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Good morning, and welcome to the Boston Scientific Third Quarter 2025 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Lauren Tengler, Vice President, Investor Relations. Please go ahead.

Thank you, Drew, and thanks to everyone for joining us. With me today are Mike Mahoney, Chairman and Chief Executive Officer; Jon Monson, Executive Vice President and Chief Financial Officer. During the Q&A session, Mike and Jon will be joined by our Chief Medical Officer, Dr. Ken Stein. We issued a press release earlier this morning announcing our Q3 results, which included reconciliations of the non-GAAP measures. The release as well as reconciliations of the non-GAAP measures used in today's call can be found on the Investor Relations section of our website. Please note that on the call, operational revenue excludes the impact of foreign currency fluctuations, and organic revenue further excludes certain acquisitions and divestitures for which there are less than a full period of comparable net sales. Guidance excludes the previously announced agreement to acquire Nalu Medical, which is expected to close in the first half of 2026, subject to customary closing conditions. For more information, please refer to the Q3 financial and operating highlights deck which may be found on the Investor Relations section of our website. On this call, all references to sales and revenue are organic, and relative growth is compared to the same quarter of the prior year, unless otherwise specified. This call contains forward-looking statements regarding, among other things, our financial performance, business plans and product performance and development. These statements are based on our current beliefs using information available to us as of today's date and are not intended to be guarantees of future events or performance. If our underlying assumptions turn out to be incorrect or certain risks or uncertainties materialize, actual results could vary materially from those projected on -- by the forward-looking statements. Factors that may cause such differences are discussed in our periodic reports and other filings with the SEC, including the Risk Factors section of our most recent annual report on Form 10-K. Boston Scientific disclaims any intention or obligation to update these forward-looking statements, except as required by law. At this point, I'll turn it over to Mike.

Thanks, Lauren. Thank you to everyone for joining us today. Our quarterly results again exceeded our expectations led by our innovative portfolio, strong execution and a winning spirit of our global team. In third quarter '25, total company operational sales grew 19% and organic sales grew 15%, exceeding the high end of our guidance range of 12% to 14%, with sustained high performance in both our Cardiovascular and MedSurg segments. Q3 adjusted EPS of $0.75 grew 19%, exceeding the high end of guidance range of $0.70 to $0.72. Q3 adjusted operating margin was 28%. Turning to our fourth quarter and full year '25 outlook, we are guiding to organic growth of 11% to 13% for fourth quarter '25, which implies an increase to our full year '25 guidance to approximately 15.5%, reflecting our confidence in sustained above-market growth. Our fourth quarter adjusted EPS guidance is now $0.77 to $0.79, and we are thus raising our full year adjusted EPS guidance to $3.02 to $3.04, representing growth of 20% to 21%. Jon will provide more details in the financial section. I'll now provide some additional highlights on our third quarter results and outlook. Regionally, on an operational basis, the U.S. grew 27% with an impressive growth. The excellent growth is broad-based across our Cardiovascular businesses, Endoscopy and Neuromodulation. Europe, Middle East and Africa did decline 2% on an operational basis as a result of 2 impactful yet transient headwinds in the quarter. First, the discontinuation of our ACURATE valve in May '25, which had prior year third quarter sales of approximately $50 million. And secondly, we implemented our upgraded ERP system mid-quarter at our Kerkrade distribution center. This did result in a backorder of approximately $30 million impacting a number of our businesses in Europe. We do anticipate this backorder will improve throughout the fourth quarter. Excluding these 2 headwinds, EMEA growth would have been high single digits driven by strong double-digit growth in EP and continued high utilization of FARAPULSE and double-digit growth in complex PCI. Asia Pac grew 17% operationally led by strong double-digit growth across Japan and China. Japan growth was driven by WATCHMAN and EP, which saw excellent performance in the quarter led by FARAPULSE, which recently received expanded labeling for persistent indication and was supported by our OPAL HDx mapping system. China grew an impressive mid-teens despite the substantial VBP in our peripheral business. China growth was broad-based and driven again by growth in ICTx and EP. Within the quarter, we received NMPA approval for the WATCHMAN FLX Pro device and recently began commercial launch, which coupled with FARAPULSE and investment in clinical evidence such as OPTION-A, drives our confidence in sustained mid-teens growth over the LRP in China. I'll now provide some additional commentary on our business units, starting with Urology. Urology sales grew 27% operationally and 5% organically. Growth in the quarter was driven by international business and a global Stone Management franchise. Axonics performance continues to be below expectations as we are focused on improving our commercial execution post the unplanned commercial disruption. However, we remain enthusiastic about the SNM market opportunity and our future to focus on strengthening the commercial team, patient activation and globalization opportunities. We're pleased to have recently received approval for Axonics F15 in Europe. Our outlook for the Axonics business, coupled with our broad innovation cadence across the business, drives confidence in our expectation that Urology growth will improve throughout 2026. Endoscopy delivered an excellent quarter, growing 9%, driven by double-digit growth in key products, including AXIOS, MANTIS and OverStitch combined with our differentiated broad portfolio. Notably, the U.S. grew 11% led by the recent launch of WallFlex PLUS and above-market growth across the pancreaticobiliary franchise. Neuromodulation had a strong quarter as sales grew 9%. Our brand franchise grew low double digits, supported by the 5-year results from the INTREPID study, which demonstrated sustainable benefits of DBS in patients with moderate to advanced Parkinson's disease. The pain franchise continues to strengthen and grew high single digits, led by strong double-digit growth in the U.S. with Intracept. The team is in the early stage of launching Intracept in Europe. We also just announced our agreement to acquire Nalu Medical which we anticipate will expand our portfolio into a new pain adjacency in peripheral nerve pain. This is an excellent new growth opportunity and complements our commercial strength with the interventional pain position. We expect this transaction to close in the first half of 2026. Peripheral Interventions sales grew 16% operationally and 6% organically with excellent low double-digit growth in the U.S. that was offset by the China VBP. Within our peripheral vascular business, we saw low single-digit decline in arterial, again, driven by the China VBP. During September, Silk Road turned organic and delivered improved high single-digit pro forma growth within the quarter, supported by the recent launch of ENROUTE in China. Looking forward, we continue to expect a very limited launch of SEISMIQ IVL for peripheral above-the-knee procedures by year-end 2025, an increase in launch cadence -- I'm sorry, in '26, an increase in launch cadence in '27. In venous, we saw excellent double-digit growth led by continued strength in Varithena and EKOS. Within the quarter, HI-PEITHO, our clinical study with EKOS versus standard-of-care anticoagulants completed enrollment, and we expect data to be presented in 2026. Our Interventional Oncology & Embolization business grew double digits, driven by our category-leading embolization and cancer therapies portfolio. With notable strength in cryoablation, which treats a broad number of cancer types. Clinical evidence remains a key enabler for future growth. And within the quarter, we completed enrollment in 2 important trials. ROWAN, which studied TheraSphere in combination with Astra

All right. Thanks, Mike. Third quarter consolidated revenue of $5.065 billion represents 20.3% reported growth versus the third quarter of 2024 and includes a 90 basis point tailwind from foreign exchange, which was favorable versus our expectations. Excluding this $38 million foreign exchange benefit, operational revenue growth was 19.4% in the quarter. Those acquisitions contributed 420 basis points to sales, resulting in 15.3% organic revenue growth which was above our third quarter guidance range of 12% to 14%. Q3 2025 adjusted earnings per share of $0.75 grew 19% versus 2024, exceeding the high end of our guidance range of $0.70 to $0.72, primarily driven by strong drop-through on above-expectation revenue and margin performance in the quarter. Adjusted gross margin was 71% for the third quarter representing a 60 basis point improvement versus the third quarter of 2024, primarily due to favorable product mix, driven by strong growth in electrophysiology and WATCHMAN and partially offset by tariffs. As a result of our Q3 performance, we now anticipate full year adjusted gross margin to slightly improve versus 2024, inclusive of an approximate $100 million tariff headwind for the full year, unchanged versus previous expectations. Third quarter adjusted operating margin was 28%, expanding 80 basis points versus the prior year period, driven by strong drop-through on our top line performance. On a GAAP basis, third quarter operating margin was 20.7%. Moving to below the line, third quarter adjusted interest and other expenses totaled $116 million, which was in line with our expectations. On an adjusted basis, our tax rate for the third quarter was 13.6%, and our operational tax rate was 13.9%. Fully diluted weighted average shares outstanding ended at 1.495 billion shares in the third quarter, and free cash flow for the third quarter was $1.163 billion with $1.343 billion from operating activities less $181 million in net capital expenditures. We continue to expect full year 2025 free cash flow to be approximately $3.5 billion, reflecting strong cash conversion driven by earnings growth and disciplined working capital management. As of September 30, 2025, we had cash on hand of $1.275 billion, and our gross debt leverage ratio was 2.0x. Our top capital allocation priority remains strategic tuck-in M&A in high-growth adjacencies, followed by share repurchase. In alignment with this strategy, we recently closed our acquisition of the Elutia BioEnvelope assets and announced our agreement to acquire Nalu Medical. Our legal reserve was $306 million as of September 30, with $46 million already funded through our qualified settlement funds. I'll now walk through guidance for Q4 and full year 2025. We expect full year 2025 reported revenue growth of approximately 20%. Excluding an approximate 100 basis point tailwind from foreign exchange, we expect full year 2025 operational revenue growth of approximately 19%. Excluding an approximate 350 basis point contribution from closed acquisitions, we expect full year 2025 organic revenue growth of approximately 15.5% versus 2024. We expect fourth quarter 2025 reported revenue growth to be in the range of 14.5% to 16.5%. Excluding an approximate 200 basis point tailwind from foreign exchange, we expect operational growth to be in a range of 12.5% to 14.5%, and excluding an approximate 150 basis point contribution from closed acquisitions, we expect fourth quarter 2025 organic revenue growth to be in a range of 11% to 13% versus 2024. As a result of our year-to-date margin performance, we now expect to expand full year adjusted operating margin by approximately 100 basis points at the high end of our prior range of 75 to 100 basis points, and we continue to expect full year 2025 adjusted below-the-line expense to be approximately $440 million. We also maintain our forecast for a full year adjusted tax rate of approximately 12.5% and an operational tax rate of approximately 14%. We expect full year adjusted earnings per share to be in the range of $3.02 to $3.04, representing growth of 20% to 21% versus 2024. We continue to expect an approximate $0.04 foreign exchange headwind on full year adjusted earnings per share. And for Q4, we expect adjusted earnings per share to be in a range of $0.77 to $0.79. In closing, I'm pleased with our strong third quarter financial performance and look forward to executing on our full year 2025 guidance and our long-range financial goals, which we shared at our recent Investor Day. From 2026 to 2028, we're targeting 10% plus average organic revenue growth, approximately 50 basis points of annual adjusted operating margin expansion, leveraged double-digit adjusted earnings per share growth and 70% to 80% annual free cash flow conversion. We feel that these goals represent differentiated performance in medtech, and we look forward to executing on them. Thank you all for joining us today. For more information, please check our Investor Relations website for the third quarter 2025 financial and operational highlights, which provides more details on our results and updated guidance. And with that, I'll turn it back over to Lauren, who will moderate the Q&A.

Thanks, Jon. Drew, let's open it up for questions for the next 35 minutes or so. In order for us to take as many questions as possible, please limit yourself to one question. Drew, please go ahead.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Robbie Marcus with JPMorgan.

Congrats on a really good quarter here. One for me. And Mike, this comes on the tail of what was a really bullish Analyst Day. And I think what's really coming through in the discussion this morning with investors is EP has been a phenomenal growth driver, but WATCHMAN is really what's the most exciting, at least from the print today and the incremental upside, that you're continuing to see an acceleration here off the back of concomitant and the OPTION data in the fall of last year. So the question is really do you think of WATCHMAN as a key growth driver? And how do you think people should really expect growth and dollar contribution to progress, assuming the CHAMPION data is positive, just given how much this market has exploded and still how low penetration is potentially versus the addressable population?

Well, thank you very much, Robbie. We're super pleased with the overall performance for the global company. And you pointed out 2 excellent performers in EP and WATCHMAN. And WATCHMAN clearly is a gem for Boston Scientific. We essentially created the market through great clinical evidence, and you saw at Investor Day a really strong portfolio going for the future, along with expanding evidence in the big CHAMPION trial to be read out first half 2026. And concomitant really continues to exceed expectations. It's been adopted very quickly. Now we expect 25% of the WATCHMAN procedures to be done concomitant. So that's certainly a tailwind for us. And the whole combination of FARAPULSE and WATCHMAN together in that procedure is really becoming standard of care for hospitals and physicians given the safety profile and trust they have in that solution along with our excellent commercial teams. So in framing the market, kind of similar to what we said at Investor Day, we're comfortable with a 20% market CAGR over the LRP, given the strong momentum of WATCHMAN, the underserved patient population that we continue to focus on. Also the globalization of WATCHMAN, we saw some good news in China in the quarter with the approval of FLX Pro, which will help China really strengthen their performance in 2026. So there's just a lot of great things going on with WATCHMAN in terms of the concomitant procedure itself, the trust that the community and referrers have in the concomitant procedure, the tremendous pipeline of patients that are still very underserved, and the resources and investment that we're placing in additional portfolio enhancements in clinical to broaden it out. We have a very unique strong market share in WATCHMAN, and we plan to continue that market share strength that we have while this market continues to grow very quickly.

The next question comes from Joanne Wuensch and Citibank.

And may I also say very nice quarter. I'd like to step back just for a second and get your impression on 2 sort of bigger items that are impacting medtech. One is China, it sounds to me like your China business is doing just fine. But obviously, would love your view. And second of all, we sort of picked up that there may be some procedures that are being pulled forward as people think about Affordable Care Act cuts and Medicare cuts as we look forward. And I love to see or hear what you're seeing in those things.

Sure. And the first one, procedure pull forward, we don't have any signals that would indicate we're seeing procedural pull forward in our -- across our businesses. So that's something we'll watch out for. But I would say we did not see that in the third quarter, more of a consistent procedural demand that we expected and continue to expect going forward. I think China shows the -- really the winning spirit of our global team and the strength of our team in China and really just the innovation focus that we have across Boston Scientific is represented well in China as we continue to differentiate ourselves versus our peer group there. In the quarter, we again grew mid-teens. We indicated at the Investor Day, we are comfortable with double-digit growth across the LRP, even though that business is getting much larger for us. And as we've mentioned before, we are able to continue to offset VBP price pressures with new innovation and new launches in our combined portfolio, combined with expanding our reach of our customer coverage across the China opportunity. So we have a broad base of business there. Years ago, it was solely ICTx, but the ICTx business is our largest business there. They do extremely well. The imaging business with ICTx has done remarkably well and growing quite well. And the EP business had a nice quarter, and we expect bigger things out of the China EP business in the fourth quarter and as we go into 2026. So that will provide some additional tailwind and WATCHMAN FLX Pro is also a big launch for us as our WATCHMAN business has been slower in '25 without that product. So we do see EP, WATCHMAN and ICTx continue to carry and offset the VBP headwinds that we face, and that's why we're comfortable with the double-digit growth going forward.

The next question comes from Larry Biegelsen with Wells Fargo.

I'll echo my congratulations on another really nice quarter here. I wanted to follow up on Ravi's question on WATCHMAN and the LAA market. I think some investors were surprised by the 20% market outlook you provided at Investor Day, given the growth we're seeing today, which is much higher, and we have CHAMPION coming in the first half of next year. So my question is, is there anything you're seeing in studies like ALONE-AF and OCEAN that's coming at American Heart that concerns you? And maybe just lastly, Dr. Stein, how much of a read-through will CLOSURE-AF at American Heart be to CHAMPION?

I would say at a high level, hopefully, you appreciate that we do like to provide accurate forecast as we can on market growth, but we also like to deliver and exceed our commitments. I think that's really important for our team and our investors. And I think, Ken, you can speak to the more substantial part of the question.

Yes. Thanks, Mike. Thanks, Larry. I got to be -- thinking about 20% growth over a sustained number of years of the LRP as conservative, just says something about just how impactful WATCHMAN has been as a therapy, and I think will continue to be. As we mentioned earlier, with Robbie's question, even the currently indicated population is way underpenetrated. And that's why we are very comfortable in that 20% growth over the long-range plan. I think to answer your questions about some of the studies that are coming up, let me talk about them first, CLOSURE. So that's a trial that is going to be reported on AHA. I don't think it's a particularly good read-through for CHAMPION. It's a very different European population, a very different primary endpoint, a shorter follow-up. We continue to think that other trials like PRAGUE-17 and OPTION, honestly, give us real confidence in what we hope that the CHAMPION will show. I think in terms of ALONE-AF and a trial called OCEAN that will be reported out at AHA, both of those -- first off, if there -- if OCEAN is confirmatory of ALONE-AF, that's great news, right? Saying that low-risk patients undergoing AF ablation may no longer need stroke prevention. And I want to remind you all, right, that up until now, except for very select populations, AF ablation was only really indicated as a way of managing patients with significant symptoms from their AF. And so this supports the continued growth of FARAPULSE as patients seek AF ablation in order to come off their blood thinners. But -- and this is important. The patients who are currently getting concomitant FARAWATCH procedures are not the low-risk patients who were studied in ALONE-AF. And we have not seen any material impact to concomitant following the publication of ALONE. And again, so taking all of this together, the significantly underpenetrated currently indicated population, the prospect of indication expansion with trial like CHAMPION, the continued growth in ablation for AF, we remain really comfortable with the projection of 20% annualized growth over LRP.

The next question comes from Rick Wise with Stifel.

I'd like to focus on the very impressive margin performance. Jon, you kept saying strong drop-through to margins from the revenue outperformance, got it. But I was hoping you'd sort of give us a little more color. I mean your gross margins, which I know you don't guide to specifically, almost back now to pre-COVID levels. Help us think through as we try to model, looking ahead, where do we go from here on the margin front? How big a driver of your operating margin goals is gross margin? And just help us understand maybe with a little more color, the drivers from here. It just feels like given the revenue strength and what we saw this quarter that your 50 basis point annual improvement could prove conservative. He said optimistically.

Thanks so much, Rick. Appreciate the question. And yes, pleased with the performance in the quarter and our expectation to expand operating margins 100 basis points on the year, overcoming the tariff impact of approximately $100 million that we've sized for the year. In the quarter, as I mentioned, saw very strong gross margin tailwind from mix. We spent some time talking in Q&A about WATCHMAN, the 35% growth there. EP continuing to perform very well for us, nice mix benefit there. You heard Mike mention in his remarks how well our AGENT drug-coated coronary balloon is performing. So mix really driving the gross margin performance that we saw in the quarter, and we're now expecting gross margin to slightly improve year-over-year despite that $100 million tariff headwind. So then as we head into next year, we're rolling up our annual operating plan process now, and we'll provide more detail as we typically do when we have our Q4 call at the start of next year. But broadly, as we mentioned at our Investor Day, we do you expect to expand operating margin each year, every year, targeted roughly 50 basis points a year. Within the pieces there, I would expect to -- with gross margin, I would expect that mix will continue to be a tailwind for us. We will see annualization of tariffs in 2026. So that will be a further headwind based off of our expectations today. Expect us to continue to drive leverage through SG&A. And then R&D, we've got that roughly between 9% and 10%. I think that's a nice level of investment at the high end of our peer set. So I think that's a good place for us to live moving forward. So again, I appreciate the question, Rick. Love the momentum of the business and the financial performance while reinvesting back in the business for growth, and as always, we'll provide much more detail when we get to our Q4 call at the start next year.

The next question comes from David Roman with Goldman Sachs.

Mike, you referenced this in response to one of the earlier questions, but I was hoping you could expand on the dynamics in the business, kind of outside EP and WATCHMAN, there's obviously a disproportionate focus on those businesses given how strong a growth contribution they've been. But as we look forward, I think everyone understands that the EP business is going to decelerate given just the size and the competitive landscape there, even with strong market growth. But if you look across the rest of the portfolio, you're seeing good momentum in businesses like Neuromodulation and Endoscopy. You talked about some of the improvements you're seeing in Silk Road. But maybe help frame for us what are kind of the drivers that support the growth outlook in the rest of the business? And where you think from a product perspective, we should be focused?

David, I really appreciate that question. So much of the attention goes to our EP business and it should, given that we were just #4, now we're a clear #2 and have higher aim over the future. But as you said, it's not going to grow as fast as it has given that we're anniversarying comps and the size of the business, but we expect it to be an outstanding performer in '26 and beyond in our EP business. But I'm really proud of the rest of the divisions. And not every one of our business grows faster than market every quarter. But as a composite, we clearly do. And that's what we indicated at our Investor Day to grow faster than our 9% WAMGR. MedSurg in the quarter had a healthy 8% growth, very strong growth with our Endoscopy business. We've got a few different alliances and product launches that we're launching in '26. We expect strong Endo performance. Euro has had a tougher year. We have high expectations. We talked about Axonics in the script. We expect Axonics to get stronger in fourth quarter and in '26. And Euro will actually have some easier comps in '26. We expect some acceleration there. And I'm really proud of our Neuromod team. They've really clawed back over the years, and now they drove 9%. I think it was 9% growth in the quarter. And we just closed the -- or we haven't closed. We signed the Nalu acquisition, another great adjacency for us. So we're really -- will be with Nalu, the clear category leader from a portfolio perspective and pain business with an improved and strengthening SCS business, a solid RF business. Relievant has done better than we had planned with that acquisition and now Nalu. So similar to Endo and other businesses, we have the widest portfolio in Neuromodulation and some unique abilities to work with our customers in that regard. Our ICTx business has transformed itself from a reliant on DES to a high-growth business led by our imaging business, our AGENT and complemented with the rest of the portfolio. And we have -- as we said in Investor Day, we have our largest investments in the company within ICTx. The most near-term one is our IVL product for PI, which we'll launch in a limited way at the end of this year. We'll get a full benefit of that in 2026,and the trial for IVL in cardiology is going extremely well. And we look to wrap that up, hopefully, early in first quarter '26 and launch that in early '27. And we have a number of other large investments, some that we talked about at Investor Day. IO continues to do well, growing double digits. Our venous portfolio grew double digits, and they absorbed the -- some of the pricing challenges in China. So EP gets the airtime, but the rest of the business continues to do very well. And what's most important is we spend a lot of time on those businesses, constantly feeding them with organic R&D, tuck-in M&A, expanding clinical work, so we continue to grow above market as our WAMGR continues to grow.

The next question comes from Travis Steed with Bank of America. Excuse me, Mr. Steed, is your phone muted accidentally? Please go ahead with your question, sir. We'll go to the next question. It comes from Michael Polark with Wolfe Research.

I have a question on PFA and persistent. So FARAWAVE got the FDA label for persistent in July. I'm hoping you can confirm FARAPOINT is on track for year-end 2025. If both of those things are true or FARAPOINT still on track, like is this the cocktail to get the penetration of PFA into persistent kicked into a higher gear? I hear about 50% PFA penetration at a high level, but I think that's a much higher rate of pen into paroxysmal or de novo cases and lower into more complex cases, including these persistent patients. So I'm just kind of interested, is '26 the year where persistent really kicks into a higher gear? And if not, what is the cocktail to enable that?

Yes, Mike, I'll take that. And I -- actually, particularly for de novo persistent, it's already in high gear. We got that approval on the back of the results of our ADVANTAGE trial, which frankly showed the best long-term outcomes anyone has ever seen in a de novo persistent ablation trial and really remarkable long-term freedom from high burden persistent atrial fibrillation or from symptomatic atrial fibrillation. And one of the things that I don't know that everyone has appreciated enough to this point is that if you look at the results of trials like ADVANTAGE as well as some of the real-world data now that we've presented at meetings, the redo rates after de novo persistent AF ablation with FARAPULSE are down into the single-digit levels. And so I think I would not agree with the characterization today of de novo persistent as a particularly complicated ablation. The FARAWAVE catheter is just exquisitely well suited for this ablation strategy of pulmonary vein isolation plus posterior wall ablation. I think I would agree with your premise when you get to the more complex things like redo procedures. And that's where things like having FARAPOINT as an adjunct, we get to things like our FARAFLEX catheter that's in first human use clinical trials today as well as things like the acquisition that we had of the Cortex technology, as Mike mentioned in the script, right, to enable a true precision mapping of AF sources so that you do have something that you can offer to those, again, single-digit number of patients who are going to have unexplained recurrences after their de novo ablation. But just to come back to it, we really already do see a very high degree of uptake of FARAWAVE in the de novo persistent population and expect to see that continue.

And the next question comes from Travis Steed with Bank of America.

Congrats on a good quarter, and I'm finished with the fantasy draft, so I'm on back. I wanted to ask about the $30 million backorder you called out. I know it's a small amount, but it did add -- could add a point of growth to the total company. What businesses did that impact? Was there anywhere it impacted the most in the quarter? And does that come back in Q4?

Sure. Thanks for the question. This is very comprehensive global ERP implementation that we've set -- embarked on a few years ago, and this was our implementation at our Kerkrade distribution facility, which didn't quite go as planned. But the team is doing a great job in recovering from that and things certainly look better now than they did 60 days ago. So I appreciate our team's hard work in that area. The impact of the quarter was fairly broad-based. I'd say, a little bit trended a bit more to the MedSurg and PI businesses. But -- so it was really kind of impacted across many businesses, less impact on EP and less impact on WATCHMAN and a bit more impact on the other divisions. But the team has made really good progress. We're still not 100% out of the woods on the backorder, but we expect that backorder to bleed down to acceptable levels by the end of the year.

The next question comes from Patrick Wood with Morgan Stanley.

I'd love to just dig into Nalu given you guys -- it's very recent and you're in that situation. PNS, obviously, a super interesting market, like there's kind of nobody really else there. I know they're very small, the other players. What was it that kind of made you feel like now is the time? I know you guys have been following them closely for a while, but I'd love any more details on how you guys are feeling expanding there and driving particularly commercial coverage over time.

Yes. We're -- as I mentioned, we're excited about the Nalu signing. In terms of timing, like many companies that we end up acquiring, we're a VC investor in Nalu when Keegan Harper and team started this many, many years ago. So we always liked the space of peripheral nerve stim. The Nalu team did a really nice job over many years, building up the portfolio, driving the clinical evidence, where now they have solid Medicare reimbursement and improving coverage from the commercial payers. So a nice job in terms of clinical evidence, which is driving the reimbursement and also solid clinical performance and solid sales track record. I think just as importantly, we always look at in our integrations, is it the right time for the business to integrate Nalu. And our Neuromod team with Jim Cassidy, has done an amazing job, Brian Betts and others with Relievant that we acquired, I don't know, 18 months ago or so, which also is a very unique asset in that pain space and what's driving considerable growth for the company. And so the team proved they can drive the integration successfully, and they're ready to take on more, and we had a large VC investment in this business. So it's a perfect puzzle piece to add to our neuromodulation and pain business. Because it really does offer a highly differentiated portfolio versus our others who primarily compete in spinal cord stim. And this is another new adjacency that will add to our WAMGR and accelerate the growth of Neuromod in '26.

The next question comes from Danielle Antalffy with UBS.

Congrats on a good quarter. Mike, I also have to admit to you that you were right about the [ raters ]. So with that, my question is on CRM. And that's been a business where you guys have been growing below the market. You have a competitor that's in a new product cycle, and they're actually talking about sustainable double-digit growth going forward. You guys have a new product cycle coming. So I'm just curious about how you think about the cadence of growth in that business as we start to get into the launch of some of those new products.

Yes. So overall CRM, we're pleased with our performance in our LUX, which is a smaller part of the market, but that continues to do quite well. And we've been investing for a number of years on an entire new platform called Denali which will really be -- there's different stages of that Denali launch that will happen through the tail end of second half of '26 and through the LRP period, which -- and Ken can provide more detail, which really is a complete refresh, which we think will improve our core pacemaker defibrillator business. We're also enthusiastic about EMPOWER, our entry into leadless pacemaker market combined with S-ICD. So we've been probably growing at -- on a unit basis kind of at market but on a dollar basis below market because we've had some of the gaps in leadless which drive a higher ASP. But on a unit basis, we're kind of holding our own growing at market, and we're confident that over this LRP period, that the CRM business will strengthen versus where it is today and be a larger contributor for us.

Yes. Maybe I'll just add to what Mike said. I mean, again, we certainly do have a gap in not being in the leadless market, excited about eventually being able to bring the EMPOWER device to market, see that as important both as playing in leadless but also as something that's going to be an enabler for accelerated growth within our S-ICD franchise. I'd also point to the acquisition of Elutia. This is an important adjunctive technology that people are using to prevent complications, in particular, things postoperative infections or postoperative complications with the pockets for these devices. That's another market that we have not played in previously, and it's one where we have a technology that we really do see as having differentiated advantages over the incumbent. Mike mentioned our complete refresh of our entire implantable platforms, brady, high-voltage, CRT and S-ICD. So that's sort of a generational opportunity to really develop market-leading technology across all of those platforms. And I think that also highlight where we've gone with the Conduction System Pacing, seeing fantastic growth in the use of our Conduction System Pacing technology for --pacemaker for brady indications, but also very excited to have a purpose-built ICD lead for doing Conduction System Pacing in a tachy market that we think would be quite disruptive.

The next question comes from Vijay Kumar with Evercore.

Congratulations on the nice print. Jon, maybe one for you on a margin share. When I look at fiscal '25, you had the TAVR recall charges in tariff. Despite that, we're at 100 basis points of margin expansion, right? But when you look at the cadence, I think Q4 is down sequentially, right? Is that the incremental tariff headwind from Q3 to Q4? And how should we think of fiscal '26, right? Is -- the Analyst Day had 50 bps of annual OMX, is that still relevant for '26?

Yes. Thanks, Vijay, for the question. And yes, pleased with our expectation for improving margins 100 basis points on the year despite the tariff headwind of roughly $100 million. And as you mentioned, we had the impact of the ACURATE withdrawal in the second quarter. So despite that, I think we've done a nice job with finding appropriate offsets in the business, driving strong margin expansion, predominantly with the top line performance that we've seen for the year, again, expecting 15.5% organic revenue growth and reinvesting back into targeted areas of the business to drive growth for the long term. So yes, we'll see where we go for the fourth quarter. We manage margins really on an annual basis. So we're a little less focused quarter-by-quarter, more focused on how we're driving margin performance for the year. And as far as 2026, we're rolling up the plan process now, and we'll provide much more detail there when we get to the Q4 call at the early part of next year. But you should expect us to expand operating margins and drive meaningful expansion there and deliver leveraged double-digit EPS growth.

The next question comes from Chris Pasquale with Nephron Research.

I wanted to ask about AGENT. Our work suggests that launch is going really well. Product has a chance to be maybe a $1 billion product for you as the indication expands, although it's not getting a kind of attention yet. I'm curious how you're thinking about growth in the interim period before STANCE reads out? Is there enough room just in ISR to sustain the current momentum, especially with competition may be coming into the U.S. next year. And while I know you don't promote off-label use, are you starting to see physicians already moving beyond in-stent restenosis and utilizing the product in de novo lesions?

Yes, Chris, maybe I'll take that. The fast answer is yes, we do see plenty of room for continued growth even before STANCE completes enrollment and reads out. We're pleased now to have a TPT and better reimbursement in place. I think to point out, we also, with trials like STANCE, see an opportunity to at least double the indicated population as you move beyond in-stent restenosis into small vessel bifurcation disease and some other de novo lesions. We will have some additional data on AGENT coming out of TCT, data from our AGENT post-approval study. And I think that will be helpful as you all do kind of see the sorts of lesions that it is being used for in the real world and see the real world outcomes. In terms of competition, I think getting more data out about the use of drug-coated balloons is good for us and good for AGENT. I think important to point out that within the use for drug-coated balloons specifically, there are some real fundamental advantages to the use of paclitaxel as the drug compared to some of the other drugs. So very comfortable with the position that we have for AGENT and excited about it as we laid out at Investor Day as a long-term growth driver for the company.

And the last question today will come from Pito Chickering with Deutsche Bank.

A question about the proposed reimbursement for AF ablation and ASCs for next year. What proportion of AF ablations do you think could be moved into the ASCs? And how could the increased capacity using ASCs help fuel additional market growth?

Yes. I may have to get -- phone in a friend with our IR team here. Just anecdotally, we're certainly seeing some strong interest in the states that don't have a certificate of need. You're seeing some interest in Arizona and Florida, which we think is good, as we talked about before, given the oftentimes long backlog that hospitals have with FARAPULSE. So we think this will help with the backlog over time in some of those states. Many states aren't able to do it because of CON needs and so forth. But we certainly think it's going to be an increasing trend in '26 and will grow more so over the LRP period. And as importantly, I think we're uniquely positioned to win in that market given the reliability and trust that physicians have in FARAPULSE, the COGS profile and gross margin profile that we have for that product as well as the complementary products that Boston Scientific offers in our -- across our cardiovascular portfolio to assist those customers. I did get an answer from my phone and the friends that says -- what we estimate is 40% of the AF ablations in the U.S. will not need a certificate of need.

Yes, are in states that don't require a certificate of need.

But maybe I'll just add something. But even in those states, it will take some time to build out the ASC capabilities, right, it's capital deployment. And there's not going to be a step change, like the step change that we saw with the adoption of concomitant that this is going to be more of a slow ramp. But I think really important just to come back to what Mike said at the end, which is that the FARAPULSE and our entire ecosystem really is very well suited to enable these procedures to move out into the ASC.

Yes. So we think there'll be a minimal impact on ASC in '26. But I just think broadly on EP, we're still remarkably early in the PFA journey, given our launch, what, 18 months ago, Ken, or whatever, less than 2 years ago, I guess.

Q1 '24, yes.

Yes. And so the key for us is we continue to drive new account openings around the globe. We still have a lot of work to do with new account openings in the U.S. and particularly in Asia Pac. And the new account openings help drive penetration. We also have the opportunity to continue to grow deeper with more physicians leveraging FARAPULSE. We also have the opportunity with our unique position with concomitant to train more electrophysiologists to do WATCHMAN. So we still have a number of EPs out there that are not doing LAC procedures and with the impact of concomitant, we are seeing an uptick in the number of physicians who want to be trained in LAC. So that ecosystem of still early innings in PFA globally, the momentum of concomitant, the demand from physicians to learn and train on WATCHMAN now to serve that need will continue to help us, which is why the ASCs are important because we do need the ASCs over time to help with the volume demands that we're seeing across these markets.

Thank you, Mike. Thanks for joining us today. We appreciate your interest in Boston Scientific. If we were unable to get to your question or if you have any follow-ups, please don't hesitate to reach out to the Investor Relations team. Before you disconnect, Drew will give you all of the pertinent details for replay. Thank you, everyone.