Mike Mahoney Chairman and Chief Executive Officer - Boston Scientific Investor Relations
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Mike Mahoney Chairman and Chief Executive Officer
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” and similar words. These forward-looking
statements are based 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 underlying assumptions 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 our forward-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 the headings “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.
We disclaim 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 on which they may be based, or that may affect
the likelihood that actual results will differ from those contained in the forward-looking statements.
2
Regulatory disclaimers
Product Regulatory Disclaimer
WATCHMAN FLX™ CE Marked. U.S.: Caution: Investigational Device. Limited by Federal (or U.S.) law to investigational use only. Not available for sale.
ACURATE neo2™ Self-Expanding Valve Platform Pending CE Mark. U.S.: Caution: Investigational Device. Limited by Federal (or U.S.) law to investigational use only. Not available for sale.
Millipede Mitral Repair Technology Device under development. Not available for use or sale worldwide.
LOTUS Mantra™ Valve System Device under development. Not available for use or sale worldwide.
EXALT™ Model D Pending CE Mark. Not available for sale outside of the U.S.
SpyGlass™ Discover Device under development. Not available for use or sale worldwide.
EXALT™ Model B Device under development. Not available for use or sale worldwide.
EXALT™ Model Bx Device under development. Not available for use or sale worldwide.
EXALT™ Model TG Device under development. Not available for use or sale worldwide.
SpyGlass™ DS III Device under development. Not available for use or sale worldwide.
PEG Scope Device under development. Not available for use or sale worldwide.
iNod™ Ultrasound Guided Needle Device under development. Not available for use or sale worldwide.
3
Financial disclaimers
Market Estimates:
Unless noted otherwise, all references to market sizes, market share positions, and market growth rates are BSX internal estimates.
Non-GAAP Financial Measures:
This presentation contains non-GAAP measures (denoted with *) in talking about our company’s performance. The reconciliations of those non-GAAP measures to their most
comparable GAAP measures are contained within this document including appendices attached to the end of this presentation.
Revenue Growth:
All growth rates are operational unless otherwise noted. Operational growth rates are non-GAAP measures that exclude the impact of foreign currency fluctuations. Organic growth
rates are non-GAAP measures that exclude the impact of foreign currency fluctuations and the sales from the acquisitions of the electrophysiology business of C.R. Bard Inc., the
Interventional Division of Bayer AG, the American Medical Systems male urology portfolio, EndoChoice Holdings, Inc., Symetis SA, NxThera, Inc., Claret Medical, Inc., Augmenix, Inc.,
Vertiflex, Inc. and BTG plc (BTG) in the periods for which there are no prior period related sales. Organic revenue growth also excludes the impact of the divestiture of our global
embolic microspheres portfolio, a transaction entered into in connection with obtaining the antitrust clearances required to complete the BTG transaction.
Medical Devices:
We have three historic reportable segments comprised of Medical Surgical (MedSurg), Rhythm and Neuro, and Cardiovascular, which represent an aggregation of our operating
segments that generates revenues from the sale of medical devices (Medical Devices). As part of our BTG acquisition, which closed on August 19, 2019, we acquired an
Interventional Medicine business, which is 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 BTG acquisition, which closed on August 19, 2019, we acquired a Specialty Pharmaceuticals business (Spec Pharma). Subsequent to acquisition, Spec Pharma is a
stand-alone operating segment presented alongside our Medical Device reportable segments. Spec Pharma net sales are substantially U.S. based. Our chief operating decision
maker (CODM) reviews financial information of our globally managed Spec Pharma operating segment at the worldwide level without further disaggregation into regional results. As
such, Spec Pharma net sales are presented globally, and our Medical Devices reportable segments regional net sales results do not include Spec Pharma.
Emerging Markets:
We define Emerging Markets as the 20 countries that we believe have strong growth potential based on 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. The revision had an immaterial impact on prior year sales.
4
Our Mission and Values
Boston Scientific is dedicated to
transforming lives through innovative
medical solutions that improve the
health of patients around the world.
Meaningful High Global Diversity & Winning
Caring
Innovation Performance Collaboration Inclusion Spirit
5
What to expect from BSX 2020+
1. Highly engaged and driven team – patient-centric,
motivated and innovative global culture
2. Continued execution of category leadership strategy
and portfolio diversification into higher growth,
adjacent markets
3. Compelling and differentiated pipeline driven by
meaningful innovation
4. Commitment to corporate social responsibility and
sustainable business models
5. Consistent, high performance to deliver shareholder value;
long term financial goals for 6-9% organic revenue growth
and margin expansion to drive double-digit adj EPS growth
6
Category leadership driving growth
2019 revenue1 $10.7B, 11.1% op* growth, 7.3% organic* growth
Interventional Cardiology Cardiac Rhythm
(incl. Structural Heart) Management
$2.8B, +11%, +10% $1.9B, +1%
Structural Heart Electrophysiology
High end of $329M, +7%
$700-725M guidance2
Peripheral Interventions Neuromodulation
(incl. IM, excl. Spec Pharma)
$1.4B, +19%, +8% $873M, +13%, +7%
Endoscopy Urology & Pelvic Health
$1.9B, +9% $1.4B, +15%, +8%
Growth rates listed are operational*, organic*
+Spec Pharma $81M 7
Endo, CRM and EP operational and organic growth rates are equivalent
Driving global expansion
Building scale and capabilities
Strong, balanced growth in every region Emerging Markets remain a key growth driver 2020+
LACA
$0.4B, +7%
+15%
APAC
$1.9B, +12%
$1.25B, +19%
2019 US
Revenue1t
$6.1B, +10%
EMEA
$2.3B, +9%
2019 2 2020E 2021E 2022E
t Excludes
Spec Pharma
Growth rates are operational*
8
Track record of delivering high performance:
Organic revenue growth
Driving market share, entering new high growth segments and expanding geographic reach
Est Organic* CAGR
6-9%
Organic* CAGR
7%
Organic* CAGR
6%
Organic* CAGR
(1%)
2011 2012 2013 2014 2015 2016 2017 2018 2019 1 2020E-
2022E
9
Track record of delivering high performance:
Operating margin improvement and EPS growth
Delivering on adjusted operating Consistent double digit adjusted EPS* growth
margin* expansion goals ’15-’19E CAGR: 14%
Adj. operating margin* goal Adj. EPS* growth goal
+DD%
Y/Y
+50-100 $1.55-
$1.58
26- bps Y/Y
26.25% $1.47
25.5% +11-
25.0% $1.26 13%
5
24.1% +17%
$1.11
+13%
22.3%
$0.93 +20%
$0.84
20.2%
$0.73 +11%
19.2% 18.8% 18.9% $0.67 $0.66 +15%
+10%
(3%) (2%)
2011 2012 2013 2014 2015 2016 2017 2018 2019E 3 2020E 2011 2012 2013 2014 2015 2016 2017 2018 4 2019E 3 2020E
- 2022E - 2022E
10Consistent portfolio diversification into
higher growth markets
BSX portfolio revenue mix
High growth markets (≥8% CAGR):
IC (Structural Heart), RM (EP), PI (Drug Eluting, Venous,
$11B ~35% Therapeutic Oncology), NM, Endo (TIPs, Endoluminal
Surgery), UroPH (Prostate Health)
$8B ~25%
$7B ~15%
~10%
Moderate growth markets (3-7% CAGR):
~45% ~50% ~45% ~45% Endo (Core), PI (Core Arterial + Core Oncology), UroPH
(Core), IC (Complex PCI), RM (ICM)
~45% ~35% ~30% ~20% Low growth markets (Multiple sources of innovation
drive compelling pipeline
Internal adjusted R&D* % of Disciplined and balanced Strategic investments &
revenue at the high end of peers approach to M&A partnerships
~10.5% • Tuck-ins across multiple • Active venture capital portfolio
10.5-11% businesses
10.8% – 40+ investments in mixed stages
~$1.2B • Strong integration track record of opportunity
~$1.0B
– 5 of 12 most recently closed deals
• Healthy pipeline augmented by
from VC portfolio
VC portfolio
2017 2019E 6 2021E
• Employee engagement
– “Imagine If” program
• Multiple incubators + spin outs +
LithoVue™ single-use
ureteroscope EXALT™ D single-use strategic partnerships
duodenoscope
HeartLogic™ Heart
Failure Alert
WaveWriter™ Tsinghua University
Spinal Cord Stimulator Vercise™ Deep Brain Stimulator
12Large and compelling high growth markets
across the portfolio
2019 BSX Sales1 Mkt Growth Key Products / New Markets
Operational* Growth 2019 – 2022 CAGR
• LAAC Global Expansion (WATCHMAN™)
Interventional $2.8B • TAVR (ACURATE neo™, LOTUS Edge™)
+6%
Cardiology +11% and Embolic Protection (Sentinel™)
• Mitral Repair Technologies
• Therapeutic Oncology
Peripheral $1.4B
+6% • Venous Stenting & Pulmonary Embolism
Interventions +19% • Drug-eluting (ELUVIA™ DES, Ranger™ DCB)
Rhythm • HeartLogic™ Heart Failure Alert
$2.3B
Management +4% • Mapping and Navigation (RHYTHMIA™)
+2% • Single Shot for Pulmonary Vein Isolation
(CRM + EP)
• Expanding pain treatment continuum
$0.9B
Neuromodulation +8-10% Superion™ for Lumbar Spinal Stenosis
+13% • DBS for Parkinson’s Disease and Tremor
• Pancreaticobiliary Disease
$1.9B
Endoscopy +5% • Infection Prevention and Pathology
+9% • Therapeutic Imagingt
• LithoVue™ Flexible Ureteroscope, StoneSmart™
Urology & $1.4B
+6% • SpaceOAR™ Hydrogel
Pelvic Health +15% • MIT benign prostatic hyperplasia (BPH)
t Therapeutic Imaging excluded from Market/CAGR
$10.7B ~6% Excludes BTG Spec Pharma
13Strong product pipeline
supports top tier growth
2020E 2021E 2022E+
Coronary Therapies Coronary Therapies Coronary Therapies
• SYNERGY XD, 48 mm, MEGATRON – U.S. • AVVIGO Guidance System • NG Atherectomy System
• SYNERGY XD – Japan • ROTAWIRE Drive - US and Japan • SYNERGY XD – China
• Comet II pressure wire
Structural Heart Structural Heart
Structural Heart • ACURATE neo2 – U.S. • Millipede Mitral Valve Repair – EU
• WATCHMAN FLX (LAAC) – U.S. • WATCHMAN FLX (LAAC) – China • LOTUS Mantra – U.S. & EU
• ACURATE neo2 (TAVR) – EU • ACURATE neo2 – Japan
• LOTUS Edge (TAVR) – Japan Peripheral Interventions • ACURATE PRIME – expanded sizes U.S. & EU
• Ranger DCB SFA – Japan
Peripheral Interventions • Interventional Oncology Coils Peripheral Interventions
• Ranger DCB SFA – U.S. • Athletis PTA Balloon • SAVAL DES BTK
• OptiCross 35 IVUS Catheter • CLI Catheter
• AngioJet Clothunter CRM/EP
CRM/EP • Resonate 2.0
CRM/EP
• RHYTHMIA 5.0 • POLARx (Cryo Single Shot) – U.S.
• POLARx (Cryo Single Shot) – EU
• Ingevity+ Pacing Lead – EU • LUMINIZE (RF Single Shot) – U.S.
• LUX-Dx ICM – U.S.
• Empower leadless pacing/mCRM – U.S.
• Ingevity+ Pacing Lead – U.S.
Neuromodulation • Force-Sensing Catheter – U.S.
• DIRECTSENSE – U.S.
• SCS/DBS next gen systems • Next gen CRM pulse generator
• Force-Sensing Catheter – EU
• LUMINIZE (RF Single Shot) – EU
Endoscopy Neuromodulation
• 3300 Programmer
• Single-use scope platform expansion • SCS indication expansion
Neuromodulation • AXIOS expanded indications – U.S.
• DBS next gen visualization platform Endoscopy
Urology/Pelvic Health • Single-use scope platform expansion
Endoscopy • LithoVue Ureteroscope next gen • Endoluminal surgery toolkit expansion
• Exalt Model D single-use scope – U.S. • AMS 700 IPP enhancements
• SpyGlass Discover single-use scope • Core Stone enhancements Urology/Pelvic Health
• ORISE ProKnife • StoneSmart expansion
• Resolution 360 Ultra hemostasis clip • Rezūm enhancements
Urology/Pelvic Health
• Tria Ureteral Stents – U.S. & EU
• SpaceOAR & Rezūm – Int’l expansion
• SpaceOAR Vue Hydrogel
14Key portfolio growth drivers 2020+
Selected product spotlights
Structural BTG Single-use
Heart Venous & Scopes
Interventional
Oncology
151) Structural Heart
Differentiated portfolio stands out in $6B market
BSX Structural Heart revenue $900M to $1B in 2020E
WATCHMAN™ LAAC SENTINEL™ Cerebral
Prevent Protection System
WATCHMAN FLX US H2:20E
Stroke PROTECTED TAVR
CHAMPION AF trial (H2H DOAC) launch 2020E
trial launch H1:20E
Match Aortic LOTUS Edge™ TAVR ACURATE neo2™ TAVR
Valve to Need 150 US accounts open by Q2:20 CE Mark mid-2020E
Mantra 29mm clinical trial H2:20E FDA Approval YE 2021E
Cornerstone Repair of MILLIPEDE TMVr
Mitral Annulus Initiated feasibility study
Prevent
iSLEEVE™ Expandable SAFARI2™ Pre-Shaped
Vascular
Introducer Sheath Guidewire
Complications
16WATCHMAN
Expanding clinical investments: CHAMPION-AF
Estimated Global
Estimated Global LAAC Market Size
LAAC Market Size
CHAMPION-AF Study
A randomized, controlled trial
studying WATCHMAN FLX vs.
DOACs
Lower bleeding risk patients with
non-vascular atrial fibrillation
2025E+ (NVAF)
2023E $2B+
2018 ~$1B Expecting ~2,000 NVAF patients
~$400M and ~150 sites
Anticipate to begin enrolling in
H2:2020
Co-Chairmen: Dr. Marty Leon and
Penetration into Penetration into
high-bleed risk NVAF patient low-to-moderate-bleed risk
Dr. Ken Ellenbogen
population NVAF patient population Principal Investigators: Dr. Shephal
Doshi and Dr. Saibal Kar
172) BTG: Venous & Interventional Oncology
Strong strategic fit, high growth adjacencies
Significant operational &
Access to BTG IM high growth adjacencies
commercial synergies
Interventional Oncology Venous Disease • Engaging customers as a newly
2018 Market: $1.6B 2018 Market: $1.4B combined entity with complementary
’19-’22 CAGR: ~8% ’19-’22 CAGR: ~8% portfolio
• Expect ~$175M in synergies by year 3
Category Leader in Cancer Therapeutics Scaled Player - Integration on plan
DVT, PE, SVI
- Leveraging BSX global footprint
Future indications: - Est. 80% synergies by end of year 2
Prostate Cancer
Brain Cancer
Lung Cancer 2019 Global Revenue Distribution
Y90 Radiotherapy Cryo, Microwave Thrombolysis Vena Cava
for Liver Cancer Therapy Treatment Filter
183) Single-use endoscopes: $2B+ market opportunity
Reduce infection, enhance efficiency, and improve availability
EXALT MODEL D COMPREHENSIVE SINGLE-USE THERAPEUTIC IMAGING PORTFOLIO
Exalt™ Model D Exalt™ Model B
Duodenoscope Bronchoscope
1.5M ERCPs 3M procedures
SpyGlass™ Discover
Exalt™ Model Bx
Choledochoscope
2M procedures
40K procedures
SpyGlass™ DS III iNod™ Ultrasound
Cholangioscope Guided Needle
150K procedures 150K procedures US
Proven commercial channel
Market leading device portfolio Exalt™ Model TG PEG Scope
Therapeutic Gastroscope for
Gastroscope PEG Placement
Favorable market conditions 800K procedures 530k procedures
19Strong cash flow generation outlook
Capital structure facilitates
Compelling adj. free cash flow*: 10% CAGR 2019E-2022E
growth strategy
• Closed $4B BTG acquisition
+10%
~$2.8B August 2019
~$2.5B
~$2.3B • Expect to repay $1.6B debt
~$2.1B
over 16 months post-BTG
close
• Targeting BBB+ credit ratings
• Flexibility to return cash to
2019E 3 2020E 2021E 2022E shareholders post debt
paydown
Debt-to- Long-term
EBITDA
~3.3x ~2.6x ---
goal ~2.25x
---
20Consistent top tier financial performance & outlook
Goals
2019E 2020E-2022E
Organic Revenue* +7.3%1 +6-9% CAGR
Operational Revenue* +11.1%1 TBD
Adj. Operating Margin* +50-75bps3 Y/Y +50-100 bps
Improvement annually
Adj. Tax Rate* ~9%3 ~11%7
Less ~100bps stock comp benefit
Adj. EPS* Growth 11%-13% Double-digit growth
ex. 2018 IRS settlement3,5
Adj. Free Cash Flow*/Growth $2.1B3 +10% CAGR
21Ongoing commitment to Corporate Social Responsibility
PEOPLE PLANET PRACTICES
Ranked 47% 87
greenhouse
28th gas emissionst
Product
launches
10/20/40 30% 95% of solid
Progress on
water waste diverted
$1B+
D&I goals consumptiont Invested in R&D
from landfillst
114
99.9% Active Clinical
55 Awareness & Gender pay
Trials
Education Events equityt
Newsweek
35K 40K 2020 Most
Employees
Volunteer Carbon Neutral 46% Responsible
Company
hours in Costa Rica Green Real Estate
t 2018 figure, greenhouse gas emissions and water consumption compared to 2009 manufacturing operations baseline. 22Acronym Reference Guide
Afib Atrial Fibrillation IO Interventional Oncology
BPH Benign Prostatic Hyperplasia MIT Minimally Invasive Techniques
CRM Cardiac Rhythm Management NM Neuromodulation
DBS Deep Brain Stimulation NVAF Non-valvular Atrial Fibrillation
DCB Drug Coated Balloon PCI Percutaneous Coronary Intervention
DES Drug-eluting Stent PE Pulmonary Embolism
DVT Deep Vein Thrombosis PI Peripheral Interventions
Endo Endoscopy RF Radiofrequency
EP Electrophysiology RM Rhythm Management
ERCP Endoscopic Retrograde Cholangiopancreatography SCS Spinal Cord Stimulation
EUS Endoscopic Ultrasound SVI Superficial Venous Insufficiency
GI Gastrointestinal TAVR Transcatheter Aortic Valve Replacement
IC Interventional Cardiology TIPs Therapeutic Imaging Platforms
ICM Insertable Cardiac Monitor TMVr Transcatheter Mitral Valve Repair
IM Interventional Medicine UroPH Urology & Pelvic Health
24References
*Non-GAAP measure; for reconciliations of non-GAAP financial measures to the most directly comparable GAAP figures, please refer to Appendix A of this
document.
1Based on preliminary, unaudited sales results issued January 14, 2020
2Based on preliminary, unaudited internal estimates
3Based on 2019 guidance issued October 23, 2019
4Full
year 2018 adjusted earnings per share of $1.47 and 17% growth includes a $0.07 net tax benefit. This net benefit includes the 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.
52019E adjusted EPS growth excluding the 2018 net tax benefit $0.07 in the base, as described above in Reference No. 4
6Based on midpoint of 2019 guidance issued October 23, 2019 and preliminary, unaudited sales results issued January 14, 2020
7Estimated tax rate is operational and excludes discrete tax items, such as the benefit related to adoption of ASU 2016-09
25Supplemental Non-GAAP Disclosures
Less: Impact of Less: Impact
Foreign of Recent
FY 2019 Divisional Revenue Growth 1 (unaudited) compared to FY Currency Operational Acquisitions / Organic
2018 Reported Basis Fluctuations Basis Divestitures Basis
Endoscopy 8% -2% 9% 0% 9%
Urology & Pelvic Health 13% -1% 15% 6% 8%
MedSurg 10% -2% 11% 3% 9%
Cardiac Rhythm Management -1% -2% 1% 0% 1%
Electrophysiology 6% -2% 7% 0% 7%
Neuromodulation 12% -1% 13% 6% 7%
Rhythm and Neuro 3% -2% 5% 2% 3%
Interventional Cardiology 9% -2% 11% 1% 10%
Peripheral Interventions 17% -2% 19% 11% 8%
Cardiovascular 11% -2% 14% 4% 9%
Medical Devices 8% -2% 10% 3% 7%
Specialty Pharmaceuticals n/a n/a n/a n/a n/a
Net Sales 9% -2% 11.1% 4% 7.3%
Less: Impact of
Foreign
Currency Operational
1
FY 2019 Revenue Growth (unaudited) compared to FY 2018 Reported Basis Fluctuations Basis
Rhythm Management (CRM & EP) 0% -2% 2%
26Supplemental Non-GAAP Disclosures
Less: Impact of
Foreign
FY 2019 Regional Revenue Growth 1 (unaudited ) compared to FY Currency Operational
2018 Reported Basis Fluctuations Basis
U.S. 10% 0% 10%
EMEA (Europe, Middle East and Africa) 4% -5% 9%
APAC (Asia-Pacific) 10% -2% 12%
LACA (Latin America and Canada) 3% -4% 7%
International 6% -4% 10%
Medical Devices (a) 8% -2% 10%
Specialty Pharmaceuticals (b) n/a n/a n/a
Net Sales 9% -2% 11%
Emerging Markets 2 14% -5% 19%
(a) We have three historical reportable segments comprised of Medical Surgical (MedSurg), Rhythm and Neuro, and Cardiovascular, which
represent an aggregation of our operating segments that generates 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, which is now included in our Peripheral Interventions
operating segment's 2019 revenues from August 19, 2019 through December 31, 2019.
(b) As part of our acquisition of BTG on August 19, 2019, we acquired a specialty pharmaceuticals business (Specialty Pharmaceuticals).
Subsequent to acquisition, Specialty Pharmaceuticals is now a stand-alone operating segment presented alongside our Medical Device reportable
segments. Specialty Pharmaceuticals net sales are substantially U.S. based. Our chief operating decision maker (CODM) reviews financial
information of our globally managed Specialty Pharmaceuticals operating segment at the worldwide level without further disaggregation into
regional results. As such, Specialty Pharmaceuticals net sales are presented globally, and our Medical Devices reportable segments regional
net sales results do not include Specialty Pharmaceuticals.
27Supplemental Non-GAAP Disclosures
Revenue Growth 2019 1 2018 2017 2016 2015 2014 2013 2012 2011
Revenue growth, as reported 9% 9% 8% 12% 1% 3% -1% -5% -2%
Less: Impact of foreign currency fluctuations -2% 1% 0% 0% -7% -3% -2% -2% 3%
Operational Revenue Growth 11% 8% 8% 12% 8% 6% 1% -3% -5%
Less: Impact of certain acquisitions and divestitures 4% 1% 1% 2% 3% 2% -1% 0% -3%
Organic Revenue Growth 7% 7% 7% 10% 5% 4% 2% -3% -2%
Organic revenue growth (2011-2013) -1%
Organic revenue growth (2014-2016) 6%
Organic revenue growth (2017-20191) 7.0%
Adjusted R&D Margin 2019E3 2017
R&D Margin, as reported 11.0%
Less: Non-GAAP adjustments 0.2%
Adjusted R&D Margin 10.5-11% 10.8%
Adjusted R&D Margin is a non-GAAP measure that excludes the impact of acquisition and divestiture and restructuring related
charges or credits.
3
Adjusted Operating Margin 2019E 2018 2017 2016 2015 2014 2013 2012 2011
Operating Margin, as reported 15.3% 14.2% 5.3% -3.8% -4.1% 1.7% -53.4% 11.9%
Less: Non-GAAP adjustments -10.2% -10.8% -18.8% -26.1% -24.3% -17.2% -72.2% -7.3%
Adjusted Operating Margin 26 - 26.25% 25.5% 25.0% 24.1% 22.3% 20.2% 18.9% 18.8% 19.2%
Growth in basis points (bps) year over year (2018-20193) 50-75
Adjusted operating margin, adjusted earnings per share and their related growth rates are non-GAAP measures that exclude the impacts of certain charges (credits) which may include medical device regulation charges,
amortization expense, goodwill and intangible asset impairment charges, acquisition/divestiture-related net charges and credits, restructuring and restructuring-related net charges and credits, litigation related net
charges and credits, pension termination charges, certain debt extinguishment net charges and credits, certain investment impairment charges, certain tax restructuring transaction net charges and credits and/or certain
discrete tax items.
28Supplemental Non-GAAP Disclosures
Earnings Per Diluted Share 2019E3,5 2018 4 2017 2016 2015 2014 2013 2012 2011 2010
GAAP net income (loss) per share $0.72 - $0.75 $ 1.19 $ 0.08 $ 0.25 $ (0.18) $ (0.09) $ (0.09) $ (2.89) $ 0.29 $ (0.70)
Non-GAAP adjustments 0.83 0.28 1.18 0.86 1.11 (a) 0.93 (b) 0.82 (c) 3.55 (d) 0.38 1.39 (e)
Adjusted net income (loss) per share $1.55 - $1.58 $ 1.47 $ 1.26 $ 1.11 $ 0.93 $ 0.84 $ 0.73 $ 0.66 $ 0.67 $ 0.69
Adjusted net income (loss) per share $ 1.47
4
Less: Impact of 2018 net tax benefit 0.07
Adjusted net income (loss) per share, excluding 2018 net tax benefit $ 1.40
Adjusted EPS growth from prior year 11-13% 17% 13% 20% 11% 15% 10% -2% -3%
Adjusted EPS CAGR 2015-2019E6 14%
(a) Assumes dilution of 21.5 million shares for the year ended December 31, 2015.
(b) Assumes dilution of 23.7 million shares for the year ended December 31, 2014.
(c) Assumes dilution of 19.5 million shares for the year ended December 31, 2013.
(d) Assumes dilution of 7.7 million shares for the year ended December 31, 2012.
(e) Assumes dilution of 10.0 million shares for the year ended December 31, 2010.
29Supplemental Non-GAAP Disclosures
Adjusted Free Cash Flow ( in billions) 2019E3 2018 2017 2016
Operating cash flow, reported $ 0.3 $ 1.4 $ 1.2
Less: Purchases of property, plant and equipment 0.3 0.3 0.4
Add: Proceed on disposals of property, plant and equipment - - -
Free Cash Flow, as reported $ - $ 1.1 $ 0.8
Plus: Special Adjustments 2.1 0.6 0.8
Adjusted Free Cash Flow $ 2.1 $ 2.1 $ 1.7 $ 1.6
Adjusted free cash flow and its related growth rate are non-GAAP measures that exclude from free cash flow the cash component of certain charges (credits) that are also
excluded from adjusted net income as well as any cash tax benefits of such charges. In addition, we exclude tax settlements payments and refunds that relate to prior
periods. Free cash flow is a non-GAAP measure that excludes net purchases of property, plant and equipment from cash provided by (used for) operating activities on a
GAAP basis. The GAAP measure that is most directly comparable to adjusted free cash flow and free cash flow is cash provided by (used for) operating activities on a GAAP
basis.
Tax Rate 2019E3 2018 2017
Tax Rate, GAAP basis 1% -18% 89%
Less: Non-GAAP adjustments -8% -24% 78%
Tax Rate, Adjusted 9% 7% 11%
Adjusted Tax Rates are non-GAAP measures that exclude the impacts of certain charges (credits) which may include medical
device regulation charges, amortization expense, intangible asset impairment charges, acquisition/divestiture-related net
charges and credits, restructuring and restructuring-related net charges and credits, litigation related net charges and credits,
certain investment impairment charges and/or certain discrete tax items.
30Supplemental Non-GAAP Disclosures
The following is an explanation of the adjustments that management excluded from GAAP measures to calculate the following forward-looking non-GAAP financial measures:
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 and Adjusted Earnings (Loss) Per Share: Excludes from GAAP operating margin and GAAP net income (loss) 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- and 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.
2020E+ Operational Revenue and related growth rates: Excludes from GAAP revenue and related growth rates the forecasted impact of foreign currency fluctuations.
2020E+ Organic Revenue and related growth rates: Excludes from GAAP revenue and related growth rates the forecasted impact of foreign currency fluctuations and the
forecasted impact of proposed and future acquisitions and divestitures with no comparable sales in the period.
Please refer to our Safe Harbor for forward-looking statements disclosure in conjunction with any forward looking information presented within.
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