Boston Scientific Corporation

Company Overview

Business Model: Boston Scientific Corporation is a global developer, manufacturer, and marketer of medical devices used across a broad range of interventional medical specialties. The Company's mission is to transform lives through innovative medical solutions that improve patient health by advancing less-invasive medicine. It provides high-performance solutions to address unmet patient needs and reduce healthcare costs. The core businesses are organized into two reportable segments: MedSurg and Cardiovascular.

Market Position: Boston Scientific Corporation operates as a medical technology leader for over 45 years, competing in highly competitive medical device markets. The Company's products and solutions primarily compete on their ability to deliver differentiated clinical and economic outcomes, ease of use, comparative effectiveness, reliability, and physician familiarity. It faces competition from large manufacturers, specialized medical device companies, and non-medical device companies (e.g., pharmaceutical, biotech). The Company's continued competitive success depends on offering differentiated products, creating/acquiring innovative technologies, applying technology cost-effectively, developing proprietary products, attracting talent, obtaining IP protection, securing regulatory/reimbursement approvals, ensuring product quality, and meeting customer demand at competitive prices.

Recent Strategic Developments:

• Acquisitions: In 2024, Boston Scientific Corporation completed the acquisitions of Silk Road Medical, Inc. for approximately $1.126 billion (net of cash acquired) to prevent stroke in carotid artery disease patients, and Axonics, Inc. for approximately $3.409 billion (net of cash acquired) for urinary and bowel dysfunction devices. In 2023, it acquired a majority stake in Acotec Scientific Holdings Limited ($519 million), Apollo Endosurgery, Inc. ($636 million), and Relievant Medsystems, Inc. ($794 million upfront plus $273 million fair value contingent consideration).
• Product Launches & Approvals:
  • Cardiology: Received FDA approval and initiated U.S. launch of the AGENT™ Drug-Coated Balloon, the first drug-coated coronary balloon in the U.S., indicated for in-stent restenosis. Received CE Mark and initiated European launch of the ACURATE™ Prime™ Aortic Valve System for TAVR procedures. Received FDA clearance and initiated U.S. launch of the WATCHMAN TruSteer™ Access System.
  • Electrophysiology: Commenced U.S. launch of the FARAPULSE™ Pulsed Field Ablation System, which has become the predominant component of the Electrophysiology business unit's revenue. Received NMPA approval in China and PMDA approval in Japan for FARAPULSE™ PFA System. Received FDA approval for the navigation-enabled FARAWAVE™ NAV Ablation Catheter and FDA 510(k) clearance for FARAVIEW™ Software.
  • Neuromodulation: Received FDA approval for an expanded indication of the WaveWriter™ Spinal Cord Stimulator Systems for chronic low back and leg pain in patients without prior back surgery.
  • Cardiac Rhythm Management: Received CE Mark for the LUX-Dx II/II+™ Insertable Cardiac Monitor system. Received FDA approval to expand the indication for INGEVITY™+ Pacing Leads.
• Restructuring Program: Approved a new global restructuring program in February 2023, expected to be substantially completed by the end of 2025, with total pre-tax charges of $450 million to $550 million and gross annual pre-tax expense reductions of $225 million to $275 million, with a substantial portion of savings reinvested in strategic growth initiatives.

Geographic Footprint: Boston Scientific Corporation markets its products and solutions in 127 countries worldwide. International net sales accounted for 39% of global net sales in 2024. The Company's strategy includes expanding its global presence, particularly in Emerging Markets (defined as all countries except the United States, Western and Central Europe, Japan, Australia, New Zealand, and Canada), which represented 16% of consolidated net sales in 2024.

• Headquarters: Marlborough, Massachusetts, U.S.
• Regional Headquarters: Singapore and Voisins-le-Bretonneux, France.
• Manufacturing Facilities: 16 principal facilities, including eight in the U.S. and Puerto Rico, three in Ireland, two in Costa Rica, one in Malaysia, one in Brazil, and one in China.
• Distribution Centers: Primary customer fulfillment centers in Massachusetts, the Netherlands, Malaysia, and Japan.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 68.6%
• Operating Margin: 15.5%
• Net Margin: 11.0%

Investment in Growth:

• R&D Expenditure: $1.615 billion (9.6% of revenue)
• Capital Expenditures: $790 million
• Strategic Investments:
  • Acquisition of Axonics, Inc. for approximately $3.409 billion (net of cash acquired) in Q4 2024.
  • Acquisition of Silk Road Medical, Inc. for approximately $1.126 billion (net of cash acquired) in Q3 2024.
  • Acquisition of the endoluminal vacuum therapy portfolio of B. Braun Medical Inc. in Q1 2024.
  • Future acquisitions announced: Cortex, Inc. ($248 million upfront + up to $50 million contingent), Bolt Medical, Inc. ($443 million upfront + up to $221 million contingent), Intera Oncology Inc. ($175 million upfront).
  • Estimated total remaining cost to complete acquired in-process research and development (IPR&D) projects is between $125 million and $135 million.

Business Segment Analysis

MedSurg

Financial Performance:

• Revenue: $5.993 billion (+10.5% YoY)
• Operating Margin: 34.3% (Segment operating income as % of net sales, constant currency)
• Key Growth Drivers: Strong commercial execution across business units, including endoluminal surgery, single-use imaging (EXALT™ Model D Single-Use Duodenoscope), biliary (AXIOS™ Stent and Delivery System), stone management (Lumenis Pulse™ Holmium Laser Systems with MOSES™ Technology), prosthetic urology, prostate health (Rezūm™ Systems), deep brain stimulation, and radiofrequency ablation.

Product Portfolio:

• Endoscopy: Resolution 360™ Clips, WallFlex™ Biliary Stent Systems, AXIOS™ Stents and Electrocautery Enhanced Delivery Systems, SpyGlass™ DS II Direct Visualization Systems, EXALT™ Model D Single-Use Duodenoscopes, OverStitch™ Endoscopic Suturing System, Orbera™ Intragastric Balloon System, and infection prevention portfolio.
• Urology: Ureteral stents, catheters, baskets, guidewires, sheaths, balloons, LithoVue™ Single-Use Digital Flexible Ureteroscopes, Lumenis Pulse™ Holmium Laser Systems with MOSES™ Technology, AMS 700™ penile implant, AMS 800™ Artificial Urinary Sphincter, GreenLight XPS™ Laser System, Rezūm™ Systems, SpaceOAR™ Hydrogel Systems, SpaceOAR VUE™ Hydrogel. The acquisition of Axonics, Inc. added Axonics R20™ and Axonics F15™ Systems for sacral neuromodulation therapy.
• Neuromodulation: WaveWriter Alpha™ Spinal Cord Stimulator System, G4™ Generator and consumable portfolio in Radiofrequency Ablation, Superion™ Indirect Decompression Systems, Intracept™ Intraosseous Nerve Ablation System, Vercise Genus™ Deep Brain Stimulation System. Expanded FDA indication for WaveWriter™ SCS Systems for chronic low back and leg pain in people without prior back surgery.

Cardiovascular

Financial Performance:

• Revenue: $10.755 billion (+22.0% YoY)
• Operating Margin: 29.4% (Segment operating income as % of net sales, constant currency)
• Key Growth Drivers: Primarily driven by the Electrophysiology business unit, led by rapid adoption of the FARAPULSE™ Pulsed Field Ablation System and access solutions portfolio. Also, continued market penetration of Left Atrial Appendage Closure (LAAC) procedures with WATCHMAN FLX™ and WATCHMAN FLX™ Pro LAAC Devices, and the percutaneous coronary intervention guidance franchise. Organic net sales growth in Peripheral Interventions was driven by interventional oncology (EMBOLD™ Fibered Coil, TheraSphere™ Y-90 radioactive glass microspheres) and the drug-eluting portfolio within vascular (Ranger™ Drug-Coated Balloons).

Product Portfolio:

• Cardiology: OptiCross™ Intravascular Ultrasound Imaging Catheters, iLab™ Ultrasound Imaging Systems, AVVIGO™+ Multi-Modality Guidance System, ROTAPRO™ Rotational Atherectomy Systems, SYNERGY™ Stent Systems, Safari2™ Pre-Shaped Guidewires, WOLVERINE™ Coronary Cutting Balloon™, AGENT™ Drug-Coated Balloon, ACURATE neo2™ and ACURATE Prime™ Aortic Valve Systems, SENTINEL™ Cerebral Embolic Protection Systems.
• Watchman: WATCHMAN FLX™ and WATCHMAN FLX™ Pro Left Atrial Appendage Closure Devices, WATCHMAN TruSteer™ Access System.
• Cardiac Rhythm Management: RESONATE™ family of ICD and CRT-D devices (including HeartLogic™ Heart Failure Diagnostic and SmartCRT™ Technology), EMBLEM™ MRI S-ICD Systems, ACCOLADE™ family of pacemakers and CRT-P, ACUITY™ X4 Quadripolar LV Leads, RELIANCE™ family of ICD Leads, INGEVITY™ Pacing Leads, LATITUDE™ Remote Patient Management Systems, LUX-Dx™ II+™ Insertable Cardiac Monitor System, BodyGuardian™ Remote Cardiac Monitoring Systems.
• Electrophysiology: FARAPULSE™ Pulsed Field Ablation System, POLARx™ Cryoablation Systems, VersaCross Connect™ Access Solutions, OPAL HDx™ Mapping System, radiofrequency (RF) cardiac ablation catheters (including INTELLANAV STABLEPOINT™ catheter with DIRECTSENSE™ Software), IntellaMap Orion™ Mapping Catheters.
• Peripheral Interventions: Eluvia™ Drug Eluting Vascular Stent Systems, Mustang™, Coyote™ and Sterling™ PTA Balloon Catheters, Ranger™ Drug-Coated Balloons, AngioJet™ Thrombectomy Systems, EKOS™ Ultrasound Assisted Thrombolysis systems, Varithena™ Polidocanol Injectable Foam, TheraSphere™ Y-90 radioactive glass microspheres, Renegade™ HI-FLO™ Microcatheter, Fathom™ Guidewire System, Interlock™ Occlusion System, EMBOLD™ Detachable Coil System, ICEFX™ and Visual ICE™ Cryoablation Systems. The acquisition of Silk Road Medical, Inc. added products for transcarotid artery revascularization.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: No share repurchases in 2024 or 2023. $1.000 billion remains available under the 2020 Share Repurchase Program.
• Dividend Payments: No cash dividends paid on common stock in 2024, 2023, or 2022. The Company does not currently intend to pay cash dividends on its common stock.
• Dividend Yield: Not applicable.
• Future Capital Return Commitments: The $1.000 billion share repurchase program remains authorized.

Balance Sheet Position:

• Cash and Equivalents: $414 million (as of December 31, 2024)
• Total Debt: $10.746 billion (as of December 31, 2024)
• Net Cash Position: -$10.332 billion (Net Debt)
• Credit Rating: Investment grade ratings at Moody's Investor Service, Standard & Poor's Rating Service, and Fitch Ratings.
• Debt Maturity Profile:
  • 2025: $1.730 billion
  • 2026: $255 million
  • 2027: $935 million
  • 2028: $1.123 billion
  • 2029: $1.051 billion
  • Thereafter: $5.547 billion
  • Total: $10.642 billion (excluding unamortized debt issuance discounts, deferred financing costs, and finance lease obligations)
  • Approximately 98% of total debt is at fixed interest rates.

Cash Flow Generation:

• Operating Cash Flow: $3.435 billion (2024)
• Free Cash Flow: Not explicitly disclosed or calculated.
• Cash Conversion Metrics: Cash provided by operating activities increased by $932 million in 2024 compared to 2023, primarily due to higher net sales and operating income, slower inventory buildup, and increases in employee-related accruals, commissions, and rebates, partially offset by higher prepaid expenses and income tax receivables.

Operational Excellence

Production & Service Model: Boston Scientific Corporation designs and manufactures medical devices in technology centers globally, either internally or through third parties. The Company focuses on continuously improving supply chain effectiveness, strengthening manufacturing processes, and increasing operational efficiencies. It emphasizes continuous improvement in product quality through process controls, validations, supplier/distribution controls, and training.

Supply Chain Architecture: Key Suppliers & Partners: The Company purchases the majority of materials and components from third-party vendors, with certain items sourced from single suppliers due to quality, expertise, cost, or regulatory requirements. It maintains an ongoing supplier resiliency program to identify and mitigate risks. Facility Network:

• Manufacturing: 16 principal manufacturing facilities, including locations in Minnesota, Ireland, Puerto Rico, Coyol (Costa Rica), Malaysia, California, Indiana, Brazil, China, and Heredia (Costa Rica).
• Research & Development: R&D efforts are focused on next-generation and novel technology offerings across multiple programs and divisions. R&D teams are expanding into emerging market countries to focus on global and local market requirements at a lower cost.
• Distribution: Primary customer fulfillment centers are located in Massachusetts, the Netherlands, Malaysia, and Japan.

Operational Metrics: All medical device manufacturing facilities and key distribution sites are certified under the ISO 13485 quality system standard. The Company has a company-wide safety goal of 0.25 or fewer injuries per 100 employees by 2030, achieving a safety level of 0.36 per 100 employees as of December 31, 2024. ISO 14001:2015 (Environmental Management Standard) certification for 18 key locations and ISO 50001 (Energy Management Standard) certification for 13 key locations. ISO 45001:2018 (Occupational Health and Safety Management System) at 17 key global locations.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: The majority of net sales are derived from countries with direct sales organizations. Dedicated sales forces and marketing teams focus on specialized physicians and hospital service line administrators.
• Channel Partners: A network of distributors and dealers offers products in certain countries and markets where a direct presence is not economical or strategic.
• Digital Platforms: The Company continues to develop digital tools and technologies for remote physician education, patient engagement, and digitally-enabled sales force productivity.

Customer Portfolio: Enterprise Customers: Products are marketed to hospitals, clinics, outpatient facilities, and medical offices. Large group purchasing organizations, hospital networks, and other buying groups represent a substantial portion of net sales. Customer Concentration: No single customer accounted for more than 10% of net sales in 2024, 2023, or 2022. However, sales to government-owned or supported customers, particularly in southern Europe, are subject to longer payment cycles. The shift of procedure volumes towards non-hospital settings (ambulatory surgery centers, office-based labs) introduces smaller customers with potentially more limited liquidity.

Geographic Revenue Distribution:

• U.S.: $10.210 billion (60.9% of total revenue)
• Europe, Middle East and Africa: $3.228 billion (19.3% of total revenue)
• Asia-Pacific: $2.686 billion (16.0% of total revenue)
• Latin America and Canada: $624 million (3.7% of total revenue)
• Emerging Markets: $2.680 billion (16% of total revenue), with strong growth in China.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The medical device markets are highly competitive, characterized by extensive research and development and rapid technological change. The healthcare industry is experiencing consolidation, leading to increased purchasing power among customers. There is an increasing prevalence of regional and national tenders, often favoring local companies. Digital technologies, including AI and machine learning, are growing in applicability and importance. Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Large manufacturers with multiple lines of business and competing products, as well as a wide range of medical device companies specializing in single or limited products/segments. Emerging Competitive Threats: New entrants, companies introducing new sales/distribution models, and those leveraging genomic, robotic, navigation, and/or other automation technologies. Non-medical device companies (pharmaceutical, biotech, diagnostic test providers) offering alternative therapies. Competitive Response Strategy: Boston Scientific Corporation's strategy involves strengthening category leadership, expanding into high-growth adjacencies, driving global expansion, funding growth through efficiency, and developing key capabilities. This includes continuous investment in R&D, strategic acquisitions, and leveraging digital tools and technologies.

Risk Assessment Framework

Strategic & Market Risks

• Market Dynamics: Pressures from competitive activity, increased market power of consolidating healthcare customers, national/regional government tenders, economic pressures on customers, staffing shortages in healthcare facilities, and public perception of products. These factors may adversely impact market sizes, market share, average selling prices, or procedural volumes.
• Technology Disruption: Rapid technological change in the medical device industry means new products/services from competitors could render existing products obsolete. Failure to develop or acquire new products or enhance existing ones could materially impact the business. Increased applicability of digital technologies (AI, machine learning) requires continuous development of new digital capabilities.
• Customer Concentration: Dependence on large group purchasing organizations, hospital networks, and other buying groups. Shift towards smaller, non-hospital settings (ambulatory surgery centers, office-based labs) may introduce customers with more limited liquidity and increased collection risks.

Operational & Execution Risks

• Supply Chain Vulnerabilities: Interruption of supply chain or manufacturing operations due to factors like failure to follow protocols, equipment malfunction, natural disasters, public health crises, geopolitical developments, labor disputes, or transportation disruptions. Reliance on single-source third-party vendors for certain materials/components.
• Geographic Concentration: Manufacturing of specific products concentrated in one or a few locations, increasing vulnerability to localized disruptions.
• Capacity Constraints: Inability to quickly move to alternate production means or meet customer demand in case of manufacturing interruption. Sterilization capacity and material availability risks.
• IT/OT Systems & Cybersecurity: Reliance on IT and operational technology (OT) systems makes the Company vulnerable to cyber-attacks, malicious intrusions, data breaches, or system disruptions. Geopolitical conflicts heighten these risks. Failure to protect systems could lead to data loss, intellectual property theft, operational disruptions, or patient harm.

Financial & Regulatory Risks

• Market & Financial Risks: Challenging global macroeconomic conditions (inflation, interest rates, monetary policy, exchange rates) could decrease customer spending, impact timely payments, increase operational costs, and affect access to credit markets. Fluctuations in foreign currency exchange rates can adversely impact results.
• Regulatory & Compliance Risks: Extensive and rigorous regulation by FDA and international agencies. EU MDR implementation requires significant ongoing investment and compliance. Failure to obtain or maintain regulatory approvals, or comply with quality standards, can lead to delays, fines, recalls, or enforcement actions. Increased scrutiny and enforcement in the medical device industry regarding marketing, business practices, and product quality.
• Legal Proceedings: Inherent risk of product liability claims, intellectual property litigation, and governmental investigations. Adverse outcomes could lead to substantial fines, penalties, administrative remedies, or impact ability to sell products. Substantially self-insured for product liability and fully self-insured for IP infringement claims.

Geopolitical & External Risks

• Geopolitical Exposure: International operations (39% of net sales) are subject to risks from geopolitical and economic instability, trade protection measures (tariffs), workforce instability, weaker intellectual property protection, and longer accounts receivable cycles in certain countries.
• Trade Relations: Potential shifts in trade policies, tariffs, or other protectionist measures following U.S. and global elections, and reciprocal actions by other countries, could adversely affect operations and costs.
• Sanctions & Export Controls: Proliferation of sanctions and export restrictions due to global conflicts (e.g., Russia/Ukraine war, Middle East conflicts, China/Taiwan tensions) could create barriers to doing business in affected regions.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: The Company's R&D efforts are largely focused on developing next-generation and novel technology offerings across multiple programs and all divisions. This includes investments in internal R&D programs, regulatory design, clinical science, and technologies obtained through strategic acquisitions and alliances. Innovation Pipeline: Focused, cross-functional teams take a formal approach to new product design and development, aiming for increased development activity and faster concept-to-market timelines. Collaborations with leading research institutions, universities, and clinicians worldwide, including R&D teams in emerging markets, are key to future success.

Intellectual Property Portfolio:

• Patent Strategy: Relies on a combination of patents, trademarks, trade secrets, and other forms of intellectual property. Generally files patent applications in the U.S. and other relevant countries. Holds worldwide patents covering various aspects of its technology and licenses third-party technologies.
• Licensing Programs: Holds exclusive and non-exclusive licenses to third-party technologies. Engages in licensing programs for revenue generation and strategic partnerships.
• IP Litigation: Actively involved in patent litigation, both as plaintiff and defendant, to enforce its rights and defend against infringement claims. Litigation is complex, expensive, and unpredictable, often leading to settlements that may include cross-licensing or monetary payments.

Technology Partnerships: Works with leading research institutions, universities, and clinicians globally to develop, evaluate, and clinically test products. Expands collaborations to include R&D teams in emerging market countries.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Company has robust succession planning to ensure future leaders are ready. It invests in employee growth and development, offering professional and technical courses, on-the-job training, mentoring, and leadership development programs. Board Composition: The Board of Directors oversees an enterprise-wide approach to risk management, including cybersecurity risks, with the Risk Committee having primary oversight responsibility for quality and nonfinancial compliance issues.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 53,000 employees as of December 31, 2024.
• Geographic Distribution: Approximately 60% of employees are outside the U.S.
• Skill Mix: Not explicitly detailed, but the Company emphasizes attracting, developing, and retaining talented employees, fostering a diverse, equitable, and inclusive workplace.

Talent Management: Acquisition & Retention: Strives to attract, develop, and retain talent by fostering a diverse, equitable, and inclusive workplace, providing competitive pay and benefits, flexible work conditions, and ongoing growth opportunities. Employee Value Proposition: Offers competitive, performance-based compensation programs, including cash bonus programs, sales incentives, stock awards, recognition awards, health insurance, paid time off, family leave, retirement savings plans, childcare, and employee assistance programs. Pay equity is a focus, with regular audits and independent third-party assessments showing no statistically significant pay disparity for over 99% of employees across gender globally and for multicultural talent in the U.S. and Puerto Rico in 2023.

Diversity & Development:

• Diversity Metrics: Made steady progress to improve workforce diversity. Executive Committee and Board of Directors oversee diversity and inclusion policies.
• Development Programs: Offers professional and technical courses, on-the-job training, skills-based learning, mentoring, and leadership development programs.
• Culture & Engagement: Fosters a culture that prioritizes employee health, safety, and well-being. Conducts periodic employee engagement surveys and supports ten Employee Resource Groups (ERGs) globally.

Environmental & Social Impact

Environmental Commitments: Climate Strategy: Focused on continuous improvement in environmental metrics to reduce pollution, minimize natural resource depletion, and reduce its overall environmental footprint. Implements a "C3" strategy: Cutting energy use, Converting to renewable energy sources, and Compensating with carbon offset projects where needed. Has obtained ISO 14001:2015 and ISO 50001 certifications for numerous key locations. Supply Chain Sustainability: Building inclusive practices throughout its supplier network, committed to supporting a broad spectrum of businesses that share its dedication to improving patient care quality.

Social Impact Initiatives:

• Community Investment: Guided by the "Caring" value, the Company invests in community well-being through employee volunteerism and donations, focusing on aid for natural/humanitarian disasters and basic needs for underserved populations.
• Product Impact: Collaborates with non-profit organizations to decrease health disparities and reduce chronic disease risk for the underserved. Provides grants (approximately $1 million in 2024) for healthcare worker education and chronic disease screenings in vulnerable communities. The "Close the Gap" initiative aims to raise awareness and empower healthcare providers to address inequities and barriers to care for patients of color.
• STEM Education: Inspires young learners in Science, Technology, Engineering, and Mathematics (STEM) roles, reaching over 58,000 students in 2024 through interactive demos, development programs, and hands-on activities.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Consolidated net sales do not reflect a significant degree of seasonality, but customer purchases of medical devices have historically been lower in the first and third quarters of the year, influenced by product launches, acquisitions, regulatory/reimbursement approvals, and holiday schedules.
• Economic Sensitivity: The business is subject to local and international macroeconomic trends and geopolitical factors. Economic slowdowns or recessions may decrease customer spending or demand, and impact customers' ability to pay. Inflationary pressures, interest rates, and monetary policy can increase operational costs.
• Industry Cycles: The healthcare industry is subject to potential fundamental changes due to political, economic, technological, and regulatory influences, including cost containment initiatives and healthcare reforms.

Planning & Forecasting: The Company monitors inventory levels, manufacturing, sterilization, and distribution capabilities, and maintains recovery plans for potential disruptions. It tracks supplier status and inventory in risk areas to prevent shortages and mitigate technology/material shortages.

Regulatory Environment & Compliance

Regulatory Framework:

• Industry-Specific Regulations: Medical devices are subject to extensive and rigorous regulation by worldwide regulatory bodies, including the FDA in the U.S. and comparable international agencies. Compliance is required for development, testing, manufacturing, labeling, marketing, and distribution.
• International Compliance: Required to comply with the Medical Device Regulation (MDR or EU MDR) in the European Union, which superseded prior directives and involves increased clinical evidence, labeling changes, and new post-market reporting obligations. The MDR transition period extends to 2027/2028 for certain devices. Other countries (e.g., China, Japan, Middle East, Southeast Asia) also impose significant local registration requirements and regulations.
• FDA Oversight: FDA actively monitors compliance through inspections of design and manufacturing practices, record-keeping, adverse event reporting, labeling, and promotional practices. Can ban devices, detain/seize products, order recalls, or initiate criminal prosecution for violations.

Trade & Export Controls:

• Export Restrictions: International sales of U.S.-manufactured devices not FDA-approved for U.S. use are subject to FDA export requirements and regulatory requirements of each importing country.
• Sanctions Compliance: International operations are subject to U.S. and foreign export control, trade embargo, and customs laws. Global businesses face increasing scrutiny and enforcement regarding international operations.

Legal Proceedings: The Company is involved in various legal and regulatory proceedings, including intellectual property, breach of contract, securities litigation, and product liability suits. It is also subject to governmental investigations (e.g., DOJ subpoena regarding ambulatory electrocardiography monitoring business, DOJ CID regarding peripheral intervention services through office-based labs, and FCPA allegations in Vietnam). Material litigation includes patent infringement claims (e.g., by The Board of Regents, University of Texas System and TissueGen. Inc. regarding Synergy™ Stent System, and by Medtronic, Inc. against Axonics, Inc. which was settled in December 2024), and product liability cases related to transvaginal surgical mesh products.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: Reported tax rate was 19.1% in 2024, compared to 19.8% in 2023. The rate from continuing operations was 18.0% in 2024 and 19.6% in 2023.
• Geographic Tax Planning: Benefits from various tax rate incentives and grants in Puerto Rico (expires 2034), Costa Rica (expires 2027/2031), Malaysia (expires 2028/2029), and China (expires 2026). These incentives resulted in significant income tax savings (e.g., $316 million in Costa Rica in 2024).
• Tax Reform Impact: Many provisions of the U.S. Tax Cuts and Jobs Act (TCJA) expire at the end of 2025, with potential new legislation in 2025. The OECD/G20 Inclusive Framework on base erosion and profit shifting (BEPS), including Pillar Two's 15% global minimum tax, has been adopted by many countries, with an immaterial impact on the Company's 2024 tax rate. Significant uncertainty exists regarding the interpretation and consistent implementation of Pillar Two rules.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Maintains an insurance policy providing limited coverage against securities claims.
• Risk Transfer Mechanisms: Substantially self-insured with respect to product liability claims and fully self-insured with respect to intellectual property infringement claims. The absence of significant third-party insurance coverage for these categories increases potential exposure to unanticipated claims or adverse decisions. Uses derivative financial instruments (forward currency contracts) to manage currency exchange rate and interest rate risks, not for speculative purposes. Manages counterparty risk by diversifying with major financial institutions and monitoring positions.