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    Boston Scientific Corp (BSX)

    Q4 2023 Earnings Summary

    Reported on Jan 10, 2025 (Before Market Open)
    Pre-Earnings Price$61.42Last close (Jan 30, 2024)
    Post-Earnings Price$64.00Open (Jan 31, 2024)
    Price Change
    $2.58(+4.20%)

    What went well

    • FDA Approval and Launch of FARAPULSE in the U.S.: Boston Scientific received FDA approval for FARAPULSE, its pulsed field ablation system for atrial fibrillation, and expects to disrupt the U.S. electrophysiology market with this innovative technology, driving significant growth in 2024 and beyond. , ,
    • Strong Growth of WATCHMAN Device Sales: The WATCHMAN left atrial appendage closure device achieved 23% organic sales growth in Q4 2023 and 25% for the full year, with continued strong utilization and new product launches expected to sustain this momentum in 2024.
    • Commitment to 8-10% Organic Revenue Growth: Despite delays in U.S. approval of the ACURATE Neo2 TAVR system, Boston Scientific remains committed to its long-term goal of 8% to 10% organic revenue growth over the 2024-2026 period, demonstrating confidence in its diversified portfolio and growth drivers. ,

    What went wrong

    • Delayed U.S. approval and launch of ACURATE Neo2: The company announced that the U.S. approval for the ACURATE Neo2 TAVR device will not occur in 2024 as previously expected, due to the need to wait for full one-year data from the ACURATE IDE study, potentially impacting growth in the U.S. market.
    • Flat to slightly decreased gross margins expected in 2024: Management indicated that gross margins in 2024 are expected to be flat or slightly below the 2023 rate of 70.7%, due to foreign exchange headwinds and investments in manufacturing capacity, which may challenge margin expansion goals.
    • Uncertainty around ACURATE IDE study results: The inability to disclose interim data from the ACURATE IDE study and the decision to await full one-year data introduces uncertainty in the regulatory strategy and may put the U.S. TAVR launch at risk or cause further delays.

    Q&A Summary

    1. ACURATE Neo2 Delay
      Q: Does U.S. TAVR launch delay impact guidance?
      A: Despite the delay of ACURATE Neo2 approval in the U.S., we remain fully committed to our 8% to 10% organic growth CAGR over 2024–2026. We're awaiting the full one-year data readout of 1,500 patients by year-end to determine our path forward, but this does not alter our financial targets.

    2. Growth Guidance Confirmation
      Q: Are you sticking to long-term growth targets?
      A: Absolutely, there's no change to our financial goals; we're fully committed to the 8% to 10% organic growth over the 2024–2026 period. We grew 12% in 2023 and continue to outpace most of our peers.

    3. FARAPULSE U.S. Approval
      Q: How will FARAPULSE impact guidance?
      A: The U.S. approval of FARAPULSE is included in our 8% to 9% full-year growth guidance. While contributions will begin in Q1, more significant impact is expected from Q2 to Q4 as we roll out the technology and contract with hospitals.

    4. ACURATE Neo2 Interim Data
      Q: What happened with ACURATE Neo2 trial?
      A: Based on an interim analysis, we decided to await the full one-year follow-up of 1,500 patients. Consequently, U.S. approval won't occur in 2024; we'll assess our path forward after the full data readout in the second half of 2024.

    5. M&A Activity and Axonics Acquisition
      Q: How active will you be in M&A?
      A: Tuck-in M&A remains our #1 capital allocation priority, and we'll continue to be active. The recent acquisition of Axonics is a strategic fit, and we're excited to leverage our urology channel to drive adoption and growth.

    6. Gross Margin Outlook
      Q: What's the gross margin expectation for 2024?
      A: We anticipate gross margins to be flat or slightly below the 70.7% achieved in 2023. While inflation is easing and product mix is favorable with FARAPULSE, headwinds like foreign exchange and manufacturing investments may impact margins.

    7. International Expansion of FARAPULSE
      Q: What are FARAPULSE opportunities in China and Japan?
      A: Approval in China and Japan is expected in the second half of 2024, opening significant opportunities in these large EP markets. We'll build on our momentum in Japan and invest to expand our presence in China.

    8. Electrophysiology (EP) Business Growth
      Q: Any reason EP growth would slow in 2024?
      A: No, we don't anticipate a slowdown. With FARAPULSE approval and improved manufacturing capacity, we expect continued strong growth in our EP business. The underpenetrated market and FARAPULSE's advantages support ongoing expansion.

    9. WATCHMAN Growth Outlook
      Q: How should we think about WATCHMAN growth?
      A: WATCHMAN grew 25% in 2023, and we plan to sustain robust growth by rolling out WATCHMAN FLX Pro in the U.S. starting in Q1. We're committed to expanding the market through clinical trials and expect to continue gaining share.

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