Beta Finch - Boston Sci. - BSX - EN

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**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex, joined as always by Jordan, and today we're digging into Boston Scientific's third quarter 2026 results. And folks, there's a lot going on here — a cyber incident, competitive pressure, and some pretty candid talk about 2027 being a tough year. But before we get into it...

This podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

**JORDAN:** Alright, let's set the scene. Boston Scientific, ticker BSX, has been a Wall Street darling for years — consistent growth, strong execution. But this quarter was rough.

**ALEX:** Rough is right. Organic revenue grew just 1.5%, way below their guided range of 3% to 5%. Adjusted EPS came in at 73 cents, down 3% year-over-year, versus a guide of 80 to 82 cents.

**JORDAN:** And the big culprit here is this cybersecurity incident that forced an operational outage. For about two weeks, they literally couldn't manufacture or ship product in some cases.

**ALEX:** Right, management says that knocked off roughly 300 basis points of revenue growth and about 7 cents of EPS in the quarter. The good news — operations were fully back online by September 8th. But here's the kicker: the pain doesn't stop there. They're expecting another 200 to 300 basis points of headwind in Q4 because customers over-ordered at the end of Q3 to restock inventory, and now that has to normalize.

**JORDAN:** It's like a hangover from the outage. You binge-order to protect your supply chain, and then the following quarter you're just burning through that excess inventory instead of placing new orders.

**ALEX:** Exactly. And that's part of why Q4 guidance is actually a revenue *decline* — negative 1% to negative 3% organically, with EPS of 77 to 79 cents. For the full year 2026, they're now looking at about 4% organic growth and EPS of $3.16 to $3.18.

**JORDAN:** Now, cyber incident aside, there's a bigger structural story here, and I think this is really the headline of the call. Two of their biggest growth engines over the last few years — Watchman, the left atrial appendage closure device, and their electrophysiology business built around FARAPULSE — are now dragging down total company growth.

**ALEX:** Yeah, let's talk about EP first because that one's a bit alarming. Sales declined 5% year-over-year, down 8% in the U.S. Management openly admitted they're losing share as new pulsed-field ablation competitors enter the market with different catheter designs. And here's the thing — they don't expect real relief until they launch FARAWAVE Ultra, which got pushed to early 2028. Originally that was supposed to be sooner.

**JORDAN:** And it's not just Ultra — their next-gen wide-area catheter, FARAFLEX, is now a 2029 launch. CEO Mike Mahoney and CFO John Monson were pretty transparent that pipeline timing has been a problem. Executive Joe Fitzgerald explained some of the delays — Ultra's held up by design verification and validation work, while FARAFLEX has had FDA negotiation delays and some operational hurdles in scaling up the clinical trial.

**ALEX:** And then there's Watchman — down 7% in the U.S., though international grew 4%. Management's take is that physicians are reassessing referral patterns based on recent clinical evidence, and that's slowing the whole left atrial appendage closure market down, not just Boston Scientific specifically.

**JORDAN:** They're throwing resources at it though — over 200 medical education events last quarter alone, more dedicated sales reps, and they've got a next-gen Watchman FLX Pro platform in a clinical trial now, aiming for a 2029 launch.

**ALEX:** So here's where it gets really interest

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ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown. Today we're diving into Boston Scientific's second quarter 2026 results — and Jordan, this one's got some real drama in it.

JORDAN: It really does. Before we jump in, quick disclaimer for everyone listening: this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

ALEX: Right, so let's set the scene. Boston Scientific actually beat expectations in Q2 — organic sales grew 7%, ahead of their 5-7% guide, and adjusted EPS came in at 86 cents, up 15% year-over-year and above the high end of guidance.

JORDAN: On paper, that sounds like a great quarter. But here's the twist — right after touting the beat, management turned around and cut full-year guidance. Full-year organic revenue guidance moved down to 5-6%, and full-year EPS guidance came in at $3.28 to $3.32.

ALEX: And the culprit? Two of their hottest businesses over the last couple years — WATCHMAN and electrophysiology, or EP.

JORDAN: Let's start with WATCHMAN, the left atrial appendage closure device. This is a fascinating case of clinical evidence essentially colliding with commercial momentum. New studies — OCEAN, CHAMPION-AF — have been published over the past several months, and they're changing how doctors think about referring patients for the procedure.

ALEX: CEO Mike Mahoney was pretty candid about it. He said the U.S. market has "slowed sharply and unexpectedly." Standalone WATCHMAN procedures — meaning not done alongside another heart procedure — are actually declining in the low teens percentage-wise.

JORDAN: The one bright spot is "concomitant" procedures — done at the same time as another cardiac procedure — which grew over 60%. But even that's expected to slow in the second half because of tougher comparisons.

ALEX: So full-year WATCHMAN growth guidance is now flat to low single digits, with the second half actually expected to decline mid-to-high single digits. That's a big swing from where this business has been.

JORDAN: Then there's EP, the electrophysiology business built around their FARAPULSE technology — that's the pulsed field ablation, or PFA, platform for treating atrial fibrillation. Management admitted they simply underestimated competitive pressure in the U.S.

ALEX: Which is almost ironic, because Boston Scientific basically created this PFA market boom. Mahoney noted PFA now makes up something like 80% of the U.S. AFib ablation market — a shift that happened faster than anyone expected, and that success invited competitors in quicker than the company modeled.

JORDAN: Meanwhile, international EP growth is still humming along around 20%. It's really a U.S.-specific share story, not a "the technology doesn't work" story.

ALEX: Here's something I found reassuring, though. Management pointed out that roughly 75% of Boston Scientific's revenue — everything outside WATCHMAN and EP — is still expected to grow about 6% in the second half, which is right in line with their historical trend.

JORDAN: Right, and there were genuinely strong pockets. Neuromodulation grew 12%. Interventional cardiology grew 15%. Interventional oncology grew 12%. This isn't a company falling apart — it's two specific franchises hitting an air pocket.

ALEX: Let's talk strategy, because they also announced a restructuring program targeting about $500 million in run-rate savings by the end of 2029, with more than half of that realized by exiting 2027.

JORDAN: That's a real signal — they're bracing for a tougher stretch and want to fund future growth catalysts without blowing up margins. CFO Jon Monson said savings will show up first in SG&A, then in cost of goods sold over time.

ALEX: And on th

This episode includes AI-generated content.

ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex.

JORDAN: And I'm Jordan. Today we're diving into Boston Scientific's fourth quarter and full year 2025 results - and wow, what a year it's been for this medical device giant.

ALEX: Before we jump in, I need to mention that this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: Absolutely. So Alex, Boston Scientific just wrapped up what CEO Mike Mahoney called an "outstanding" year. Let's start with the headline numbers - they're pretty impressive.

ALEX: They really are. For the full year, Boston Scientific hit over $20 billion in sales - that's 19% operational growth and nearly 16% organic growth. They actually exceeded their guidance of around 15.5%. And on the bottom line? Adjusted earnings per share of $3.06, up 22% year-over-year.

JORDAN: That's their third consecutive year of 20%+ EPS growth, which is remarkable consistency in this industry. But what I found interesting was the fourth quarter specifically - 13% organic growth, which hit the high end of their guidance range. The question is, what's driving all this growth?

ALEX: Two words: EP and WATCHMAN. Their electrophysiology business grew 35% in Q4 and a staggering 73% for the full year. That's largely driven by their FARAPULSE technology - basically a next-generation treatment for atrial fibrillation that uses pulsed field ablation instead of traditional methods.

JORDAN: And WATCHMAN, their left atrial appendage closure device, grew 29% in the quarter. Mike Mahoney mentioned they've now treated more than 25,000 patients with what they call "concomitant procedures" - essentially doing WATCHMAN and EP procedures together, which is more efficient for hospitals.

ALEX: But here's where it gets really interesting - and where some investors got a bit nervous during the earnings call. There were questions about whether growth is slowing, especially in the U.S. EP market. Some analysts were expecting even higher numbers.

JORDAN: Right, and Mahoney pushed back on this pretty hard. He said competitors are claiming the EP market grew 25% in Q4, but Boston Scientific thinks it was more like 18-20%. And even at that growth rate, they're significantly outpacing competitors - some major players only grew 6.5% and 12.5% respectively.

ALEX: That's a crucial point for investors. Market share dynamics are shifting as competitors launch their own PFA products, but Boston Scientific believes they'll maintain clear market leadership. Mahoney said by year-end 2026, their PFA share might equal all other competitors combined, but they'll still be the leader.

JORDAN: And looking ahead, they're guiding for some pretty solid numbers in 2026. Organic revenue growth of 10-11% for the full year, though Q1 will be softer at 8.5-10% due to some one-time headwinds and tough comparisons.

ALEX: Those headwinds include discontinuing a product called ACURATE and a temporary withdrawal of certain sizes of their AXIOS device due to manufacturing issues. But they expect both situations to resolve by mid-year.

JORDAN: Let's talk about what could be a game-changer - the CHAMPION trial results. This is a major clinical study comparing their WATCHMAN device to blood thinners for stroke prevention. Dr. Ken Stein, their Chief Medical Officer, said results will be presented at the American College of Cardiology conference.

ALEX: If positive, this could be huge. Currently, WATCHMAN is indicated for about 5 million patients globally who can't tolerate blood thinners. But if CHAMPION shows WATCHMAN is as effective as blood thinners with better bleeding outcomes, that addressable market could jump to 20 million patients.

JORDAN: That would essentially position WATCHMAN as a first-line therapy instead of just for patients who ca

This episode includes AI-generated content.

ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex.

JORDAN: And I'm Jordan. Today we're diving into Boston Scientific's fourth quarter and full year 2025 results - and wow, what a year it's been for this medical device giant.

ALEX: Before we jump in, I need to mention that this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: Absolutely. So Alex, Boston Scientific just wrapped up what CEO Mike Mahoney called an "outstanding" year. Let's start with the headline numbers - they're pretty impressive.

ALEX: They really are. For the full year, Boston Scientific hit over $20 billion in sales - that's 19% operational growth and nearly 16% organic growth. They actually exceeded their guidance of around 15.5%. And on the bottom line? Adjusted earnings per share of $3.06, up 22% year-over-year.

JORDAN: That's their third consecutive year of 20%+ EPS growth, which is remarkable consistency in this industry. But what I found interesting was the fourth quarter specifically - 13% organic growth, which hit the high end of their guidance range. The question is, what's driving all this growth?

ALEX: Two words: EP and WATCHMAN. Their electrophysiology business grew 35% in Q4 and a staggering 73% for the full year. That's largely driven by their FARAPULSE technology - basically a next-generation treatment for atrial fibrillation that uses pulsed field ablation instead of traditional methods.

JORDAN: And WATCHMAN, their left atrial appendage closure device, grew 29% in the quarter. Mike Mahoney mentioned they've now treated more than 25,000 patients with what they call "concomitant procedures" - essentially doing WATCHMAN and EP procedures together, which is more efficient for hospitals.

ALEX: But here's where it gets really interesting - and where some investors got a bit nervous during the earnings call. There were questions about whether growth is slowing, especially in the U.S. EP market. Some analysts were expecting even higher numbers.

JORDAN: Right, and Mahoney pushed back on this pretty hard. He said competitors are claiming the EP market grew 25% in Q4, but Boston Scientific thinks it was more like 18-20%. And even at that growth rate, they're significantly outpacing competitors - some major players only grew 6.5% and 12.5% respectively.

ALEX: That's a crucial point for investors. Market share dynamics are shifting as competitors launch their own PFA products, but Boston Scientific believes they'll maintain clear market leadership. Mahoney said by year-end 2026, their PFA share might equal all other competitors combined, but they'll still be the leader.

JORDAN: And looking ahead, they're guiding for some pretty solid numbers in 2026. Organic revenue growth of 10-11% for the full year, though Q1 will be softer at 8.5-10% due to some one-time headwinds and tough comparisons.

ALEX: Those headwinds include discontinuing a product called ACURATE and a temporary withdrawal of certain sizes of their AXIOS device due to manufacturing issues. But they expect both situations to resolve by mid-year.

JORDAN: Let's talk about what could be a game-changer - the CHAMPION trial results. This is a major clinical study comparing their WATCHMAN device to blood thinners for stroke prevention. Dr. Ken Stein, their Chief Medical Officer, said results will be presented at the American College of Cardiology conference.

ALEX: If positive, this could be huge. Currently, WATCHMAN is indicated for about 5 million patients globally who can't tolerate blood thinners. But if CHAMPION shows WATCHMAN is as effective as blood thinners with better bleeding outcomes, that addressable market could jump to 20 million patients.

JORDAN: That would essentially position WATCHMAN as a first-line therapy instead of just for patients who ca

This episode includes AI-generated content.

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This episode includes AI-generated content.