BOSTON SCIENTIFIC CORP

Previous wording

Our net sales for the second quarter of 2024 were $4.120 billion, compared to $3.599 billion for the second quarter of 2023. This increase of $521 million, or 14.5 percent, included operational 1 net sales growth of 16.1 percent and the negative impact of 160 basis points from foreign currency fluctuations. Operational net sales growth included organic 2 net sales growth of 14.7 percent and the positive impact of 140 basis points from our majority stake investment in Acotec Scientific Holdings Limited (Acotec) and the acquisitions of Relievant Medsystems, Inc. (Relievant) and the endoluminal vacuum therapy portfolio of B. Braun Medical Inc. (Braun) during the first and fourth quarters of 2023 and first quarter 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.

Current wording

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 operational 1 net sales growth of 19.5 percent and the negative impact of 10 basis points from foreign currency fluctuations. Operational net sales growth included organic 2 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.

Previous wording

Our net sales for the first six months of 2024 were $7.977 billion, compared to $6.988 billion for the first six months of 2023. This increase of $988 million, or 14.1 percent, included operational 1 net sales growth of 15.5 percent and the negative impact of 140 basis points from foreign currency fluctuations. Operational net sales growth included organic 2 net sales growth of 13.9 percent and the positive impact of 160 basis points from our majority stake investment in Acotec and the acquisitions of Apollo Endosurgery, Inc. (Apollo), Relievant and the endoluminal vacuum therapy portfolio of Braun during the first, second and fourth quarters of 2023 and first quarter of 2024, respectively, for which there is less than a full period of comparable sales. The increase in our net sales was primarily driven bystrong 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.

Current wording

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 operational 1 net sales growth of 16.9 percent and the negative impact of 100 basis points from foreign currency fluctuations. Operational net sales growth included organic 2 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.

Previous wording

3 Adjusted 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.

Current wording

3 Adjusted 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.

Previous wording

4 For the three months ended June 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 earnings per share (EPS). Accordingly, GAAPNet 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 GAAPNet income attributable to Boston Scientific common stockholders. On June 1, 2023, all outstanding shares of MCPS automatically converted into shares of common stock.

Current wording

(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, GAAPNet 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 GAAPNet income attributable to Boston Scientific common stockholders. On June 1, 2023, all outstanding shares of MCPS automatically converted into shares of common stock.

Previous wording

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 $676 million during the second quarter and $1.318 billion during the first six months of 2024 represented 16 percent and 17 percent of our consolidated net sales, respectively. Endoscopy net sales increased $45 million, or 7.1 percent, during the second quarter and $111 million, or 9.2 percent, during the first six months of 2024, compared to the prior year periods. During the second quarter of 2024, this increase included operational net sales growth of 8.4 percent and a negative impact of 130 basis points from foreign currency fluctuations, compared to the prior year period. During the first six months of 2024, this increase included operational net sales growth of 10.2 percent and a negative impact of 100 basis points from foreign currency fluctuations, compared to the prior year period.

Current wording

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.

Previous wording

Operational net sales growth included organic net sales growth of 7.9 percent during the second quarter of 2024 and 8.8 percent for the first six months of 2024, and the positive impact of 50 and 140 basis points, respectively, 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 and our endoluminal surgery franchise.

Current wording

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.

Previous wording

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 $525 million during the second quarter and $1.038 billion during the first six months of 2024 represented 13 percent of our consolidated net sales in both periods. Urology net sales increased $40 million, or 8.2 percent, during the second quarter and $83 million, or 8.7 percent, during the first six months of 2024, compared to the prior year periods. During the second quarter of 2024, this increase included operational net sales growth of 9.1 percent and a negative impact of 90 basis points from foreign currency fluctuations, compared to the prior year period. During the first six months of 2024, this increase included operational net sales growth of 9.5 percent and a negative impact of 70 basis points from foreign currency fluctuations, compared to the prior year period.

Current wording

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.

Previous wording

Our Neuromodulation business develops and manufactures devices to treat various neurological movement disorders and manage chronic pain. Net sales of Neuromodulation products of $282 million during the second quarter and $539 million during the first six months of 2024 represented 7 percent of our consolidated net sales in both periods. Neuromodulation net sales increased $38 million, or 15.5 percent during the second quarter and $60 million, or 12.6 percent during the first six months of 2024, compared to the prior year periods. During the second quarter of 2024, this increase included operational net sales growth of 16.2 percent and a negative impact of 70 basis points from foreign currency fluctuations, compared to the prior year period. During the first six months of 2024, this increase included operational net sales growth of 13.1 percent and a negative impact of 50 basis points from foreign currency fluctuations, compared to the prior year period.

Current wording

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 duringthe 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.

Previous wording

Operational net sales growth included organic net sales growth of 3.7 percent during the second quarter of 2024 and 1.2 percent during the first six months of 2024, and the positive impact of 1,250 and 1,180 basis points, respectively, from our acquisition of Relievant in the fourth quarter of 2023. Organic net sales growth in the second quarter of 2024 was primarily driven by improved performance in our U.S. pain franchise from our radiofrequency ablation portfolio. Organic net sales growth in the first six months of 2024 was primarily driven by improved performance in our U.S. pain franchise from our radiofrequency ablation portfolio and our deep brain stimulation franchise.

Current wording

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.

Previous wording

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 $2.047 billion during the second quarter and $3.919 billion for the first six months of 2024 represented 50 percent and 49 percent of our consolidated net sales, respectively. Cardiology net sales increased $343 million, or 20.1 percent, during the second quarter and $609 million, or 18.4 percent, during the first six months of 2024, compared to the prior year periods. During the second quarter of 2024, this increase included operational net sales growth of 22.0 percent and a negative impact of 190 basis points from foreign currency fluctuations, compared to the prior year period. During the first six months of 2024, this increase included operational net sales growth of 20.0 percent and a negative impact of 160 basis points from foreign currency fluctuations, compared to the prior year period.

Current wording

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.

Previous wording

Operational net sales growth in both periods was primarily driven by growth of our electrophysiology business, led by our Farapulse™ Pulsed Field Ablation System, 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 access solutions portfolio and our percutaneous coronary intervention guidance franchises.

Current wording

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.

Previous wording

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 $590 million during the second quarter and $1.163 billion for the first six months of 2024 represented 14 percent and 15 percent of our consolidated net sales, respectively. Peripheral Interventions net sales increased $55 million, or 10.2 percent, during the second quarter and $125 million, or 12.0 percent, during the first six months of 2024, compared to the prior year periods. During the second quarter of 2024, this increase included operational net sales growth of 12.3 percent and a negative impact of 210 basis points from foreign currency fluctuations, compared to the prior year period. During the first six months of 2024, this increase included operational net sales growth of 14.1 percent and a negative impact of 210 basis points from foreign currency fluctuations, compared to the prior year period.

Current wording

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.

Previous wording

Operational net sales growth included organic net sales growth of 9.4 percent during the second quarter of 2024 and 10.4 percent during the first six months of 2024, and the positive impact of 280 and 370 basis points, respectively, from our majority stake investment in Acotec which we acquired in the first quarter of 2023. 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.

Current wording

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, resp ectively. 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.

Previous wording

Our Emerging Markets' net sales represented 16 percent and 17 percent of our consolidated net sales during the second quarter and first six months of 2024, respectively, and 16 percent during the second quarter and first six months of 2023. During the second quarter of 2024, our Emerging Markets net sales grew 14.8 percent on a reported basis, which included operational net sales growth of 19.3 percent and a negative impact of 460 basis points from foreign currency fluctuations, compared to the prior year period. During the first six months of 2024, our Emerging Markets net sales grew 18.5 percent on a reported basis, which included operational net sales growth of 23.5 percent and a negative impact of 500 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.

Current wording

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.

Previous wording

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, 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.

Current wording

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.

Previous wording

Our Gross profit was $2.850 billion for the second quarter of 2024, $2.542 billion for the second quarter of 2023, $5.498 billion for the first six months of 2024 and $4.891 billion for the first six 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:

Current wording

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:

Previous wording

The primary factors contributing to the decrease in our gross profit margin in the second quarter of 2024, as compared to the same period in the prior year, were inventory charges, including related to the POLARx™ cryoablation system given the strong commercial adoption of our Farapulse™ Pulsed Field Ablation System in the U.S., and other period expenses. These impacts were partially offset by favorable foreign currency fluctuations. The decrease in our gross profit margin in the first six months of 2024, as compared to the same period in the prior year, resulted primarily from inventory charges, including related to the POLARx™ cryoablation system given the strong commercial adoption of our Farapulse™ Pulsed Field Ablation System, and other period expenses, partially offset by increased sales of higher margin products.

Current wording

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.

Previous wording

During the second quarter of 2024, SG&A expenses increased $92 million, or 7 percent, compared to the prior year period and were 250 basis points lower as a percentage of net sales. During the first six months of 2024, SG&A expenses increased $241 million, or 9 percent, compared to the prior year period and were 160 basis points lower as a percentage of net sales. 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.

Current wording

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.

Previous wording

We remain committed to advancing medical technologies and investing in meaningful R&D projects across our businesses. During the second quarter of 2024, R&D expenses increased $24 million, or 7 percent, compared to the prior year period and were 70 basis points lower as a percentage of net sales. During the first six months of 2024, R&D expenses increased $53 million, or 8 percent, compared to the prior year period, and were 60 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.

Current wording

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.

Previous wording

During the second quarter of 2024, Amortization expense increased $3 million, or 2 percent, compared to the prior year period. In the first six months of 2024, Amortization expense increased $14 million, or 3 percent, compared to the prior year period. The increase in Amortization expense during both periods was driven by the addition of amortizable intangible assets associated with our recent acquisitions.

Current wording

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.

Previous wording

We recorded Intangible asset impairment charges of $276 million in the second quarter and first six months of 2024 and $57 million in the second quarter and first six months of 2023. 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. 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.

Current wording

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.

Previous wording

To recognize changes in the fair value of our contingent consideration liability, we recorded net charges of $2 million in the second quarter of 2024, $19 million in the second quarter of 2023, $18 million in the first six months of 2024 and $31 million in the first six months of 2023. The net charges recorded in the second quarter and first six months of 2024 related to an increase in expected payments for achievement of revenue-based earn outs as a result of over-performance. In addition, we made payments of $133 million and $73 million associated with prior acquisitions during the first six 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.

Current wording

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.

Previous wording

Pursuant to the 2023 Restructuring Plan, we recorded restructuring charges in accordance with FASB ASC Topic 420, Exit or Disposal Cost Obligations of $1 million and $5 million in the second quarter and first six months of 2024, respectively. The restructuring reserve balance was $29 million as of June 30, 2024. In addition, we recorded restructuring-related charges of $49 million and $92 million in the second quarter and first six months of 2024, respectively, primarily within Cost of products sold and SG&A Expenses. During the second quarter and first six months of 2023, we recorded restructuring charges of $16 million and $36 million, respectively, and restructuring-related charges of $26 million and $50 million, respectively, and the restructuring reserve balance as of December 31, 2023 was $41 million.

Current wording

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.

Previous wording

We did not record any litigation-related net charges (credits) during the second quarter and first six months of 2024 or 2023. 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.

Current wording

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.

Previous wording

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

Current wording

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

Previous wording

Interest expense increased during the second quarter and first six months of 2024 compared to the prior year period primarily due to increased debt from the registered public offering of €2.000 billion in aggregate principal amount of euro-denominated senior notes during the first quarter of 2024. Our average borrowing rate remained relatively flat during the second quarter and first six months of 2024 compared to the prior year period. 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.

Current wording

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.

Previous wording

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 effective tax rate.

Current wording

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.

Previous wording

The primary reasons for the difference between the statutory rate and our reported tax rate in the second quarter and first six months of 2024 relate to certain charges for acquisition expenses, as well as certain benefits for intangible asset impairment charges and integration costs, and discrete benefits primarily related to stock-based compensation. In the second quarter and first six months of 2023, the primary difference between the statutory tax rate and our reported tax rate relates to acquisition-related charges, as well as certain benefits for integration costs, and discrete tax items primarily related to unrecognized tax benefits.

Current wording

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.

Previous wording

Our financial results are affected by the selection and application of accounting policies and methods. During the second quarter and first six 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.

Current wording

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.

Previous wording

As of June 30, 2024, we had $2.913 billion of unrestricted Cash and cash equivalents on hand, including approximately $83 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 $2.153 billion invested in money market funds and time deposits and $793 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.

Current wording

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.

Previous wording

During the first six months of 2024, cash provided by (used for) operating activities increased $130 million compared to the prior year period primarily due to comparatively higher sales, operating income and slower inventory buildup due to improved macroeconomic supply chain conditions, offset by higher income tax and employee related payments.

Current wording

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.

Previous wording

During the first six months of 2024, cash provided by (used for) investing activities included purchases of property, plant and equipment and internal use softwareof $334 million as well aspayments for investments and acquisitions of certain technologies, net of investment proceeds of $139 million. During the first six 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 aspurchases of property, plant and equipment and internal use software of $254 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.

Current wording

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 softwareof $513 million as well aspayments 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 aspurchases 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.

Previous wording

During the first six months of 2024, cash provided by (used for) financing activities included a registered public offering (the Offering) of €2.000 billion in aggregate principal amount of euro-denominated senior notes (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 six months of 2023 included proceeds from issuances of common stock pursuant to employee stock compensation and purchase plansof $90 million, cash used to net share settle employee equity awardsof $52 million andpayments of contingent consideration previously established in purchase accounting of$39 million.

Current wording

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 plansof $165 million, cash used to net share settle employee equity awardsof $54 million andpayments of contingent consideration previously established in purchase accounting of$39 million.

Previous wording

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 June 30, 2024, we excluded from our leverage ratio calculation $2.120 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.

Current wording

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.

Previous wording

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 June 30, 2024, we had $453 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 June 30, 2024, we had $1.448 billion of the litigation exclusion remaining.

Current wording

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.

Previous wording

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 are responding to the Second Request and continue to work cooperatively with the FTC in its review. The transaction is expected to be completed in the second half 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 and net proceeds from the Offering. The Axonics business will be integrated into our Urology division.

Current wording

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.

Previous wording

We received $106 million during the first six months of 2024 and $90 million during the first six 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.

Current wording

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.

Previous wording

We did not repurchase any shares of our common stock during the first six 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 June 30, 2024, we had the full amount remaining available under the authorization.

Current wording

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.

Previous wording

•The possibility of failure to protect our intellectual property rights and the outcome of patent litigation,

Current wording

•The possibility of failure to protect our intellectual property rights and the outcome of patent litigation, and

Previous wording

•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

Current wording

•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.