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Boston Scientific Corporation (NYSE: BSX) Third Quarter 2021 Earnings Conference Call, October 27, 2021, 8:00 AM Eastern Time
Good morning, and welcome to Boston Scientific's 2021 third quarter earnings conference call. [Operation Instructions] After today's introduction is over, there will be an opportunity to ask questions. [Operator Instructions] I now want to transfer the meeting to Lauren Tengler, Vice President of Investor Relations. please continue.
Lauren Tengler - Investor Relations
Thank you, Andrew. Welcome everyone and thank you for joining us. Joining me in today’s conference call are Chairman and CEO Mike Mahoney; and Executive Vice President and CFO Dan Brennan.
We issued a press release earlier this morning announcing our third quarter 2021 results, which included a reconciliation of the non-GAAP metrics used in the press release. We have posted a copy of this version and the reconciliation of non-GAAP measures used in today's conference call in the "Investor Relations" section of our website under the heading "Finance and Filing."
This morning's talk time is about 1 hour. Mike will focus his comments on third quarter performance and future catalysts and prospects for our business, including full-year guidance for the fourth quarter of 2021. Dan will review the financial situation this quarter, provide more detailed information about our fourth quarter and 2021 guidance, and then we will answer your questions.
In today’s Q&A session, our Chief Medical Officer, Dr. Ian Meredith, will join Mike and Dan; and Dr. Kenstein.
Before we start, I want to remind everyone that during the conference call, operating income growth does not include the impact of foreign currency fluctuations, and organic income growth further excludes acquisitions and divestitures, and its comparable net sales are lower than the entire period. Compared with 2020 and 2019, related acquisitions to achieve organic growth include prevention, Farapulse and Lumenis Surgical, which were closed in March, August and September 2021 respectively, and in May and mid-August 2019 Closed Vertiflex and BTG Interventional Medicines, respectively. The divested businesses include BTG Spec Pharma, which was closed on March 1, 2021, and the global embolization microsphere product portfolio and intrauterine health franchise, which were divested in August 2019 and the second quarter of 2020, respectively.
The guidelines do not include the recently announced acquisitions of Devoro Medical and Baylis Medical, which are expected to be completed in the fourth quarter of 21 and the first quarter of 22, respectively. For more information, please refer to slide 9 of our financial and operational highlights slide, which can be found on our investor relations website.
In this conference call, unless otherwise stated, all references to sales and revenue are organic. Finally, the growth target of 6% to 8% (a comparison between the time periods during which the COVID-19 pandemic did not materially affect the results) represents the growth target of 6% to 8% before the COVID-19 pandemic. It is worth noting that this conference call contains forward-looking statements within the meaning of the federal securities laws. These statements may be identified by expectations, expectations, possibilities, beliefs, estimates and other similar words. These include the impact of the COVID-19 pandemic on the company’s operations and financial performance; about our growth and market share, new product approvals and releases, acquisitions, clinical trials, cost savings and growth opportunities, our cash flow and expected use, our Statement of our financial performance (including sales, profit margins and earnings) as well as our tax rates, research and development expenditures and other expenses.
Factors that may cause such discrepancies include the factors described in the risk factors section of our latest 10-K and subsequent 10-Q submissions to the SEC. These statements only represent today's date, and we do not intend or are obliged to update them.
At this point, I will hand it over to Mike for comments.
Michael F. Mahoney - Chairman and Chief Executive Officer
Thank you, Lauren, and thank you all for joining us today. Although the COVID surge in the third quarter has brought various challenges, I am proud of the execution of our global team. The impact of COVID in the third quarter exceeded our expectations as Delta variants proliferated globally and some electronic procedures were postponed.
Although we were not satisfied with our sales performance this quarter, we achieved our third quarter earnings per share and profit margin targets. We believe that with the continuous increase in global vaccination rates and the weakening of COVID, we are capable of achieving our long-term sales targets.
We continue to be excited and confident about the opportunities we have demonstrated at the recent Investor Day, which is further benefited from our category leadership strategy, access to higher adjacent growth markets and mergers and acquisitions. The company’s total operating sales in the third quarter increased by 10% compared with 2020, while organic sales increased by 11% compared with 20 years, and increased by 4% compared with 2019. % To 14% of the guidance, because Delta Air Lines has affected the volume of operations worldwide.
Although the number of programs was temporarily affected, we saw the strength of new product launches, which produced strong clinical evidence and were widely implemented across the entire product portfolio. Adjusted earnings per share for the third quarter were US$0.41, an increase of 10.5% compared to 2020 and 4% compared to 2019, reaching the high end of our third-quarter guidance range of US$0.39 to US$0.41. The adjusted operating profit margin was 25.6%, which continued to improve and was in line with our expectations for the third quarter.
We continue to be satisfied with our cash flu. The free cash flow in the third quarter was $360 million, and the adjusted free cash flow was $525 million. We are updating our fourth-quarter and full-year sales and earnings per share guidance ranges, assuming that COVID and staff shortages have a certain degree of impact on the program. Compared with 2020, our goal is to increase organic revenue by 12% to 16% in the fourth quarter of 21, and 18% to 19% for the full year. Compared with 2019, our goal is for organic revenue to grow by 4% to 8% in the fourth quarter of 21, and for the full year organic revenue to grow by 5% to 6% compared to 2019.
Our adjusted earnings per share for the fourth quarter are estimated to be US$0.43 to US$0.45, and we have updated the adjusted earnings per share for the full year to the revised range of US$1.60 to US$1.62. Dan will provide more detailed information on sales and earnings per share performance and prospects, including the revenue contribution from our acquisition this year. I will now provide additional highlights in the third quarter of 21 results, as well as comments on our fourth quarter and 21 year outlook.
On the basis of operations, in the third quarter of 2020, the United States increased by 15%; Europe, the Middle East and Africa increased by 8%, the Asia-Pacific region increased by 8%, and emerging market sales increased by 18%. In terms of operations, despite being affected by Delta, driven by new products such as TheraSphere, POLARx and AXIOS and continuous product releases, most of Europe, the Middle East and Africa have significant strengths in PI, EP and Endo in the third quarter Enterprises and the country have achieved steady growth. Compared with 20 years and 2019, our [technical issues] performance and strong utilization have driven double-digit growth.
Although China’s growth is still very strong, the Asia-Pacific region has been affected by pandemic-related blockades in parts of the region. With the increase in vaccination rates and the decrease in COVID cases, countries in the Asia-Pacific region are reopening, and we are very happy to enter the fourth quarter in 2022.
Although Japan was in a state of emergency throughout the third quarter, we were able to promote the release of new products and achieved the number one market share position with our Ranger Drug-Coated Balloon and POLARx launched in October. China continues to achieve outstanding performance, with sales increasing by 14% compared to 2020. We continue to see complex PCI and imaging, as well as the introduction of new products such as Eluvia and AXIOS, driving the momentum of the entire product portfolio.
Digital tools are also playing a role, supporting virtual doctor training and allowing us to expand our reach through differentiated products such as IVUS. We continue to expect that China will achieve double-digit growth in 2021 compared to 2020 and 2019.
I will now provide some additional comments on the business sector.
Compared with 2020, sales of urology and pelvic health have increased organically by 7%. The Lumenis acquisition ended in September and expanded the urology product portfolio and stone products, including MOSES lasers, which are disposable products that complement the LithoVue disposable flexible ureteroscope in our broad product portfolio to support the removal of kidney stones.
As our Rezum and SpaceOAR businesses continue to be strong and the prostate health franchise has grown by double digits, we are pleased to launch two trials in this area within this quarter. The global SABRE clinical trial will examine the effectiveness of SpaceOAR Vue in reducing the late-stage toxicity of prostate cancer patients receiving stereotactic body radiotherapy; and the VAPEUR trial, which compares the dual drug treatments of Rezum and BPH.
Our elective surgery in the pelvic health portfolio was affected by the delta's surge in the third quarter, but as the COVID surge weakened, the historical growth trend showed a faster recovery.
Compared with 2020, the sales of endoscopy business increased by 11% organically. Our market-leading global endoscope product portfolio continues to benefit from differentiated and innovative technology releases, including AXIOS, Resolution Ultra hemostatic clips and disposable endoscopes. In this quarter, EXALT B was approved by the FDA and is now available in the United States and Europe. Doctors are satisfied with the image quality and suction ability. We continue to make progress on EXALT-D and launch a 1.5 enhanced version of EXALT-D design with improved doctor ergonomics. In addition, we are pleased that approximately 40% of ERCP procedures are now eligible for additional reimbursement approved by NTAP as of October 1.
In terms of heart rhythm management, organic sales are the same as in 2020. Supported by the introduction of enhanced electrodes, S-ICD sales increased by a mid-single digit compared to the third quarter of 2019. Although the third-quarter trend of core CRM for defibrillators and pacemakers has improved in the first half of 21, we believe that growth may lag behind the market. Looking ahead, with the support of S-ICD and our differentiated HeartLogic products, we expect that our core CRM growth will stabilize before 2021 and early 2022.
In our diagnostic franchise, our LUX-Dx implantable heart monitor continues to gain share because doctors are satisfied with the implant experience, technology and remote programming capabilities. Driven by our extensive and differentiated Holter product portfolio, our prevention business is still expected to achieve an annual growth of 20% compared to 2020 on the basis of exam preparation. Driven by strong international sales in Europe and Japan, electrophysiological organic sales have increased by 10% compared to 2020.
Driven by innovative product portfolios such as POLARx and STABLEPOINT, international growth is much higher than the market. POLARx was recently approved in Japan, and the first case occurred in October. In addition, the registration of the FROZEN-AF trial has been completed, which is an important step in bringing POLARx to the United States, and is expected to be launched in 2023.
We also completed the acquisition of Farapulse in the third quarter, which is the only commercially available PFA technology, and we see a large amount of early use in the limited number of startup accounts in Europe.
Finally, we announced the acquisition of Baylis Medical to further realize our category leadership strategy with a novel left-heart pathway approach. In the United States, the Baylis platform is used for nearly 40% of EP ablation procedures on the left side of the heart. In addition, it is also used for left atrial appendage closure and mitral valve intervention. We expect to complete the acquisition in the first quarter of 2022.
In terms of neuromodulation, organic revenue increased by 2% compared to 2020, because the amount of basic procedures has been affected by the delta surge for most of the quarter. In our pain management franchise, we continue to see our WaveWriter Alpha SCS system and differentiated FAST algorithm and our Cognita digital solution exciting.
In deep brain stimulation, most of our accounts have transitioned to Vercise Genus, and as doctors are satisfied with the integrated platform and personalized treatment, we will continue to promote the opening of new accounts. Last week, we received approval for the Essential Tremor indication and are pleased to begin limited release in the fourth quarter of 2021, which expands our target market by US$2 billion.
In interventional cardiology, organic sales increased by 26% compared to 2020, including a 1,200 basis point tailwind related to the WATCHMAN consignment sales return reserve adopted in the third quarter of 20. As doctors continue to be satisfied with the next-generation FLX performance and differentiated clinical data, our WATCHMAN franchise has achieved strong double-digit growth. This positive sentiment is further supported by the ongoing real-world clinical evidence on HRS, which shows that the effective LAA closure rate is high and the postoperative complications rate is low.
We continue to innovate and introduce fixed-curve sheaths to provide better deployment control and the ability to expand the scope of anatomy. We also expect to enable our US label to include DAPT by the end of the year to support doctors and patients in patient implant care choices.
In TAVR, ACURATE neo2 continues to be satisfied by doctors with its clinical performance and ease of use, and is backed by strong real-world clinical data, thus occupying approximately 20% of the market share in open accounts. Our cerebral embolism protection device SENTINEL continues to maintain its momentum, with more than 20% of its use in the United States.
As the impact of China's DES bidding begins to increase year by year, and our portfolio shifts to higher-growth markets, coronary artery treatment has increased by 8% compared to 2020. We continue to see outstanding growth in complex PCI and imaging driven by ROTAPRO and IVUS. Our next-generation guidance platform AVVIGO II has just received FDA approval.
Peripheral Interventions' organic sales continued to grow by 8% compared to the third quarter of 2020. TheraSphere once again stood out and increased by double digits during the quarter. The aggressive EPOCH trial continued to maintain its momentum. This is the first time that TheraSphere has been studied as a second-line therapy to reach the primary endpoint of progression-free survival for patients with mCRC.
In addition, we have begun to recruit patients in the MANDARIN trial, which is an important first step in bringing HCC treatment to Chinese patients. On the arterial side, our drug-eluting portfolio continues to perform well, increasing by double digits compared to 2020, and we announced positive late-stage clinical data on VIVA earlier this month.
Compared with bare metal stents, our drug-eluting stent Eluvia has shown superiority in the EMINENT trial. The 2-year data of the RANGER 2 trial shows that our Ranger DCB has a consistently high incidence, major patency rate, and re-intervention. It reduces.
In terms of veins, we continue to promote our first patient to participate in the HI-PEITHO trial. We also obtained the latest clinical data from the KNOCKOUT PE registry on VIVA, which confirmed the safety and effectiveness of EKOS.
Establishing our category leadership strategy, we announced the acquisition of Devoro Medical in the WOLF thrombectomy platform, an innovative technology designed to quickly capture and extract blood clots in the arterial and venous system while minimizing blood loss. We look forward to completing the acquisition in the fourth quarter of 21.
More broadly, we are furthering our commitment to sustainable development, and I am proud to report that Boston Scientific is joining the United Nations’ "race to zero" movement. Since 2017, we have reduced the carbon footprint of BSC by 50% and hope to achieve our goal of achieving carbon neutrality in all manufacturing and key distribution locations by 2030.
We are establishing ambitious science-based goals on this basis to enable us to embark on the path of net zero emissions throughout the value chain. We are optimistic about the future prospects of Boston Scientific. On our most recent investor day, we detailed our LRP plan to achieve 6% to 8% growth, 50 basis points or more per year operating margin expansion, and double-digit adjusted earnings per share growth .
I would like to express my heartfelt gratitude to our employees for their contributions and the spirit of victory. I will leave the matter to Dan now.
Daniel J. Brennan - Executive Vice President and Chief Financial Officer
Thanks, Mike. Consolidated revenue in the third quarter was US$2.932 billion. Compared with the third quarter of 2020, reported revenue increased by 10.3%, reflecting the US$17 million tailwind brought by foreign exchange.
On an operational basis, revenue for the quarter increased by 9.7%. The sales of acquisition prevention, Farapulse and Lumenis contributed 220 basis points, more than offset by the divestment of Specialty Pharmaceuticals, resulting in a 10.6% increase in organic revenue, slightly below our guidance range (an increase of 12% to 14 compared to 2020) %).
Compared with the third quarter of 2019, organic growth was 4.1%, which is below our guidance range of 5% to 7%. This 4.1% increase does not include the $35 million in sales of the Intrauterine Health, Embolic Beads, and BTG specialty pharmaceutical businesses that were divested in 2019, and the $117 million in sales of the acquired business in 2021, including the half-quarter of BTG interventional drugs. Prevention of Farapulse and Lumenis' post-closing revenue for the entire quarter.
Expenditure control and preferential tax rates drove adjusted earnings per share for the third quarter to US$0.41, an increase of 10.5% compared to 2020 and 4% compared to 2019, and achieved the high end of our guidance range of US$0.39 to US$0.41. The adjusted gross profit margin in the third quarter was 70.6%, which was in line with our expectations. We expect to continue to improve slightly in the fourth quarter, as some unfavorable factors still exist, especially the temporary cost of operating factories with COVID-specific measures, increased shipping costs, and some price pressures on direct materials and wages.
The adjusted operating profit margin in the third quarter was 25.6%, again in line with our expectations, driven by unfavorable revenue factors offset by expenditure control and reduced travel. We are satisfied with our development trajectory and will continue to set the adjusted operating profit margin target for the second half of this year at an average of 26%.
According to generally accepted accounting principles, the operating profit margin was 13.2%, including the $128 million impairment of intangible assets mainly related to VENITI, because we have decided to discontinue the VICI VENOUS STENT venous stent after a voluntary recall earlier this year.
Move below the line. The adjusted interest and other expenses totaled 104 million U.S. dollars, again in line with expectations. Our tax rate for the third quarter was adjusted to 7.8%, in line with our expectations, driven by the profitable geographic mix. We had 1.436 billion fully diluted weighted average shares outstanding at the end of the third quarter. Adjusted free cash flow for the quarter was US$525 million and free cash flow was US$359 million, of which US$465 million came from operating activities, minus US$106 million in net capital expenditures.
Our goal remains to provide approximately US$2 billion in adjusted free cash flow consistent with 2020, as we continue to expect an increase in working capital investment in inventory and accounts receivable for the remainder of 2021. As of September 30, 2021, we have $1.9 billion in cash on hand. We continue to expect to complete the acquisition of Devoro Medical in the fourth quarter of this year, and the acquisition of Baylis Medical Company in the first quarter of 2022.
Our primary task for capital is still to conduct mergers and acquisitions, and we will continue to evaluate other opportunities in conjunction with our financial goals.
I will now present guidance for the fourth quarter and full year of 2021.
Compared with 2020, we expect the full-year operating income growth of 2021 to be between 18% and 19%, including approximately 30 basis points net of the divestiture of our intrauterine healthcare franchise and specialty pharmaceutical business The headwind of the company was partly acquired by Preventice, Farapulse and Lumenis.
Excluding the effects of closed-end acquisitions and divestitures, we expect full-year organic revenue to grow by 18% to 19% compared to 2020 and 5% to 6% compared to 2019. For an organic comparison with 2019, sales for the full year of 2019 excluding our embolization bead portfolio and intrauterine health franchise sales are US$50 million, and sales of special medicines are US$81 million. In the guidance period, 2021 Annual sales do not include the recently acquired sales of approximately US$530 million, including [technical issues] BTG interventional drugs through mid-August, Preventice, Farapulse and Lumenis, and Specialty Pharmaceutical sales of US$13 million before the divestiture.
For the fourth quarter of 2021, we expect that compared with 2020, operating income growth will be between 14% and 18%, including the net tailwind of approximately 180 basis points brought by the acquisitions of preventice, Farapulse and Lumenis, which will be partially divested Special medicine.
Excluding the effects of acquisitions and divestitures, we expect organic revenue in the fourth quarter to grow by 12% to 16% compared to 2020 and 4% to 8% compared to 2019. For an organic comparison with the fourth quarter of 2019, sales in 2019 do not include the $67 million in sales of our spin-off intrauterine health and specialty pharmaceutical business. At the midpoint of the guidance, 2021 sales do not include $90 million—approximately $90 million comes from acquisition prevention, Farapulse, and Lumenis sales.
We continue to expect that this year's adjusted offline expenses (including interest payments, dilution of risky portfolios, and costs associated with hedging programs) will be approximately US$400 million to US$425 million. Based on the year-to-date favorability, we now predict that the business tax rate for the full year of 2021 will be about 10%, and the adjusted tax rate will be about 9%. We estimate that the weighted average number of fully diluted shares in the fourth quarter of 2021 will be approximately 1.439 billion shares, and the full-year 2021 will be approximately 1.434 billion shares.
We narrowed the scope of our adjusted earnings per share guidance for the full year of 2021 to US$1.60 to US$1.62, which includes our sales guidance update, and believes that the performance in the third quarter is at the high end of our guidance range. In the fourth quarter, adjusted earnings per share are expected to be between US$0.43 and US$0.45.
Please check our Investor Relations website for financial and operational highlights for the third quarter of 2021, which outlines more detailed third-quarter results.
With this, I will turn it back to Lauren, who will host the Q&A.
Lauren Tengler - Investor Relations
Thanks, Dan. Andrew, let's start asking questions in the next 35 minutes or so. In order for us to answer as many questions as possible, please limit yourself to one question and one related follow-up. Andrew, please continue.
Thank you. We will now begin the Q&A session. [Operator Instructions] The first question comes from Bob Hopkins of Bank of America. please continue.
Robert Hopkins-Bank of America Securities-Analyst
Hi, thank you. can you hear my voice?
Michael F. Mahoney - Chairman and Chief Executive Officer
Good morning, Bob. Very good, Bob.
Robert Hopkins-Bank of America Securities-Analyst
Great, good morning. Thank you. So the first question is very simple. I'm curious how your thoughts on Q4 have evolved since the analyst day, and what you see today in terms of program volume, especially in the United States.
Michael F. Mahoney - Chairman and Chief Executive Officer
certainly. Good morning, Bob. I will-as you have seen among some other colleagues, the third quarter of July is very good. Then we saw a slowdown, which is the biggest slowdown expected in August and September. I want to say that compared with the trends in August and early September, the last few weeks of September definitely improved. We are here to provide sales guidance for the fourth quarter.
In general, it is obvious that when you travel outside the United States, the vaccination rate in Western countries, Japan, South Korea, Australia is increasing, and the vaccination rate in Europe is increasing. You know what the vaccination status is here.
Therefore, overall, based on the increase in vaccination rates, we are more optimistic about the growth in the fourth quarter compared to the third quarter. Although we do expect COVID to still be somewhat uneven, we have also emphasized some aspects of staffing. challenge. So overall, based on the guidance, we do expect an improvement in the fourth quarter compared to the third quarter, but given the staffing challenges and COVID in certain locations, we remain vigilant.
Robert Hopkins-Bank of America Securities-Analyst
Yes. make sense. Then just a quick follow-up. I think, taking a step back, one thing that has stopped many medical technology investors now is the number of macro issues ranging from staffing, the COVID wave to the supply chain to inflation. That was before we even started to study the company's fundamentals.
So I thought, Mike, the big question I want to ask you is to make it difficult for investors to know how to think about modeling in the next 12 months. With all these disadvantages in mind, I really like your top-down thinking about Boston's ability to deliver in the next 12 months. I am not asking for specific quantification of things, but for your ability to deal with all these headwinds.
Michael F. Mahoney - Chairman and Chief Executive Officer
Yes. So if you think about it, you will take a step back and look at the third quarter, which is why I started my script and I am very proud of the global execution of the team. Because you think about it, we experienced a delta surge in the third quarter, which was bigger than most people expected. We have increased by 11% compared with 20 years and 4% compared with 19 years. Now 4% is not a good number, but considering the surge in Delta, a 4% increase is not a bad number.
During that time, although everyone is familiar with some supply chain headwinds, our operating income margins have greatly improved, and we have achieved earnings per share growth.
Therefore, in a quarter when Delta has soared, our revenue has grown quite well. Obviously, this is not what we want under normal circumstances, but we increased our profit margins and reached earnings per share. In the third quarter, we have all the macro issues you talked about. But we do expect to move forward—the impact on COVID and the company—when the surge—decreases with each surge. Therefore, every time there is a delta surge, the performance is not what we want, but it is better every time. This shows the hospital's ability to manage COVID.
One of the great advantages of our portfolio is that we are mainly interventional medicine companies. Just yesterday, I went to several sites and they are now doing 80% of WATCHMAN outpatient visits. So you have seen a huge transformation of WATCHMAN, such as outpatient procedures. Therefore, I think our product portfolio has favorable factors that support hospital productivity. Despite the surge, hospitals have shown execution capabilities. In this quarter, almost all macro issues have been thrown on the company, and I think the performance is quite good.
Robert Hopkins-Bank of America Securities-Analyst
great. Appreciate thoughts. Thank you.
The next question comes from Robbie Marcus from JPMorgan Chase. please continue.
Robert Marcus-JPMorgan Chase-Analyst
Yes. great. Thank you for answering the question. So maybe it will be transferred to some business. I would love to know what you saw at the scene. I know it's still early, but you have some competition from the watchmen. I would love to hear what you saw there, what are your views on your positioning, and how we should consider trying competitive products in the short term.
Michael F. Mahoney - Chairman and Chief Executive Officer
Hey Robbie, good morning. Obviously, competition will have some experimental benefits. But I want to say that I participated extensively in this field in Europe last week and in the United States this week, and may never have been enthusiastic about the future of WATCHMAN.
I have previously commented on the program trend, that is, the efficiency of using WATCHMAN FLX to complete the program. Every doctor we talked to-the doctors I talked to, there are many in our field, the doctors who have transitioned-99.9% of them from Amulet-from 2.5 to WATCHMAN FLX significantly increased the utilization rate . They do this because of the safety of the equipment and the results they get.
Then you will see that now, we have some additional product enhancements launched together with the delivery catheter. In the next 2 years, we will also develop more platforms and expand clinical results. Therefore, WATCHMAN's growth in the third quarter was excellent. We believe that this will be a key growth driver to move forward. We are confident in our ability to maintain a clear leadership position here.
Robert Marcus-JPMorgan Chase-Analyst
great. Maybe on the other side of the house, you yourself have a few new disposable oscilloscope launches. I know that entering the hospital and opening an account has been a difficult environment in the past 12 months or so. But maybe it's just the latest update about where you are in the third quarter, and where do you think these releases and the environment and acceptance will be so far? thanks.
Michael F. Mahoney - Chairman and Chief Executive Officer
Yes, I will say on EXALT-D that its comments are similar to previous conference calls, and I will say that we continue to work hard to eliminate it. We have made progress mainly in the United States through capital allocation. The utilization rate continues to increase. What’s important is that we launched another 1.5 EXALT-D this quarter, which will solve some of the ease-of-use enhancements in the platform. This is what doctors worry about us.
I think it will help. This will be a good growth driver for Endo in 2022. What I want to say is that after the end of this quarter, we are more optimistic about EXALT-D, I want to say. The suction performance of the platform is quite good. Our team is upgrading supply chain manufacturing capabilities to increase the supply of EXALT-B in 2022. Therefore, along with many other products in AXIOS and Endo, the merger will continue to push Endo to bring good value-added to the company going forward here.
Robert Marcus-JPMorgan Chase-Analyst
great. Thank you for answering the question.
The next question comes from Joanne Wuensch from Citigroup. please continue.
Joanne Wuensch - Citi - Analyst
Good morning, thank you for answering this question. For the fourth quarter, the range of 12% to 16% was slightly larger than usual. I am a little curious about what brings you to the low-end and the high-end. I want to confirm that FLX is over $1.62 this year, assuming the high-end guidance for the whole year.
Daniel J. Brennan - Executive Vice President and Chief Financial Officer
Just the second question, the earnings per share range is $1.60 to $1.62. Is there any problem with Joanne?
Joanne Wuensch - Citi - Analyst
Does this assume that the high-end coaching, the mid-range coaching, I thought I had heard of higher.
Daniel J. Brennan - Executive Vice President and Chief Financial Officer
I don't think it is hypothetical. It assumes that we are in the range of 4% to 8% in the fourth quarter compared to 2019, and in the range of 12% to 16% compared to 2020.
Joanne Wuensch - Citi - Analyst
Thank you for being so clear. For the fourth quarter, what brought you to the high end and the low end?
Daniel J. Brennan - Executive Vice President and Chief Financial Officer
So as we saw in the third quarter, I mean, its scope is a bit larger than we are used to. But as Mike elaborated, the uncertainty surrounding COVID and staff shortages and where we are, I think only provides a greater scope this quarter. Similarly, we believe that at any point in this range, 4% to 8% is a good growth compared to 2019, and 12% to 16% compared to 2020. However, considering the uncertainty, it is appropriate to have a larger scope in the fourth quarter.
Joanne Wuensch - Citi - Analyst
OK. thanks. Then there are follow-up questions about the product. Can you tell us what you see in Neuromod from the perspective of the competitive landscape? Thank you.
Michael F. Mahoney - Chairman and Chief Executive Officer
This is a market with many innovations and competitors. I think we have not received all the reports from our competitors. But based on what we have seen so far, we believe that the share we have gained so far is based on the reported competition, based on our recently launched platform that uses the FAST algorithm and the Cognita practice management software application that we also use as our system a part of. So I think this is a vibrant market with a lot of new product improvements, but I think our team in Valencia, our Neuromod business, we think it is best in class in terms of innovation.
Almost all of their innovation comes from within, whether it is DBS or SCS. And they will have a very strong and impressive pace of new releases every 18 months. So I let our team fight against anyone in SCS, at least so far in the third quarter, we have gained share in this FAST algorithm, which has just been launched.
Indeed, as you know, Joanne’s business has been affected by COVID. Urology and Neuromod are the two most sensitive and most sensitive businesses when COVID is weakened. Therefore, it is hoped that the COVID trend will continue globally, and as COVID continues to stabilize, you will see improvements in Urology and Neuromod in the fourth quarter. Therefore, this is a business that has been challenged during COVID, and so are our competitors, but we expect that this business will improve as COVID improves.
Joanne Wuensch - Citi - Analyst
excellent. thank you very much.
The next question comes from Rick Wise and Stifel. please continue.
Frederick Wise - Stifel - Analyst
Hi. Good morning, Mike. Hi Dan. I hope to get it-there is just a big problem. We are talking about the pressure of COVID. But on the other hand, I continue to read reports on patient backlogs. I read a report yesterday that a large hospital center in Maine had a backlog of 1,500 procedures waiting to be processed. How do you see the backlog of a large number of programs? How do you not only dial in the fourth quarter, but how do we see its impact-how do you see its impact on next year, there may be more and more backlogs around the world?
Michael F. Mahoney - Chairman and Chief Executive Officer
Yes. So-good morning, Rick, so we obviously-we don't-we can't-we won't give guidance for 2022 yet. We will postpone it for a few more months. But our LRP target is 6% to 8% organic. We may have an organic combination of 5 to 6, which is larger than that of 19 and 2020. But anyway, so I mean, in general, you want to be optimistic, because you think that based on vaccination rates and improvements in Asia, Europe, and the United States, the impact of COVID in 22 years will be less than 21 years. Therefore, you hope to see a better COVID environment in 2022.
Staff shortage is a challenge, but the hospital is really busy, and they are trying to get things done well. But this did cause some headwinds, but COVID should be better. In the backlog, you will indeed see a backlog in some of our programs. You will see WATCHMAN backlogs in other areas. So in general, I hope-I think given the widespread vaccination rate, I think the macro trend in 22 years should be better than what we saw in 21 years.
Frederick Wise - Stifel - Analyst
Get you. Maybe it's just a product issue. You emphasized that on the DBS side, you are opening a new account. Obviously, the signs of essential tremor have opened up a new opportunity. Can you give us more colors, where do you think you are in opening a new account? What are we expecting? Will that speed up? How are you going to chase? Maybe you can give us more about how you will get the color after the basic tremor indication?
Michael F. Mahoney - Chairman and Chief Executive Officer
certainly. This is a good new sign for us. As you know, DBS Bank is a very good growth market. Its penetration rate is still very low. This is a market that performed well when the COVID weakened and a market that did not perform well when the COVID surged. Therefore, I hope you will see an overall improvement in the market in the fourth quarter, especially ours, and the improvement in 22 years with COVID. However, due to the duration of the procedure and the fact that it can usually be postponed to your to-do issue for a few months, it does not work well when the COVID surges.
As far as the business itself is concerned, they have done a very good job. Six or seven years ago, we were not players at all. We are now the leader in Europe with the largest market share from scratch. I would like to say that we are likely to be tied for first place in the US de novo market share, and the team will continue to increase sales and commercial resources. Obviously, new signs will help the business in 2022 because we have already put the label on it.
So this is a similar call point, a similar doctor, the same commercial team we have. So it's almost like the same doctor and the same sales representative next door to us. Therefore, it should help business in 2022. Again, I don't think I am optimistic, but I assume that COVID is better in 22 years compared to 21 years. This will help Neuromod DBS business.
Frederick Wise - Stifel - Analyst
The next question comes from Larry Biegelsen of Wells Fargo Bank. please continue.
Lawrence Biegelsen-Wells Fargo Securities-Analyst
Good morning. Thank you for your question. One on WATCHMAN and one on the income statement for Dan. So on WATCHMAN, I would like to hear what Dr. Stein or Dr. Meredith’s counter-strategy and counter-information are about Amulet? If a doctor is considering using it, what data are you referring to? We heard that the doctor is very satisfied with FLX. But I am curious what you would say to doctors who are considering using Amulet. I have a follow-up.
Ian T. Meredith-Executive Vice President and Global Chief Medical Officer
Well, maybe I can start, and then Ken can keep up. Therefore, first of all, as Mike mentioned before, one of the important features of WATCHMAN FLX is the ease of use, the ball design, and the proven safety of the device. Therefore, doctors will of course try new equipment. However, the support we have received in education and training, the ease of use, safety of the equipment, and the outstanding results we have seen do drive continued use and loyalty to WATCHMAN FLX.
I think Larry, as you know, it’s also important to emphasize that we like the Amulet IDE test. It’s just another large test. It provides for the closure of the left atrial appendage in the context of patients with an increased risk of atrial ischemia. evidence. Trembling. So this will expand the entire market. This is an important piece of evidence that basically shows that if you have an increased risk of stroke in the case of atrial fibrillation, we have two equally effective devices. Of course, it is very, very focused on the first generation of devices. Ken?
Kenstein-Senior Vice President and Chief Medical Officer
Yes. Thanks, Ian. Yes, Larry, reiterate what Ian said. First of all, yes, the annual IDE once again showed you more data, these data show that the left atrial appendage containing treatment is safe and effective, and is an excellent choice for patients who need this treatment. Then the experiment was compared with our previous generation of equipment. This generation of equipment is no longer sold in the United States and shows non-inferiority in terms of safety and effectiveness, but the incidence of surgical complications is higher. If it were me, I know which device I want.
Lawrence Biegelsen-Wells Fargo Securities-Analyst
This is very helpful. And Dan, looking forward to 2022, Wall Street's earnings per share will grow by about 16%. Do you have anything to say that the street is missing? How should we consider the tax rate for next year, excluding the potential increase in the corporate tax rate? Thank you for your question.
Daniel J. Brennan - Executive Vice President and Chief Financial Officer
certainly. And I think as always, I think you will have to wait for our guidance until our fourth quarter conference call. So I will not necessarily point out anything in 2022. You heard about our long-term goals on Investor Day, but we will postpone our guidance until we hold a fourth quarter conference call in February.
Lawrence Biegelsen-Wells Fargo Securities-Analyst
The next question comes from Vijay Kumar with Evercore ISI. please continue.
Vijay Kumar - Evercore ISI - Analyst
Hey guys, thank you for answering my question. I have two. One is about WATCHMAN and the other is about tax rates. I will ask them both in advance. Mike, at WATCHMAN, we understand that there is insufficient market penetration, and given the amount of clinical data, it should expand on a large scale. However, in the context of staffing challenges, COVID and my understanding is that the number of centers that can perform this type of structural heart surgery is limited. Given the challenges, how should we consider market expansion and acceleration in the current environment? Two players join. Will like your thoughts on market expansion and competition. Regarding taxation, Dan, and corporate tax reform, what kind of impact should we assume? Thank you.
Michael F. Mahoney - Chairman and Chief Executive Officer
Vijay, yes, to be honest, we are confident that "Watchmen" will enter the fourth quarter and the full year of 22 years. Before that, I made some comments. The first is WATCHMAN, the clinical effect of WATCHMAN FLX is very good. Doctors are full of confidence in this platform and they have been using it for about a year. Your general doctors are increasing their use of WATCHMAN every quarter because they are confident that the referral doctor community is seeing their patients recover and get rid of blood thinners and reduce the risk of stroke. Therefore, it is expanding the awareness of the referral physician community, gastrointestinal community, and neurological community. So there is a lot of motivation there.
Another important thing, I mentioned that even with productivity in COVID, you have the hospital to move WATCHMAN drastically, limit anesthesia, use ICE imaging and perform very, very effective procedures. In many cases, less than an hour. Now, WATCHMAN's economic situation is very good all over the United States. Therefore, there are always headwinds and headwinds in a diversified portfolio. However, WATCHMAN's advantages in reimbursement, program efficiency, clinical results, new clinical data, and product rhythm are very, very positive.
Daniel J. Brennan - Executive Vice President and Chief Financial Officer
Then in terms of tax rates, Vijay, as you would expect, we are closely monitoring the development of legislation. I would say that all of this is still in progress. As you can see, there are still many negotiations on the outcome that are still in progress. As always, we will provide guidance on the fourth quarter conference call in February.
Vijay Kumar - Evercore ISI - Analyst
The next question comes from Danielle Antalffy of SVB Leerink. please continue.
Danielle Antalffy - SVB Leerink - Analyst
Hi, good morning everyone. Thank you very much for answering this question. Mike, I appreciate all the comments about COVID and improvements. We are all in the same boat and hope that next year will be better. But the new development here is the shortage of labor in hospitals. I'm just curious, as a company, how do you help the hospital solve this problem? Considering the labor shortage, you have seen how hospitals can continue to allow patients to receive treatment through the system. To me, this seems to be a more difficult problem to solve, just like when to solve it. It feels like this is not something that can be repaired overnight. So I just like some of the comments there.
Michael F. Mahoney - Chairman and Chief Executive Officer
certainly. So I have been in this field recently. This is also a problem faced by hospital CEOs. no doubt. They had to increase wages and labor costs to accommodate the rising wages of nurses and staff. So they are doing it-they are completing the process.
But this will not be a short-term problem, but hospitals are highly flexible. As you know, I want to say that some of the views on BSC and the way of this change are just the use of telemedicine and telemedicine and pre-screening of patients has become very common and very effective. This greatly reduces the number of patient visits and improves efficiency and employee productivity.
So I think you will continue to see this trend continue to increase. Another thing that is more specific to Boston is that I mentioned earlier that we are not a surgical company. So we will not stay in the hospital for many days.
The shift in investment portfolio and the shift to interventional medicine are helpful to hospitals. It usually allows patients to enter and exit the clinic or outpatient setting on the same day. You will see more of our complex procedures because of our enhanced capabilities and technology by transferring images to more outpatient settings. I commented on WATCHMAN on how hybrid conversions are increasingly being transferred to the same day program. So I think the combination of telemedicine, outpatient guidance and day procedures is very helpful to our product portfolio. Hospitals are like anyone else, they innovate and find ways.
So this is headwind. But in this quarter, we have experienced staff shortages and surges, and we have grown well. And I think the surge will calm down, and the staff shortage may continue for some time, but hospitals are very flexible in finding ways to increase production.
Danielle Antalffy - SVB Leerink - Analyst
That's it for me. That's very helpful. Thank you.
The next question comes from Matthew O'Brien and Piper Sandler. please continue.
Matthew O'Brien-Piper Sandler-Analyst
Good morning. Thank you for answering the question. Mike, when I look at the portfolio, I think many things are better than what I expected in the third quarter. Because of all these COVID headwinds, TheraSphere has done a better job on the periphery and prevention, assuming that stopping CRM and WATCHMAN is obviously even doing very well. Good when the reserve is eliminated.
So what I’m curious about is, in terms of the momentum of these businesses, what do you see in non-COVID regions? Are you sharing some of these new products? Do you see the momentum of some of these new categories is accelerating? Considering some potential forces that I think exist, why not accelerate from Cove?
Michael F. Mahoney - Chairman and Chief Executive Officer
Yes, I think it will definitely accelerate in a year less affected by COVID. You hit many bright spots. Our PI business has always been very resilient, and it drives consistent high performance. We are now the number one DCB player in Japan. The team performed well in this release, the TheraSphere platform continues to perform well, and you have seen the clinical data.
So this department continues to do well. Endo, even though COVID has increased by 8% compared to 19 in this quarter and launched many new products, I will still consider them. Uro has been affected by COVID, but usually rebounds when COVID improves. We made a lot of comments on WATCHMAN today. We have seen strong EP growth in Europe. We continue to lag behind in the United States, but based on our Cryo capabilities and early insights into Farapulse, the EP momentum we have seen in Europe and Japan is very encouraging.
I don’t know if I answered your question, but in fact, as I said in the conference call, given the macro headwinds facing the company, I am very satisfied with this quarter.
Matthew O'Brien-Piper Sandler-Analyst
understood. This is very helpful. As a follow-up to the acquisition, can you talk about Devoro's plans for the next few years? Then Baylis, I think you said that 40% of all your interventional cardiologists' cases are EP crossovers. As we look forward to the next few years, from the perspective of atrial appendage closure or mitral valve, what can you do? thanks.
Kenstein-Senior Vice President and Chief Medical Officer
Hey, Matt, maybe—this is Ken. I start with Bayliss. So yes, you are right. We do see that the Baylis technique in the United States is used for approximately 40% of left-sided EP ablation procedures, at least for structural left atrial procedures such as WATCHMAN or mitral valve intervention. For us, the potential acquisition is a great thing for us because it provides a synergistic effect in our entire left atrium surgery portfolio. Back to some of the previous questions.
One of its advantages, yes, anything that makes our programs safer, more predictable, and more effective is becoming more and more important in this pandemic, and hopefully it will eventually become the environment after the pandemic.
Matthew O'Brien-Piper Sandler-Analyst
understood. It's really fast on Devoro. thanks.
Michael F. Mahoney - Chairman and Chief Executive Officer
So Devoro has not closed yet. It is expected to end in the fourth quarter, I guess, right? It will be here soon. So we think it is very suitable for PI product portfolio. Our Eluvia and DCB have great advantages in our arterial business. Our interventional oncology business has maintained strong growth for several consecutive quarters, and you have already seen data from TheraSphere business. We are doing a lot of work in the venous area of EKOS through clinical trials.
But there are gaps in some product segments, and Devoro does fill these gaps. Therefore, we made an early investment in Devoro a few years ago because we like their technology and we like their leadership team. Sure enough, they delivered very well, so we acquired them. But it is still an early product, still an early company, so our goal is-Lauren, I'm not sure we communicated on product economics in 22 years.
Lauren Tengler - Investor Relations
Michael F. Mahoney - Chairman and Chief Executive Officer
The second half began. OK. Therefore, you will see the impact of product approvals and product releases in the second half of 22 years, and we are happy to introduce them.
Matthew O'Brien-Piper Sandler-Analyst
The next question comes from Anthony Petrone and Jefferies. please continue.
Anthony Petrone-Jefferies-Analyst
thanks. I have a two-part question. One is high-level, and the other is on WATCHMAN. High level, I think, can you look back, and the company has done a good job during the pandemic, what percentage of the entire portfolio is related to non-urgent selective procedures rather than critical procedures? Therefore, perhaps to ask in another way, when we survey 22 years, what percentage of the business might see a tailwind, and what might face a headwind? Then on WATCHMAN, maybe it's just a high level of how we view the trend of stocks over time.
This could be a 70% Boston market and 30% Abbott. This takes into account the different designs outside the door. I just want to hear comments on the differences in anatomical structures of different sizes, as well as potential competition restrictions and complete closure of the left appendage immediately after surgery. Does this limit any subsequent surgery?
Daniel J. Brennan - Executive Vice President and Chief Financial Officer
Of course, Anthony, I can accept a relative acuity about the program. The short answer is that it varies from business to business, right? So if you look at cardiology and look at peripherals, and then look at heart rhythm management, these have remained the same, and we are now actually doing a good job with COVID-related wave numbers. Those are more urgent and keep better.
Mike mentioned earlier that businesses like neuromodulation and urology will soon fail during the COVID wave. The good news is that they will be back soon. Therefore, for these companies, this is a V-shaped curve.
Therefore, they clearly do not perform well in the COVID environment. But they came back well on the other side. So really-there is no single number that can point to the entire company and pinpoint it, it varies from business to business, but I think it's good that we have proven and have a good track record in a non-COVID environment. As Mike’s comment ruled out, this is what we expect in 22 years and beyond.
Kenstein-Senior Vice President and Chief Medical Officer
Anthony, on WATCHMAN, I think you just need to return to the Amulet IDE trial version and compare the device with our previous generation WATCHMAN device. The WATCHMAN FLX device, which is now our commercialized device in the United States, does set the standard for safety and effectiveness.
Remind everyone that the results of the PINNACLE FLX test we conducted with WATCHMAN FLX showed that the surgical safety event was less than 1%. The test had no pericardial effusion, no device embolism within 7 days, and the closure of the left atrial appendage was 100% effective. I just think that nothing else can approach these numbers. Therefore, as Mike said, as Ian said, we are still very optimistic about the continued success of WATCHMAN and are full of confidence.
Lauren Tengler - Investor Relations
Thank you, Dr. Stan. With this, we want to end this conference call. Thank you for joining us today. Thank you for your interest in Boston Scientific. Before disconnecting, Andrew will provide you with details about the replay.
Thank you. Again, this concludes today's conference call. The replay of this phone can be accessed by dialing 1(877) 344-7529 or 1(412) 317-0088 and using the access code 10160203 within 1 hour before November 3, 2021. thanks. You can disconnect your line.
Lauren Tengler - Investor Relations
Michael F. Mahoney - Chairman and Chief Executive Officer
Daniel J. Brennan - Executive Vice President and Chief Financial Officer
Ian T. Meredith-Executive Vice President and Global Chief Medical Officer
Kenstein-Senior Vice President and Chief Medical Officer
Robert Hopkins-Bank of America Securities-Analyst
Robert Marcus-JPMorgan Chase-Analyst
Joanne Wuensch - Citi - Analyst
Frederick Wise - Stifel - Analyst
Lawrence Biegelsen-Wells Fargo Securities-Analyst
Vijay Kumar - Evercore ISI - Analyst
Danielle Antalffy - SVB Leerink - Analyst
Matthew O'Brien-Piper Sandler-Analyst
Anthony Petrone-Jefferies-Analyst
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