Boston Scientific : 2021 Annual Report and Form 10-K

2021 Annual Report

Dear Stockholders:

Boston Scientific performed strongly in 2021. Amid significant disruption, our global team proved its resilience by navigating uncertainty with agility, developing new capabilities and turning challenges into opportunities.

Throughout the year, with each stage of the pandemic having a smaller impact on our business, we supported health care systems, physicians, communities and one another. And, most important to our mission, Boston Scientific helped improve the lives of more than 30 million patients.

Throughout the year we challenged what's possible. This winning spirit led us to launch 145 new clinical trials, introduce 90 innovative products and enhance our digital capabilities. We kept our focus on organic innovation and business development deals to support our category leadership strategy, including the acquisition of five companies in the past year that expand our portfolio and complement our existing medical technologies. We invested in our growth while continuing to work on minimizing our impact on

the environment and advancing our diversity, equity and inclusion (DE&I) goals. And around the world we supported local communities through health equity initiatives and more than 50,000 volunteer hours in more than 50 countries.

We are stronger for the hurdles we have overcome. While we will continue to face challenges, our business and our talented team of employees are well-positioned for the future.

the COVID-19 pandemic presented. As a result, our 2021 organic net sales1 grew 5.7 percent versus 2019, the last period unaffected by COVID-19, approaching our long-range plan

of 6-8% growth, in line with what had been a six-year trend of excellent performance, until the pandemic hit in 2020.

Our full-year net sales in 2021 were $11.888 billion. This represents growth of 18.7 percent on an operational2 basis and 18.9 percent on an organic1 basis compared to 2020. Organic net sales1 grew 19.0 percent in MedSurg,3 12.3 percent in Rhythm and Neuro,3 and 23.9 percent in Cardiovascular.3

Our worldwide performance reflected a rebound from 2020 results that were significantly affected by the COVID-19 pandemic. Compared to 2020 we grew operational2 net sales 25.3 percent in the United States, 16.4 percent in Europe, Middle East and Africa (EMEA), 13.9 percent in Asia Pacific (APAC), and 23.3 percent in Latin America and Canada. Net sales in Emerging Markets4 countries grew 22.3 percent on an operational2 basis.

Our full-year adjusted operating margin5 was 25.3 percent with adjusted earnings per share5 of $1.63, compared to $0.96 in 2020. We generated $2.2 billion in adjusted free cash flow,6 exceeding our expectations, with growth of 11 percent versus 2020, driven by lower working capital as we balanced increasing our inventory with sales recovery.

2021 Results

The global strength of our product diversification and category leadership strategy resulted in all businesses, with the exception of cardiac rhythm management and U.S. electrophysiology, gaining share despite the disruptions

While we anticipate less COVID-19 impact on the volume of procedures involving our medical devices for the full year 2022, we still face uncertainty related to future COVID-19 waves and hospital staffing shortages. We remain committed to our long-range financial goals of 6-8 percent organic1

1 Organic growth rates are non-GAAP measures that exclude the impact of foreign currency fluctuations and net sales from acquisitions and divestitures with less than a full year of comparable net sales. See non-GAAP reconciliations on pages 6 and 7. 2 Operational growth rates are non-GAAP measures that exclude the impact of foreign currency fluctuations; see non-GAAP reconciliations on pages 6 and 7. 3 We have three historical reportable segments comprised of Medical Surgical (MedSurg), Rhythm and Neuro, and Cardiovascular, which represent an aggregation of our operating segments that generate revenues from the sale of medical devices. 4 We define Emerging Markets as including certain countries that we believe have strong growth potential based on their economic conditions, health care sectors, and our global capabilities. 5 Adjusted operating margin and adjusted earnings per share are non-GAAP measures that exclude the impacts of certain charges (credits) which may include amortization expense; goodwill and intangible asset impairment charges; acquisition/divestiture-related net charges and credits; restructuring and restructuring- related net charges and credits; certain litigation-related net charges and credits, investment portfolio gains and losses, EU MDR implementation costs, debt extinguishment charges, discrete tax items and deferred tax expenses (benefits). See non-GAAP reconciliations on pages 6 and 7. 6 Adjusted free cash flow is a non-GAAP measure that excludes net purchases of property, plant and equipment and internal use software, as well as the cash component of certain charges (credits) that are excluded from adjusted net income, in addition to any cash tax benefits of such charges. Further, we exclude from this measure tax settlement payments that relate to prior periods. The GAAP measure that is most directly comparable to adjusted free cash flow is cash provided by operating activities. See non-GAAP reconciliations on pages 6 and 7.

Boston Scientific 2021 Annual Report

A Message to Our Stockholders

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revenue growth, operating margin expansion, double-digit adjusted EPS growth and strong cash flow generation.

With category leading, innovative products, a strong focus on developing clinical evidence and a proven strategy of entering high growth, adjacent markets, Boston Scientific is in an excellent position to continue increasing shareholder value.

Positioned for Growth

Our products help physicians diagnose and treat complex cardiovascular, respiratory, digestive, oncological, neurological, urological and pelvic health diseases and conditions. Our category leadership strategy - to deepen our portfolio in these areas through organic research and development and smart investments and acquisitions - continues to create value for patients, physicians and payers. We continue to expand our presence in high-growth markets and regions to make our technologies available to more people in need. We believe skillful execution by our global team, our exciting pipeline and strong financial fundamentals position us well for the long term.

Five Acquisitions Advance Outcomes and

Strengthen Our Future

Three of the five acquisitions we announced last year came from our venture capital portfolio. All five deals expand our current product and service offerings to fuel growth. Specifically, here is what we expect to gain from each acquisition:

Preventice Solutions establishes Boston Scientific in the high-growth ambulatory electrocardiography space and strengthens our diagnostic portfolio with ambulatory cardiac monitors, cardiac event monitors and mobile cardiac telemetry. Our enhanced portfolio now includes the BodyGuardian® products, a family of remote, wearable cardiac monitors that use a cloud-based platform supported by an independent diagnostic testing facility, where clinical technicians and artificial intelligence algorithms provide insights that may lead to improved clinical diagnoses and outcomes.

Farapulse, Inc., supports our goal to offer physicians comprehensive therapeutic options to treat atrial fibrillation, as well as other cardiac arrhythmias, based on their clinical preferences and the individual needs of their patients.

The FARAPULSE™ Pulsed Field Ablation system* is designed to enable physicians to precisely ablate cardiac tissue while minimizing procedural complications. Real-world and clinical evidence from trials throughout Europe has demonstrated positive results.

Baylis Medical Company, Inc., gives us access to solutions that are clinically proven to enhance procedural safety, efficacy and efficiency when physicians cross the atrial septum to deliver therapies in the left side of the heart, such as atrial fibrillation ablation and left atrial appendage closure with our WATCHMAN™ Device. The Baylis Medical and Farapulse technologies expand our electrophysiology and structural heart portfolios and make Boston Scientific the sole provider of a comprehensive portfolio of left heart access devices that facilitate therapies on the left side of the heart.

Devoro Medical, Inc., strengthens our vascular portfolio, which now includes products that treat deep vein thrombosis, pulmonary embolism (PE), deep venous obstruction and superficial venous disease. The WOLF Thrombectomy® Platform from Devoro uses finger-like prongs to capture blood clots in the arterial and venous systems. This technology rounds out our suite of interventional strategies for blood clots, which also includes the EkoSonic™ Endovascular System (EKOS) and the AngioJet™ Thrombectomy System.

The global surgical business of Lumenis LTD, which develops and commercializes energy-based medical solutions, enhances our portfolio of products to manage kidney stones and enlarged prostates. MOSES™ Laser Technology - used for urology procedures - is among the company's premier laser systems, fibers and accessories. The acquisition helps us accelerate growth, particularly in Europe and Asia, establish a global surgical laser center of excellence in Yokneam, Israel and expand our global footprint.

Comparison of 5-Year Cumulative Total Return**

300
200
100
12/16	12/17	12/18	12/19	12/20	12/21

Boston Scientific Corporation: $196.39

S&P 500: $233.41

S&P Health Care Equipment: $276.26

• $100 invested on 12/31/16 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.

Copyright© 2022 Standard & Poor's, a division of S&P Global. All rights reserved.

* In the U.S., the ACURATE neo2™ Aortic Valve System, FARAPULSE™ Pulsed Field Ablation system and the EMPOWER™ Modular Pacing System are investigational devices and are not available for sale.

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Boston Scientific 2021 Annual Report

A Message to Our Stockholders

Our team has strong experience integrating acquisitions and we expect these acquisitions to contribute approximately $600 million to 2022 net sales.

Expanding Digital Capabilities

The COVID-19 pandemic has accelerated a digital transformation in health care. Some technology experts claim we've seen five years of change compressed into a single year. Digital technology enhances patient engagement, facilitates global education for physician and hospital administrators, and improves sales representative productivity. It also allows us to use artificial intelligence in our sensor portfolio, algorithms for cardiac rhythm management as well as in our processes for quality control, manufacturing and regulatory compliance. Digital technology no longer just supports the business: it propels the business, generating growth, cost savings and competitive advantages.

Addressing Challenging Diseases with Interventional Oncology

In interventional oncology, our TheraSphere™ Y-90 Glass Microspheres received U.S. Food and Drug Administration (FDA) approval to treat patients with hepatocellular carcinoma (HCC), the most common type of liver cancer. We also began a clinical trial in China to show the safety and efficacy of TheraSphere for patients with HCC. Further, we secured FDA Breakthrough Device designation for TheraSphere treatment for patients with glioblastoma, an aggressive form of brain cancer, and findings from the EPOCH trial presented in Europe showed that TheraSphere significantly delayed metastatic colorectal tumor growth isolated in the liver. The EPOCH study underscored the success of integrating a device-based therapy like TheraSphere in the continuum of care, with systemic chemotherapy and biologic regimens, and it provides a rationale for future investigation in other types of cancer.

Meaningful Innovation

That Solves Urgent Challenges

Boston Scientific relentlessly strives to improve upon current medical technology and create practical new products that meet unmet clinical needs. Our innovation is the product of organic research, collaborations, strategic investments in our venture portfolio and acquisitions. Fast Company named Boston Scientific a Top Workplace for Innovators, and for the fifth year in a row, Boston Scientific was named one of the Top 100 Global Innovators by Clarivate Analytics. In 2021, in addition to launching 90 new products and initiating 145 global clinical trials, we invested more than $1 billion in research and development, received approximately 1,250 worldwide regulatory approvals and were granted more than 1,830 new patents worldwide.

Personalizing Care for Chronic Pain and Neurological Conditions

We continue to enhance our neuromodulation portfolio with devices that enable physicians to personalize therapy. Our Spinal Cord Stimulation (SCS) systems help manage chronic pain, including pain associated with failed back surgery, complex regional pain, and low back and leg pain. Real-world data presented at the North American Neuromodulation Society (NANS) meeting showed chronic pain sufferers experienced significant pain relief when using Fast-ActingSub-perception Therapy (FAST™) in our WaveWriter Alpha™ SCS System. FAST, which is new to the industry, is designed to deliver immediate and significant results even before patients leave the clinic. We are also making progress introducing neuromodulation systems with Bluetooth connectivity that can be safely used in a magnetic resonance imaging (MRI) environment. These include the U.S. introduction of our WaveWriter Alpha™ portfolio of SCS Systems with Cognita™ Practice Optimization Solutions and the FDA-approved Vercise Genus™ Deep Brain Stimulation System to treat patients with movement disorders such as Parkinson's disease and essential tremor.

	2021 Net Sales by Region	Reported	Operational	Percent of
		Growth	Consolidated
	(dollars in millions)	Net Sales	(Decline)2	Net Sales
$11,888	U.S.	$ 6,901	25.3 %	58.0%
EMEA (Europe, Middle East and Africa)	2,518	16.4 %	21.2%
million
APAC (Asia-Pacific)	2,070	13.9 %	17.4%
	LACA (Latin America and Canada)	386	23.3 %	3.2%
	Medical Devices3	11,875	21.2 %	99.9%
	Specialty Pharmaceuticals7	13	(94.0)%	0.1%

Net Sales

$11,888

18.7 %

100.0%

Single Use Scopes to Reduce the Risk of Infection

Boston Scientific has one of the most diverse endoscopy portfolios in the industry, providing an end-to-end solution for our hospital customers. We've made progress developing and commercializing our single-use medical scope portfolio, which includes technologies to diagnose and treat often life-threatening conditions in the gastrointestinal, pancreaticobiliary, urological and airway spaces. Physicians use single-use scopes to help prevent infections that are due to ineffective reprocessing of reusable scopes and to reduce the inefficiencies associated with scheduling and maintaining reusable scopes. Our EXALT™ Model B Single-Use Bronchoscope received clearance from the FDA, after it completed the CE Mark and made a strong introduction in the Europe, Middle East and Africa (EMEA) region. In 2021, the U.S. Centers for Medicare

• Medicaid Services granted additional reimbursement for Medicare beneficiaries for our EXALT™ Model D Single-Use Duodenoscope, the world's first single-use duodenoscope.

Reducing the Risk of Stroke

The WATCHMAN FLX™ Left Atrial Appendage Closure (LAAC) Device remains one of the most important growth drivers for Boston Scientific. More than 200,000 patients have been implanted with the WATCHMAN Device, which is used to treat patients with non-valvular atrial fibrillation (NVAF) to reduce their risk of stroke. With solid momentum in the U.S. and Europe, we are now seeing increased use in other regions. In Japan, we received strong reimbursement for the WATCHMAN FLX Device, and we plan to introduce this next-generation technology to serve patients in China this year.

Boston Scientific 2021 Annual Report

A Message to Our Stockholders

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Trial progress in 2021 includes:

The PINNACLE FLX clinical trial, a two-yearstudy with results that underscore how the WATCHMAN FLX Device provides a safe, effective and durable option for patients with NVAF who are at increased risk for stroke and embolism - and an appropriate option for those seeking non-pharmaceuticaltreatment alternatives. Two ongoing, large randomized controlled trials are adding to this body of evidence: OPTION, which compares the WATCHMAN FLX Device to oral anticoagulants in patients who also undergo a cardiac ablation procedure, and CHAMPION-AF,which evaluates the device as a first-linetherapy for patients who can tolerate oral anticoagulants.

ACURATE neo2* registry data, presented at the EuroPCR Congress, reinforce the effectiveness of enhancements to the device's design. Physicians in Europe continue to share positive feedback on the valve's clinical performance and ease-of-use.The pivotal U.S. trial evaluating the device, ACURATE IDE, continues to enroll patients and has been expanded to include patients with severe, symptomatic aortic stenosis who are at low risk of open-heartsurgery, in addition to those at intermediate, high and extreme risk.

The KNOCOUT PE registry confirmed the safety and efficacy of our EkoSonic Endovascular System (EKOS) for treating patients with pulmonary embolism (PE). We started the HI-PEITHOclinical trial to compare the use of EKOS

in combination with anticoagulation to anticoagulation alone for the treatment of acute, intermediate-high-risk PE. This trial is meant to address gaps in clinical guidelines

so physicians can make data-based clinical decisions when choosing the best therapy for their patients.

Advancing Science

We maintain a strong base of clinical research to support the safety and efficacy of our devices with data from bench testing, randomized controlled trials and ongoing real-world evidence. In 2021, nearly 14,000 patients participated in 145 clinical trials with our devices.

2021 Net Sales by Business	Reported	Operational	Percent of
		Growth	Consolidated
(dollars in millions)		Net Sales	(Decline)2	Net Sales
MedSurg	Endoscopy	$	2,141	18.9 %	18.0%
	Urology and Pelvic Health		1,583	22.1 %	13.3%
Rhythm and Neuro	Cardiac Rhythm Management		2,019	17.1 %	17.0%
	Electrophysiology		365	25.8 %	3.1%
	Neuromodulation		909	18.6 %	7.6%
Cardiovascular	Interventional Cardiology		3,038	30.7 %	25.6%
	Peripheral Interventions		1,820	14.2 %	15.3%
Medical Devices3			11,875	21.2 %	99.9%
Specialty Pharmaceuticals7		13	(94.0)%	0.1%
Net Sales		$	11,888	18.7 %	100.0%

1 Organic growth rates are non-GAAP measures that exclude the impact of foreign currency fluctuations and net sales from acquisitions and divestitures with less than a full year of compa- rable net sales. See non-GAAP reconciliations on pages 6 and 7. 2 Operational growth rates are non-GAAP measures that exclude the impact of foreign currency fluctuations; see non-GAAP reconciliations on pages 6 and 7. 3 We have three historical reportable segments comprised of Medical Surgical (MedSurg), Rhythm and Neuro, and Cardiovascular, which represent an aggregation of our operating segments that generate revenues from the sale of medical devices. 7 On March 1, 2021, we completed the sale of the Specialty Pharmaceuticals business. Our consolidated net sales include Specialty Pharmaceuticals up to the date of the closing of the transaction. Specialty Pharmaceuticals net sales were substantially U.S. based and presented as a stand-alone operating segment alongside our Medical Device reportable segments.

* In the U.S., the ACURATE neo2™ Aortic Valve System, FARAPULSE™ Pulsed Field Ablation system and the EMPOWER™ Modular Pacing System are investigational devices and are not available for sale.