Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

Boston Scientific Corporation is a global developer, manufacturer and marketer of medical devices that are used in a broad range of interventional medical specialties. Our mission is to transform lives through innovative medical solutions that improve the health of patients around the world. As a medical technology leader for more than 40 years, we have advanced the practice of less-invasive medicine by helping physicians and other medical professionals diagnose and treat a wide range of diseases and medical conditions and improve patients’ quality of life by providing alternatives to surgery and other medical procedures that are typically traumatic to the body. We advance science for life by providing a broad range of high performance solutions to address unmet patient needs and reduce the cost of health care. When used in this report, the terms "we," "us," "our" and "the Company" mean Boston Scientific Corporation and its divisions and subsidiaries.

Financial Summary

Three Months Ended September 30, 2024

Our net sales for the third quarter of 2024 were $4.209 billion, compared to $3.527 billion for the third quarter of 2023. This increase of $683 million, or 19.4 percent, included operational1 net sales growth of 19.5 percent and the negative impact of 10 basis points from foreign currency fluctuations. Operational net sales growth included organic2 net sales growth of 18.2 percent and the positive impact of 130 basis points from the acquisitions of Relievant Medsystems, Inc. (Relievant), the endoluminal vacuum therapy portfolio of B. Braun Medical Inc. (Braun) and Silk Road Medical, Inc. (Silk Road Medical) during the fourth quarter of 2023, and first and third quarters of 2024, respectively, for which there is less than a full period of comparable net sales. The increase in our net sales was primarily driven by strong commercial execution across our businesses, led by the rapid adoption of our Farapulse™ Pulsed Field Ablation System following U.S. launch in early 2024. Refer to Quarterly Results and Business Overview for a discussion of our net sales by business.

Our reported net income attributable to Boston Scientific common stockholders for the third quarter of 2024 was $469 million, or $0.32 per diluted share. Our reported results for the third quarter of 2024 included certain charges and/or credits totaling $469 million (after-tax), or $0.32 per diluted share. Excluding these items, adjusted net income attributable to Boston Scientific common stockholders3 was $937 million, or $0.63 per diluted share.

Our reported net income attributable to Boston Scientific common stockholders for the third quarter of 2023 was $505 million, or $0.34 per diluted share. Our reported results for the third quarter of 2023 included certain charges and/or credits totaling $227 million (after-tax), or $0.15 per diluted share. Excluding these items, adjusted net income attributable to Boston Scientific common stockholders3 was $732 million, or $0.50 per diluted share.

1Operational net sales growth excludes the impact of foreign currency fluctuations.

2Organic net sales growth excludes the impact of foreign currency fluctuations and net sales attributable to acquisitions and divestitures for which there are less than a full period of comparable net sales.

3Adjusted measures, including operational and organic net sales growth and adjusted net income attributable to Boston Scientific common stockholders, exclude certain items required by generally accepted accounting principles in the United States (GAAP), are not prepared in accordance with GAAP and should not be considered in isolation from, or as a replacement for, the most directly comparable GAAP measure. Refer to Additional Information for a discussion of management’s use of these non-GAAP financial measures.

The following is a reconciliation of our results of operations prepared in accordance with GAAP to those adjusted results considered by management. Refer to Quarterly Results and Business Overview and Additional Information for a discussion of these reconciling items:


	Three Months Ended September 30, 2024
(in millions, except per share data)	Income (Loss) Before Income Taxes		Income Tax Expense (Benefit)		Net Income (Loss)		Net Income (Loss) Attributable to Noncontrolling Interests		Net Income (Loss) Attributable to Boston Scientific Common Stockholders		Impact per Share
Reported	$	669	$	200	$	468	$	(0)	$	469	$	0.32
Non-GAAP adjustments:
Amortization expense	205		28		177		2		175		0.12

Acquisition/divestiture-related net charges (credits)	144		(56)		200		—		200		0.13
Restructuring and restructuring-related net charges (credits)	52		7		45		—		45		0.03

Investment portfolio net losses (gains) and impairments	(1)		0		(1)		—		(1)		(0.00)
European Union (EU) Medical device regulation (MDR) implementation costs	13		2		12		—		12		0.01

Deferred tax expenses (benefits)	—		(38)		38		—		38		0.03

Adjusted	$	1,082	$	143	$	939	$	2	$	937	$	0.63


	Three Months Ended September 30, 2023
(in millions, except per share data)	Income (Loss) Before Income Taxes		Income Tax Expense (Benefit)		Net Income (Loss)		Net Income (Loss) Attributable to Noncontrolling Interests		Net Income (Loss) Attributable to Boston Scientific Common Stockholders		Impact per Share
Reported	$	610	$	105	$	504	$	(0)	$	505	$	0.34
Non-GAAP adjustments:
Amortization expense	208		28		179		2		177		0.12
Goodwill and other intangible asset impairment charges	1		0		0		—		0		0.00
Acquisition/divestiture-related net charges (credits)	66		10		56		—		56		0.04
Restructuring and restructuring-related net charges (credits)	47		6		41		—		41		0.03
Litigation-related net charges (credits)	(111)		(25)		(86)				(86)		(0.06)
Investment portfolio net losses (gains) and impairments	2		(0)		2		—		2		0.00
European Union (EU) Medical device regulation (MDR) implementation costs	17		2		14		—		14		0.01

Deferred tax expenses (benefits)	—		(23)		23		—		23		0.02
Discrete tax items	—		(0)		0		—		0		0.00
Adjusted	$	838	$	104	$	734	$	2	$	732	$	0.50

Nine Months Ended September 30, 2024

Our net sales for the first nine months of 2024 were $12.186 billion, compared to $10.515 billion for the first nine months of 2023. This increase of $1.671 billion, or 15.9 percent, included operational1 net sales growth of 16.9 percent and the negative impact of 100 basis points from foreign currency fluctuations. Operational net sales growth included organic2 net sales growth of 15.4 percent and the positive impact of 150 basis points from our majority stake investment in Acotec Scientific Holdings Limited (Acotec) and the acquisitions of Apollo Endosurgery, Inc. (Apollo), Relievant, the endoluminal vacuum therapy portfolio of Braun and Silk Road Medical during the first, second and fourth quarters of 2023 and the first and third quarters of 2024, respectively, for which there is less than a full period of comparable sales. The increase in our net sales was primarily driven by strong commercial execution across our businesses, led by the rapid adoption of our Farapulse™ Pulsed Field Ablation System following U.S. launch in early 2024. Refer to Quarterly Results and Business Overview for a discussion of our net sales by business.

Our reported net income attributable to Boston Scientific common stockholders for the first nine months of 2024 was $1.288 billion, or $0.87 per diluted share. Our reported results for the first nine months of 2024 included certain charges and/or credits totaling $1.395 billion (after-tax), or $0.94 per diluted share. Excluding these items, adjusted net income attributable to Boston Scientific common stockholders3 for the first nine months of 2024 was $2.683 billion, or $1.81 per diluted share.

Our reported net income attributable to Boston Scientific common stockholders for the first nine months of 2023 was $1.065 billion, or $0.73 per diluted share. Our reported results for the first nine months of 2023 included certain charges and/or credits totaling $1.116 billion (after-tax), or $0.76 per diluted share. Excluding these items, adjusted net income attributable to Boston Scientific common stockholders3 for the first nine months of 2023 was $2.181 billion, or $1.50 per diluted share.

1Operational net sales growth excludes the impact of foreign currency fluctuations.

3Adjusted measures, including operational and organic net sales growth and adjusted net income attributable to Boston Scientific common stockholders, exclude certain items required by GAAP, are not prepared in accordance with GAAP and should not be considered in isolation from, or as a replacement for, the most directly comparable GAAP measure. Refer to Additional Information for a discussion of management’s use of these non-GAAP financial measures.


	Nine Months Ended September 30, 2024
(in millions, except per share data)	Income (Loss) Before Income Taxes		Income Tax Expense (Benefit)		Net Income (Loss)		Preferred Stock Dividends		Net Income (Loss) Attributable to Noncontrolling Interests		Net Income (Loss) Attributable to Boston Scientific Common Stockholders		Impact per Share
Reported	$	1,697	$	413	$	1,284	$	—	$	(4)	$	1,288	$	0.87
Non-GAAP adjustments:
Amortization expense	631		86		545		—		7		539		0.36
Goodwill and other intangible asset impairment charges	276		33		243		—		—		243		0.16
Acquisition/divestiture-related net charges (credits)	256		(59)		315		—		—		315		0.21
Restructuring and restructuring-related net charges (credits)	149		20		129		—		—		129		0.09

Investment portfolio net losses (gains) and impairments	17		(0)		17		—		—		17		0.01
European Union (EU) Medical device regulation (MDR) implementation costs	39		5		34		—		—		34		0.02

Deferred tax expenses (benefits)	—		(120)		120		—		—		120		0.08

Adjusted	$	3,065	$	380	$	2,685	$	—	$	2	$	2,683	$	1.81


	Nine Months Ended September 30, 2023
(in millions, except per share data)	Income (Loss) Before Income Taxes		Income Tax Expense (Benefit)		Net Income (Loss)		Preferred Stock Dividends		Net Income (Loss) Attributable to Noncontrolling Interests		Net Income (Loss) Attributable to Boston Scientific Common Stockholders		Impact per Share(4)
Reported	$	1,480	$	392	$	1,088	$	(23)	$	(0)	$	1,065	$	0.73
Non-GAAP adjustments:
Amortization expense	620		84		536		—		2		534		0.37
Goodwill and other intangible asset impairment charges	58		4		54		—		—		54		0.04
Acquisition/divestiture-related net charges (credits)	244		(54)		298		—		—		298		0.20
Restructuring and restructuring-related net charges (credits)	133		21		112		—		—		112		0.08
Litigation-related net charges (credits)	(111)		(25)		(86)		—		—		(86)		(0.06)
Investment portfolio net losses (gains) and impairments	21		(2)		22		—		—		22		0.02
European Union (EU) Medical device regulation (MDR) implementation costs	53		7		45		—		—		45		0.03
Deferred tax expenses (benefits)	—		(111)		111		—		—		111		0.08
Discrete tax items	—		(26)		26		—		—		26		0.02
Adjusted	$	2,497	$	290	$	2,206	$	(23)	$	2	$	2,181	$	1.50

(4) For the nine months ended September 30, 2023, the effect of assuming the conversion of our 5.50% Mandatory Convertible Preferred Stock, Series A (MCPS) into shares of common stock was anti-dilutive, and therefore excluded from the calculation of Net income (loss) per common share - diluted EPS. Accordingly, GAAP Net income (loss) and Adjusted net income were reduced by cumulative Preferred stock dividends, as presented within our unaudited consolidated statements of operations, for purposes of calculating GAAP Net income attributable to Boston Scientific common stockholders. On June 1, 2023, all outstanding shares of MCPS automatically converted into shares of common stock.

Quarterly Results and Business Overview

The following section describes our net sales and results of operations by reportable segment and business. For additional information on our businesses and product offerings, refer to Item 1. Business of our most recent Annual Report on Form 10-K.


	Three Months Ended September 30,
(in millions)	2024		2023		Increase/(Decrease)
Endoscopy	$	678	$	629	7.8%
Urology	532		483		10.3%
Neuromodulation	268		229		17.0%
MedSurg	1,479		1,341		10.3%
Cardiology	2,129		1,647		29.2%
Peripheral Interventions	602		538		11.8%
Cardiovascular	2,731		2,185		25.0%


Net Sales	$	4,209	$	3,527	19.4%

	Nine Months Ended September 30,
(in millions)	2024		2023		Increase/(Decrease)
Endoscopy	$	1,996	$	1,836	8.7%
Urology	1,570		1,437		9.3%
Neuromodulation	807		708		14.0%
MedSurg	4,373		3,981		9.9%




Cardiology	6,048		4,958		22.0%
Peripheral Interventions	1,765		1,577		11.9%
Cardiovascular	7,813		6,534		19.6%


Net Sales	$	12,186	$	10,515	15.9%

MedSurg

Endoscopy

Our Endoscopy business develops and manufactures devices to diagnose and treat a broad range of gastrointestinal (GI) and pulmonary conditions with innovative, less-invasive technologies. Net sales of Endoscopy products of $678 million during the third quarter and $1.996 billion during the first nine months of 2024 represented 16 percent of our consolidated net sales in both periods. Endoscopy net sales increased $49 million, or 7.8 percent, during the third quarter and $160 million, or 8.7 percent, during the first nine months of 2024, compared to the prior year periods. During the third quarter of 2024, this increase included operational net sales growth of 7.9 percent and a negative impact of 10 basis points from foreign currency fluctuations, compared to the prior year period. During the first nine months of 2024, this increase included operational net sales growth of 9.4 percent and a negative impact of 70 basis points from foreign currency fluctuations, compared to the prior year period.

Operational net sales growth during the third quarter of 2024 included organic net sales growth of 7.4 percent and the positive impact of 50 basis points from our acquisition of the endoluminal vacuum therapy portfolio of Braun in the first quarter of 2024. Operational net sales in the first nine months of 2024 included organic net sales growth of 8.3 percent and the net positive impact of 110 basis points from our acquisition of Apollo and divestiture of our pathology business in the second quarter of 2023, and our acquisition of the endoluminal vacuum therapy portfolio of Braun in the first quarter of 2024.

Organic net sales growth in both periods was primarily driven by our biliary franchise led by our AXIOS™ Stent and Delivery System, our single-use imaging franchise led by our EXALT™ Model D Single-Use Duodenoscope and our endoluminal surgery franchise.

Urology

Our Urology business develops and manufactures devices to treat various urological conditions for both male and female anatomies, including kidney stones, benign prostatic hyperplasia (BPH), prostate cancer, erectile dysfunction and incontinence. Net sales of Urology products of $532 million during the third quarter and $1.570 billion during the first nine months of 2024 represented 13 percent of our consolidated net sales in both periods. Urology net sales increased $50 million, or 10.3 percent, during the third quarter and $133 million, or 9.3 percent, during the first nine months of 2024, compared to the prior year periods. During the third quarter of 2024, this increase included operational net sales growth of 10.4 percent and a negative impact of 10 basis points from foreign currency fluctuations, compared to the prior year period. During the first nine months of 2024, this increase included operational net sales growth of 9.8 percent and a negative impact of 50 basis points from foreign currency fluctuations, compared to the prior year period.

Operational net sales growth in the third quarter of 2024 was primarily driven by our prostate health and stone management franchises. Operational net sales growth in the first nine months of 2024 was primarily driven by our stone management and prosthetic urology franchises.

Neuromodulation

Our Neuromodulation business develops and manufactures devices to treat various neurological movement disorders and manage chronic pain. Net sales of Neuromodulation products of $268 million during the third quarter and $807 million during the first nine months of 2024 represented 6 percent and 7 percent of our consolidated net sales, respectively. Neuromodulation net sales increased $39 million, or 17.0 percent during the third quarter and $99 million, or 14.0 percent during the first nine months of 2024, compared to the prior year periods. During the third quarter of 2024, this increase included operational net sales growth of 17.1 percent and a negative impact of 10 basis points from foreign currency fluctuations, compared to the prior year period. During the first nine months of 2024, this increase included operational net sales growth of 14.4 percent and a negative impact of 40 basis points from foreign currency fluctuations, compared to the prior year period.

Operational net sales growth included organic net sales growth of 2.7 percent during the third quarter of 2024 and 1.7 percent during the first nine months of 2024, and the positive impact of 1,440 and 1,270 basis points, respectively, from our acquisition of Relievant in the fourth quarter of 2023. Organic net sales growth in both periods was primarily driven by our deep brain stimulation franchise and our radiofrequency ablation portfolio.

Cardiovascular

Cardiology

Our Cardiology business develops and manufactures devices and medical technologies for diagnosing and treating a variety of diseases and abnormalities of the heart. Net sales of Cardiology products of $2.129 billion during the third quarter and $6.048 billion for the first nine months of 2024 represented 51 percent and 50 percent of our consolidated net sales, respectively. Cardiology net sales increased $482 million, or 29.2 percent, during the third quarter and $1.090 billion, or 22.0 percent, during the first nine months of 2024, compared to the prior year periods. During the third quarter of 2024, this increase included operational net sales growth of 29.3 percent and a negative impact of 10 basis points from foreign currency fluctuations, compared to the prior year period. During the first nine months of 2024, this increase included operational net sales growth of 23.1 percent and a negative impact of 110 basis points from foreign currency fluctuations, compared to the prior year period.

Operational net sales growth in both periods was primarily driven by growth of our electrophysiology business, led by our Farapulse™ Pulsed Field Ablation System and our access solutions portfolio, continued market penetration of Left Atrial Appendage Closure (LAAC) procedures with our WATCHMAN FLX™ LAAC Device and our WATCHMAN FLX™ Pro LAAC Device, as well as our percutaneous coronary intervention guidance franchise.

Peripheral Interventions

Our Peripheral Interventions business develops and manufactures products to diagnose and treat peripheral arterial and venous diseases, as well as products to diagnose, treat and ease various forms of cancer. Net sales of Peripheral Interventions products of $602 million during the third quarter and $1.765 billion for the first nine months of 2024 represented 14 percent our consolidated net sales in both periods. Peripheral Interventions net sales increased $64 million, or 11.8 percent, during the third quarter and $188 million, or 11.9 percent, during the first nine months of 2024, compared to the prior year periods. During the third quarter of 2024, this increase included operational net sales growth of 12.0 percent and a negative impact of 10 basis points from foreign currency fluctuations, compared to the prior year period. During the first nine months of 2024, this increase included operational net sales growth of 13.4 percent and a negative impact of 140 basis points from foreign currency fluctuations, compared to the prior year period.

Operational net sales growth during the third quarter of 2024 included organic net sales growth of 10.3 percent and the positive impact of 170 basis points from our acquisition of Silk Road Medical in the third quarter of 2024. Operational net sales growth during the first nine months of 2024 included organic net sales growth of 10.3 percent and the positive impact of 300 basis points from our majority stake investment in Acotec and the acquisition of Silk Road Medical during the first quarter of 2023 and third quarter of 2024, respectively. Organic net sales growth in both periods was primarily driven by our interventional oncology franchise led by our Therasphere™ Y-90 Radioactive Glass Microspheres and EMBOLD™ Fibered Coil, as well as our drug-eluting portfolio within our vascular franchise led by our Ranger™ Drug Coated Balloon.

Emerging Markets

As part of our strategic imperative to drive global expansion, we are seeking to grow net sales and market share by expanding our global presence, including in Emerging Markets. Periodically, we assess our list of Emerging Markets countries, and effective January 1, 2023, modified our list to include all countries except the United States, Western and Central Europe, Japan, Australia, New Zealand and Canada.

Our Emerging Markets' net sales represented 16 percent and 17 percent of our consolidated net sales during the third quarter and first nine months of 2024, respectively, and 17 percent and 16 percent during the third quarter and first nine months of 2023, respectively. During the third quarter of 2024, our Emerging Markets net sales grew 15.2 percent on a reported basis, which included operational net sales growth of 16.8 percent and a negative impact of 150 basis points from foreign currency fluctuations, compared to the prior year period. During the first nine months of 2024, our Emerging Markets net sales grew 17.3 percent on a reported basis, which included operational net sales growth of 21.2 percent and a negative impact of 380 basis points from foreign currency fluctuations, compared to the prior year period. Operational growth in both periods was driven primarily by growth in China, fueled by the breadth of our portfolio and focus on innovation and strong commercial execution.

Economic Environment

Our business has been impacted by global supply chain disruptions, which have continued to improve in recent quarters, however challenges still exist. We have experienced, and may continue to experience, increases in cost and limited availability of certain raw materials, components, and other inputs necessary to manufacture and distribute our products due to constraints and continued inflation within the global supply chain, as well as increases in wage costs and the cost and time to distribute our products. Uncertainty around inflationary pressures, interest rates, monetary policy and changes in tax laws could potentially cause new, or exacerbate existing, economic challenges that we may face, including the impact of foreign currency fluctuations on our results of operations, or result in an economic downtown or recession, which could negatively impact our business operations and results. Existing and future potential geopolitical dynamics, including matters related to the Russia/Ukraine war, Israel/Hamas war and broader conflicts in the region, as well as tension in the Taiwan strait, may create economic, supply chain, energy, and other challenges, including disruptions to business operations, which impact, and may in the future negatively impact, our business. In particular, international conflicts could create instability, have and may further result in sanctions, tariffs, and other measures that restrict international trade and may negatively affect our business operations and results.

Gross Profit

Our Gross profit was $2.897 billion for the third quarter of 2024, $2.426 billion for the third quarter of 2023, $8.395 billion for the first nine months of 2024 and $7.317 billion for the first nine months of 2023. The following is a reconciliation of our gross profit margin and a description of the drivers of the changes from period to period:


	Percentage of Net Sales
	Three Months	Nine Months
Gross profit margin - period ended September 30, 2023	68.8%	69.6%
Sales pricing, volume and mix	0.9	0.4






All other, including inventory charges and other period expenses	(0.9)	(1.0)
Gross profit margin - period ended September 30, 2024	68.8%	68.9%

Gross profit margin remained flat in the third quarter of 2024 and decreased in the first nine months of 2024, as compared to the same periods in the prior year. The primary factors that impacted gross profit margin in the third quarter of 2024 were increased sales of higher margin products, offset by strategic manufacturing capacity investments to support future growth, inventory charges and other period expenses. The primary factors that contributed to the decrease in the first nine months of 2024 were inventory charges, including related to the POLARx™ cryoablation system given the strong commercial adoption of our Farapulse™ Pulsed Field Ablation System, strategic manufacturing capacity investments and other period expenses, partially offset by increased sales of higher margin products.

Operating Expenses

The following table provides a summary of our key operating expenses:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2024				2023				2024				2023
(in millions)	$		% of Net Sales		$		% of Net Sales		$		% of Net Sales		$		% of Net Sales
Selling, general and administrative expenses	$	1,562	37.1	%	$	1,242	35.2	%	$	4,372	35.9	%	$	3,811	36.2	%
Research and development expenses	407		9.7	%	356		10.1	%	1,156		9.5	%	1,051		10.0	%

Selling, General and Administrative expenses (SG&A Expenses)

During the third quarter of 2024, SG&A expenses increased $320 million, or 26 percent, compared to the prior year period and were 190 basis points higher as a percentage of net sales. During the first nine months of 2024, SG&A expenses increased $561 million, or 15 percent, compared to the prior year period and were 30 basis points lower as a percentage of net sales. The increase in SG&A expenses in the third quarter of 2024 was driven in part by comparatively higher acquisition-related expenses. The increase in SG&A expenses in both periods was primarily due to higher selling costs driven by higher global net sales and costs to support recent and upcoming product launches, including the Farapulse™ Pulsed Field Ablation System.

Research and Development expenses (R&D Expenses)

We remain committed to advancing medical technologies and investing in meaningful R&D projects across our businesses. During the third quarter of 2024, R&D expenses increased $51 million, or 14 percent, compared to the prior year period and were 40 basis points lower as a percentage of net sales. During the first nine months of 2024, R&D expenses increased $104 million, or 10 percent, compared to the prior year period, and were 50 basis points lower as a percentage of net sales. R&D expenses increased in both periods as a result of investments across our businesses in order to maintain a pipeline of new products that we believe will contribute to profitable sales growth.

Other Operating Expenses

The following provides a summary of certain of our other operating expenses, which are excluded by management for purposes of evaluating operating performance; refer to Additional Information for a further description.

Amortization Expense

During the third quarter of 2024, Amortization expense decreased $3 million, or 1 percent, compared to the prior year period. In the first nine months of 2024, Amortization expense increased $11 million, or 2 percent, compared to the prior year period.

Intangible Asset Impairment Charges

In 2024, we did not record any Intangible asset impairment charges in the third quarter and recorded $276 million in the first nine months. In 2023, we recorded Intangible asset impairment charges of less than $1 million in the third quarter and $58 million in the first nine months. The impairment charges recorded in 2024 were associated with amortizable intangible assets established in connection with our acquisitions of Cryterion Medical, Inc. (Cryterion) and Devoro Medical, Inc. (Devoro), which were integrated into our Electrophysiology and Peripheral Interventions business units, respectively. Intangible assets acquired from Cryterion were impaired due to strong commercial adoption of our Farapulse™ Pulsed Field Ablation System and the resulting lower revenue projections and cannibalization of our cryoablation business in major markets like the U.S. Intangible assets acquired from Devoro were impaired following management's decision to cancel the related program in the second quarter of 2024. The impairment charges recorded in 2023 were primarily associated with the cancellation of an IPR&D program due to the incremental time and cost to complete the program and bring the technology to market.

Refer to Note C – Goodwill and Other Intangible Assets to our unaudited consolidated financial statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q and Critical Accounting Policies and Estimates contained in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our most recent Annual Report on Form 10-K for additional details and a discussion of key assumptions used in our intangible asset impairment testing and future events that could have a negative impact on the recoverability of our intangible assets.

Contingent Consideration Net Expense (Benefit)

To recognize changes in the fair value of our contingent consideration liability, we recorded net benefits of $23 million and $4 million in the third quarter and first nine months of 2024, respectively. We recorded net charges of $12 million and $43 million in the third quarter and first nine months of 2023, respectively. The net benefits recorded in the third quarter and first nine months of 2024 related to a decrease in expected payments for achievement of revenue-based earn outs. The net charges recorded in the third quarter and first nine months of 2023 related to an increase in expected payments for achievement of commercialization-based milestones and revenue-based payments as a result of over-performance. In addition, we made payments of $232 million and $73 million associated with prior acquisitions during the first nine months of 2024 and 2023, respectively, following the achievement of revenue-based earnouts. Refer to Note B – Acquisitions and Strategic Investments to our unaudited consolidated financial statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details related to our contingent consideration arrangements.

Restructuring and Restructuring-related Net Charges (Credits)

On February 22, 2023, our Board of Directors approved, and we committed to, a new global restructuring program (the 2023 Restructuring Plan). The 2023 Restructuring Plan will advance our Global Supply Chain Optimization strategy, which is intended to simplify our manufacturing and distribution network by transferring certain production lines among facilities and drive operational efficiencies and resiliency. Key activities under the 2023 Restructuring Plan will also include optimizing certain functional capabilities to achieve cost synergies and better support business growth. For more information, refer to 2023 Restructuring Plan contained in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our most recent Annual Report on Form 10-K.

Pursuant to the 2023 Restructuring Plan, we recorded restructuring charges in accordance with FASB ASC Topic 420*,* Exit or Disposal Cost Obligations of $8 million and $12 million in the third quarter and first nine months of 2024, respectively. The restructuring reserve balance was $31 million as of September 30, 2024. In addition, we recorded restructuring-related charges of $44 million and $136 million in the third quarter and first nine months of 2024, respectively, primarily within Cost of products sold and SG&A Expenses. During the third quarter and first nine months of 2023, we recorded restructuring charges of $15 million and $51 million, respectively, and restructuring-related charges of $32 million and $82 million, respectively, and the restructuring reserve balance as of December 31, 2023 was $41 million.

Litigation-related Net Charges (Credits)

We did not record any litigation-related net charges (credits) during the third quarter and first nine months of 2024. We recorded litigation-related net credits of $111 million during the third quarter and first nine months of 2023 related to the settlement of offensive patent litigation. We record certain legal and product liability charges, credits and costs of defense, which we consider to be unusual or infrequent and significant as Litigation-related net charges (credits) within our accompanying unaudited consolidated financial statements. All other legal and product liability charges, credits and costs are recorded within SG&A expenses.

We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation, and therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with the financial covenant required by our credit arrangements. Refer to Note H – Commitments and Contingencies to our unaudited consolidated financial statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q for discussion of our material legal proceedings.

Interest Expense and Interest Income

The following table provides a summary of our Interest expense, interest income and average borrowing rate:


	Three Months Ended September 30,								Nine Months Ended September 30,
2024				2023				2024				2023
Interest expense (in millions)	$	(79)			$	(66)			$	(225)			$	(200)
Interest income (in millions)	41				5				85				13
Average borrowing rate	2.8		%		2.8		%		2.8		%		2.8		%

Interest expense increased during the third quarter and first nine months of 2024 compared to the prior year periods primarily due to increased debt from the registered public offering of €2.000 billion in aggregate principal amount of euro-denominated senior notes (the 2024 Eurobonds) during the first quarter of 2024. Our average borrowing rate remained flat during the third quarter and first nine months of 2024 compared to the prior year periods. Refer to Liquidity and Capital Resources and Note E – Contractual Obligations and Commitments to our unaudited consolidated financial statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q for more information regarding our debt obligations. Interest income increased during the third quarter and first nine months of 2024 compared to the prior year periods primarily due to higher average cash balances invested in each period as a result of the registered public offering of the 2024 Eurobonds during the first quarter of 2024. Interest income is recorded in Other, net within our accompanying unaudited consolidated statement of operations.

Tax Rate

The following table provides a reconciliation of our reported tax rate to the rate from continuing operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Reported tax rate	30.0	%	17.3	%	24.4	%	26.5	%
Impact of certain receipts/charges(1)	(12.3)	%	(0.2)	%	(6.0)	%	(7.3)	%
Rate from continuing operations	17.7	%	17.1	%	18.3	%	19.2	%

(1)These receipts/charges are taxed at different rates than our rate from continuing operations.

Our reported tax rate is affected by recurring items such as the amount of our earnings subject to differing tax rates in foreign jurisdictions and the impact of certain receipts and charges that are taxed at rates that differ from our rate from continuing operations.

In the third quarter of 2024, the primary difference between the rate from continuing operations and our reported tax rate relates to certain acquisition-related net charges. In the first nine months of 2024, the primary difference between the rate from

continuing operations and our reported tax rate relates to certain acquisition-related net charges, benefits for intangible asset impairment charges, and discrete tax benefits primarily related to stock-based compensation.

In the third quarter of 2023, the primary difference between the rate from continuing operations and our reported tax rate relates to litigation-related charges. In the first nine months of 2023, the primary difference between the rate from continuing operations and our reported tax rate relates to certain acquisition-related net charges, litigation-related charges and discrete tax benefits related to unrecognized tax benefits and stock-based compensation.

Effective January 1, 2024, many countries where we do business, including the United Kingdom, Japan, South Korea, Canada and many EU member states, adopted a global minimum effective tax rate of 15% based on the Pillar Two framework issued by the Organization for Economic Cooperation and Development (OECD). Other countries where we do business are also actively considering adopting the framework or are in various stages of enacting the framework into their country’s laws. While the Company continues to monitor legislative adoption of the Pillar Two rules by country, as well as for additional guidance from the OECD, there is significant uncertainty that exists regarding the interpretation of the detailed Pillar Two rules, whether such rules will be implemented consistently across taxing jurisdictions, how such rules interact with existing national tax laws and whether such rules are consistent with existing tax treaty obligations. Although the current impact of the adoption of a global minimum effective tax on our financial statements is not material, it is possible that the final adoption, implementation, and interpretation of Pillar Two across all jurisdictions where we do business could have a material adverse impact on our financial position, results of operations, and cash flows.

Our operations presently benefit from various tax provisions of the Tax Cuts and Jobs act which are set to expire in 2025. If future legislation is unable to extend or modify these provisions, this could have a material adverse impact on our overall effective tax rate, financial condition, results of operations, and cash flows.

Critical Accounting Policies and Estimates

Our financial results are affected by the selection and application of accounting policies and methods. During the third quarter and first nine months of 2024, there were no material changes to the application of critical accounting policies previously disclosed in our most recent Annual Report on Form 10-K.

Liquidity and Capital Resources

Based on our current business plan, we believe our existing balance of Cash and cash equivalents, future cash generated from operations, access to capital markets and existing credit facilities will be sufficient to fund our operations, invest in our infrastructure, pay our legal-related liabilities, pay taxes due, service and repay our existing debt and fund possible acquisitions for the next 12 months and for the foreseeable future.

As of September 30, 2024, we had $2.502 billion of unrestricted Cash and cash equivalents on hand, including approximately $67 million held by Acotec, a less than wholly owned entity of which we acquired a majority stake investment during the first quarter of 2023. The balance is comprised of $1.733 billion invested in money market funds and time deposits and $803 million in interest bearing and non-interest-bearing bank accounts. We invest excess cash on hand in short-term financial instruments that earn at market interest rates while mitigating principal risk through instrument and counterparty diversification, as well as what we believe to be prudent instrument selection. We limit our direct exposure to securities in any one industry or issuer.

In 2021, we entered into our $2.750 billion revolving credit facility (as amended, supplemented or otherwise modified from time to time, the 2021 Revolving Credit Facility) with a global syndicate of commercial banks. On May 10, 2024, we entered into a third amendment to the 2021 Revolving Credit Facility credit agreement, which provided for, among other things, an extension of the scheduled maturity date to May 10, 2029, an amendment of the Ratings based pricing grid of the Applicable Margin, each as defined in the credit agreement, and reset the applicable date for purposes of determining the amounts of restructuring charges and restructuring-related expenses that may be excluded from consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), as defined by the credit agreement, for purposes of our maximum leverage ratio covenant, from December 31, 2022 to March 31, 2024, as further discussed under Financial Covenant below. This facility provides backing for our commercial paper program, and outstanding commercial paper directly reduces borrowing capacity under the 2021 Revolving Credit Facility. There were no amounts outstanding under the 2021 Revolving Credit Facility or our commercial paper program as of September 30, 2024, resulting in an additional $2.750 billion of available liquidity.

For additional details related to our debt obligations, including our financial covenant requirement, refer to Note E – Contractual Obligations and Commitments to our unaudited consolidated financial statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q.

The following provides a summary and description of our net cash inflows (outflows):


	Nine Months Ended September 30,
(in millions)	2024		2023
Cash provided by (used for) operating activities	$	1,979	$	1,546
Cash provided by (used for) investing activities	(1,983)		(1,521)
Cash provided by (used for) financing activities	1,600		(10)

Operating Activities

During the first nine months of 2024, cash provided by (used for) operating activities increased $433 million compared to the prior year period primarily due to higher operating income and slower inventory buildup due to improved macroeconomic supply chain conditions, offset by higher income tax and employee related payments.

Investing Activities

During the first nine months of 2024, cash provided by (used for) investing activities included cash payments of $1.222 billion for acquisitions of businesses, net of cash acquired, primarily related to the acquisition of Silk Road Medical, purchases of property, plant and equipment and internal use software of $513 million as well as payments for investments and acquisitions of certain technologies, net of investment proceeds of $264 million. During the first nine months of 2023, cash used for investing activities included cash payments of $1.018 billion, net of cash acquired, for the acquisition of Apollo and a majority stake investment in Acotec, as well as purchases of property, plant and equipment and internal use software of $444 million. For more information on our acquisitions, refer to Note B – Acquisitions and Strategic Investments to our unaudited consolidated financial statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Financing Activities

During the first nine months of 2024, cash provided by (used for) financing activities included the registered public offering of the 2024 Eurobonds. The offering resulted in cash proceeds of $2.145 billion, net of investor discounts and issuance costs. We used the net proceeds from the offering of the 2024 Eurobonds to fund the repayment at maturity of our 3.450% Senior Notes due March 2024 and to pay accrued and unpaid interest with respect to such notes. Additionally, we plan to use the remaining net proceeds from the offering to fund a portion of the purchase price of our announced agreement to acquire Axonics, Inc. (Axonics) and to pay related fees and expenses, and for general corporate purposes. If the Axonics acquisition is not consummated by the applicable outside date pursuant to the merger agreement or we choose to not pursue consummation of the acquisition, we will be required to redeem each series of the notes at a special mandatory redemption price equal to 101% of the aggregate principal amount of such series of notes, plus accrued and unpaid interest, if any, to, but excluding, the date on which the notes will be redeemed. For more information, refer to Note E – Contractual Obligations and Commitments to our unaudited consolidated financial statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q. Cash provided by (used for) financing activities in the first nine months of 2023 included proceeds from issuances of common stock pursuant to employee stock compensation and purchase plans of $165 million, cash used to net share settle employee equity awards of $54 million and payments of contingent consideration previously established in purchase accounting of $39 million.

Financial Covenant

As of September 30, 2024, we were in compliance with the financial covenant required by the 2021 Revolving Credit Facility.

The 2021 Revolving Credit Facility includes the financial covenant requirement for all of our credit arrangements that we maintain the maximum permitted leverage ratio of 3.75 times for the remaining term. The credit agreement provides for higher leverage ratios, at our election, for the period following a Qualified Acquisition, as defined by the agreement, for which consideration exceeds $1.000 billion. In the event of such an acquisition, for the four succeeding quarters immediately following, including the quarter in which the acquisition occurs, the maximum permitted leverage ratio is 4.75 times. It steps down for the fifth, sixth and seventh succeeding quarters to 4.50 times, 4.25 times and 4.00 times, respectively. Thereafter, a maximum leverage ratio of 3.75 times is required through the remaining term of the 2021 Revolving Credit Facility. We have elected to designate the Axonics acquisition as a Qualified Acquisition under the credit agreement, and upon closing, will increase the maximum permitted leverage ratio at that time. The agreement also provides for an exclusion of any debt incurred to fund a Qualified Acquisition, until the earlier of the acquisition close date or date of abandonment, termination or expiration

of the acquisition agreement. As of September 30, 2024, we excluded from our leverage ratio calculation $2.218 billion of debt incurred in connection with the Axonics acquisition. We believe that we have the ability to comply with the financial covenant for the next 12 months.

The financial covenant requirement, as amended on May 10, 2024, provides for an exclusion from the calculation of consolidated EBITDA, as defined by the credit agreement, through maturity, of certain charges and expenses. The credit agreement amendment reset the starting date for purposes of calculating such permitted exclusions related to restructuring charges and restructuring-related expenses from December 31, 2022 to March 31, 2024. Permitted exclusions include up to $500 million in cash and non-cash restructuring charges and restructuring-related expenses associated with our current or future restructuring plans. As of September 30, 2024, we had $401 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreement, are excluded from the calculation of consolidated EBITDA, as defined by the agreement, provided that the sum of any excluded net cash litigation payments do not exceed $1.000 billion plus all accrued legal liabilities as of December 31, 2022. As of September 30, 2024, we had $1.442 billion of the litigation exclusion remaining.

Contractual Obligations and Commitments

On January 8, 2024, we announced our entry into a definitive agreement to acquire 100 percent of Axonics, a publicly traded medical technology company primarily focused on the development and commercialization of devices to treat urinary and bowel dysfunction. The purchase price is $71.00 in cash per share, or approximately $3.670 billion. On April 3, 2024, we and Axonics each received a request for additional information (Second Request) from the United States Federal Trade Commission (FTC) in connection with the FTC's review of the transaction. The issuance of the Second Request extends the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act), until 30 days after both we and Axonics have substantially complied with the Second Request, unless the waiting period is extended voluntarily by the parties or terminated earlier by the FTC. We and Axonics have responded to the Second Request and continue to work cooperatively with the FTC in its review. The transaction is expected to be completed in the fourth quarter of 2024, subject to the expiration or termination of the waiting period under the HSR Act and the satisfaction (or waiver) of other customary closing conditions. We plan to fund the acquisition through a mix of cash on hand, commercial paper and net proceeds from the offering of the 2024 Eurobonds. The Axonics business will be integrated into our Urology division.

Certain of our acquisitions involve the payment of contingent consideration. Refer to Note B – Acquisitions and Strategic Investments to our unaudited consolidated financial statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q for further details regarding the estimated potential amount of future contingent consideration we could be required to pay associated with our acquisitions. There have been no other material changes to our contractual obligations and commitments as of September 30, 2024.

Equity

On June 1, 2023, in accordance with the terms of our MCPS, all outstanding shares of MCPS automatically converted into shares of common stock. No action by the holders of the MCPS was required in connection with the mandatory conversion. The conversion rate for each share of MCPS was 2.3834 shares of common stock. Cash was paid in lieu of fractional shares in accordance with the terms of the MCPS. An aggregate of approximately 24 million shares of common stock, including shares of common stock issued to holders of MCPS that elected to convert prior to the mandatory conversion date, were issued upon conversion of the MCPS. Following the mandatory conversion of the MCPS, there were no outstanding shares of MCPS, resulting in the retirement of the annualized approximately $55 million cash dividend payment on the MCPS.

We received $202 million during the first nine months of 2024 and $165 million during the first nine months of 2023 in proceeds from stock issuances related to our stock option and employee stock purchase plans. Proceeds from the exercise of employee stock options and employee stock purchases vary from period to period based upon, among other factors, fluctuations in the trading price of our common stock and in the exercise and stock purchase patterns of our employees.

We did not repurchase any shares of our common stock during the first nine months of 2024 or 2023. On December 14, 2020, our Board of Directors approved a new stock repurchase program authorizing the repurchase of up to $1.000 billion of our common stock. As of September 30, 2024, we had the full amount remaining available under the authorization.

Legal Matters

For a discussion of our material legal proceedings refer to Note H – Commitments and Contingencies to our unaudited consolidated financial statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q and Note I – Commitments and Contingencies to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K.

Recent Accounting Pronouncements

Information regarding new accounting pronouncements implemented since December 31, 2023, and relevant accounting pronouncements to be implemented in the future are included in Note N – New Accounting Pronouncements to our unaudited consolidated financial statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Additional Information

Corporate Responsibility

Our sustainable environmental, social and governance (ESG) practices underpin all aspects of our global business. Our approach is aligned with the United Nations Sustainable Development Goals and our material topics and practices are informed by a broad range of internal and external stakeholders – locally, nationally and globally. Our employees around the world work with suppliers and other organizations that share our commitment to these practices that help address issues related to health inequity, economic disparity, climate change and environmental protection. Our global ESG vision and strategy is led by our ESG Executive Steering Committee and our vice president of ESG, who provides regular updates to our Board of Directors or committees thereof as appropriate. Our ESG team works closely with subject matter experts and key advisors from across the business to implement our ESG practices and determine how we measure and share progress. The importance of our ESG efforts is reinforced by a company wide scorecard that is part of our annual bonus program. For additional information on our sustainability efforts, as well as our Diversity, Equity and Inclusion initiatives, refer to our most recent Annual Report on Form 10-K. For additional information on our annual bonus plan, refer to our Proxy Statement for the 2024 Annual Meeting of Shareholders.

Cybersecurity

We have established controls and procedures to escalate enterprise level issues, including cybersecurity matters, to the appropriate management levels within our organization and our Board of Directors, or members or committees thereof, as appropriate. Under our framework, cybersecurity issues, including those involving vulnerabilities introduced by our use of third-party software, are analyzed by subject matter experts, including a crisis committee as needed in accordance with our incident response plans, for potential financial, operational, and reputational risks, based on, among other factors, the nature of the matter and breadth of impact. Matters determined to present potential material impacts to our financial results, operations, and/or reputation are immediately reported by management to the Board of Directors, or individual members or committees thereof, as appropriate, in accordance with our established escalation framework. In addition, we have established procedures to help ensure that members of management responsible for overseeing the effectiveness of disclosure controls are informed in a timely manner of known cybersecurity risks and incidents that may materially impact our operations and that timely public disclosure is made, as appropriate. For additional information on our risk management, strategy and governance around cybersecurity, refer to Part I, Item 1C. Cybersecurity in our most recent Annual Report on Form 10-K.

Stock Trading Policy

Our directors and executive officers are subject to our Stock Trading Policy, which is designed to facilitate compliance with insider trading laws and governs transactions in our common stock and related derivative securities. Our policy designates certain regular periods, dictated by release of financial results, in which trading is restricted for individuals in information-sensitive positions, including directors and executive officers. In addition, additional periods of trading restriction may be imposed as determined by the President and Chief Executive Officer, General Counsel, or Chief Financial Officer in light of material pending developments. Further, during permitted windows, certain individuals in information-sensitive positions are required to seek pre-clearance for trades from the General Counsel, who assesses whether there are any important pending developments which need to be made public before the individual may participate in the market.

Periodically, certain of our executive officers adopt written stock trading plans in accordance with Rule 10b5-1 under the Exchange Act and our own Stock Trading Policy. A Rule 10b5-1 trading plan is a written document that pre-establishes the amount, prices and dates (or formulas for determining the amounts, prices and dates) of future purchases or sales of our stock, including shares issued upon exercise of stock options or vesting of restricted stock units. These plans are entered into at a time when the person is not in possession of material non-public information about the Company. In addition to any plans described in Part II, Item 5 of this Quarterly Report on Form 10-Q, we disclose details regarding individual Rule 10b5-1 trading plans on the Investor Relations section of our website.

Use of Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented on a GAAP basis, we disclose certain non-GAAP financial measures, including adjusted net income (loss), adjusted net income (loss) attributable to Boston Scientific common stockholders and adjusted net income (loss) per share (EPS) that exclude certain charges (credits); operational net sales, which exclude the impact of foreign currency fluctuations; and organic net sales, which exclude the impact of foreign currency fluctuations as well as the impact of acquisitions and divestitures with less than a full period of comparable net sales. These non-GAAP financial measures are not in accordance with GAAP and should not be considered in isolation from or as a replacement for the most directly comparable GAAP financial measures. Further, other companies may calculate these non-GAAP financial measures differently than we do, which may limit the usefulness of those measures for comparative purposes.

To calculate adjusted net income (loss), adjusted net income (loss) attributable to Boston Scientific common stockholders and adjusted net income (loss) per share, we exclude certain charges (credits) from GAAP net income and GAAP net income attributable to Boston Scientific common stockholders, which include amortization expense, goodwill and other intangible asset impairment charges, acquisition/divestiture-related net charges (credits), investment portfolio net losses (gains) and impairments, restructuring and restructuring-related net charges (credits), certain litigation-related net charges (credits), EU MDR implementation costs, debt extinguishment net charges, deferred tax expenses (benefits) and certain discrete tax items. Amounts are presented after-tax using our effective tax rate, unless the amount is a significant unusual or infrequently occurring item in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 740-270-30, “General Methodology and Use of Estimated Annual Effective Tax Rate.” Please refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission for an explanation of each of these adjustments and the reasons for excluding each item.

The GAAP financial measures most directly comparable to adjusted net income (loss), adjusted net income (loss) attributable to Boston Scientific common stockholders and adjusted net income (loss) per share are GAAP net income (loss), GAAP net income (loss) attributable to Boston Scientific common stockholders and GAAP net income (loss) per common share – diluted, respectively.

To calculate operational net sales growth rates, which exclude the impact of foreign currency fluctuations, we convert actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior periods. To calculate organic net sales growth rates, we also remove the impact of acquisitions and divestitures with less than a full period of comparable net sales. The GAAP financial measure most directly comparable to operational net sales and organic net sales is net sales reported on a GAAP basis.

Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP financial measure are included in the relevant sections of this Quarterly Report on Form 10-Q.

Management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors and to establish operational goals

and forecasts that are used in allocating resources. In addition, management uses these non-GAAP financial measures to further its understanding of the performance of our operating segments. The adjustments excluded from our non-GAAP financial measures are consistent with those excluded from our operating segments’ measures of net sales and profit or loss. These adjustments are excluded from the segment measures reported to our chief operating decision maker that are used to make operating decisions and assess performance.

We believe that presenting adjusted net income (loss), adjusted net income (loss) attributable to Boston Scientific common stockholders, adjusted net income (loss) per share, operational net sales and organic net sales growth rates, in addition to the corresponding GAAP financial measures, provides investors greater transparency to the information used by management for its operational decision-making and allows investors to see our results “through the eyes” of management. We further believe that providing this information assists our investors in understanding our operating performance and the methodology used by management to evaluate and measure such performance.

Safe Harbor for Forward-Looking Statements

Certain statements that we may make from time to time, including statements contained in this Quarterly Report on Form 10-Q and information incorporated by reference herein, constitute “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,” “aim,” "goal," "target," "continue," "hope," "may" 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 vary materially from the expectations and projections expressed or implied by our forward-looking statements.

The forward-looking statements in this Quarterly Report on Form 10-Q are based on certain risks and uncertainties, including the risk factors described in Part I, Item 1A. Risk Factors in our most recent Annual Report on Form 10-K and the specific risk factors discussed herein and in connection with forward-looking statements throughout this Quarterly Report on Form 10-Q, which could cause actual results to vary materially from the expectations and projections expressed or implied by our forward-looking statements. These risks and uncertainties, in some cases, have affected and in the future could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the statements expressed in this Quarterly Report on Form 10-Q. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements. Risks and uncertainties that may cause such differences include, among other things: economic conditions, including the impact of foreign currency fluctuations; future U.S. and global political, competitive, reimbursement and regulatory conditions; geopolitical events; manufacturing, distribution and supply chain disruptions and cost increases; disruptions caused by cybersecurity events; disruptions caused by public health emergencies or extreme weather or other climate change-related events; labor shortages and increases in labor costs; variations in outcomes of ongoing and future clinical trials and market studies; new product introductions and the market acceptance of those products; market competition for our products; expected pricing environment; expected procedural volumes; the closing and integration of acquisitions; demographic trends; intellectual property rights; litigation; financial market conditions; the execution and effect of our restructuring program; the execution and effect of our business strategy, including our cost-savings and growth initiatives; our ability to achieve environmental, social and governance goals and commitments; and future business decisions made by us and our competitors. New risks and uncertainties may arise from time to time and are difficult to predict. All of these factors are difficult or impossible to predict accurately and many of them are beyond our control. For a further list and description of these and other important risks and uncertainties that may affect our future operations, refer to Part I, Item 1A. Risk Factors in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, which we may update in Part II, Item 1A. Risk Factors in subsequent Quarterly Reports on Form 10-Q that we will file hereafter. We disclaim any intention or obligation to publicly update or revise any forward-looking statement to reflect any change in our expectations or in events, conditions, or circumstances on which those expectations may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements, except as required by law. This cautionary statement is applicable to all forward-looking statements contained in this Quarterly Report on Form 10-Q.

The following are some of the important risk factors that could cause our actual results to differ materially from our expectations in any forward-looking statements. For further discussion of these and other risk factors, refer to Part I, Item 1A. Risk Factors in our most recent Annual Report on Form 10-K.

Our Business

Risks associated with challenging or uncertain domestic and international economic conditions, including those related to interest rates, inflation, supply chain disruptions and constraints, adverse developments and volatility in the banking industry, currency devaluations or economies entering into periods of recession,
The impact of disruptions in the supply of the materials and components used in manufacturing our products or the sterilization of our products,
Labor shortages and the impact of inflation on the cost of raw materials and direct labor,
The impact of any future pandemics or other public health crises on worldwide economies, financial markets, manufacturing and distribution systems, including disruption in the manufacture or supply of certain components, materials or products, and business operations,
The impact of natural disasters, climate change or other catastrophic events on our ability to manufacture, distribute and sell our products,
The impact of competitive offerings, value-based procurement practices, government-imposed payback provisions and changes in reimbursement practices and policies on average selling prices for our products,
The ongoing impact on our business of physician alignment to hospitals, governmental investigations and audits of hospitals and other market and economic conditions on the overall number of procedures performed,
The performance of, and physician and patient confidence in, our products and technologies or those of our competitors,
The impact and outcome of ongoing and future clinical trials and market studies undertaken by us, our competitors or other third parties or perceived product performance of our or our competitors' products,
Variations in clinical results, reliability or product performance of our and our competitors' products,
Our ability to acquire or develop, launch and supply new or next-generation products and technologies worldwide and in line with our commercialization strategies in a timely and successful manner and with respect to our recent acquisitions,
The effect of consolidation and competition in the markets in which we do business or plan to do business,
Our ability to achieve our projected level or mix of product sales, as some of our products are more profitable than others,
Our ability to attract and retain talent, including key personnel associated with acquisitions, and to maintain our corporate culture in a hybrid work environment,
The impact of enhanced requirements to obtain and maintain regulatory approval in the U.S. and around the world, including EU MDR and the associated timing and cost of product approval,
The impact of increased pressure on the availability and rate of third-party reimbursement for our products and procedures in the U.S. and around the world, including with respect to the timing and costs of creating and expanding markets for new products and technologies,
The issuance of new or revised accounting standards by the Financial Accounting Standards Board or the Securities and Exchange Commission, and
The impact of potential goodwill and intangible asset impairment charges on our results of operations.

Regulatory Compliance, Litigation and Data Protection

The impact of health care policy changes and legislative or regulatory efforts in the U.S., the EU and around the world to modify product approval or reimbursement processes, including a trend toward demonstrating clinical outcomes, comparative effectiveness and cost efficiency, as well as the impact of other health care reform legislation,
Risks associated with our regulatory compliance and quality systems and activities in the U.S., the EU and around the world, including meeting regulatory standards applicable to manufacturing and quality processes,
The effect of global legal, regulatory or market responses to climate change and sustainability matters, including increased compliance burdens and costs to meet regulatory obligations,
Our ability to minimize or avoid future field actions or FDA warning letters, or similar actions by regulatory agencies around the world, relating to our products and processes and the ongoing inherent risk of potential physician advisories related to our or our competitors' products,
The impact of increased scrutiny of and heightened global regulatory enforcement facing the medical device industry arising from political and regulatory changes, economic pressures or otherwise, including under U.S. Anti-Kickback Statute, U.S. False Claims Act and similar laws in other jurisdictions, U.S. Foreign Corrupt Practices Act (FCPA) and similar laws in other jurisdictions, and U.S. and foreign export control, trade embargo and customs laws,
Costs and risks associated with current and future asserted litigation,
The effect of our litigation and risk management practices, including self-insurance and compliance activities on our loss contingencies, legal provisions and cash flows,
The impact of, diversion of management attention as a result of, and costs to cooperate with, litigate and/or resolve governmental investigations and our class action, product liability, contract and other legal proceedings,
The possibility of failure to protect our intellectual property rights and the outcome of patent litigation, and
Our ability to secure our information technology and operational technology systems that support our business operations and protect our data integrity and products from a cyber-attack, other breach or other malicious actors that may have a material adverse effect on our business, reputation or results of operations, including increased risks as an indirect result of the ongoing Russia/Ukraine war and Israel/Hamas war and broader conflicts in the region.

Innovation and Certain Growth Initiatives

The timing, size and nature of our strategic growth initiatives and market opportunities, including with respect to our internal research and development platforms and externally available research and development platforms and technologies and the ultimate cost and success of those initiatives and opportunities,
Our ability to complete planned clinical trials successfully, obtain regulatory approvals and launch new and next generation products in a timely manner consistent with cost estimates, including the successful completion of projects from in-process research and development,
Our ability to identify and prioritize our internal research and development project portfolio and our external investment portfolio on profitable net sales growth opportunities as well as to maintain the estimated timing and costs of such projects and expected revenue levels for the resulting products and technologies,
Our ability to develop, manufacture and market new products and technologies successfully and in a timely manner and the ability of our competitors and other third parties to develop products or technologies that render our products or technologies noncompetitive or obsolete,
Our ability to execute appropriate decisions to discontinue, write-down or reduce the funding of any of our research and development projects, including projects from in-process research and development from our acquisitions, in our growth adjacencies or otherwise,
Our dependence on acquisitions, alliances or investments to introduce new products or technologies and to enter new or adjacent growth markets and our ability to fund them or to fund contingent payments with respect to those acquisitions, alliances and investments, and
The potential failure to successfully integrate, collaborate or realize the expected benefits, including cost synergies, from strategic acquisitions, alliances and investments we have consummated or may consummate in the future.

International Markets

Our dependency on international net sales to achieve growth, and our ability to maintain or expand our worldwide market positions in the various markets in which we compete or seek to compete, including through investments in China and other Emerging Markets countries,
The timing and collectability of customer payments, as well as our ability to continue factoring customer receivables where we have factoring arrangements, or to enter new factoring arrangements with favorable terms,
The impact on pricing due to national and regional tenders, including value-based procurement practices and government-imposed payback provisions,
Geopolitical and economic conditions, including civil unrest, terrorist activity, governmental changes, restrictions on the ability to transfer capital across borders, tariffs and other protectionist measures,
The impact of the Russia/Ukraine war, Israel/Hamas war and broader conflicts in the region, and tension in the Taiwan strait, and related, downstream effects thereof, including disruptions to operations or the impact of sanctions on U.S. manufacturers doing business in these regions,
Protection of our intellectual property,
Our ability to comply with established and developing U.S. and foreign legal and regulatory requirements, including FCPA, EU MDR and similar laws in other jurisdictions,
Our ability to comply with U.S. and foreign export control, trade embargo and customs laws,
The impact of significant developments or uncertainties stemming from changes in the U.S. government following the 2024 presidential and congressional elections, including changes in U.S. trade policies, tariffs and the reaction of other countries thereto, particularly China, and
The potential effect of foreign currency fluctuations and interest rate fluctuations on our net sales, operating expenses and resulting profit margins.

Liquidity

Our ability to generate sufficient cash flow to fund operations, capital expenditures, global expansion initiatives, any litigation settlements and judgments, share repurchases and strategic investments and acquisitions as well as maintaining our investment grade ratings and managing our debt levels and financial covenant compliance,
Our ability to access the public and private capital markets when desired and to issue debt or equity securities on terms reasonably acceptable to us,
The unfavorable resolution of open tax matters, exposure to additional tax liabilities and the impact of changes in U.S. and international tax laws,
The unfavorable resolution of open litigation matters, exposure to additional loss contingencies and legal provisions,
The impact of examinations and assessments by domestic and international taxing authorities on our tax provisions, financial condition or results of operations,
The possibility of counterparty default on our derivative financial instruments, and
Our ability to collect outstanding and future receivables and/or sell receivables under our factoring programs.

Cost Reduction and Optimization Initiatives

Risks associated with changes made or expected to be made to our organizational and operational structure, pursuant to our restructuring plans as well as any further restructuring or optimization plans we may undertake in the future and our ability to recognize benefits and cost reductions from such programs, and
Business disruption and employee distraction as we execute our global compliance program, restructuring and optimization plans and any divestitures of assets or businesses and implement our other strategic and cost reduction initiatives.

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