Good morning and welcome to the Boston Scientific Third Quarter 2024 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jon Monson, Senior Vice President, Investor Relations. Please go ahead.

Thanks, Drew, and thanks everyone for joining us. With me today are Mike Mahoney, Chairman and Chief Executive Officer; and Dan Brennan, Executive Vice President and Chief Financial Officer. During the Q&A session, Mike and Dan will be joined by our Chief Medical Officer, Dr. Ken Stein and Art Butcher, President of our MedSurg and Asia Pacific businesses. We issued a press release earlier this morning announcing our Q3 results, which included reconciliations of the non-GAAP measures used in this release. The release as well as reconciliations of the non-GAAP measures used in today's call can be found on the Investor Relations section of our website. Please note, on the call, operational revenue excludes the impact of foreign currency fluctuations, and organic revenue further excludes acquisitions and divestitures for which there are less than a full period of comparable net sales. Guidance excludes the previously-announced agreement to acquire Axonics, which is expected to close in the fourth quarter of 2024, subject to customary closing conditions. For more information, please refer to the Q3 financial and operational highlights deck, which may be found on the Investor Relations section of our website. On this call, all references to sales and revenue are organic, and relative growth is compared to the same quarter of the prior year, unless otherwise specified. This call contains forward-looking statements regarding, among other things, our financial performance, business plans and product performance and development. These statements are based on our current beliefs using information available to us as of today's date and are not intended to be guarantees of future events or performance. If our underlying assumptions turn out to be incorrect or certain risks or uncertainties materialize, actual results could vary from those projected by the forward-looking statements. Factors that may cause such differences are discussed in our periodic reports and other filings with the SEC, including the Risk Factors section of our most recent annual report on Form 10-K. Boston Scientific disclaims any intention or obligation to update these forward-looking statements, except as required by law. At this point, I'll turn it over to Mike. Mike?

Thanks, John. Thank you, everyone, for joining us today. Our Q3 results exceeded our expectations and we continue to invest in our portfolio and capabilities to deliver differentiated performance over the long-term. In Q3 '24, total company operational sales grew 19% and organic sales grew 18%, exceeding the high end of our guidance range of 13% to 15%. Our excellent growth is and will continue to be focused on our category leadership strategy, fueled by innovation, clinical evidence generation and the winning spirit of our global team. Q3 adjusted EPS of $0.63 grew 27%, exceeding the high end of our guidance range of $0.57 to $0.59. In Q3, adjusted operating margin was 27.2%. Turning to our fourth quarter and the full year '24 outlook. We're guiding to organic growth of 14% to 16% for fourth quarter and raising our full year guidance to approximately 15%, reflecting momentum across our broad portfolio and particularly in AF solutions. Our fourth quarter adjusted EPS guidance is now $0.64 to $0.66 and we expect our full year adjusted EPS to be $2.45 to $2.47 representing growth of 20% to 21%. Dan will provide more details on our financials in a few minutes and I'll provide additional highlights on our third quarter results, along with our comments and our outlook. Regionally, on an operational basis, the US grew 24% with double-digit growth or higher in six of eight business units. Our EP business continues to deliver impressive performance fueled by FARAPULSE, new account openings and very strong reorder rates. Europe, Middle East and Africa grew 14% on an operational basis. This performance was driven by continued above-market performance in EP, where we continue to expand our PFA leadership, complex PCI and structural heart. In TAVI, we received CE Mark and recently launched our next-generation ACURATE…

Thanks, Mike. Third quarter 2024 consolidated revenue of $4,209 million represents 19.4% reported growth versus third quarter of 2023 and includes a 10 basis point headwind from foreign exchange, which was favorable versus our expectations. Excluding this $4 million foreign exchange headwind, operational revenue growth was 19.5% in the quarter. Sales impact from closed acquisitions contributed 130 basis points, resulting in 18.2% organic revenue growth, exceeding our third quarter guidance range of 13% to 15%. Q3 2024 adjusted earnings per share of $0.63 grew 27% versus 2023, exceeding the high end of our guidance range of $0.57 to $0.59 primarily driven by our strong sales performance. Adjusted gross margin for the third quarter was 70.4%, slightly lower than anticipated, driven primarily by foreign exchange. We continue to expect second half adjusted gross margin to be higher than the first half and full year adjusted gross margin to be slightly below our 2023 rate. Third quarter adjusted operating margin was 27.2%, which expanded 110 basis points versus the prior year period. Given our strong year-to-date performance, we now expect full year adjusted operating margin to be approximately 27%. We believe this strikes a nice balance of delivering incremental margin from our sales upside and continuing to invest appropriately to drive strong top line performance. On a GAAP basis, third quarter operating margin was 17.4%. Moving to below the line. Third quarter adjusted interest and other expenses totaled $65 million, which was favorable to our expectations primarily due to higher interest income. On an adjusted basis, our tax rate for the third quarter was 13.2%, which includes favorable discrete tax items. Our operational tax rate for the quarter was 13.5%. Fully diluted weighted average shares outstanding ended at 1,487 million in the third quarter. Free cash flow for the third quarter was…

Thanks, Dan. Drew, let's open it up for questions for the next 40 minutes or so. In order for us to take as many questions as possible, please limit yourself to one question. Drew, please go ahead.

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Robbie Marcus with JPMorgan. Please go ahead.

Great. Good morning and congrats on another fantastic quarter here.

Thanks, Robbie.

My one question, there's so much to ask about here.

Make it a good one, Robbie.

In our checks, we hear consistently that the upcoming OPTION trial that we'll see at AHA, combined with the recently started on October 1st reimbursement for concomitant, WATCHMAN and PF ablation has already started to kick in the gear and OPTION could meaningfully alter the usage patterns ahead of CHAMPION in the first half of '26. So I wanted to get your thoughts on the importance of both concomitant and should OPTION be positive what that can mean for both of those franchises, both in the short and long-term? Thanks.

Sure. I'll comment and Dr. Stein can add probably more helpful color. Clearly, independently, both platforms are doing incredibly well. WATCHMAN on its own with all the clinical evidence, and you saw the amazing results of FARAPULSE today. And doctors are so comfortable with both procedures. It's a very safe procedure. The concomitant reimbursement, we view as quite positive. It's also very positive economic for the hospital, benefits for the patient, the procedure will be performed safety. So we're really pleased with that concomitant. And so it's clearly an ongoing long-term tailwind for WATCHMAN and also further helps FARAPULSE. Both platforms, as you know, have a number of different clinical trials to continue to expand indications. And Dr. Stein, any other comments you'd like to make on it?

No. Sure, Mike. Thanks, Robbie. I again reiterate what Mike said at the outset, right? I mean, the ability to do concomitant procedures and get reimbursed with them under the new CMS DRG, it's one of those things that it's positive for patients, it's positive for the health care system and hospitals and it's certainly positive for us given the unique advantages in doing concomitant procedures when you think of the safety and efficiency of FARAPULSE, and you think of the safety and efficiency and frankly excellent outcomes with FARAPULSE and with WATCHMAN FLX and WATCHMAN FLX Pro. Again, just to give some sense of the importance of this, right, there are approximately 350,000 ablations performed in the US every year for atrial fibrillation. And roughly half of those patients are at high risk of stroke according to things like the CHA2DS2-VASc scoring system. I think we are all anxiously looking forward to see the OPTION data when it gets read out and the impact that will have, I think stating the obvious will depend on what those data show. And if they do show a compelling benefit to WATCHMAN, right, how big is that benefit? And then, again, to reiterate what Mike said, beyond OPTION, we also have the CHAMPION trial. Expecting that trial to read out in early '26, which would look at WATCHMAN versus the new oral anticoagulants in all comers.

Great. Thanks a lot.

The next question comes from Joanne Wuensch with Citi. Please go ahead.

Good morning and thank you for the question. I want to talk about the amazing results of FARAPULSE that we just saw. And specifically how you're thinking about moving. I was really interested in one quote that you said to exceed 40% to 60% of global AF procedures by 2026. Thank you.

Sure. So this has just been a tremendous launch. Just a quick shout out to our operations supply chain team for staying ahead of the manufacturing. Extremely high demand for this product and the excellence that we're seeing in the field by the commercial and clinical teams. So doctors are moving surprisingly quickly towards FARAPULSE, surprisingly to what we thought it would be a year ago. So when we had the Investor Day, we weren't quite sure because we had didn't have approval in the US. We saw excellent momentum in Europe. And now our operations team is scaled to meet the demand. And those same excellent clinical outcomes and procedural efficiencies and safety benefits that patients received in Europe are being felt throughout the world now. We've been planning over 120,000 of them. So that was our point estimate about a year ago or so. And based on the rapid uptake, we're confident in stating that we do expect it to be at the high end and likely exceed that 40% to 60% based on how quickly physicians are transforming, especially for PVI from traditional RF and cryo to FARAPULSE. And it's also been supported by the studies within ADVENT that show the benefits of FARAPULSE versus traditional RF. So it's a great time in the market for the physicians and the patients. And we've also proven based on our competitive launches in Europe who have been out for a while that we clearly are the market leader in PFA and we have lots of plans in place to continue to extend that leadership with clinical differentiation and product enhancements.

Thank you.

The next question comes from Larry Biegelsen with Wells Fargo. Please go ahead.

Good morning. Thanks for taking the question. I'll echo my congratulations on a really phenomenal quarter here. Dr. Stein, given the importance of FARAPULSE, can you provide more color on the AVANT GUARD trial and the observations you saw? And related to that, there are going to be more PFA ablation choices soon, including from the market leader. Once these new PFA catheters are launched, what are the factors that will lead existing FARAPULSE customers to stay with FARAPULSE or choose FARAPULSE if they haven't adopted it yet? Thank you.

Yes. Sure, Larry. Let me take those successively. So first, on AVANT GUARD. Again, as Mike said, due to a few unanticipated observations in the trial which is studying a completely new population, which is drug-naive patients with persistent AF, which FARAPULSE is not currently indicated to treat. We did elect to temporarily pause enrollment until we develop better understanding of the observations. While none of the observations were life-threatening, we did make a decision to temporarily pause, but it is our intention to resume enrollments in the near-term. And this in no way at all affects our confidence in the overall performance of the FARAPULSE system as it's being used today commercially or in other clinical trials. Again, as Mike said in his opening comments, we remain confident that we're going to obtain expanded indication for drug-refractory persistent AF patients. And that's the data from our ADVANTAGE Phase I trial. Again, as Mike said, we expect to submit that data to the FDA later this quarter. We expect to present that data in early 2025, with indication expansion expected to come in the second half of 2025. And again, I just want to close by emphasizing that this patient population that we're studying in AVANT GUARD, which is drug-naive persistent AF patients has not previously been studied, it's a population that's not indicated for ablation today under guidelines, and it's not the population that's being treated today with FARAPULSE system. And I also want to emphasize that we remain highly confident in the global performance of FARAPULSE, which has now been used to treat more than 125,000 patients across more than 65 different countries and is supported by extensive clinical data demonstrating positive outcomes for the device. And I think that also leads into your second question, right, which…

Thank you so much.

The next question comes from Rick Wise with Stifel. Please go ahead.

Thank you, and good morning, everybody. I'm hoping, Mike, that you or Dr. Stein will expand on the NAV Cat comments from a couple of aspects. Just are you ready to fully launch and train? Will NAV Cat have a price premium, given premier technology first to market with something like this integrated. Can we assume that you're going to sell it at a higher price? And just last and sort of related to what Dr. Stein was talking about as well. If FARAWAVE is approved for, only AFib, obviously a huge portion of the market, how does it, how are you going to manage the argument that other imaging mapping systems, obviously are approved for all imaging? Just where will FARA NAV fit in, in the broader, the larger scheme? Thank you.

Dr. Stein?

Yes, Rick. Let me take the second part of that question first and then get on to what some of the advantages are that we see unique to FARAVIEW right, which is on our refreshed OPAL HDx platform. And so again, right, the OPAL platform is approved for mapping navigation across the whole spectrum of cardiac arrhythmias. Now when we look at the use specifically as it integrates with FARAWAVE and FARAWAVE NAV like FARAWAVE is an AF ablation catheter. And I think part of the reason that we've seen the success that we've had, part of the reason I was able to give the answer that I did to Larry, right, is that it's just exquisitely beautifully designed for ablating atrial fibrillation. It's a fantastic tool for pulmonary vein isolation. And again, we hope to share our data from our ADVANTAGE clinical trial showing how it is also can be used to treat persistent atrial fibrillation. But it is really explicitly not designed to be the catheter to tackle some other arrhythmias. The next catheter in our pipeline is our FARAPOINT Catheter. And that catheter was studied in Phase II of our ADVANTAGE clinical trial. And we have completed enrollment in that Phase II of ADVANTAGE and are continuing to follow those patients. And to start, we'd expect to qualify that catheter for use for treating arrhythmia called atrial flutter as an adjunct to atrial fibrillation ablation procedures. But beyond that, right, it could see FARAPOINT used, right, for really any sort of arrhythmia where you would prefer a point catheter form factor. And then next to follow after that, right, is our so-called map and ablate catheter. It's a large focal lesion catheter called FARAFLEX, right, which, again, all of these will integrate with FARAWAVE on OPAL, right? And that would really give us building the capability to be able to target the vast majority of arrhythmias that are seen in clinical practice. In terms of FARAVIEW specifically, again, I think it's really important to emphasize. This is the first mapping and navigation software that's built around understanding Pulsed Field Ablation. And so it gives a lot of advantages to users to want to use it to navigate a catheter. It gives dynamic visualization of the FARAWAVE catheter as it moves into its various configurations, whether it's a basket or a flower or anything in between. And it's also got a unique feature of called field tagging, where physicians will be able to see where the pulsed field will intersect with tissue and hopefully allow them to better strategize where and when and how to put lesions in when they're doing an ablation procedure.

That's an amazing answer. And just the price premium part? Thank you.

Yes, I'm not going to comment on pricing on specific products, Rick?

Thanks so much, everybody.

The next question comes from David Roman with Goldman Sachs. Please go ahead.

Thank you and good morning everyone. I was hoping to switch gears a little bit from the EP side of the business. And maybe if you could spend a few minutes on the performance of the franchises kind of ex-WATCHMAN and EP, which are still trending very well, although a slowdown from where you started the year. How are you thinking about resource allocation and just the focus on those businesses and maintaining ongoing support for those franchises in light of the success of PFA? And how should we think about the growth drivers in some of those more established categories on a go-forward basis?

Sure. I'll take that. I'll give Dr. Stein some oxygen here. We run as a very decentralized business units. And so we have -- the leaders of these divisions that's all they do. They have global teams, thousands of employees. They wake up and think about peripheral inventions, interventional oncology, endoscopy, urology, neuromod all day long and ICTx, which grew at what 15% in the quarter. So there's tremendous focus by their teams on the global execution of these businesses. We just announced the closing of Silk Road. We anticipate announcing the closing of Axonics in the fourth quarter here. Just as Ken said, we attempt to drive this category leadership in terms of our breadth of portfolio and unique innovation across each division. And we have different varying degrees of success in that. But in general, we're very strong in that area. So in terms of capital allocation, we've obviously invested significantly in the manufacturing ramp of PFA as well as ongoing R&D and clinical studies as well as commercial capabilities to continue to enhance our mapping sales force. But that in no way has detracted from the investments that we're making across these other businesses, which are really the foundation of the company. And despite doing both those at the same times, we continue to improve our margin profile, which I think shows the testament and the winning spirit of the team. So we have a rich pipeline of products organically within these business units. You've seen the performance for the quarter and the full year. We did see a bit of a slowdown in some procedure volume in the summertime in July, August, specifically in our endo, uro business. But we saw a nice procedure bounce back in September and essentially grew kind of in line where we have for the past eight quarters in those businesses. So we have a lot of confidence in them and we don't, Dr. Stein and I may spend a bit more time on PFA, certainly Dr. Stein does. But we don't take the gas pedal down on the other businesses at all in the company.

Great. Thanks. I appreciate the perspective.

The next question comes from Patrick Wood with Morgan Stanley. Please go ahead.

Perfect. Thank you very much for taking my question. I guess just one on capacity in totality for the system. Obviously, I get PFA adding some efficiencies to the system overall. But for EPs, between WATCHMAN and everything, there's a tremendous call on people's time. We saw in structural heart a little bit of noise on one of the players saying there were capacity constraints. How are you viewing that going forward? And how quickly do you think the system can adapt to enable you to keep growing these franchise and still have capacity to actually get them done? Thanks.

Well, we're still relatively early in our launch. In the US, we got approved in February. We started launching in late February and March. So that we still have a number of new accounts that have not used FARAPULSE in the US. And we have yet to launch in Japan and we've yet to launch in a meaningful way in China in many other countries. So we're still quite early in the launch in very major markets. And we're seeing, in currently launched accounts, we're seeing many accounts move from one system originally to two, three and sometimes four systems. So they're increasing their utilization of FARAPULSE across their multiple labs. So we have a lot to do to continue to increase share within existing accounts. And then thirdly, because of the efficiencies of the system, the hospitals are improving their workflow, and most accounts are doing, I don't know, Ken, 25%, 30% more procedure volume in a day. So there's a lot of efficiencies and the hospitals win economically and the patients benefit as do the physicians. And then to your term on capacity, that's why this concomitant procedure is also a big win for the workflow of the hospital and the patient. So now an extra 10, 15 minutes for the appropriate patient, you can do a FARAPULSE system as well as the LAAC with WATCHMAN. So it also drives procedural efficiency, which is very unique to Boston Scientific versus our competitors. So when we design these platforms, we look at operational efficiency and also the economics of the hospital. And we think FARAPULSE and WATCHMAN and concomitant are all very helpful to hospitals efficiency. And we're still really early in the launch of FARAPULSE.

Love it. Thanks for the color.

The next question comes from Travis Steed with Bank of America. Please go ahead.

Hey, thanks for taking the question. I wanted to follow up on the AVANT GUARD trial pausing. I guess a lot of questions on that this morning. So it seems like the observations you saw didn't change your thoughts drastically if you're restarting the trial soon. And then just making sure that maybe help us understand why this doesn't really change your view on safety of FARAPULSE overall or mitigate the real-world data you have or and maybe just help us understand this patient population that's in this trial today, how they're getting treated today would be great? Thanks a lot.

Yes. Sure, Travis. Let me again begin, at least the patient population. And so right today standard of care for patients with newly diagnosed persistent atrial fibrillation is to get a trial of antiarrhythmic drug therapy first. And then guidelines would say only to be referred for ablation if they actually fail antiarrhythmic drug therapy. Obviously because even though we've paused enrollment for the moment, there's still an ongoing clinical trial. So I really can't get into any detail on the observations. Again, just to reassure everyone, nothing that we saw certainly was life-threatening. And I think we are very highly confident in the overall safety profile, overall efficacy and again overall efficiency of FARAPULSE system. And again that's just based on the extensive experience that we've got with it, which is both commercial experience, as we said, over 125,000 patients now have been treated with this system globally as well as extensive clinical data that's been published in approximately 20,000 patients and data that we see from all of our ongoing clinical trials.

Great. Thanks a lot.

The next question comes from Danielle Antalffy with UBS. Please go ahead.

Hey, good morning, everyone. Thanks so much for taking the question. Congrats on this amazing quarter. I'm kind of speechless. But just wanted to ask, I appreciate there's not going to be a lot you can say, Dan, I appreciate the comments that you did give on 2025. But specifically, as we think about sales, you noted above-market sales growth. I mean market can be a moving target a little bit here about how you think about the market's growing next year. So I was hoping maybe you could give a little bit more color, if possible, even if it's just highlighting tailwinds and headwinds from a sales growth perspective to think about as we look ahead to 2025. Thanks so much.

I'll start and then Dan, you can clean up my mess. So we're excited, obviously, about '24 growing estimated 15% over a comp of 12% of 2023. And as we head into 2025, obviously, we'll have a nice comp at approximately 15%. But there's so many good things going on with the company. Thank you for the non-FARAPULSE question that was asked earlier about the other businesses like PI and ICTx and neurology commonly growing double-digits and the strength of endo and we want to strengthen neuromod and US CRM a bit more. And so but as we look at 2025, the big headlines obviously are FARAPULSE and WATCHMAN. We do think the Japan launch and China launch will drive meaningful growth for the franchise. And as I mentioned just prior, there's a number of new accounts to open in the US and there's a lot of penetration in current accounts to add additional volume to both FARAPULSE. You've heard all about the concomitant reimburse for WATCHMAN. So those are all nice tailwinds for the company. The procedure volumes we see is relatively consistent. We did see a bit of a slowdown in July, August, but strengthening in September. And so we think procedure volumes will maintain strong versus as they are now. And we see strong global performance. So obviously, we'll have some more challenging comps. There will be some more competition in PFA, but we're doing very well, I guess, that competition in Europe. I don't know, Dan, also we have the AGENT, which throw one out to the cardiology team, which has performed quite well. So we'll find out about reimbursement on that product in the next coming weeks. That should add some additional momentum to that franchise.

I think that summarizes it well. And just to give you a sense of the process, it's no different than it is any year. We have our annual operating plan process that's alive and well here through the fourth quarter. We'll review that as we go through the end of the quarter and into early next year and we'll let you know what we think for 2025 at our Q4 earnings call.

Appreciate it. Thanks, guys.

The next question comes from Anthony Petrone with Mizuho Group. Please go ahead.

Thanks and congrats on a strong quarter here. I think the question will be on the go-to-market next year, 2025, you go back to the October 18 press release and you have FARAWAVE NAV Catheter out there, but it indicates that it's exclusive to OPAL on the mapping side. So in other words, the company is coming with a closed loop offering here next year. And presumably, we'll have competitors that are coming with a bundled approach. So maybe the question here is just when we enter '25, it seems that three competitors will be out there with a bundled approach to PFA with mappers. So maybe just walk through that dynamic a little bit. Congratulations again on the quarter.

Yes. I'll just comment and Ken, again, you can finish this. So today customers using FARAPULSE with our legacy RHYTHMIA mapping system and they're also using it with our two primary competitors today. So the OPAL platform will not be closed out in such a way that if a physician wants to continue to use a competitive mapping system with FARAPULSE, they still can. We do think that with the OPAL mapping system, specifically with FARAPULSE, the user experience will be more meaningful and more streamlined and differentiated. So we're not closing the system and that we're shutting out competitive systems from doing FARAPULSE cases. But we're quite confident in the user experience, the overall economics and the value of the OPAL integration with FARAPULSE to be differentiated versus what they're using today.

Yes. I mean, Anthony, just to again build on what Mike said, right, we do not feel that we've got to force people to use our products. And what we see with FARAWAVE is people want to use it. And people have used it in a variety of different ways and we are going to continue to support their ability to use it in the way that they want to. And that includes people who use no mapping navigation at all, which is really through the predominant use case that we see in Europe and throughout a lot of the world or use it with a mapping and navigation system. We're going to continue to keep the original , right, the FARAWAVE Catheter without the NAV sensor on the market for people who want to use it with a competitive mapping system. FARAWAVE NAV, because it's got a magnetic NAV sensor and it does have to get tied into a particular mapping system, which for us is the refreshed OPAL HDx system with FARAVIEW. But we're not going to force people to use it. we think it's got enough compelling differentiated advantages compared to what else is out there that people are going to want to use it.

Very helpful. Thank you.

The next question comes from Vijay Kumar with Evercore ISI. Please go ahead.

Hi, guys. Congrats on a nice quarter here and thanks for taking my question. Mike, maybe one for you on next week's ACURATE Neo2 results here. What is the regulatory strategy? Do you expect to file with the FDA? And I think you mentioned that you expect to have a successful launch in the US. Is that referring to Neo2 or some other generation of the valves? So maybe talk about your TAVR strategy in the US?

Sure. So as we've talked about before, the ACURATE Neo2 trial on the 1,500 patient will be TCT on what Wednesday?

October 30th.

October 30th. So that is an important milestone to see that clinical trial datas that will be presented. And we'll actually be holding an investor meeting that day with Joe Fitzgerald and Lance Bates and the team to talk about the broader cardiology portfolio and the plan for ACCURATE post the data. As you know, we've continued to have excellent momentum in Europe. You saw the third quarter results. We continue to grow above-market. And kudos to the team on the launch of Prime, the next-generation ACURATE Neo2, which they just recently started implementing in Europe.

Sorry and does it mean you expect to file with the FDA, Mike? And what does successful launch mean?

Well, a successful launch, we've never provided share, attainment goals just like we don't provide a share for FARAPULSE. So we obviously want to grow the business. It's a very large market, very mature, market growing, I don't know, 8% -- 7%, 9% and we continue to do quite well in the US, but we'll provide more information at the TCT at the investor call there.

The next question comes from Matt Miksic with Barclays. Please go ahead.

Hey, thanks so much for fitting us in and congrats on a really impressive quarter and all the great growth drivers you have running. I had a question just on maybe for Dan on some of the dynamics in the gross margin line in the quarter you mentioned FX being kind of one of the primary headwinds. But as you move into '25, maybe you can talk a little bit about where the leverage in the model is, if it's stable gross margin and levering some of the operating investments that you're making? Maybe just some color on how that -- how you see that progressing at this point? Thanks.

Sure, Matt. The Q3 story is actually pretty simple. So we were 70.4% gross margin in Q3, slightly below what we would have expected and that's really driven by foreign exchange in the quarter. So simple story for Q3. We've said consistently that we believe our full year adjusted gross margin will be below last year. Last year, we were 70.7%. So we've consistently said, you know what, we're probably not going to hit that 70.7% in 2024, that's okay because we're actually driving 70 basis points of adjusted operating margin expansion without that kind of testament to the hallmark of the DNA of the company of continuing to drive margin expansion through all lines of the P&L. So 2024 gross margin, not going to contribute, that's okay because we have the SG&A and other horses to ride there. As you go into '25 and beyond, I think all lines of the P&L could contribute. I think gross margin is part of that. And how does that happen? A big piece of that will be product mix. So call FARAPULSE today, the single-use catheter, that's a nice margin, but you have a lot of that, the capital placements that we have. As Mike mentioned, we're still launching this. It's only six or seven months into the launch. So we're still launching a lot of capital, placing a lot of capital. And next year, we'll have Japan and China. So we'll still be doing that. We'll be effectively launching there. But I think the story is as you go into '25 and work through '25 and beyond, FARAPULSE becomes accretive overall as the single-use catheter kind of swamps the overall margin within FARAPULSE and is accretive to overall Boston Scientific. WATCHMAN is obviously helpful. You heard a lot of commentary on the call today about the some of the tailwinds that could be there for WATCHMAN. That's great news for the gross margin line. So I think the takeaway is gross margin, '25 and beyond, gross margin can be a contributor to the overall operating margin journey that's been so successful for the company for the last decade.

That's great. Thanks a lot. Thanks.

The next question comes from Josh Jennings with TD Cowen. Please go ahead.

Hi. Good morning. Thanks for taking the questions and congratulations on another home run quarter. I wanted to just check the box, Mike, you called out or you called out your ops and supply chain team for keeping up with the demand for FARAPULSE and staying on time. I just want to make sure that there's no manufacturing capacity issues next year if that franchise continues to outperform internal expectations? And then also just sorry to follow up on a two-parter. But wanted to just get your team's view on this mapping segment. I mean our understanding is that mapping capital and diagnostic mapping catheters, the kind of the percentage of the overall ablation market, it's even higher than the ablation catheter segment and just I know you guys are now well positioned there, but just to review that and maybe just the revenue -- the business model for Boston Scientific, whether there's FARAPULSE NAV Catheter will be single-use for PVIs and or and then just how you're building out your diagnostic mapping catheter portfolio. Sorry for the multipart.

Hey, Josh, I'll take the second part first and then we can get to the supply issue. So just for clarity.

Let me just jump up. There is no supply issue. So let's talk about that. So kudos to the team. Let me take the first part. We do not anticipate, even despite the high demand, our team has done a great job on the catheter supply and the console supply. So we don't anticipate any supply shortages.

Thanks. I should not have used that word. Yes, in terms of just for clarity. So the FARAWAVE NAV Catheter, it is a single-use device. It is, again, current indicated for PVI for patients with paroxysmal atrial fibrillation. As we said at the ADVANTAGE clinical trial is our clinical trial to get label expansion for the FARAWAVE Catheter family for use in patients with drug refractory persistent atrial fibrillation. And again I think what we really want to emphasize here is that there's some really significant differentiated advantages to FARAVIEW versus other systems that are currently on the market for mapping a navigation of PFA catheters, right? And that's specifically ability to dynamic visualization of the catheter shape as it changes ability also to do field tagging and so ability to plan where to put lesions in when you're doing an ablation procedure.

And just in terms of the diagnostic mapping catheter portfolio buildout, you guys do have a high-density mapping catheter in the pipeline is my understanding, but just wanted to get a better look on that.

Yes. I mean, Josh, we already have a high-density mapping catheter, right, which is our ORION catheter, which can be used on the refreshed OPAL system. And then as we go down the road, right, we've talked about additional catheters and be part of the FARAPULSE family, which includes FARAPOINT and includes our FARAFLEX catheter, which would have the capability to do both high-density mapping and also do PFA ablation in the same catheter.

They're all -- just I'll just add on and we'll move on to the next one. There are elements of the procedure that we don't compete in today that pie like ice catheters and others. So we're doing extremely well in the ablation portion of it. We expect OPAL to do quite well in the mapping segment, which we've been underscaled in, but there are still segments within the EP procedure mix that we don't play in today that we're shooting to fill out in the portfolio over time. I'll just make one other comment on FARAPULSE relates to China for -- it wasn't a question, but we're excited about the approval in Japan and in China. We do expect the China launch to be a bit slower than what you typically see in the US and Japan based on obviously, not product or team, but it's more on getting approvals and registries and launch cadence in terms of the volume of new accounts. We've done some recent openings there that have gone quite well, but we don't anticipate the same aggressive launch in China that you've seen in US. We do expect to have a very strong launch in Japan. And also just a shout out to the China team. Despite the significant VBP headwinds that we've seen, which have impacted our IVUS franchise and there will be more VBPs in 2025. We continue to grow essentially at the company average in China despite those headwinds when many of our peers have faced tougher results.

Drew, let's take one more question.

Thank you. That question will come from Matt O'Brien with Piper Sandler. Please go ahead.

Good morning. Thanks for taking the question. And I'd much rather focus on all the positive things going on here, but I'm looking at the stock down now versus up prior to this AVANT GUARD commentary. So Dr. Stein, I'm not sure exactly what you can say, but is there any kind of safety signal that we should be aware of? And then if you can't comment on that, is there anything to think about in terms of this patient population really being the cause of the difference, maybe extra lesions that need to be created, higher risk benefit requirements because it's drug-naive patients. Just anything along those lines that you can share because I think folks are pretty nervous this morning just based on how important FARAPULSE is to the business. Thanks.

Yes, Matt, again, because this is an ongoing trial, I can't get into any details. Again, what I can say is we are highly confident in the safety of the system. Again, we've got extensive commercial use data and over 125,000 patients treated. We've got extensive published clinical trial data and other ongoing clinical trials and are highly confident in the safety, the efficiency and the efficacy of the FARAPULSE system.

We expect to re-launch this trial soon.

All right. Thanks, Ken. Thanks, Mike, and thanks, everyone for joining us today. We appreciate your interest in Boston Scientific. If we weren't able to get to your question or if you have any follow-ups, please don't hesitate to reach out to the Investor Relations team. Before you disconnect, Drew will give you all the pertinent details for the replay. Thanks, everyone. Have a great day.

Please note, a recording will be available in one hour by dialing either 1877-344-7529 or 1412-317-0088 using replay code 2607711 until October 30th, 2024, at 11:59 P.M. Eastern Time. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.