Executive Summary / Key Takeaways

• Boston Scientific is executing a robust category leadership strategy, fueled by significant innovation and strategic tuck-in acquisitions, particularly in high-growth markets like Electrophysiology (EP) and Left Atrial Appendage Closure (LAAC).
• The company delivered exceptional Q3 2025 financial results, with operational sales growth of 19.4% and organic sales growth of 15.3%, surpassing guidance, driven by strong performance in its FARAPULSE and WATCHMAN franchises.
• Key technological differentiators, including the FARAPULSE Pulsed Field Ablation (PFA) System and the WATCHMAN LAAC device, are expanding market penetration and driving superior clinical outcomes and procedural efficiency.
• Management has raised its full-year 2025 guidance, projecting approximately 15.5% organic revenue growth and adjusted EPS of $3.02 to $3.04, and targets 10%+ average organic revenue growth with leveraged double-digit EPS growth through 2028.
• Strategic acquisitions, a strong pipeline of new technologies, and a disciplined approach to capital allocation are positioning Boston Scientific for sustained above-market growth, despite ongoing macroeconomic and competitive pressures.

Advancing Science for Life: Boston Scientific's Strategic Foundation

Boston Scientific Corporation, incorporated in 1979, has established itself as a global leader in medical devices, consistently transforming patient lives through innovative, less-invasive solutions. For over 45 years, the company's overarching strategy has centered on identifying and addressing unmet patient needs, reducing healthcare costs, and achieving category leadership through a combination of internal innovation and strategic tuck-in acquisitions. This foundational approach has shaped its current market position and strategic responses to evolving industry dynamics.

The medical device industry is characterized by stringent regulatory requirements, high research and development (R&D) costs, and the critical importance of intellectual property. Boston Scientific operates within this landscape, facing competition from diversified healthcare giants and specialized medical technology firms. The company's ability to consistently deliver differentiated technology and clinical evidence is paramount to its success.

Technological Edge: The Core of Boston Scientific's Moat

Boston Scientific's competitive advantage is deeply rooted in its differentiated technology, which offers tangible benefits over alternative treatments and underpins its market leadership. The company's R&D investments are strategically focused on expanding its portfolio and enhancing existing platforms with quantifiable improvements.

The FARAPULSE Pulsed Field Ablation (PFA) System stands out as a transformative technology in Electrophysiology (EP). This system has already treated over 500,000 patients globally, demonstrating a strong safety profile, ease of use, and procedural efficiency. Clinical data, including the CHAMPION trial, has shown superior effectiveness for paroxysmal AF compared to cryoablation, with low single-digit redo rates after de novo persistent AF ablation. Management projects global PFA penetration to reach 50% by the end of 2025 and grow to approximately 80% by 2028, highlighting the rapid adoption and market conversion driven by FARAPULSE. This technological leadership allows Boston Scientific to command a premium in a rapidly expanding market, contributing significantly to its gross margins and overall revenue growth.

Another cornerstone of Boston Scientific's portfolio is the WATCHMAN Left Atrial Appendage Closure (LAAC) device. Celebrating its 10-year approval anniversary in Q1 2025, WATCHMAN has surpassed 600,000 patients treated to date. Its growth is significantly driven by accelerated concomitant uptake in the U.S., where approximately 25% of WATCHMAN procedures are expected to be performed concomitantly by year-end 2025, with the potential to double by 2028. This "FARAWATCH" approach, combining FARAPULSE and WATCHMAN in a single procedure, offers enhanced safety and efficacy, appealing to both physicians and patients. The company anticipates the WATCHMAN market will continue to grow by approximately 20% annually, supported by upcoming CHAMPION trial data in the first half of 2026 and the launch of the next-generation WATCHMAN Elite device in late 2027 or early 2028. This strong market position and continuous innovation in LAAC contribute to Boston Scientific's robust revenue streams and reinforces its competitive moat.

In Interventional Cardiology Therapies (ICTx), the AGENT Drug-Coated Balloon (DCB) is a significant growth driver. This technology has fueled double-digit growth in coronary therapies, supported by strong reorder rates, new account openings, and favorable reimbursement in both outpatient and inpatient settings. The ongoing STANCE trial, evaluating AGENT DCB in de novo lesions, aims to expand its indicated patient population, potentially doubling the addressable market. The fundamental advantages of paclitaxel as the drug in DCBs provide a competitive edge.

Boston Scientific is also expanding its technological footprint through strategic acquisitions. The SoniVie TIVUS Intravascular Ultrasound System, acquired in May 2025, represents an entry into the promising renal denervation (RDN) market for hypertension. The company believes ultrasound technology will be preferred over radiofrequency due to its greater tissue penetration and ability to perform RDN without abstract flow, avoiding heating to the vascular endothelium. While early in clinical trials, this technology has the potential to address a multi-billion dollar market. Similarly, the acquisition of Bolt Medical's intravascular lithotripsy (IVL) system in April 2025 positions Boston Scientific to launch this differentiated technology for peripheral above-the-knee procedures by year-end 2025, with a coronary launch expected in early 2027 after the FRACTURE trial completes in Q1 2026.

Further enhancing its portfolio, the acquisition of Elutia BioEnvelope assets aims to prevent postoperative complications for pacemakers and defibrillators, offering differentiated advantages. In neuromodulation, the agreement to acquire Nalu Medical, Inc. (expected to close H1 2026) will expand offerings into peripheral nerve pain, complementing the strong performance of the Intracept Intraosseous Nerve Ablation System, which has demonstrated safety, effectiveness, and durability through five-year data. The Cortex AI algorithm, acquired in January 2025, is a differentiated mapping software designed to precisely visualize and target arrhythmia sources, addressing an unmet need in persistent AF patients. Additionally, the Denali platform represents a complete refresh of the company's Cardiac Rhythm Management (CRM) implantable platforms, with launches expected from late 2026, and the EMPOWER leadless pacemaker is anticipated to receive FDA approval by year-end, offering a modular system with S-ICD to address a critical unmet need in high-voltage therapy.

Financial Performance: A Story of Consistent Outperformance

Boston Scientific's financial performance in 2025 reflects the successful execution of its innovation-driven strategy. In the third quarter of 2025, the company reported net sales of $5.065 billion, a 20.30% increase on a reported basis, 19.40% operationally, and 15.30% organically, exceeding its guidance range. For the first nine months of 2025, net sales grew 21.40% reported, 21% operationally, and 16.90% organically, driven primarily by the strong momentum in Electrophysiology and WATCHMAN. Adjusted net income attributable to common stockholders reached $1.12 billion, or $0.75 per diluted share, in Q3 2025, also surpassing expectations.

Profitability metrics demonstrate the positive impact of its high-growth portfolio. The adjusted gross margin for Q3 2025 improved to 71%, a 60 basis point increase year-over-year, largely due to a favorable product mix from the strong performance of EP and WATCHMAN. This improvement occurred despite an approximate $100 million tariff headwind expected for the full year 2025. Selling, general and administrative (SGA) expenses increased by 11% in Q3 2025 and 16% in the first nine months of 2025, reflecting investments in commercial execution and product launches, particularly for FARAPULSE. R&D expenses also saw significant increases of 26% in Q3 2025 and 28% in the first nine months of 2025, underscoring the company's commitment to fueling its pipeline and integrating newly acquired technologies.

The company's liquidity remains robust. As of September 30, 2025, Boston Scientific held $1.275 billion in cash and cash equivalents. Total debt stood at $11.60 billion, but the company maintained a healthy gross debt leverage ratio of 2.0x and was in compliance with its financial covenants. Cash provided by operating activities increased by $1.19 billion in the first nine months of 2025, driven by higher sales and improved operating income. Strategic acquisitions, such as Bolt Medical, SoniVie, Intera Oncology, and Cortex, collectively utilized $1.50 billion in cash for investing activities during the first nine months of 2025, demonstrating the company's active M&A strategy.

Competitive Positioning: Outpacing the Market

Boston Scientific operates in a highly competitive medical device landscape, directly contending with industry giants like Medtronic (MDT), Abbott Laboratories (ABT), Johnson & Johnson (JNJ), and Stryker Corporation (SYK). While these competitors possess vast resources and diversified portfolios, Boston Scientific distinguishes itself through targeted innovation and a focus on procedural efficiency in its core interventional segments.

In Electrophysiology, Boston Scientific has rapidly ascended to the #2 global player, with FARAPULSE establishing clear leadership in the PFA market. This contrasts with competitors who may still be developing or launching their first-generation PFA technologies. The company's open mapping platform strategy, supporting both its OPAL HDx system and competitive mapping systems, provides flexibility for physicians, a key differentiator. While larger players like Medtronic offer integrated systems for chronic disease management, Boston Scientific's specialized solutions in ablation and LAAC often provide superior clinical outcomes and efficiency, potentially exploiting niche market opportunities.

In the LAAC market, Boston Scientific's WATCHMAN device holds a strong market share, driven by its safety profile and the accelerated adoption of concomitant procedures. This positions it favorably against any emerging competitors in this rapidly growing segment. In Interventional Cardiology, the AGENT DCB provides a competitive edge, particularly with its paclitaxel drug, which offers fundamental advantages over other drug-coated balloons.

However, Boston Scientific faces challenges. Larger competitors like Medtronic and Johnson & Johnson benefit from greater scale, which can translate into more robust profitability margins and cash flow generation. Abbott's strength in diagnostics and integrated health monitoring presents a different competitive dynamic, focusing on user-friendly and accessible solutions. Boston Scientific's reliance on device-specific revenue, while driving high growth, could make it more vulnerable to supply chain disruptions or shifts in procedural preferences compared to more diversified players. The company's operational sales in Europe, Middle East, and Africa (EMEA) declined 2% in Q3 2025, partly due to the discontinuation of the ACURATE valve and a temporary $30 million backorder from an ERP system upgrade, highlighting operational sensitivities. In China, despite strong mid-teens growth, the company continues to navigate substantial Volume-Based Procurement (VBP) pricing pressures in its peripheral business.

Outlook and Strategic Initiatives

Boston Scientific has raised its full-year 2025 guidance, reflecting strong momentum and confidence in its strategic direction. The company now expects full-year 2025 organic revenue growth of approximately 15.5% and adjusted earnings per share (EPS) in the range of $3.02 to $3.04, representing 20% to 21% growth over 2024. For Q4 2025, organic growth is projected between 11% and 13%, with adjusted EPS of $0.77 to $0.79.

Looking further ahead, Boston Scientific has set ambitious long-range financial goals for 2026 to 2028, targeting 10%+ average organic revenue growth, approximately 50 basis points of annual adjusted operating margin expansion, leveraged double-digit adjusted EPS growth, and 70% to 80% annual free cash flow conversion. These targets are underpinned by several key assumptions:

• Continued EP and WATCHMAN Dominance: Global PFA penetration is expected to reach 80% by 2028, with FARAPULSE maintaining its leadership. The WATCHMAN market is projected to grow 20% annually, with concomitant procedures potentially doubling by 2028.
• Pipeline Catalysts: The limited launch of SEISMIQ IVL for peripheral procedures by year-end 2025, with a full launch in 2026 and coronary launch in early 2027, is expected to significantly contribute to growth. FDA approval for the EMPOWER leadless pacemaker is anticipated by year-end 2025, and the Denali CRM platform refresh will drive future growth.
• Acquisition Synergies: The Axonics business is expected to improve throughout 2026 as commercial execution strengthens post-disruption. The Nalu Medical acquisition will further expand the Neuromodulation pain portfolio.
• Operational Efficiency: The company anticipates full-year adjusted gross margin to slightly improve in 2025 despite tariff headwinds, driven by favorable product mix. The ERP system backorder in EMEA is expected to resolve by year-end 2025.
• Favorable Tax Environment: The passage of the One Big Beautiful Bill Act (OBBBA) has largely eliminated a previously forecasted 200-300 basis point headwind to the tax rate for 2026, which is a significant positive for future EPS growth.

Risks and Challenges

Despite the compelling growth narrative, Boston Scientific faces several risks. Intellectual property litigation remains a complex and unpredictable area, with adverse outcomes potentially impacting product sales, operating margins, and liquidity. The company's substantial self-insurance for product liability and IP infringement claims increases its exposure. Governmental investigations, such as those related to alleged FCPA violations and DOJ subpoenas, could lead to significant fines and administrative remedies.

Macroeconomic factors, including inflationary pressures, interest rate fluctuations, and changing trade and tariff policies, continue to pose challenges. While the company has managed to offset the $100 million tariff headwind in 2025, annualization of tariffs in 2026 will present a further headwind. Geopolitical uncertainties and supply chain disruptions could also negatively impact operations. The discontinuation of the ACURATE valve, while a strategic reallocation of resources, resulted in approximately $90 million in pre-tax charges. Additionally, the performance of acquired businesses like Axonics has been "below expectations" due to commercial disruption, requiring focused efforts to improve. Proposed reimbursement cuts for physicians, particularly in LAAC procedures, could also impact adoption, though management believes physicians will prioritize clinically appropriate treatments.

Conclusion

Boston Scientific Corporation stands as a compelling investment opportunity, driven by its relentless pursuit of innovation and a well-executed category leadership strategy. The company's robust performance in Q3 2025, marked by strong revenue growth and exceeding EPS guidance, underscores the power of its differentiated technologies like FARAPULSE and WATCHMAN. These platforms, along with strategic tuck-in acquisitions and a rich pipeline of new products, are expanding addressable markets and solidifying Boston Scientific's competitive moat in high-growth interventional medical specialties.

With ambitious yet achievable long-range financial targets, a disciplined approach to capital allocation, and a proven ability to navigate operational and macroeconomic headwinds, Boston Scientific is poised for sustained above-market growth. While competitive pressures and regulatory complexities persist, the company's commitment to clinical evidence, technological advancement, and global commercial execution positions it as a leader capable of delivering differentiated financial results and long-term value for investors.