q4 2019 highlights - boston...

Q4 2019 HighlightsFebruary 5, 2020

2 Q4 2019 Financial & Operational Highlights | February 5, 2020

Safe Harbor for Forward-Looking Statements andUse of Document:

Safe Harbor for forward-looking statements:This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “estimate,” “intend,” "aiming" and similar words. These forward-looking statements arebased on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. If our underlyingassumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could differ materially from the expectations and projections expressed or implied by ourforward-looking statements.

Factors that may cause such differences can be found in our most recent Form 10-K and Forms 10-Q filed or to be filed with the Securities and Exchange Commission under theheadings “Risk Factors” and “Safe Harbor for Forward-Looking Statements.” Accordingly, you are cautioned not to place undue reliance on any of our forward-looking statements. Wedisclaim any intention or obligation to publicly update or revise any forward-looking statements to reflect any change in our expectations or in events, conditions, or circumstances onwhich they may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements.

Non-GAAP Measures:This document contains non-GAAP measures (denoted with *) in talking about our Company’s performance. The reconciliations of those non-GAAP measures to their most comparableGAAP measures are contained within this document including appendices attached to the end of this presentation or in our earnings release.

Operational revenue growth excludes the impact of foreign currency fluctuations. Organic revenue growth excludes the impact of foreign currency fluctuations, sales from the recent acquisitionsof Vertiflex, Inc. and BTG plc and divestiture, each with no prior year comparable sales.We define Emerging Markets as the 20 countries that we believe have strong growth potential basedon their economic conditions, healthcare sectors and our global capabilities in our Medical Devices business. Periodically, we assess our list of Emerging Markets; effective January 1, 2019,we updated our list of Emerging Market countries. Our current list is comprised of the following countries: Argentina, Brazil, Chile, China, Colombia, Czech Republic, India, Indonesia,Malaysia, Mexico, Philippines, Poland, Russia, Saudi Arabia, Slovakia, South Africa, South Korea, Thailand, Turkey and Vietnam. We have revised prior year amounts to the current year’spresentation (as denoted with † throughout). The revision had an immaterial impact on prior year Emerging Markets sales.

Medical Devices:We have three historical reportable segments comprised of Medical Surgical (MedSurg), Rhythm and Neuro, and Cardiovascular, which represent an aggregation of our operating segmentsthat generate revenues from the sale of medical devices (Medical Devices). As part of our acquisition of BTG on August 19, 2019, we acquired an Interventional Medicine business, whichis now included in our Peripheral Interventions operating segment's 2019 revenues from August 19, 2019 through December 31, 2019.

Specialty Pharmaceuticals:As part of our acquisition of BTG on August 19, 2019, we acquired a specialty pharmaceuticals business (Specialty Pharmaceuticals). Subsequent to acquisition, Specialty Pharmaceuticalsis now a stand-alone operating segment presented alongside our Medical Device reportable segments. Specialty Pharmaceuticals net sales are substantially U.S. based. Our chief operatingdecision maker (CODM) reviews financial information of our globally managed Specialty Pharmaceuticals operating segment at the worldwide level without further disaggregation into regionalresults. As such, Specialty Pharmaceuticals net sales are presented globally, and our Medical Devices reportable segments regional net sales results do not include Specialty Pharmaceuticals.

Use of document:This document contains certain highlights with respect to our fourth quarter 2019 performance and developments and does not purport to be a complete summary of thereof. Accordingly,we encourage you to read our Earnings Release for the quarter ended December 31, 2019 located in the investor section of our website at www.bostonscientific.com and our AnnualReport on Form 10-K for the year ended December 31, 2019 to be filed with the Securities and Exchange Commission.

Amounts reported in millions within this presentation are computed based on the amounts in thousands. As a result, the sum of the components reported in millions may not equal the totalamount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages presented are calculated from theunderlying numbers in dollars.


Q4 2019 Financial Results and Recent Highlights

• Revenue growth Y/Y:• +14.1% operational*, +13.4% as reported,

+7.3% organic*• Earnings per share:

• Adjusted*: $0.46 vs. $0.39 Q4:18• GAAP: $2.83 vs. $0.27 Q4:18

• Gross margin:• Adjusted*: 73.1%, +30 bps Y/Y

◦ Includes +40 bps FX impact Y/Y• GAAP: 70.7%, (80) bps Y/Y

• Operating margin:• Adjusted*: 27.0%, +150 bps Y/Y• GAAP: 7.2%, (530) bps Y/Y

• FY 2020 guidance:• GAAP revenue growth: 10% - 12% • GAAP EPS: $0.95 - $1.00• Organic* revenue growth: 6.5% - 8.5% • Adjusted EPS*: $1.74 - $1.79

Financial Results Operational Highlights• Received U.S FDA 510(k) clearance and Breakthrough Device Designation plus

CE Mark for the EXALT™ Model D Duodenoscope, the first and only single-use duodenoscope. Initiated limited market release, including successful firstcases in patients undergoing endoscopic retrogradecholangiopancreatography (ERCP), a procedure performed more than 1.5million times worldwide each year to diagnose and treat pancreatic and biliaryconditions.

• Announced plans to initiate CHAMPION-AF – a randomized head-to-head trialof the WATCHMAN FLX™ LAAC Device vs. direct oral anticoagulants – inthe H2:20. The global trial is designed to study stroke risk reduction efficacy andbleeding endpoints in lower-risk patients with non-valvular atrial fibrillation.

• Received Japanese PMDA approval and positive reimbursement in Japanfor the LOTUS Edge™ Aortic Valve System, a minimally invasive TAVRtechnology for patients with severe aortic stenosis.

• Received CE Mark for the POLARx™ Cryoablation System, which isindicated for the treatment of patients with paroxysmal AF, an intermittent formof AF which causes an irregular and often abnormally fast heart rate.

• Announced at the NANS Annual Meeting results of the COMBO randomizedclinical trial showing that Combination Therapy delivered by the SpectraWaveWriter™ SCS System achieves an 88% responder rate in treatingchronic pain, significantly higher than monotherapy alone. Also at NANS,announced an exclusive partnership with IBM Research to develop AI-generated predictive algorithms for highly personalized chronic pain therapy.

• Presented positive 12-month data from the COMPARE trial at the LINCCongress which demonstrated non-inferiority of the low dose paclitaxelcoated Ranger™ DCB compared to the higher dose IN.PACT™ DCB (MDT).


WW Sales by Segment and Business

Q4 2019 Reported Revenue: $2,905MRevenue by Business; Segment Percentage of Total Sales

CRM$473M

EP$84M

NM$261M

IC$748M

PI$403M

Endo$499M

Uro$379M

MedSurg30%

Rhythm andNeuro28%

Cardiovascular 40%

SpecialtyPharmaceuticals

2%


Year-over-Year Change

(in millions)Q4

2019Q4

2018As Reported

Basis

Less: Impactof ForeignCurrency

FluctuationsOperational

Basis

Less: Impactof Recent

Acquisitions /Divestitures

OrganicBasis

ENDOSCOPY $ 499 $ 458 8.8 % (0.8)% 9.6 % 0.0% 9.6 %

UROLOGY AND PELVIC HEALTH 379 342 11.1 % (0.6)% 11.7 % 0.0% 11.7 %

MEDSURG 878 800 9.8 % (0.8)% 10.6 % 0.0% 10.6 %

CARDIAC RHYTHM MANAGEMENT 473 488 (3.3)% (0.7)% (2.6)% 0.0% (2.6)%

ELECTROPHYSIOLOGY 84 81 3.0 % (0.7)% 3.7 % 0.0% 3.7 %

NEUROMODULATION 261 220 18.7 % (0.5)% 19.2 % 11.4% 7.8 %

RHYTHM AND NEURO 817 790 3.5 % (0.6)% 4.1 % 3.1% 1.0 %

INTERVENTIONAL CARDIOLOGY 748 668 12.1 % (0.7)% 12.8 % 0.0% 12.8 %

PERIPHERAL INTERVENTIONS 403 302 33.2 % (0.6)% 33.8 % 30.2% 3.6 %

CARDIOVASCULAR 1,151 970 18.7 % (0.6)% 19.3 % 9.3% 10.0 %

MEDICAL DEVICES 2,847 2,561 11.2 % (0.7)% 11.9 % 4.6% 7.3 %

SPECIALTY PHARMACEUTICALS 58 n/a n/a n/a n/a n/a n/a

WORLDWIDE NET SALES $ 2,905 $ 2,561 13.4 % (0.7)% 14.1 % 6.8% 7.3 %

EMERGING MARKETS† SALES 325 285 14.1 % (2.1)% 16.2 %

EMERGING MARKETS† SALES PERCENTAGE OF TOTAL BSC 11 % 11 %

UNITED STATES SALES PERCENTAGE OF TOTAL BSC 59 % 58 %

INTERNATIONAL SALES PERCENTAGE OF TOTAL BSC 41 % 42 %

Three Months Ended December 31, 2019 and 2018

WW Sales Detail



(in millions)YTD2019

YTD2018

As ReportedBasis



Basis



OrganicBasis

ENDOSCOPY $ 1,894 $ 1,762 7.5 % (1.7)% 9.2% 0.0% 9.2%

UROLOGY AND PELVIC HEALTH 1,413 1,245 13.4 % (1.3)% 14.7% 6.3% 8.4%

MEDSURG 3,307 3,007 10.0 % (1.5)% 11.5% 2.7% 8.8%

CARDIAC RHYTHM MANAGEMENT 1,939 1,951 (0.6)% (1.8)% 1.2% 0.0% 1.2%

ELECTROPHYSIOLOGY 329 311 5.5 % (2.0)% 7.5% 0.0% 7.5%

NEUROMODULATION 873 779 12.0 % (1.1)% 13.1% 6.3% 6.8%

RHYTHM AND NEURO 3,140 3,041 3.3 % (1.6)% 4.9% 1.6% 3.3%

INTERVENTIONAL CARDIOLOGY 2,816 2,590 8.7 % (2.3)% 11.0% 1.0% 10.0%

PERIPHERAL INTERVENTIONS 1,392 1,187 17.3 % (1.8)% 19.1% 11.3% 7.8%

CARDIOVASCULAR 4,208 3,777 11.4 % (2.1)% 13.5% 4.2% 9.3%

MEDICAL DEVICES 10,654 9,823 8.5 % (1.7)% 10.2% 2.9% 7.3%

SPECIALTY PHARMACEUTICALS 81 n/a n/a n/a n/a n/a n/a

WORLDWIDE NET SALES $ 10,735 $ 9,823 9.3 % (1.8)% 11.1% 3.8% 7.3%

EMERGING MARKETS† SALES 1,252 1,097 14.1 % (5.4)% 19.5%

EMERGING MARKETS† SALES PERCENTAGE OF TOTAL BSC 12 % 12%

UNITED STATES SALES PERCENTAGE OF TOTAL BSC 57 % 57%

INTERNATIONAL SALES PERCENTAGE OF TOTAL BSC 43 % 43%

Year Ended December 31, 2019 and 2018

WW Sales Detail

Q4 2019 Highlights


MedSurg Performance Summary

Measure($ in millions) Q4 2019 Q4 2018 Change Y/Y

Reported Revenue $878M $800M +9.8%

Operating Income $333M $296M +13%

Operating IncomeMargin 38.0% 36.9% +110 bps

• Endoscopy: Global revenue +9.6% Y/Y operational*/organic* (+8.8% as reported)• Strong organic full year growth trend continued, with Q4 sales led by double-digit growth in both the pancreaticobiliary and infection prevention

franchises.• Successfully launched Exalt-D in the U.S. (YE:19) and received CE Mark in late January; remain pleased with the FDA’s continued support for

single-use technologies, and expect more significant contributions from Exalt-D in Q2:20 and beyond post Q1's limited market release.

• Urology and Pelvic Health: Global revenue +11.7% Y/Y operational*/organic* (+11.1% as reported)▪ Excellent performance continued as Q4 strength was led by double-digit growth in single-use ureteroscope LithoVue™, core stone, and

Rezūm™ minimally invasive therapy for BPH treatment.▪ SpaceOAR™ continues to resonate in the market place and achieved $100M revenue goal in 2019. Given the prevalence of prostate cancer

globally, we will continue to expand market presence and awareness in 2020.

Q4 2019 Highlights



Reported Revenue $817M $790M +3.5%


Operating IncomeMargin 21.7% 22.0% (30 bps)

Rhythm and Neuro Performance Summary

• Cardiac Rhythm Management: Global revenue +(2.6)% Y/Y operational*/organic* ((3.3)% as reported)• After growing above market from Q1 to Q3, Q4 sales declined low single-digits primarily due to a mid-single-digit downturn in U.S. ICD revenue where weakness was largely

related to tough comps and overall core CRM (excluding ICM) market slowdown. • We remain on track to launch LUX-Dx™ ICM by mid-2020 (but expect limited revenue contribution due to revenue recognition policies). Anticipate WW CRM revenue to be

more in line with the market .

• Electrophysiology: Global revenue +3.7% Y/Y operational*/organic* (+3.0% as reported)• U.S. sales in the quarter were disappointing following U.S. commercial changes ahead of the U.S. DirectSense™ launch later this year; International sales continue to be

strong and were led by the launch of DirectSense catheter in Europe and Japan, as well as continued double-digit growth in major markets for Rhythmia HDx™.• Continue to enhance catheter pipeline globally and are pleased to have received CE mark for POLARx™ in Europe, and plan to begin enrollment in U.S. IDE Trial.

• Neuromodulation: Global revenue +19.2% Y/Y operational*, +7.8% Y/Y organic* (+18.7% as reported)• High single-digit organic Neuromodulation growth in the quarter was led by a doubling of Vercise™ DBS sales due to its ability to offer unique directionality with Cartesia™

lead, as well as CE Mark approval for Neural Navigator 3. Expect solid DBS momentum to continue in 2020.• SCS sales sequentially grew from Q3 to Q4 and were down low single-digits for FY:19. We believe the SCS market will return to growth in 2020. Importantly, COMBO RCT 3-

month data demonstrated an 88% responder rate for WaveWriter™ combination therapy which represents one of the highest rates of any pain trial.• Vertiflex continued to perform well and exceeded its FY:19 pro forma sales goal of $60M.

Q4 2019 Highlights



Reported Revenue $1,151M $970M +18.7%


Operating IncomeMargin 23.9% 26.7% (280 bps)

Cardiovascular Performance Summary

• Interventional Cardiology: Global revenue grew +12.8% Y/Y operational*/organic* (+12.1% as reported)• Broad based strength in Structural Heart led to achievement of high end of 2019 revenue guidance and drove above market growth in Interventional Cardiology:

– Watchman™ posted its strongest quarterly growth rate of the year as we continue to focus on market development, continued clinical evidence, productenhancements, and geographic expansion.

– TAVR: Lotus Edge™ continues momentum, remains on track to open 150 U.S. accounts in the first 12 months post approval, and receivedreimbursement approval in Japan with a limited market release to begin over the coming months. Acurate grew mid-teens and we look forward to thenext gen Acurate neo2™ launch in EU mid-year.

– Sentinel™ is now in over 600 U.S. hospitals and approaching 20% overall U.S. TAVR procedural penetration. We look forward to beginning enrollmentfor the PROTECTED TCR RCT this quarter.

– In Mitral, we are pleased to have entered the clinic in Australia in December with our Millipede full annuloplasty ring and target enrollment of an earlyfeasibility study in the U.S. by YE:20.

• Synergy™ Megatron, an extension of our market-leading Synergy bioresorbable polymer stent franchise, is off to a solid start in Europe and remains on track for aH2:20 U.S. launch.

• Peripheral Interventions: Global revenue +33.8% Y/Y operational*, +3.6% organic* (+33.2% as reported)• Organic sales grew mid-single-digits in Q4 as Legacy PI saw strong double-digit growth in Asia-Pacific but was offset by a decline in U.S. sales due to tough

comps from the U.S. launch of Eluvia™ and a competitor’s manufacturing issues one year ago.• Growth trends are expected to be similar in Q1:20 but accelerate thereafter on the integration of BTG as well as new product approvals such as Ranger™ DCB.


Income Statement InformationNon-GAAP ReconciliationThree Months Ended December 31, 2019 (unaudited)

In millions, except per share data GAAPResults Amortization

IntangibleAsset

ImpairmentCharges

Acquisition /Divestitures-

RelatedCharges(Credits)

Restructuringand

Restructuring-RelatedCharges(Credits)

Litigation-RelatedCharges(Credits)

InvestmentImpairment

Charges

EU MDRImplementation

Charges

DebtExtinguishment

Charges

Deferred TaxExpenses(Benefits)

Discrete TaxItems

Adjusted*Results

Net sales $ 2,905 $ 2,905

Cost of products sold 851 54 13 3 781

Gross profit 2,054 0 — (54) (13) 0 0 (3) 0 0 0 2,124

Gross margin 70.7% 73.1%

Selling, general and administrative expenses 1,092 62 3 1,026

SG&A margin 37.6% 35.3%

Research and development expenses 309 10 1 297

R&D margin 10.6% 10.2%

Royalty expense 17 17

Royalty expense margin 0.6% 0.6%

Amortization expense 201 201 0

Intangible asset impairment charge 0 — 0

Contingent consideration expense (benefit) (26) (26) 0

Restructuring charges (credits) 28 28 0

Litigation-related charges (credits) 223 223 0

1,843 201 — 47 31 223 0 1 0 0 0 1,341

Operating income (loss) 210 (201) — (101) (44) (223) 0 (4) 0 0 0 783

Operating margin 7.2% 27.0%

Other income (expense):

Interest expense (179) (86) (93)

Other, net (37) (19) (1) (17)

Income (loss) before income taxes (6) (201) — (121) (44) (223) (1) (4) (86) 0 0 674

Income tax expense (benefit) (4,002) (17) 5 161 (7) (54) 0 (1) (19) (4,102) 2 30

Net (loss) income $ 3,996 $ (184) $ — $ (282) $ (37) $ (169) $ (1) $ (3) $ (67) $ 4,102 $ (2) $ 643

Net income (loss) per diluted commonshare $ 2.83 $ (0.13) $ — $ (0.20) $ (0.03) $ (0.12) $ (0.00) $ (0.00) $ (0.05) $ 2.90 $ (0.00) $ 0.46

Weighted average diluted sharesoutstanding 1,413.1 1,413.1 1,413.1 1,413.1 1,413.1 1,413.1 1,413.1 1,413.1 1,413.1 1,413.1 1,413.1 1,413.1

Margin rates are based on actual, non-rounded amounts and may not recalculate precisely.


Income Statement InformationNon-GAAP ReconciliationYear Ended December 31, 2019 (unaudited)

In millions, except per share data GAAPResults Amortization

IntangibleAsset

ImpairmentCharges

Acquisition /Divestitures-

RelatedCharges(Credits)

Restructuringand

Restructuring-RelatedCharges(Credits)

Litigation-RelatedCharges(Credits)

InvestmentImpairment

Charges

EU MDRImplementation

Charges

DebtExtinguishment

Charges

DeferredTax

Expenses(Benefits)

DiscreteTax Items

Adjusted*Results

Net sales $ 10,735 $ 10,735

Cost of products sold 3,116 114 32 4 2,966

Gross profit 7,620 0 0 (114) (32) 0 0 (4) 0 0 0 7,769Gross margin 71.0% 72.4%

Selling, general and administrative expenses 3,941 162 12 — 3,766

SG&A margin 36.7% 35.1%

Research and development expenses 1,174 35 0 1 1,138

R&D margin 10.9% 10.6%

Royalty expense 65 65

Royalty expense margin 0.6% 0.6%

Amortization expense 699 699 0

Intangible asset impairment charge 105 105 0

Contingent consideration expense (benefit) (35) (35) 0

Restructuring charges (credits) 38 38 0

Litigation-related charges (credits) 115 115 0

6,102 699 105 161 50 115 0 1 0 0 0 4,970

Operating income (loss) 1,518 (699) (105) (275) (82) (115) 0 (6) 0 0 0 2,800

Operating margin 14.1% 26.1%

Other income (expense):

Interest expense (473) (61) (86) (325)

Other, net (358) (289) (4) (65)

Income (loss) before income taxes 687 (699) (105) (626) (82) (115) (4) (6) (86) 0 0 2,409

Income tax expense (benefit) (4,013) (72) (2) 47 (14) (43) (1) (1) (19) (4,102) 18 176

Net (loss) income $ 4,700 $ (628) $ (102) $ (672) $ (68) $ (72) $ (3) $ (5) $ (67) $ 4,102 $ (18) $ 2,234

Net income (loss) per diluted commonshare $ 3.33 $ (0.44) $ (0.07) $ (0.48) $ (0.05) $ (0.05) $ (0.00) $ (0.00) $ (0.05) $ 2.91 $ (0.01) $ 1.58

Weighted average diluted sharesoutstanding 1,410.6 1,410.6 1,410.6 1,410.6 1,410.6 1,410.6 1,410.6 1,410.6 1,410.6 1,410.6 1,410.6 1,410.6

Margin rates are based on actual, non-rounded amounts and may not recalculate precisely.


Balance Sheet & Cash Flow Metrics

Days Sales Outstanding (DSO) Adjusted Free Cash Flow*

Days Inventory on Hand (DIOH) Capital Expenditures

Dec2019

Sept2019

June2019

Mar2019

Dec2018

58 62 59 59 58

Dec2019

Sept2019

June2019

Mar2019

Dec2018

170 170 152 148 147

Q4 2019

Q4 2018 FY2019 FY2020

Guidance

$638M $659M $2,007M $2.3B

Q4 2019

Q4 2018 FY2019 FY2020

Guidance

$185M $106M $461M $450M to$475M


Measure Q1 2020 FY 2020Organic Growth* +5% to +7% +6.5% to +8.5%

Contribution from Acquisitions & Divestitures ~600 bps ~350 bps

Operational Revenue Growth* +11% to +13% +10% to +12%

Reported Revenue Growth +10% to +12% +10% to +12%

FX Impact on Revenue ($M) $25M - $30M headwind $30M - $40M headwind

Adjusted Gross Margin* 71% to 72% ~72%

Adjusted SG&A % of Sales* 35% to 36% 34.5% to 35.0%

Adjusted R&D % of Sales* 10.5% to 11% 10% to 10.5%

Adjusted Operating Margin* ~25% ~26.7%

Adjusted Tax Rate* ~8% ~10%

Adjusted EPS* $0.37 to $0.40 $1.74 to $1.79

FX Impact on EPS Neutral Neutral

Adjusted EPS Growth* +6% to +15% +10% to +13%

GAAP EPS $0.16 to $0.19 $0.95 to $1.00

Q1 & 2020 Guidance SummaryIssued February 5, 2020


2020E+ Catalysts

2020E Product Launches1

2021E Product Launches1

2022E+ Product Launches1

Coronary Therapies• SYNERGY™ XD, 48 mm, MEGATRON – U.S.• SYNERGY™ XD – Japan• COMET™ II pressure wire

Structural Heart• WATCHMAN FLX™ LAAC Device – U.S.• ACURATE neo2™ Valve System – EU• LOTUS Edge™ Valve System – Japan

Peripheral Interventions• Ranger™ DCB SFA – U.S.• OptiCross™ 35 IVUS Catheter• AngioJet™ Clothunter

CRM/EP• POLARx™ (Cryo Single-Shot) – EU• LUX-Dx™ ICM – U.S.• INGEVITY™+ Pacing Lead – U.S.• DIRECTSENSE™ – U.S. • Force-Sensing Catheter – EU• LUMINIZE™ (RF Single-shot) – EU• LATITUDE™ Model 3300 Programmer

Neuromodulation• DBS next gen visualization platform

Endoscopy• EXALT™ Model D single-use scope – U.S.• SpyGlass™ Discover single-use scope• ORISE™ ProKnife• Resolution 360™ Ultra hemostasis Clip

Urology/Pelvic Health• Tria™ Ureteral Stents – U.S. & EU• SpaceOAR™ & Rezūm™ – Int'l expansion• SpaceOAR Vue™ Hydrogel

Coronary Therapies• AVVIGO™ Guidance System• ROTAWIRE™ Drive – U.S. and Japan Structural Heart• ACURATE neo2™ Valve System – U.S.• WATCHMAN FLX™ LAAC Device – China

Peripheral Interventions• Ranger™ DCB SFA – Japan• Interventional Oncology Coils• Athletis™ PTA Balloon• CLI Catheter

CRM/EP• RHYTHMIA™ 5.0• INGEVITY™+ Pacing Lead – EU

Neuromodulation• SCS/DBS next gen systems

Endoscopy• Single-use scope platform expansion• AXIOS™ expanded indications – U.S.

Urology/Pelvic Health• LithoVue™ Ureteroscope next gen• AMS 700™ IPP enhancements• Core Stone enhancements

Coronary Therapies• Next gen Atherectomy System• SYNERGY™ XD – China

Structural Heart• Millipede Transcatheter Mitral Valve Repair – EU• LOTUS Mantra™ Valve – U.S. & EU• ACURATE neo2™ Valve – Japan • ACURATE PRIME – expanded sizes U.S. & EU

Peripheral Interventions• SAVAL™ DES BTK

CRM/EP• Resonate™ 2.0• POLARx™ (Cryo Single-shot) – U.S.• LUMINIZE™ (RF Single-shot) – U.S.• Empower™ leadless pacing/mCRM – U.S.• Force-Sensing Catheter – U.S.• Next gen CRM pulse generator

Neuromodulation• SCS indication expansion

Endoscopy• Single-use scope platform expansion• Endoluminal surgery toolkit expansion

Urology/Pelvic Health• StoneSmart™ expansion • Rezūm™ enhancements

1 All launches are WW, unless otherwise noted


Business Development Activity - 2019

Target Business Description ClosingDate

Upfront($M)

MaxMilestone

($M)

PotentialTotal($M)

Comments OrganicDate

Acquisitions

Millipede(a) IC - Structural Heart TMVR - Full annuloplastyring for mitral repair Jan-19 $ 325 $ 125 $ 450 Initial $90M investment made 2018 Upon Launch

Vertiflex(b) Neuromodulation Spacer for Lumbar SpinalStenosis Jun-19 465 N/A 465 Overlapping call point with SCS/RF

treatment for pain Jun-2020

BTG(c) Peripheral Interventions IO, venous and arterialportfolio additions Aug-19 4,023 — 4,023 Includes specialty pharmaceuticals and

licensing segments Aug-2020

(a) Previously held equity investment; purchase price represents cash paid for remaining stake not already owned

(b)Vertiflex contingent payments that are based on a percentage of Vertiflex sales growth in the first three years following the acquisition close. We estimate the sales-based contingent payments to be in a range ofzero to $100 million; however, the payments are uncapped over the three year term.

(c) Represents purchase price of approximately £3.312 billion using an exchange rate of U.S. $1.21: £1.00 as of August 19, 2019


Use of Non-GAAP Measures

To supplement Boston Scientific’s consolidated financial statements presentedon a GAAP basis, the Company discloses certain non-GAAP financialmeasures. These non-GAAP financial measures are not in accordance withgenerally accepted accounting principles in the United States.

A reconciliation of the non-GAAP financial measures included in this documentto the corresponding GAAP measures follows in the Appendix. In addition, anexplanation of the ways in which Boston Scientific management uses thesesupplemental non-GAAP measures to evaluate its business and thesubstantive reasons why Boston Scientific management believes that thesenon-GAAP measures provide useful information to investors is included under“Use of Non-GAAP Financial Measures” in the Company’s most recent earningsrelease filed with the SEC on Form 8-K. This non-GAAP financial informationis not meant to be considered in isolation from or as a substitute for financialinformation prepared in accordance with GAAP.

Appendix A Sales Detail


Appendix A - Sales DetailThree Months Ended December 31, 2019 and 2018


(in millions)Q4

2019Q4

2018As Reported

Basis

Less: Impact ofForeign

CurrencyOperational

BasisMEDSURG SEGMENT:

ENDOSCOPYUNITED STATES $ 280 $ 257 9.2 % — % 9.2 %INTERNATIONAL 218 201 8.3 % (1.9)% 10.2 %

WORLDWIDE $ 499 $ 458

UROLOGY AND PELVIC HEALTHUNITED STATES $ 268 $ 241 11.3 % — % 11.3 %INTERNATIONAL 111 101 10.4 % (2.3)% 12.7 %


RHYTHM AND NEURO SEGMENT:CARDIAC RHYTHM MANAGEMENT

UNITED STATES $ 276 $ 290 (5.2)% — % (5.2)%INTERNATIONAL 197 198 (0.5)% (1.7)% 1.2 %


ELECTROPHYSIOLOGYUNITED STATES $ 36 $ 39 (8.3)% — % (8.3)%INTERNATIONAL 48 43 13.3 % (1.3)% 14.6 %

WORLDWIDE $ 84 $ 81

NEUROMODULATIONUNITED STATES $ 208 $ 177 17.2 % — % 17.2 %INTERNATIONAL 53 42 24.7 % (2.9)% 27.6 %


CARDIOVASCULAR SEGMENT:INTERVENTIONAL CARDIOLOGY

UNITED STATES $ 352 $ 294 19.6 % — % 19.6 %INTERNATIONAL 397 373 6.2 % (1.3)% 7.5 %


PERIPHERAL INTERVENTIONSUNITED STATES $ 235 $ 159 47.2 % — % 47.2 %INTERNATIONAL 168 143 17.6 % (1.3)% 18.9 %


SPECIALITY PHARMACEUTICALS:UNITED STATES $ 51 n/a n/a n/a n/aINTERNATIONAL 7 n/a n/a n/a n/a

WORLDWIDE $ 58 n/a


Appendix A - Sales DetailYear Ended December 31, 2019 and 2018


(in millions) YTD 2019 YTD 2018As Reported

Basis

Less: Impact ofForeign

CurrencyOperational

BasisMEDSURG SEGMENT:

ENDOSCOPYUNITED STATES $ 1,080 $ 980 10.2 % — % 10.2 %INTERNATIONAL 814 781 4.2 % (3.7)% 7.9 %

WORLDWIDE $ 1,894 $ 1,762

UROLOGY AND PELVIC HEALTHUNITED STATES $ 1,005 $ 864 16.3 % — % 16.3 %INTERNATIONAL 408 381 7.0 % (4.3)% 11.3 %

WORLDWIDE $ 1,413 $ 1,245

RHYTHM AND NEURO SEGMENT:CARDIAC RHYTHM MANAGEMENT

UNITED STATES $ 1,135 $ 1,159 (2.1)% — % (2.1)%INTERNATIONAL 804 792 1.5 % (4.4)% 5.9 %

WORLDWIDE $ 1,939 $ 1,951

ELECTROPHYSIOLOGYUNITED STATES $ 148 $ 150 (1.4)% — % (1.4)%INTERNATIONAL 180 161 11.9 % (3.8)% 15.7 %


NEUROMODULATIONUNITED STATES $ 695 $ 624 11.4 % — % 11.4 %INTERNATIONAL 178 155 14.6 % (5.4)% 20.0 %


CARDIOVASCULAR SEGMENT:INTERVENTIONAL CARDIOLOGY

UNITED STATES $ 1,293 $ 1,154 12.1 % — % 12.1 %INTERNATIONAL 1,522 1,436 6.0 % (4.0)% 10.0 %

WORLDWIDE $ 2,816 $ 2,590

PERIPHERAL INTERVENTIONSUNITED STATES $ 742 $ 608 22.0 % — % 22.0 %INTERNATIONAL 651 579 12.3 % (3.9)% 16.2 %

WORLDWIDE $ 1,392 $ 1,187

SPECIALTY PHARMACEUTICALS:UNITED STATES $ 70 n/a n/a n/a n/aINTERNATIONAL 11 n/a n/a n/a n/a

WORLDWIDE $ 81 n/a


Appendix A - Sales InformationSales Growth

Year Ended December 31, 5-YearAverageTotal BSC Revenue Growth 2019 2018 2017 2016 2015

Percentage change in net sales, as reported 9.3 % 8.6% 7.9% 12% 1 % 8%Less: Impact of foreign currency fluctuations (1.8)% 0.6% 0.1% 0% (7)%

Percentage change in net sales, operational 11.1 % 8.0% 7.8% 12% 8 % 9%Less: Impact of recent acquisitions and divestitures 3.8 % 0.8% 1.2% 2% 3 %

Percentage change in net sales, organic (a) 7.3 % 7.2% 6.6% 10% 5 % 7%

(a) Organic net sales exclude the impact of sales from the recent acquisitions of BTG, Vertiflex, Augmenix, Inc., Claret Medical, Inc., NxThera, Inc., Symetis SA, EndoChoiceHoldings, Inc., the American Medical Systems male urology portfolio and the interventional business of Bayer AG with no prior year period comparable sales.

Appendix B Income Statement Information


Appendix B - Income Statement InformationMargins

Three Months EndedAdjusted Gross Margin 12/31/2019 12/31/2018 Basis Points ChangeGross Margin, as reported 70.7 % 71.5 % (80)

Less: Non-GAAP adjustments (2.4)% (1.3)%Adjusted Gross Margin 73.1 % 72.8 % 30

Three Months EndedAdjusted Operating Margin 12/31/2019 12/31/2018 Basis Points ChangeOperating Margin, as reported 7.2 % 12.5 % (530)

Less: Non-GAAP adjustments (19.8)% (13.0)%Adjusted Operating Margin 27.0 % 25.5 % 150

Three Months EndedAdjusted SG&A Margin 12/31/2019 12/31/2018 Basis Points ChangeSG&A Margin, as reported 37.6% 37.2% 40

Less: Non-GAAP adjustments 2.3% 1.5%Adjusted SG&A Margin 35.3% 35.7% (40)

Three Months EndedAdjusted R&D Margin 12/31/2019 12/31/2018 Basis Points ChangeR&D Margin, as reported 10.6% 11.2% (60)

Less: Non-GAAP adjustments 0.4% 0.4%Adjusted R&D Margin 10.2% 10.8% (60)


Appendix B - Income Statement InformationMargins

Year EndedAdjusted Gross Margin 12/31/2019 12/31/2018 Basis Points ChangeGross Margin, as reported 71.0 % 71.4 % (40)

Less: Non-GAAP adjustments (1.4)% (0.9)%Adjusted Gross Margin 72.4 % 72.3 % 10

Year EndedAdjusted Operating Margin 12/31/2019 12/31/2018 Basis Points ChangeOperating Margin, as reported 14.1 % 15.3 % (120)

Less: Non-GAAP adjustments (12.0)% (10.2)%Adjusted Operating Margin 26.1 % 25.5 % 60

Year EndedAdjusted SG&A Margin 12/31/2019 12/31/2018 Basis Points ChangeSG&A Margin, as reported 36.7% 36.3% 40

Less: Non-GAAP adjustments 1.6% 0.9%Adjusted SG&A Margin 35.1% 35.4% (30)

Year EndedAdjusted R&D Margin 12/31/2019 12/31/2018 Basis Points ChangeR&D Margin, as reported 10.9% 11.3% (40)

Less: Non-GAAP adjustments 0.3% 0.6%Adjusted R&D Margin 10.6% 10.7% (10)


Appendix B - Income Statement InformationQTD Segment Operating Income

SEGMENT NET SALES (dollars in millions) Q4 2019 Q4 2018

MedSurg $ 878 $ 800Rhythm and Neuro 817 790Cardiovascular 1,151 970

Total net sales of reportable segments (Medical Devices) $ 2,847 $ 2,561All other (Specialty Pharmaceuticals) 58 n/aConsolidated net sales 2,905 2,561

SEGMENT OPERATING INCOME (dollars in millions)Q4

2019%

of SalesQ4

2018%

of Sales

YoY Change

(%)

YoYChange

(bps)Less:

Fx Impact

YoYChange,excl. Fx

MedSurg $ 333 38.0% $ 296 36.9% 1.1 % 110 (1.8)% 2.9 %Rhythm and Neuro 177 21.7% 174 22.0% (0.3)% -30 0.4 % (0.7)%Cardiovascular 275 23.9% 259 26.7% (2.8)% -280 7.1 % (9.9)%

Total operating income of reportable segments (Medical Devices) 786 728All other (Specialty Pharmaceuticals) 43 n/aUnallocated amounts:

Corporate expenses, including hedging activities (46) (75)Intangible asset impairment charges, acquisition/divestiture-related,restructuring- and restructuring-related, litigation-related net(charges) credits and medical device regulation charges (372) (172)Amortization expense (201) (162)

Operating income (loss) $ 210 $ 319

Note: We measure and evaluate our reportable segments based on segment net sales, operating income allocated to reportable segments, excluding intersegmentprofits, and operating income allocated to reportable segments as a percentage of segment net sales. Operating income allocated to reportable segments as apercentage of segment net sales is defined as operating income allocated to reportable segments divided by segment net sales. Our presentation of segment netsales to include foreign exchange fluctuations, since the chief operating decision maker (CODM) reviews operating results both at actual foreign exchange rates

and excluding foreign exchange rates and the following presentation more closely aligns to our consolidated financial statements. We exclude from operatingincome allocated to reportable segments certain corporate-related expenses and certain transactions or adjustments that our CODM considers to be non-operational,such as amounts related to amortization expense, intangible asset impairment charges, acquisition/divestitures-related items, restructuring and restructuring-relateditems, medical device regulation charges and litigation-related items. Although we exclude these amounts from operating income of reportable segments, they are

included in reported Income (loss) before income taxes on the consolidated statements of operations and are included in the reconciliation below.


Appendix B - Income Statement InformationYTD Segment Operating Income

SEGMENT NET SALES (dollars in millions) YTD 2019 YTD 2018

MedSurg $ 3,307 $ 3,007Rhythm and Neuro 3,140 3,041Cardiovascular 4,208 3,777

Total net sales of reportable segments (Medical Devices) $ 10,654 $ 9,823All other (Specialty Pharmaceuticals) 81 n/aConsolidated net sales 10,735 9,823

SEGMENT OPERATING INCOME (dollars in millions) YTD 2019%

of Sales YTD 2018%

of Sales

YoY Change

(%)

YoYChange

(bps)Less:

Fx Impact

YoYChange,excl. Fx

MedSurg $ 1,204 36.4% $ 1,102 36.7% (0.3)% -30 (0.3)% 0.0 %Rhythm and Neuro $ 665 21.2% $ 655 21.5% (0.3)% -30 (0.5)% 0.2 %Cardiovascular $ 1,135 27.0% $ 1,117 29.6% (2.6)% -260 4.0 % (6.6)%

Total operating income of reportable segments (Medical Devices) 3,004 2,875All other (Specialty Pharmaceuticals) 56 n/aUnallocated amounts:

Corporate expenses, including hedging activities (261) (372) `Intangible asset impairment charges, acquisition/divestiture-related,restructuring- and restructuring-related, litigation-related net(charges) credits and medical device regulation charges (582) (398)Amortization expense (699) (599)

Operating income (loss) $ 1,518 $ 1,506

Note: We measure and evaluate our reportable segments based on segment net sales, operating income allocated to reportable segments, excluding intersegmentprofits, and operating income allocated to reportable segments as a percentage of segment net sales. Operating income allocated to reportable segments as apercentage of segment net sales is defined as operating income allocated to reportable segments divided by segment net sales. Our presentation of segment netsales to include foreign exchange fluctuations, since the chief operating decision maker (CODM) reviews operating results both at actual foreign exchange rates

and excluding foreign exchange rates and the following presentation more closely aligns to our consolidated financial statements. We exclude from operatingincome allocated to reportable segments certain corporate-related expenses and certain transactions or adjustments that our CODM considers to be non-operational,such as amounts related to amortization expense, intangible asset impairment charges, acquisition/divestitures-related items, restructuring and restructuring-relateditems, medical device regulation charges and litigation-related items. Although we exclude these amounts from operating income of reportable segments, they are

included in reported Income (loss) before income taxes on the consolidated statements of operations and are included in the reconciliation below.


Three Months Ended December 31, 2019

YoYEPS Growthin millions, except per share data

Cost ofProducts

SoldSG&A

ExpensesR&D

Expenses

OperatingIncome(Loss)

Pre-TaxIncome(Loss)

Net Income(Loss)

Impact perShare

GAAP net income (loss) $ 851 $ 1,092 $ 309 $ 210 $ (6) $ 3,996 $ 2.83 930 %Non-GAAP adjustments:

Amortization expense — — — 201 201 184 0.13

Intangible asset impairment charges — — — — — 5 0.00

Acquisition / divestitures-related net charges (credits) (54) (62) (10) 101 121 282 0.20

Restructuring and restructuring-related net charges (credits) (13) (3) — 44 44 37 0.03

Litigation-related net charges (credits) — — — 223 223 169 0.12

Investment impairment charges — — — — 1 1 0.00

EU MDR implementation charges (3) — (1) 4 4 3 0.00

Debt extinguishment charges — — — — 86 67 0.05

Deferred tax expenses (benefits) — — — — — (4,102) (2.90)

Discrete tax items — — — — — 2 0.00

Adjusted net income $ 781 $ 1,026 $ 297 $ 783 $ 674 $ 643 $ 0.46 16 % Less: Impact of Q4 2018 net tax benefit (a) (3)%Adjusted net income, net tax benefit 19 %

Three Months Ended December 31, 2018

in millions, except per share data

Cost ofProducts

SoldSG&A

ExpensesR&D

Expenses


Pre-TaxIncome(Loss)

Net Income(Loss)

Impact perShare

GAAP net income (loss) $ 729 $ 953 $ 288 $ 319 $ 296 $ 386 $ 0.27Non-GAAP adjustments:


Acquisition-related net charges (credits) (18) (32) (9) 50 22 84 0.06

Restructuring and restructuring-related net charges (credits) (14) (7) (1) 37 37 30 0.02


Investment impairment charges — — — — — (2) 0.00

Discrete tax items — — — — (7) (151) (0.11)

Adjusted net income $ 697 $ 915 $ 278 $ 653 $ 596 $ 552 $ 0.39

(a) The fourth quarter net tax benefit of $0.01 includes a fourth quarter $0.05 charge for our previously announced tax reinvestment strategy, which was estimated to be $0.06 at the time of guidance issuedOctober 24, 2018, offset by an additional $0.06 benefit for our fourth quarter IRS tax settlement for the 2011 through 2013 tax years.

Appendix B - Income Statement InformationEarnings per ShareThree Months Ended December 31, 2019 and 2018


Year Ended December 31, 2019

YoYEPS Growthin millions, except per share data

Cost ofProducts

SoldSG&A

ExpensesR&D

Expenses


Pre-TaxIncome(Loss)

Net Income(Loss)

Impact perShare

GAAP net income (loss) $ 3,116 $ 3,941 $ 1,174 $ 1,518 $ 687 $ 4,700 $ 3.33 179 %

Non-GAAP adjustments:


Intangible asset impairment charges — — — 105 105 102 0.07

Acquisition / divestitures-related net charges (credits) (114) (162) (35) 275 626 672 0.48

Restructuring and restructuring-related net charges (credits) (32) (12) — 82 82 68 0.05



EU MDR implementation charges (4) — (1) 6 6 5 0.00

Debt extinguishment charges — — — — 86 67 0.05

Deferred tax expenses (benefits) — — — — — (4,102) (2.91)

Discrete tax items — — — — — 18 0.01

Adjusted net income $ 2,966 $ 3,766 $ 1,138 $ 2,800 $ 2,409 $ 2,234 $ 1.58 8 %

Less: Impact of full year 2018 net tax benefit (a) (5)%

Adjusted net income, net tax benefit 13 %

Year Ended December 31, 2018

in millions, except per share dataCost of

Products SoldSG&A

Expenses R&D ExpensesOperating

Income (Loss)Pre-Tax

Income (Loss)Net Income

(Loss)Impact per

Share

GAAP net income (loss) $ 2,813 $ 3,569 $ 1,113 $ 1,506 $ 1,422 $ 1,671 $ 1.19

Non-GAAP adjustments:


Intangible asset impairment charges — — — 35 35 31 0.02

Acquisition-related net charges (credits) (41) (84) (60) 164 (46) 5 0.00

Restructuring and restructuring-related net charges (credits) (47) (11) (1) 96 96 77 0.05



Discrete tax items — — — — (7) (328) (0.23)

Adjusted net income $ 2,724 $ 3,474 $ 1,052 $ 2,503 $ 2,209 $ 2,060 $ 1.47

(a) Full year 2018 net tax benefit of $0.07 includes our previously disclosed second quarter $0.06 benefit from settling the IRS Stipulation of Settled Issues for the 2001 through 2010 tax years, offset by a fourth quarter$0.05 charge for our previously announced tax reinvestment strategy. In addition, the net benefit includes a $0.06 benefit in the fourth quarter for the settlement with the IRS of our 2011 through 2013 tax years.

Appendix B - Income Statement InformationEarnings per ShareYear Ended December 31, 2019 and 2018

Appendix C Additional Non-GAAP

Reconciliations


in millions Three Months Ended Twelve Months EndedAdjusted Free Cash Flow 12/31/2019 12/31/2018 12/31/2019 12/31/2018Operating cash flow, reported $ 692 $ 19 $ 1,836 $ 310

Less: Purchases of property, plant and equipment 185 106 461 316

Add: Proceeds on disposals of property, plant andequipment 1 14 7 14

Free Cash Flow, reported 508 (73) 1,383 8

Plus: Restructuring and restructuring-related payments 24 13 66 89

Plus: Acquisition-related payments 84 127 266 205

Plus: EU medical device regulation payments 4 — 4 —

Plus: Special Tax Payments (Refunds/Credits) (62) 269 (42) 977

Plus: Litigation-related Settlements 79 323 330 791

Adjusted Free Cash Flow $ 638 $ 659 $ 2,007 $ 2,070

Appendix C - Additional ReconciliationsAdjusted Free Cash Flow


Appendix C - Additional Reconciliations

Adjusted Tax RateThree Months

Ended 12/31/19Year Ended

12/31/19Tax Rate, as reported 71,643.8% (584.1)%

Less: Non-GAAP adjustments 71,639.3% (591.4)%

Adjusted Tax Rate 4.5% 7.3 %

First Half 2019 Total Company WW Sales Detail 2019 2018As Reported

Basis



Basis



OrganicBasis

Q1 2019 Worldwide Net Sales $2,493 $2,379 5% (3)% 8% 2% 6%Q2 2019 Worldwide Net Sales 2,631 2,490 6% (2)% 8% 2% 6%First Half 2019 Worldwide Net Sales $5,124 $4,870 5% (3)% 8% 2% 6%

Second Half 2019 Total Company WW Sales Detail 2019 2018As Reported

Basis



Basis



OrganicBasis

Q3 2019 Worldwide Net Sales $2,707 $2,393 13% (1)% 14% 5% 9%Q4 2019 Worldwide Net Sales 2,905 2,561 13% (1)% 14% 7% 7%Second Half 2019 Worldwide Net Sales $5,612 $4,954 13% (1)% 14% 6% 8%

Second Half 2019 acceleration over First Half 2019 bps 200


Appendix C - Additional Reconciliations

Year EndedInterventional Cardiology Revenue Growth 2019 2018Revenue growth, as reported 8.7 % 7.1%Less: Impact of foreign currency fluctuations (2.3)% 0.5%Revenue growth, operational 11.0 % 6.6%Less: Impact of certain acquisitions / divestitures 1.0 % 2.1%Revenue growth, organic 10.0 % 4.5%

YoY Growth bps 550

Coronary Therapies Revenue GrowthThree Months EndedDecember 31, 2019

Year EndedDecember 31, 2019

Revenue growth, as reported 0.2 % (0.4)%Less: Impact of foreign currency fluctuations (0.6)% (2.2)%Revenue growth, operational 0.8 % 1.8 %

Three Months Ended Year EndedAdjusted Interest Expense December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018Interest Expense, as reported (179) (64) (473) (241)

Less: Non-GAAP adjustments (86) (2) (148) (2)

Adjusted Interest Expense (93) (62) (325) (239)

Three Months Ended Year EndedAdjusted Other Expense December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018Other Expense, as reported (37) 40 (358) 156

Less: Non-GAAP adjustments (20) 36 (293) 211

Adjusted Other Expense (17) 4 (65) (55)


Appendix D - Forward-Looking Non-GAAPFinancial Measures

The following is an explanation of the adjustments that management excluded from GAAP measures to calculate the following

forward-looking non-GAAP financial measures for the first quarter and full year 2020:

Adjusted Gross Margin: Excludes from GAAP gross margin the impacts of forecasted acquisition- and divestiture- and

restructuring-related charges or credits.

Adjusted SG&A: Excludes from GAAP SG&A the impacts of forecasted acquisition- and divestiture- and restructuring-related

charges or credits.

Adjusted R&D: Excludes from GAAP R&D the impacts of forecasted acquisition- and divestiture- and restructuring-related

charges or credits.

Adjusted Operating Margin: Excludes from GAAP operating margin the impacts of forecasted medical device regulation charges,

acquisition- and divestiture- and restructuring- and restructuring-related charges or credits and amortization expense.

Adjusted Tax Rate: Excludes from GAAP tax rate the tax impacts related to forecasted medical device regulation charges,

acquisition- and divestiture-, restructuring- and restructuring-related charges or credits and amortization expense.

Adjusted Free Cash Flow: Adjusts GAAP operating cash flow to include the impacts of forecasted medical device regulation

charges, capital expenditures and excludes the impact of estimated after-tax acquisition- and divestiture-, restructuring- and

litigation-payments.

Please refer to our Safe Harbor for forward-looking statements disclosure on slide 2 in conjunction with any forward looking

information presented within.

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