Boston Scientific Corp Q1 FY2026 Earnings Call

Good morning, and welcome to the Boston Scientific First Quarter 2026 Earnings Call. 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.

Thank you, Bailey, and thanks to everyone for joining us. With me today are Mike Mahoney, Chairman and Chief Executive Officer; Jon Monson, Executive Vice President and Chief Financial Officer. During the Q&A session, Mike and Jon 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 10-K. 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 the proposed transaction with Penumbra. Boston Scientific has filed with the SEC a registration statement on Form S-4 containing a proxy statement of Penumbra and a prospectus of Boston Scientific that contains important information about Penumbra, Boston Scientific, the proposed transaction and related matters. At this point, I'll turn it over to Mike.

Thanks, Lauren, and thank you to everyone for joining us today. The 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 $0.80 grew 6%, achieving the high end of our guidance range of $0.78 to $0.80 and Q1 adjusted operating margin was 28%. Turning to our outlook. 2026 has proven to be a more challenging year than we initially expected. And to that end, we are guiding to organic growth of 5% to 7% for the second quarter and reducing our full year guidance to 6.5% to 8%, reflecting unanticipated headwinds and changing business patterns that I'll cover in more detail on this call. Our second quarter '26 adjusted EPS guide is $0.82 to $0.84, and we now expect our full year adjusted EPS to be $3.34 to $3.41, representing growth of 9% to 11%. I and our company do not take this change lightly. At Boston Scientific we take great pride in 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 long-range plan (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 U.S. 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 was driven by FARAPULSE, coronary and vascular therapies and Neuromodulation, offset by the discontinuation of ACURATE and POLARx, largely impacting the EMEA region. Last year, we did announce our intent to discontinue the POLARx Cryo catheter but have accelerated that timing given some recent safety events and the availability of nonthermal ablation technologies. As we look forward, we expect that growth in demand will continue to improve with the annualization of the ACURATE discontinuation in 2Q and ongoing momentum from FARAPULSE, WATCHMAN and other key products. Asia Pacific 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, FARAVIEW and FARAPULSE as well as strong reception of WATCHMAN FLX Pro. But within the quarter, we're pleased to have received PMDA approval for the de novo indication of our coronary drug-coated balloon agent DCB, expanding the patient population eligible for this differentiated technology. China also delivered strong growth, inclusive of the impact of the VBP, led by our Interventional Cardiology portfolio, particularly our imaging technologies. We are making consistent progress against our FARAPULSE goals in a competitive market in China and received NMPA approval within the quarter for OPAL HDx Mapping system with FARAVIEW, 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 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 insurers to unlock value within our StoneSmart ecosystem alongside LithoVue Elite and we also anticipate launching additional new products in 2026 including a next-generation ureteroscope later this year. Our sacral neuromodulation business continued to see impact from commercial model disruption. And importantly, within the first quarter, we have hired and trained a significant number of new sales and clinical reps. We do anticipate improvement in the Pelvic Health franchise throughout the year as the sales and marketing commercial organization capability stabilizes, along with the addition of eCoin percutaneous tibial nerve stimulation with the closure of Valencia Technologies in April. We expect our Urology performance to improve throughout the year. However, we now expect our full year urology 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're 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 of the divestiture. Our pain business grew mid-teens, inclusive of a strong quarter for Intersect, as I mentioned, which closed at the end of January. Intercept continues to perform well, supported by compelling 5-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 U.S. Cardiovascular delivered organic sales growth of 11%. Within those businesses, we'll start with ICVT, Interventional Cardiology and Vascular Therapies. Interventional Cardiology grew organic sales driven by double-digit growth in our coronary therapies franchise, with strength in atherectomy and ongoing momentum with our imaging portfolio. Earlier this year, we completed enrollment in our Fracture trial, studying the use of the IVL device in coronary arteries with data to be presented at EuroPCR on May 19 and we continue to expect launch in the U.S. in the first half of '27. Our Vascular Therapies business had a nice quarter, growing 7% organically driven by double-digit growth in TCAR and other structural therapies, and this was offset by a large VBP impact on their arterial business in China, which is expected to annualize in second quarter. We expanded our launch with our peripheral IVL for above-the-knee with positive physician 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 was presented at ACC evaluating catheter-directed anticoagulation versus anticoagulation alone, providing new clinical evidence that can help physicians make more informed decisions for patients with acute pulmonary embolism. We remain excited about the opportunity to combine the Penumbra team and their highly differentiated portfolio with Boston Scientific. We anticipate that the deal will close in the second half of '26, 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 a limited market release. Any-day dosing is enabled by the TheraSphere 360 management platform, which positions treatments on more days of the week and offers 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 of 2025 replacements. On the high-voltage side, we saw some impact from the Middle East region impacting this particular business. In first quarter, our diagnostics franchise grew low double digits with continued strength across our broad diagnostic portfolio. And overall, we anticipate our CRM business to return to growth in the second quarter and expect low single-digit growth in the year, supported by our full launch of the new CRT product in the second quarter within the U.S. Turning to WATCHMAN. WATCHMAN grew 19% organically in the first quarter, which was below our expectations, with pressure on volumes in the U.S. as the quarter progressed; we believe this reflects the annualization of the initial concomitant adoption tailwind and a softening in stand-alone WATCHMAN cases driven by hospital capacity-related procedure prioritization and evolving reimbursement dynamics. Importantly, we remain focused on expanding physician and patient education within the approximately 5 million patient indicated population today. And we expect data from CHAMPION to support a return to 20% market growth over the LRP. In late March, CHAMPION data was presented as a late breaker at ACC with the trial achieving all primary and secondary endpoints, reinforcing the safety and efficacy of WATCHMAN and highlighting the high burden of clinically relevant bleeding on oral anticoagulation. As the next step, in addition to submitting for a label update, we are working with medical societies to support consideration of changes to LAAC guidelines using the totality of WATCHMAN clinical evidence ahead of any update to the National Coverage Determination. We also have additional data being presented at HRS this weekend, a CHAMPION 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 U.S., 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 U.S. In the U.S., while concomitant demand continues to strengthen, we anticipate overall WATCHMAN growth to decelerate with tougher comps and expect stand-alone WATCHMAN procedures to improve over the course of the year as it takes time for the totality of this clinical evidence to translate into 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% globally, 18% in the U.S. 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 FARAPOINT. U.S. growth was driven by continued expansion of the OPAL mapping system and strong catheter utilization of FARAPOINT, 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 U.S., we are updating our full year expected growth to be in the mid-single-digit range, with continued strength internationally at plus 20%, inclusive of full year impact of approximately $35 million from the discontinuation of POLARx. This outlook is a change from previous commentary but we feel it is prudent and reflects ongoing competitive dynamics, offset by strength in our evolving FARAPULSE PFA catheter and mapping portfolio. We are highly confident in our ability to maintain our leadership position in PFA both in the U.S. and internationally through investment in commercial capabilities, ongoing clinical evidence, our expanding mapping footprint, and an impressive next-generation catheter which includes our FARAWAVE Ultra in the first half of '27. This weekend, AVANTI-GUARD cited FARAPULSE new data in a 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 PFA study setting for FANAFLEX, which is our large global mapping and ablation catheter for more complex arrhythmias. We anticipate initiating our IDE later this year and continue to expect launching FANAFLEX in the U.S. in 2028. 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 weighted average market growth rate (WAMGR) 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 licensing and M&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 patient care and I'm confident in the sustainability of our top-tier financial performance. With that, I'll hand it over to Jon.

Thanks, Mike. First quarter consolidated revenue of $5.203 billion 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 $0.78 to $0.80. Results include an approximate $0.01 headwind from FX. Adjusted gross margin for the first quarter was 70.5%, which represents a 100 basis point decline versus the first quarter of 2025 and was 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 28.8%. 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. 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 billion shares in the first quarter. Free cash flow for the first quarter was $170 million with $348 million from operating activities, less $177 million in net capital expenditures. We now expect full year 2026 free cash flow to be approximately $4 billion. As of March 31, 2026, we had cash on hand of $1.453 billion and our gross debt leverage ratio was 1.8x. Our top capital allocation priority remains strategic tuck-in M&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 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 the 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 $0.04 headwind from foreign exchange. We expect second quarter adjusted earnings per share to be in the 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&A.

Thanks, Jon. 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 yourselves to one question. Bailey, please go ahead.

Our first question comes from Robbie Marcus with JPMorgan.

Great. I wanted to ask whether Mike or Jon, three months ago on the fourth quarter call provided 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 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?

Yes. Thanks, Robbie. I would say first quarter, we're overall pleased with the result. The 9.4% growth and on track for our margin and EPS. Essentially, what we saw, there are really three main contributors to the takedown of the guide, which is not a happy moment and we are very disappointed in that, as we're a company that consistently delivers on our commitments. So this is a guide down that we are not proud of, but we think it's the right thing to do. That reflects the current environment and the prudence required. But we can talk about the future of the company. The timing of the takedown particularly focused on three areas: primarily EP, WATCHMAN and Urology. If we start with WATCHMAN, we saw a very, very strong growth engine in 2025; we grew almost 30%. We saw very consistent volume trends in January. So there was no signal to any WATCHMAN weakness until early to mid-February, when we started to see declining WATCHMAN volume for the first time. As we did the analysis on that, essentially it is a strong increase in concomitant growth and a deceleration of stand-alone WATCHMAN. We can go through more details on that. That's the first primary one. 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 U.S. and globally in '26. We have a very rich R&D cadence and the launches over the next 2.5 years are very impressive. But that being the case, even though the market is strong, we lost a bit more share than we anticipated. So in this guide we anticipated greater share erosion than we particularly saw and still allows us to be the market share leader in PFA, but we're guiding globally to approximately 10% for EP. The last reason making up the guide change is Urology, which I mentioned had a difficult first quarter. Sacral neuromodulation had a real tough period and that business is growing double digit in other areas, 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 improve as the quarters go on, and we have key product launches that will impact that business and help it in 2027. But it's essentially going to be a below-market year in urology. So those are the three contributors overall to the guide down. We did this very objectively and believe it is prudent. As you look forward in the LRP, we're not going to make a detailed comment on the LRP top line growth at this point. We feel that will be under some pressure given the 2026 guide. We will update that more in the future when we go through our strategic planning process. We are comfortable with the 150 basis points of margin improvement in the LRP, and we're comfortable with delivering double-digit EPS growth over the LRP. Lastly, we compete in an approximately 8% WAMGR market. We almost always grow at or above this WAMGR. This setup for '26 would show us at market or slightly below. This is not Boston Scientific's typical result, and in '27, we have a number of key product launches and far easier comps than we do this year. We're very bullish about '27 and '28 and can detail that more later. I hope that long answer helped a little bit.

Our next question will come from Joanne Wuensch with Citi.

Mike, I think you just summarized what everybody needed to hear in 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, WATCHMAN and Urology? I'm sort of trying to think about the gist of Robbie's question. How do we get from first quarter to fourth quarter and then the jumping off point into 2027? And I just want to make sure those are somewhat set up appropriately.

I'll take a shot and Jon you can clean up the math here. 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. We also think with some of the impacts of some transient trends in EP and endoscopy 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 of 5% to 7% and the full year guide is 6.5% to 8%. Jon, do you want to touch on sequencing and more detail?

Yes. Thanks, Joanne. So maybe stepping through WATCHMAN and EP. You heard Mike mentioned in his prepared remarks that we expect global WATCHMAN to grow mid-teens for the year. So that would imply, Joanne, low double-digit growth for WATCHMAN for the rest of the year. For EP, global EP at about 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, expect 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, a relatively consistent profile with a slight uptick in the second half as Urology and CRM drive better growth as we move through the year.

Our next question comes from Larry Biegelsen with Wells Fargo.

I guess on EP, just a little bit more color on the market and share assumptions, how they've changed. Where is the share pressure coming from Mike? And on U.S. EP, sales have been flattish for the past 3 or 4 quarters. Should we expect relatively flat U.S. EP sales for the rest of the year? And what does that mean for 2027? I think people are trying to understand when you can get back to market growth in EP.

Yes, I think Jon gave some of those numbers for the year. We expect global EP to be approximately 10%. In the U.S., particularly, we expect mid-single-digit growth for the U.S. business, which implies modest sequential performance through the year. Internationally we expect about 20% growth. What's different about it from our previous commentary where we said we were growing at market is that we're seeing increased competition. There are three other large players in the marketplace. Medtronic continues to be a solid competitor, J&J is enhancing their footprint in PFA and Abbott is in the early stages of launch in the U.S. In Europe, all these companies are performing and we continue to grow at a 20%-plus clip internationally where we have an advanced mapping capability and platform. So we do expect a little bit more share erosion than we'd anticipated in the past in previous guidance, but we think this is the appropriate guide to provide and it allows us to continue to be the PFA market leader while we're bringing our next-generation products forward. Importantly, our commercial capabilities continue to strengthen every quarter. We continue to install more OPAL mapping platforms, our maps get more sophisticated, and we continue to add new catheters to the mix along with FARAPOINT, which we recently launched. We'll continue to invest commercially and in marketing, particularly behind WATCHMAN and EP. We're confident we'll maintain PFA leadership, but we are seeing more share pressure than we expected earlier in the year.

Our next question comes from Rick Wise with Stifel.

I was hoping you might 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 or the reaction to the data than I perhaps expected. How are you addressing some of the concerns that you heard? How are you changing the narrative about the risk of WATCHMAN? And maybe how specifically are you going to tackle the growth rate factors that impacted this quarter?

Yes, I'll ask Ken to add comments here. First on some of the factors. First of all, we're very proud that we essentially created this category, leading clinical science and creating a concomitant category. This category grew rapidly in 2025, and we expected mid-teens growth this year. We're seeing evolving practice patterns as the product continues to evolve with great clinical data. With extraordinary growth in ablations and WATCHMAN, we are seeing some practice pattern changes that I highlighted which became more acute in February. We're seeing terrific concomitant demand. Bottom line, we are seeing pressure in the stand-alone WATCHMAN implant business, which historically has not been a challenge for us. Those challenges in stand-alone WATCHMAN are multifactorial. You've seen a bit more shift to EP physicians from interventional cardiologists as interventional cardiologists are less exposed to concomitant procedures due to other structural procedures they perform and changes in reimbursement. You're seeing strengthening among EP physicians. Hospitals are adapting operational workflows; they're adding new labs and moving to ASCs because they've experienced multiyear growth in these procedures. So hospitals are investing but also managing their own workflow constraints. There's been a consistent backlog for WATCHMAN, which indicates high demand. So what are we doing to make it better? We're doing a lot. The most impactful quick action is commercial investment. We are putting more focused commercial resources directly on WATCHMAN. Today, many territory reps cover both EP and WATCHMAN; we'll augment with additional dedicated WATCHMAN focus and increase marketing to highlight the CHAMPION data. We'll also make investments to engage with Medicare and medical societies to leverage the clinical data. It's important to note that today about 25% of WATCHMAN procedures are concomitant; we expect that to grow to 50% over the LRP. That view hasn't changed. What we've seen is an offset in standalone WATCHMAN procedures. Ken, do you want to add?

Yes. I don't have too much to add beyond Mike's comments. First, it takes time to disseminate data and to educate physicians on results like CHAMPION. We were not able to pre-promote ahead of the data release and ahead of publication in the New England Journal of Medicine. Having said that, the trial met all of its primary safety and efficacy endpoints and important secondary endpoints. We still anticipate a significant labeling update, updated guidelines and eventually an updated national coverage determination, but it just takes time for that to play through. In parallel, we see the opportunity to continue to improve operational efficiencies required to unlock more capacity for handling these procedures. Hospitals are building out dedicated programs for these procedures; the move of simpler procedures to ASCs will further unlock capacity. High-level, we see a very large opportunity for continued growth in concomitant procedures. One statistic to add: roughly half of ablations for AFib in the U.S. today are done in patients who are at high risk for stroke, with a CHA2DS2-VASc score of 3 or higher and who are potential candidates for WATCHMAN. So the clinical opportunity is substantial.

Our next question comes from David Roman with Goldman Sachs.

I wanted maybe just to toggle over to the other 70-plus percent of the business that's non-EP and non-WATCHMAN. I 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 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 towards kind of an 8% growth level where it was before the ACURATE discontinuation.

Sure. The area not in the spotlight is ICVT, Interventional Cardiology and Vascular Therapies, which had the ACURATE discontinuation anniversary in May; that will help the business. This business is performing well, driving double-digit growth in China despite VBP, and our imaging businesses continue to exceed internal expectations. We're excited about the IVL peripheral and coronary programs; the seismic IVL peripheral launch has been well received and we expect meaningful activity in 2027 with manufacturing ramps and below-the-knee indications coming in the second half of this year. The fracture trial readout at EuroPCR will support our coronary IVL launch in 2027. The Interventional Oncology business grew mid-teens and had a workflow product launch this quarter. We are hopeful the Penumbra vote on May 6 goes in favor and we close in the second half. That combination brings differentiated capabilities and is a powerful expansion for our portfolio. MedSurg overall: EP had the strong performance but some share pressure we discussed. Urology underperformed in Q1; we have clear line of sight to improvement in 2026 but not enough to return to double-digit immediately. Endoscopy is doing well with product launches coming over the next nine months. Overall, MedSurg will be a bit lighter in '26 than we anticipated and we see improvement as the year progresses with a stronger '27.

Our next question comes from Travis Steed with Bank of America.

On the WAMGR, I think there was a slight change to the WAMGR from 9% to 8%. I wanted to touch on that. And on the LRP, was the message more 'we are not achieving 10%'? Or was it more 'we'll kind of wait and see how it all plays out' because I'm thinking about '27 — you sound pretty bullish on '27 with product launches and easier comps. So just kind of curious where you ended up on the WAMGR messaging?

On the WAMGR drivers, at Investor Day we were clear that we're at about 8% moving toward 9% over the LRP. So that's consistent: we're in the right high-growth markets and expect WAMGR nearer to 8% now moving higher over time. On the LRP, what we can say confidently now is we're comfortable with delivering about 150 basis points of margin improvement and double-digit EPS growth over the LRP. On the sales side, with the 2026 guide at 6.5% to 8%, that puts pressure on any previous 10%-plus LRP revenue assumptions. That's likely an upside scenario at this point. It's premature for us to give a new explicit LRP organic revenue growth number now; we'll work through our strategic plan and launch cadence and update over the course of the year.

Our next question comes from Josh Jennings with TD Cowen.

I just wanted to touch on the EPS guidance revision. I think some may be concerned that with the deceleration in high-margin products, the U.S. EP franchise and WATCHMAN franchise, there may be incremental pressure on margins. Any more details you can share on offsets or the impact on profitability with the revised outlook for U.S. EP and WATCHMAN?

Yes. We will see less mix benefit than we expected at the start of the year, which is a reason we expect our gross margins now will be slightly lower than 2025. But what we're doing is driving leverage across OpEx. Most immediately, we put in much more restrictive spend controls across the company. We're reducing spend that isn't correlated to revenue generation or that isn't pointed at our key product pipeline programs. We also have structure optimization initiatives including scaling centralized shared services and accelerating AI automation and other productivity initiatives. We're reviewing the R&D portfolio to ensure we're focusing on the most impactful programs and trimming less impactful projects. We have a number of initiatives focused on driving OpEx toward the most revenue-impactful areas and squeezing everything else to protect profitability.

Our next question comes from Marie Thibault with BTIG.

I wanted to double back to Urology. I think you mentioned you have some active execution plans in place for improving the sacral neuromodulation business. Can you dive a little deeper into that? I know that's something you've been focused on for a couple of quarters and maybe it's going a little bit slower than hoped. Any update on how that's going?

Yes, it's definitely gone slower than we anticipated. We had too much commercial turnover over the last 6 to 9 months, and we learned from that. We've made adjustments. At this point, we feel we have the right leadership structure in place from regional managers on out that are key to driving a business like this. We had turnover at manager, clinical rep and territory levels. A lot of the hires have now been made. We've hired nearly 100 people across various stages of training, both clinical reps and territory reps, to strengthen that commercial team which is needed not only for case coverage but also to drive patient activation and pull-through to procedures. That is an area where other competitors have historically done well. We're also leveraging internal capabilities from WATCHMAN and others. Primarily it was a commercial disruption issue that lingered longer than we wanted. But at this point we have made the hires, provided training, and are confident we'll see improvement in that business as the quarters progress.

Our next question comes from Vijay Kumar with Evercore.

Mike, I had one question on the buyback. Generally, when we see companies announce large deals like Penumbra, a $15 billion deal, we generally see buybacks being suspended. So my question is, is the $2 billion buyback in 2Q signaling anything on the deal? Jon, I think you mentioned you had $1.5 billion of cash on hand. How are you funding this $2 billion buyback? Are you going to raise any debt? Why now?

Thanks, Vijay. We intend to fund the approximate $2 billion repurchase through cash on hand. We had $1.453 billion on the balance sheet as of March 31 and project cash flows over the second quarter to fund the program. We've been restricted from trading and 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 about $2 billion of our shares, subject to market conditions. Why now? We look at the stock price, the outlook for the company, our confidence in the pipeline and think it's a good use of capital.

Our next question comes from Matthew O'Brien with Piper Sandler.

I was hoping to talk a little bit about Penumbra. I know the vote is coming up here in just a few weeks. Just curious about Boston's comfort level in adding additional cash to that transaction, if required, given the pullback in your stock and the degradation in 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 previous valuation if a higher cash component is required?

Yes, I would comment on the strategic rationale. We've gotten to know the Penumbra leadership team well. We focused on their momentum and the talented team. We plan to run Penumbra largely as a distinct business unit, keeping their strong commercial team and R&D pipeline intact. We believe the combination is a powerful and differentiated growth driver for Boston Scientific over time. We have been clear about our financial approach and remain hopeful and confident the shareholder vote on May 6 will approve the transaction as planned.

Our last question will come from Matt Taylor with Jefferies.

I just wanted to follow up on some of the comments that you made about the outlook for WATCHMAN and PFA. Wondering 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 stand-alone this year and next?

I won't call out a specific numerical split between concomitant and standalone for the quarter, but I will reiterate that concomitant demand has strengthened while stand-alone WATCHMAN procedures have softened recently. Our full year WATCHMAN outlook is mid-teens globally with low to mid-teens growth in the U.S. and international growth north of 20%. That outlook is slower than the first quarter pace and reflects tough comps, operational efficiency issues at some hospitals and the time it takes for the CHAMPION evidence to fully translate into practice. Over time, we expect CHAMPION to drive expansion of the indicated population and for standalone procedures to recover as education, labeling updates and operational capacity improvements take hold. For next year, with easier comps and product and commercial momentum, we are optimistic about growth re-acceleration.

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 the pertinent details for the replay. Thank you, everyone.

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