Boston Scientific Corporation (BSX) Earnings Call Transcript & Summary

Great. Hi, everyone. I cover the Medtech space here at True Securities with my team, David Rescott and Sam Brodovsky. We appreciate you joining us this call today. Before we begin, I need to read the following disclaimer. This call is arranged by Truist Securities research for use by institutional investors and issuer clients as defined by FINRA. If you're not an institutional investor or issuer, please disconnect at this time, For required disclosures, please see our website at truistsecurities.com or our equity research library. On today's call, we have the Investor Relations team from Boston Scientific, including Vice President Susie Lisa and Director Lauren Tengler. I'll start out the call, but if anyone on the line has any questions for management, please e-mail them to me at Kaila, K-A-I-L-A, dot Krum, K-R-U-M, at Truist, T-R-U-I-S-T, dot com, and I'll do my best to get those in. So Susie, Lauren, thanks so much for joining us today, and sorry about the long-winded intro, but it's great to see you both virtually.

Just as a starting point, Boston reported earnings last week, raised the low end of your top line growth in adjusted EPS guidance for the full year. So as one of the largest more diversified companies in Medtech, can you just talk through some of the trends that you saw in the first few months of the year and if there were any sort of pockets within specialties that have outperformed or underperformed your expectations?

Sure. Thanks, Kaila, and I'm sympathetic with long intros, I had my own call last week, just given all the considerations for calculating true organic growth when you go '21 versus '19 given our acquisitions and divestitures. But thanks so much for the time and the opportunity today. And I think we were really encouraged by the results in the quarter, particularly the trends, as we talked about, an acceleration sort of from mid-February on through March that we saw sustained into April. So we reported 3% organic growth versus 2019. And that was 6% growth versus 2020, and our EPS exceeded expectations as well at $0.37. And I think that proceed -- that recovery over the back half of the quarter was based on both procedural recovery broadly as different regions at different paces come out of the pandemic, but we were encouraged by that procedural recovery as well as I think some of our key launches and some of our bigger franchises saw nice share gains, and that's what led to the result that was probably about 3% greater than we had thought at the top line coming into the quarter. The nice thing, I think, about the performance, that the strength was spread broadly across the businesses as well as the regions, where we saw 9% growth versus 20 in U.S. and Asia/Pac and 2% growth in Europe where you did see more lockdowns and restrictions. The strongest growth, switching back to comparisons versus '19, I think, were clearly in our MedSurg businesses, which continue to just be terrific franchises. So both Urology/Pelvic Health and Endoscopy grew double digits versus 2019. And you also saw mid- to low single-digit growth versus '19 out of Interventional Cardiology and Peripheral. And then I think we were really encouraged to see our EP business, which overall grew 2% versus 2019 but had mid-teens growth in Europe on some of the new launches there. And then some of the weaker performers were Neuromodulation, which was down low single digits and our CRM business. But we can get into more of the details there. And that is more hospital-based, which I think continues to be a challenge, and there's a little bit of noise in the numbers. But I think encouraged by the breadth of the outperformance, and I think it's sustainable, and hence that's where we have guided to 3% to 6% growth for the second quarter on an organic basis versus '19.

Great. Now that's super helpful as a starting point. So you mentioned -- I mean your guidance does call for modest improvements in the second quarter, but more significantly, I guess, into the second part of the year. Can you talk about what you're assuming in terms of a backlog recovery, the procedure environment and how your spending will trend for the remainder of the year?

Yes. I think it is really hard to get very specific on things like backlog and percent of backlog you're already through or what's anticipated. And it varies greatly by business and by region. And it's -- sometimes it's hard to get good data. So broadly speaking, as we've talked about coming into the year and continue to expect, we're assuming recovery over the course of the year and not a sharp rebound. And some of that is just due to the uncertainty. Obviously, there's terrible situations with COVID in certain regions of the world. And I think we're optimistic overall, and that's, hence, the recovery scenario but not a big rebound, just giving ourselves still some room here given all the uncertainty. And I think that from a -- if -- a rebound scenario would be an upside. And so with that recovery scenario that we've talked about, so 3% to 6% for the second quarter, 2% to 5% for the full year organic versus '19 that, with that, we're looking for our operating margin to be in the second half of the year sort of at or above the same levels that we had in 2019, that 26.1% that we had for an average for the second half of '21. And that really will be driven mostly by SG&A and some spending controls there. I think that our second quarter, we talked about, will look a lot like Q1 because there was some favorability in Q1 with COVID and spending controls. And things like travel will start to come back, especially later in the second quarter, and then that will be a headwind in the back half, but that's in our assumptions. And I think above all, we're trying to stay flexible with our investment opportunities, and where we see opportunity to gain share and drive top line growth, we'll do what we think is right for the business.

So I guess as you're thinking about stabilizing around a more normalized 6% to 8% revenue growth profile, what key products do you think will be most meaningful in terms of contributors and could potentially provide either upside to that profile or are there products out there that come with more risk?

Yes. It's an interesting question. And I guess, in some ways, wish I could rattle off here's our top 3, and we could, but I just want to emphasize sort of core to our strategy, right, as we talk about category leadership, so offering breadth of bag is so important to what we do. And we think that having differentiated products but as well all the supporting products is what helps us drive above-market growth, by really surrounding and knowing our physicians and providing them all the solutions that they need. But then also our portfolio diversification strategy continues to add high-growth adjacencies, and we're looking to do that in each of our 7 business units. So really, each business has something exciting, either a high-growth adjacency, a new launch or both ideally. But if I had to pick, maybe if we could just go through all 7 quickly, in Interventional Cardiology, obviously WATCHMAN continues to be one of our most exciting and largest growth products. We're really pleased with how the launch of ACURATE neo2 is going in Europe in the TAVR space. Peripheral, we see strength across all 3 franchises: arterial, venous and Interventional Oncology, but TheraSphere is something really exciting with the recent PMA approval and drug-eluting technologies like our Eluvia DES and Ranger DCB are really enjoying a rebound in that market as well as new launch for Ranger. In the MedSurg space, LithoVue continues to grow nicely and drive a lot of pull-through in our core stone franchise. We see nice growth out of SpaceOAR for use to protect the organs during prostate cancer radiation therapy, and then Rezum, we talked about double-digit growth in the quarter and lots of room to run in minimally invasive therapies for BPH. Within endo, its products -- the whole franchise, I talked about that 11% growth is really from the core, but EXALT D remains an exciting opportunity as does AXIOS. SpyGlass DS is another single-use scope. And the back half of the year, we'll enter into EXALT B for the bronchoscope, which should be an exciting opportunity. And then shifting to cardio -- to Rhythm and Neuro, Preventice acquisition is exciting, launching POLARx and StablePoint, which drove that mid-teens growth in Europe, the implantable cardiac monitor. And then 2 launches in neuromodulation with WaveWriter Alpha and SCS and Vercise Genus in deep brain stimulation.

Perfect. And I know -- I mean that's a lot of different products. So I appreciate you trying to dial it down there. Now I guess I want to start digging into the different product categories. And maybe we'll start with Preventice. Now that the deal has closed, can you talk to us about sort of the rationale behind the deal, why Preventice is different from other cardiac monitoring companies?

Yes. So on the rationale, it's -- we're really excited to be -- to have category leadership in the cardiac diagnostics space, right? So we recently launched the implantable cardiac monitor. We've uniquely had the only FDA-approved alert on our defibrillators in HeartLogic, which can give you a 30-day advance alert on an impending heart failure event. And now to go earlier stream and essentially kind of capture patients earlier by adding Preventice, which uniquely offers all 4 types of shorter-term ambulatory ECG testing modality on one device. So you can do short and long-term Holter as well as cardiac event monitoring and then MCOT testing. And not only do they offer all 4, but they can offer it on one device, which is really nice for ease of use from a physician and patient standpoint. If the patient needs changes or the reimbursement needs changes, you can, with the flip of a switch, change that remotely from one type of testing to the other. We also know -- the algorithms behind Preventice I think are really compelling, and their unique sort of B2B model in terms of, for those practices that want to monitor and collect both the physician and the patient monitoring fee, that we can offer sort of that software licensing model. And that's early days of that growth there. So we were excited. We reported on a pro forma basis it grew mid-20% in the first quarter. And I think some of that is kind of earlier phase of their launch and continued strong growth in the market overall and then probably a little bit of share gains given the flexibility of the model that they can offer.

I mean -- so you mentioned that 20% growth profile even with reimbursement headwinds in the extended wear Holter segment, is there a way to quantify how significant those headwinds were to you in the quarter? And what will be sort of your strategy on reimbursement going forward? I think that the largest provider has mentioned they're not going to service Medicare patients. So that's why I'm asking the question.

Sure. So last year, in 2020, Preventice grew 30%. And so I think we haven't quantified, although we have said long-term Holter is a smaller piece of Preventice's business than peers in the industry. It's an important growth driver. But I think some of that shift from 30% to mid-20% is reflected in the reimbursement challenges in extended wear Holter. But we still see significant opportunity. We'll continue to provide that type of testing for Medicare patients who need it. But we do think that current reimbursement rates are obviously a challenge and don't reflect the value that the test provides given the greater diagnostic yields, et cetera. So we'll continue to work to educate and collaborate and would hope for improvement there, but certainly not specifying anything in terms of timing. And I do think you can see potentially a shift to other types of testing, and that's where Preventice can benefit. But we've stated that on a pro forma basis for 2021, we're comfortable with 20% growth outlook for the Preventice asset. And again, we kind of really enjoy our unique positioning of, if it makes sense, transitioning those patients over time to an ICM and then also, uniquely, we can offer implantable or ablation therapies if that's what's appropriate for that patient.

Got it. Okay. That's really helpful. So I guess, I mean digging into the rest of the cardio side, maybe starting with CRM. I mean how do you expect growth to trend in the CRM business over the next 12 to 18 -- 12 to 24 months? You have sort of a new modular CRM device that'll compete with Micra coming, but you're also going to have new competition in the SICD market as Medtronic launches a product there. So how do those 2 items kind of balance out over time? Where does growth kind of shake out for the CRM business?

Yes. So that's a good question, Kaila. So the CRM or the core CRM market, pre-COVID, we pegged that at a flat to low single-digit decliner and said Boston Scientific would kind of grow with that market. Susie just talked about our entry into high-growth adjacent markets with Preventice, our implantable cardiac monitor, LUX-Dx. So would expect us to grow above market in those areas kind of bringing up and diversifying that overall portfolio. And you brought up our modular ATP trial, which we're excited to get in clinic in the first -- no middle of this year. And that's a dual-track approach, right? So we'll have a leadless stand-alone pacemaker as well as it will work in conjunction with our S-ICD to provide anti-tachycardia pacing. So -- I mean it's still a number of years out, but we're really excited to kind of start that trial this year overall.

Okay. That's -- no, that's helpful. And then just, I guess, on structural heart, if we can dig into that segment of the business. I guess within TAVR, Boston recently discontinued its LOTUS platform. How have physicians responded to this announcement so far? Are you finding they still have confidence in the company's ability to bring a TAVR platform to market over time? Just any color there would be helpful.

Sure. I think maybe it's not intuitive, but we actually think earned credibility and gained trust in terms of our physician relationships as a result of that decision. It's really challenging. Recall we actually had superiority data on the LOTUS platform and the only randomized head-to-head IDE that had been performed. But I think they understood. And recall the rationale was based on, essentially in order to increase commercial penetration, we felt we needed to simplify the delivery mechanism of the device itself, and that was the decision about the turnaround time and the investment cost to simplify the delivery system. We felt it just didn't make sense, and we could redeploy those assets into other aspects of our TAVR platform, in ACURATE neo 2 as well as in other areas in structural heart and IC broadly across the organization. So I think there's strong enthusiasm for ACURATE neo2 and the launch that's rolling out now in Europe. And I think actually, in some ways, certainly physicians were disappointed, because I think LOTUS could uniquely offer a TAVR option for many patients who are extremely high risk or really challenging cases. But I think there's good confidence and good trust just given our presence in the cath lab and in structural heart broadly and then the success that we're seeing to date early days with ACURATE neo2.

So it sounds like it will open -- this will open [indiscernible] up to invest in other segments within structural heart -- I mean including TAVR, but you guys are also sort of undergoing early testing with your Millipede platform. I mean is there any update on how this program is going? And how has that sort of strategy in mitral shifted since the discontinuation of LOTUS, if at all? Just would be curious to get your thoughts on that.

Yes. See we're excited to begin our Millipede early feasibility study this year. And I think, actually, our strategy has been pretty consistent here in that we feel the preferred approach here, what Millipede offers, is a full annuloplasty ring. And that's the preferred option from open surgical repair. So we're really excited about that approach and have long thought that repair would be preferred broadly in the market versus replacement and that a full annuloplasty ring brings lots of advantages, including it doesn't preclude any downstream interventions either. So we're excited about the technology and the approach. And I think that with the discontinuation of LOTUS, if anything, it frees up resources and time for the team to be able to continue to push and accelerate on Millipede, on WATCHMAN and ACURATE neo 2 and SENTINEL. Again, we're not just coming sort of with one-off valves. We're trying to execute that category leadership strategy across structural heart broadly with guidewires and cerebral embolic protection devices, et cetera. So Millipede fits really well within all of that. And we're excited to get in clinic in the U.S. this year.

Great. And I mean you mentioned earlier in the conversation just how important WATCHMAN is to the portfolio. And it's been around in the U.S. since 2015, but a consistent 30%-plus grower. I think it's around $500 million worldwide in 2019. I guess what inning do you think that we're in as it relates to WATCHMAN? I mean how big do you think that this product can be over time? Just would love to hear how you guys are thinking about that over the next few years.

I think we're still really early innings. It has been since 2015, but we've created a new market essentially and offering patients at higher risk of stroke with nonvalvular AFib and higher risk of stroke who today aren't well controlled on oral anticoagulants. We're offering them for the first time an alternative to those oral anticoagulants, whether it's due to bleed risk or they're just not well controlled or hard to titrate. And as you know, compliance is a big issue with those drugs as well. And so for patients to be walking around unprotected from stroke, WATCHMAN offers a -- just a really elegant solution to that. So we've talked about, in today's existing indication, that every 1 percentage point penetration is about a $250 million opportunity. So based on your number, right, we're still in low single digits in terms of market penetration. And then we continue to improve the device, expand geographically as well as expand indications. So we're currently enrolling several ISRs, but 2 large studies. One is called OPTION, which looks at patients -- a new patient population post atrial fibrillation ablation procedures. So it's typically a younger patient who may be cured of their Afib from their ablation procedure but then are told, okay, you need to take oral anticoagulants for the rest of your life. So we think they're highly motivated to seek an alternative. And that's randomized head-to-head oral anticoagulants versus WATCHMAN, and that's currently enrolling. And then the big study to really expand the patient population is into a lower bleed risk population called CHAMPION. And that would essentially be first-line therapy versus oral anticoagulants. And so to date, back at TCT last October, we talked about we felt $1 billion, $1.5 billion market opportunity by 2024 and around $3 billion is kind of 2026 plus sort of time frame, but I think those numbers will continue to move up over time as we gain more visibility to these data and our ability to continue to penetrate existing markets with direct to patient, direct to referrer, improvements in ease of use, et cetera.

Got it. Okay. That's helpful. And then I mean you have competition expected to come this year in the U.S. How is the company preparing for a new entrant in this space? Are you still comfortable that the product can sustain its current growth profile into next year? Just would like to get your thoughts on that.

Sure. And just to start on the penetration point that we were just discussing, right, to have another voice in the market to reach these patients given the vast size of the population, I think that could be helpful overall. But we're really pleased with the launch of FLEX, right, which is our next gen. So they'll be launching their first gen where we've already launched our second-gen FLEX, which we know offers real ease-of-use benefits and had really pristine data from an outcome standpoint and very, very low adverse event rates, right, 100% seal at, I think, at 3 months and very, very low adverse event rates, which I think helped shift some of the mindset from "Why would you consider an intervention from an oral therapy?" to "Why not?" particularly given the low rates of compliance and the 2% to 3% annual incidence of major bleeds on oral anticoagulants. So I think all of that -- and then the work that we've done over the past 6 years in terms of market development, support for referring physicians, helping them build their practice for implanting physicians, the hospital level support and software programs to help accelerate and manage their patient flow, all of that, I think, has helped build good support as well as our field clinical support team that supports each procedure, deserves a big shout-out there, too. So we'll have to wait and see how the data compare. It is against our older generation device. So I think in some ways we'll continue to sustain an advantage there. But we know with strong ease-of-use and the growth that we're seeing, right, we disclosed mid-30% growth in Q1 for WATCHMAN, I think that speaks to the enthusiasm for the device and the pace -- the physician receptivity to it. So I think we welcome another competitor but feel really good about where WATCHMAN sits today.

So it's more about market expansion, of course. But I mean, where do you think that market share ultimately shakes out? I guess if Boston had 70% market share in the U.S. in 5 years, do you think that would be a bull or bear case scenario in your view?

I think we're going to stay away from share predictions, if you'll allow me that, but see this as a key growth driver for the company for many years to come.

Totally fair. And with that, we'll move on to the MedSurg business, which also had a great quarter. I know you guys have been rolling out a bunch of single-use scopes in recent years, more coming. So where are we at in terms of adoption of single-use scopes versus reusables? Where do you think penetration of that can go over time?

Yes. So we're really excited to launch these innovative technologies, which are core to Boston Scientific and really core to MedSurg. I'd say there's tremendous value in single-use scopes with infection prevention, efficiencies, portability. And we've really seen that over the longer term with LithoVue, which is our urology single-use ureteroscope. I'd say on EXALT D, specifically, we're still early days there. We have market development activities. There's a lot of momentum with building out our global footprint. We had TPT, which is for the outpatient reimbursement, approved last year. We just got an early lead on a proposed ruling for NTAP, which would be the inpatient setting. So good momentum and feel really bullish around that opportunity in the long term. We've kind of stayed away from exact penetration rates because this is more of a long-term approach to building out the market and transitioning that market over time.

Okay. Got it. That makes sense. I mean would you mind just kind of giving us some of the benefits of single-use scopes? I guess how have centers reacted? Or how do they sort of view the economic benefit or associated cost of single-use scopes versus reusables?

Yes. This is -- I'd say there's -- different hospitals are kind of seeing different things in their practices. And what this really requires is a broader approach on "How do I and when do I use EXALT D in my practice?" And it's what we saw with LithoVue. And that takes time, right, to build out those protocols so that physicians can know and understand. They have to make the decision before the procedure to use EXALT D and change what has always been their historical practice, which is grabbing a reusable scope. And so we're in the process of seeing those protocols get developed and supporting our physicians and all the other key stakeholders of the hospital in the move towards single-use scopes. But like I said, it does take time.

Do you think that single-use scopes can accelerate growth in the MedSurg business? Or is it more just about sustaining growth in that business?

I -- that's a really good question. So there's a lot of core pull-through. So if you look -- just to point to urology and LithoVue, it took us -- that product has been launched for about 5 years. It took us about 3.5 years to get through our first 100,000 procedures. It took another 1.5 years to get through the second 100,000 procedures, which shows that we were building sort of the market and then driving utilization in those hospitals and those accounts. So this is really, again, sort of a long-term approach to driving that transition and that growth into the penetration of single-use scopes in the marketplace.

That makes sense. I mean, we've seen several FDA warnings in the last couple of years about infection risk with reusable scopes. Is that something that you hear from your customers? I mean is that accelerated use at all?

I think it's accelerated the excitement and the interest in EXALT D. Timing of having -- so we launched, there's all this FDA sort of tailwind, but then we went right into COVID, right? And rightfully so, hospitals were focused on figuring out that at their hospitals in their systems. So I'd say that tailwind is still there and the interest is absolutely still there. It's just a matter of now doing those activities to drive that shift.

Okay. That's helpful. And I think -- Boston I think is targeting a second half launch of EXALT model B, the single-use bronchoscope. Just on a high level, can you talk about the opportunity in this market, sort of what your current presence is in this space today? And is this launch here sort of indicative of any deeper interest in addressing the pulmonary space with other products over time?

Yes. So first and foremost, still targeting second half launch for EXALT B. And just to frame the market sizing, there's about 3 million procedures per year in this area globally. I'd say we're coming to market with a device that brings ease-of-use and better visualization and suction. And today, we do have a small suite of products that are used in the pulmonary space with a smaller team of salespeople that call on that space. So we're familiar with it. We know it, and we'll continue to look into other opportunities to expand that presence.

Got it. And I guess, I mean, within this business, you guys recently announced the acquisition of Lumenis. Can you just, for everyone, give sort of the high-level rationale behind that deal and just how we should think about your guide on that portfolio overall. Is there any sort of single product that can really drive growth? Do you guys think you'll continue to do sort of M&A here? Any additional thoughts there would be helpful.

Yes. So just starting with Lumenis. This is a partnership we've had for over 20 years in the U.S. and Japan. So we're really excited to kind of formalize the relationship with the acquisition of their surgical business. So the laser in their Moses technologies -- lasers are used in 75% of stone cases, right? So we've got all the disposables that work with the laser as well -- or the stone procedure as well as the scope with LithoVue. So this really extends our ability to drive category leadership in that stone portfolio. I think additionally, this allows us to expand globally outside of the U.S. and Japan, where we don't have our presence today with lasers, and then also gives us new capabilities with both service and capital. Boston Scientific has a very -- less than 5% portion of their business in capital. So this is really kind of good to build out that capability. And then just on other growth drivers across urology. I'd say this is another tough one to peg. There are so many good things going on in urology and public health. So we've already talked about LithoVue, the strong growth we're seeing there. I'd say SpaceOAR is another tremendous driver of growth with SpaceOAR Vue. We're currently sort of the only player in the market in the U.S., and we do have competition outside, so there's a lot of room to grow there. It's still early days on penetration of that market. And then there's a bunch of other nice growth drivers within neurology kind of supporting that above-market growth rate. And then finally, on M&A, I think you've seen a lot of historic acquisitions in this space. It's certainly -- there's a lot of different things the urologists and uro/gyns do. And so we're always looking for other things to extend our category leadership. And we have talked about OAB being a point of interest but nothing to kind of disclose there.

Okay. Great. No, that's really helpful. I guess to get into neuromodulation, and we can start with SCS. We estimate that your SCS business was down sort of in the mid-single digits in the first quarter. I mean, first, does that sound like it's in the right ballpark? And second can you talk about sort of how the business has trended through the quarter and into April? I guess where are we in terms of reaching normal levels of activity just given this is a more elective procedure category?

Sure. So overall, versus '20, neuromod grew 2%. And we -- just like you said, we did see a nice rebound in SCS in March as patient medicine waned, and those procedures were kind of rebooked that were canceled in Q4 and early Q1. And the timing of the procedural rebound really timed nicely with our launch of Alpha, so our WaveWriter Alpha device in SCS, which brings both fast and contour waveforms, MRI compatibility, and then paired with our Cognitus software offering, which enhances physicians' abilities to select the right patient and then manage and maintain the SCS patient.

Got it. Okay. No, that's helpful. I guess within SCS, I mean there's been a lot of new waveforms that have come to market versus -- I mean HF10 a while back, now there's DTM, which seems to be getting traction. I guess can you talk about sort of Boston's strategy to maintain or grow share with WaveWriter Alpha, just how it's different from other available platforms?

Yes. So I'd say, in general, our focus has been on enhancing our -- the existing patient outcomes within SCS, which is really the offering that you see with Alpha. We've also added in Vertiflex, which is a different procedure but focuses with the same interventional pain specialists. So we've seen great collaboration and momentum across those 2 product offerings. And then over the long term within SCS, we're looking to expand indication with first our Virgin Back trial, which we initiated at the end of Q4 '20. It's called SOLIS. And we're looking to get into PDN in the second half of this year as well for initiating a trial.

Great. Okay. Got it. Yes, starting the trial. That makes sense. I guess, I mean, from your standpoint, how important is it to have a portfolio of products to sell into the chronic pain space like you do? Are there just there any other types of technologies within this call point that you think would help you guys take market share?

I think we're always looking. So nothing to kind of point to but always looking and I think sort of extending that indication with additional indications for SCS like Virgin Back and PDN where we expect to kind of grow.

Okay. That's helpful. I do want to talk about M&A and your strategy there. On the call last week, it sounds like M&A will remain sort of a key priority focus for the company and that Boston may do 1 or 2 other deals this year. You guys have done some decent-sized M&A in recent history with Preventice and Lumenis. So if you did 1 or 2 more deals, I mean what criteria would be important to you? And how do you think about sort of size scale?

Yes. So we've been really consistent in terms of the criteria in that we're looking to add adjacent growth markets, where we have an existing sales force that knows the physician specialty call point really well. We understand referral channels, reimbursement, competitive landscape, et cetera. So we'll continue to execute that model. And then from a financial standpoint, right, our parameters is that our goal is to have something that -- an ROIC that approaches beating our cost of capital in year 3. And sometimes we can beat that, and sometimes for something like a Millipede, for example, it's just a longer gestation period, right? We're willing to make exceptions, but we try and be really strict with both of those criteria and view them as significant, critical to our past success that we've shown in the M&A area. I think we continue to see a good pipeline. Some of that is fueled by the VC portfolio that we started 6, 7 years ago now and continue to -- Preventice is the latest example of that. It's often an advantage to us, we feel, when you've known a company for 5 or 6 years, you've seen their successes, their growing pains, you understand management, and they know us similarly. So we continue to see opportunities within that portfolio as well as we'll kind of -- we have a decentralized BD effort with scouts in each of the businesses working very closely with their management teams and continue to scour for other opportunities externally as well.

What does the current M&A market look like today? I guess, what are you seeing in terms of private company valuations relative to 6 to 8 months ago? Because I think mid-2020 was kind of a hot IPO time. We've kind of gone up and down there. So just would like to get your thoughts on that.

Yes, definitely over the past several years, right, that has been a real shift, is that opening of the IPO market. And so some things in our VC portfolio have chosen to go public and others have not. So I think you'll continue to see different companies make different decisions for a variety of reasons. So we do see a good -- as I said, a good continued pipeline from the VC portfolio. And then we're, I think, doing a good job of looking for other opportunities that others might not see. BTG, we ended up having to divest 2 businesses to get kind of the crown jewels that fit very strongly with our Peripheral Interventions business. So we're willing to do things with creative structures or that might take a little more time and vision than just a first face-value glance. So I think we're optimistic about the ability. And given the breadth of our businesses and all the unmet needs around them still, we see lots of opportunity to continue to add high-growth adjacent markets.

Okay. That's helpful. And now with just a few minutes left, on the earnings call last week, the company announced an Investor Day in September. I mean what should we be expecting to get out of that Investor Day? Are you guys going to talk about sort of long-term growth plans, operating margin expectations, if there's anything that you want investors to sort of expect, or coming out of that event?

I'd say it's going to be similar. So I guess the short answer would be yes to all those things, similar to years past, but we'd like for everyone to come. So expect to learn more about the business, more around the strategy and financial goals.

Okay. So stay tuned.

Got it. Okay, cool. And just I guess to end then, I mean, we're looking at the current Street revenue estimates in 2022 are calling for 8% to 9% revenue growth and 18% earnings growth. I know that Susie is looking at me like you're not going to comment directly on that. But is there just anything that you think The Street should be thinking about or considering as it relates to assumptions for the remainder of 2021, which you've given guidance for, and into 2022, how you're thinking about those trends?

Well, we have talked about sort of excluding COVID comparisons, tough or easy, that we still firmly believe we are at 6% to 8% organic growth -- an organic growth company. And so then if you look just at the Q1 result, right, there will be some easy comparisons heading into '22. And so I won't endorse your numbers or the Street's numbers, but that 6% to 8% long-term growth, and then if you take into account comparisons, hopefully, that gives you the pieces there. And while we haven't commented specifically on operating margin targets beyond '21, we have said that we see sustained opportunity for continued improvement and that our goal long term is to be among the best in class in the industry, and which implies something that we've talked about, getting back to 26% by the back half of this year, but that would get you over time to something in the low 30% range. And so we haven't given the pace of that, and we'll look to update that Investor Day, but we still see a pathway to that type of adjusted operating margin. And we see continued ability to deploy our capital effectively and continue to tuck in these high-growth markets as well as the overall focus, as always, is to deliver double-digit earnings per share growth over to consistently over time.

Great. That's clear. So with that, we're at 11:10 Eastern. So we will end the call there. But again, Susie and Lauren, thank you both so much for all the time today. And I hope that everyone has a great rest of day and week.

Thanks, Kaila.

Thanks, Kaila.

Take care.