Boston Scientific cuts guidance as WATCHMAN and EP stumble
A Sharp Reversal
On July 29, Boston Scientific reported a decent second quarter — organic sales up 7%, adjusted EPS of $0.86, beating guidance. But the optimism was quickly tempered by a surprising guidance cut for the full year. CEO Mike Mahoney acknowledged the shift: “This update today is not the outcome we planned or what you have come to expect from us.” — Michael Mahoney, Chairman and Chief Executive Officer · 2026-07-29 The company now expects organic revenue growth of 5% to 6% for 2026, down from a prior 7% to 8%, and adjusted EPS growth of 7% to 8%, down from double digits.
The culprits are two of the company's most prominent growth engines: LAAC market and Electrophysiology. In WATCHMAN, the U.S. market has slowed "sharply and unexpectedly," as Mike put it. The company now sees global WATCHMAN growth flat to low-single digits for the year, with second-half declines of mid- to high-single digits. The EP business, which had been growing around 9% in Q2, is expected to be roughly flat in the second half. “Our guidance reduction is concentrated in 2 areas: First, WATCHMAN, where the U.S. market has slowed sharply and unexpectedly... And second, EP, where we did not anticipate the degree of competitive share movement we're now seeing in the U.S. market.” — Michael Mahoney, Chairman and Chief Executive Officer · 2026-07-29
Why the Sudden Slowdown?
The referral pattern for WATCHMAN has been disrupted by a slew of clinical evidence over the past nine months, and the rapid uptake of concomitant procedures (those performed together with AF ablation) has created operational inefficiencies. “The adoption of concomitant has been swift, and we now estimate that 1/3 of WATCHMAN procedures in the U.S. are done concomitantly.” — Michael Mahoney, Chairman and Chief Executive Officer · 2026-07-29 Meanwhile, competitive pressure in EP has been more intense than expected, especially from other PFA players.
This is a stark contrast to the company's prior tone. As recently as February, an executive on the Q4 call boasted: “We actually exceeded analyst consensus. The mix of that is slightly different, but it shows the power of all of Boston Scientific being able to deliver to beat our guidance to be consensus in the quarter and the full year and we're quite proud of the EP performance based on the commentary I just provided.” — Unknown Executive, Executive (likely CEO or CFO, but not specifically identified) · 2026-02-04 And just three months ago, Mahoney admitted to "a guide down" but framed it as a prudent reset. Now the company is cutting again, and this time it's not just a tweak — it's a fundamental re-rating of the growth profile for 2027.
Mahoney was candid about the difficulty:
This update today is not the outcome we planned or what you have come to expect from us. Boston Scientific has had a strong record of growing above our weighted average market growth rates while delivering double-digit adjusted EPS growth. However, market conditions have evolved quickly and has been challenged to forecast effectively.
Restructuring to Protect the Core
In response, the company announced a comprehensive restructuring program targeting approximately $500 million in run-rate savings by 2029, with over half expected by the end of 2027. CFO Jon Monson said the savings will come from supply chain optimization, functional transformation, org changes, and indirect spending reductions. The goal is to “position us to return to strong growth and meaningful EPS expansion and growth in '28 and beyond.” — Jonathan Monson, Executive Vice President and Chief Financial Officer · 2026-07-29
Notably, the company is protecting its high-growth areas like Interventional Cardiology and Neuromodulation, which continue to deliver double-digit growth. growth driver is a recurring theme, but the company is now looking to a new set of catalysts, including farawave Ultra, the Faraflex catheter, and the Penumbra acquisition, to reaccelerate growth in 2028.
Market and Financial Backdrop
The stock has already priced in the disappointment. Over the past 90 days, BSX is down 18.5%, and it remains 53% below its September 2025 peak. The drawdown has accelerated as the guidance cuts became known. The fundamentals confirm the story: Total revenue reached $5.2B in the latest quarter, up 12% yoy, but the company's revised outlook implies a sharp slowdown in the back half. Operating income remains solid, but the mix shift away from high-margin WATCHMAN and EP is expected to pressure gross margins. Gross margin at 69.5% may have peaked for now as the company's most profitable businesses lose momentum.
While the company emphasizes that 75% of the business is growing at ~6%, the two affected units are too large to ignore. The market is watching for signs that the WATCHMAN narrative can be rebuilt — through physician education, commercial investment, and perhaps a favorable label update. And in EP, the company expects to regain momentum with new product launches in 2027.
This quarter marks a pivotal moment for Boston Scientific. The company is no longer the hyper-growth story it was a year ago, but it's also taking decisive steps to reset its cost base and invest in the next wave of innovation. Whether that will be enough to restore investor confidence remains to be seen.