth, and recent tax legislation has largely removed previous headwinds, with updated guidance expected soon. -
EP Expansion
Q: How broad is the EP portfolio growth?
A: The EP segment is rapidly expanding with enhanced mapping, iterative FaroWave improvements, and new catheter launches driving long-term potential. -
ASC Impact
Q: Will ASC shifts affect WATCHMAN volumes?
A: Management sees the ASC move as positive, gradually shifting simpler, lower-risk cases out of hospitals without significantly reducing WATCHMAN implant volumes. -
Mapping Moat
Q: How strong is your mapping portfolio moat?
A: With a 60% adoption rate among WATCHMAN implanters and continuous innovation across the EP suite, the mapping platform remains a distinctive competitive advantage. -
Capacity & Rollout
Q: Is capacity a concern in lower volume centers?
A: Current capacity remains robust with healthy backlogs, and planned ASC conversions will further relieve potential constraints while expanding into smaller centers. -
Renal Denervation
Q: What is the update on the Sanofi RDN deal?
A: The recently closed deal positions Boston Scientific in the ultrasound RDN market, with clinical milestones expected soon though not first to market. -
Medicare Rates
Q: Impact of Medicare LAA rate cuts on procedures?
A: Management is cautiously concerned but believes that appropriate valuation of procedural complexity will keep the negative impact minimal, with support provided to affected societies.
Research analysts covering BOSTON SCIENTIFIC.