CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

See notes to the unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

See notes to the unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS

See notes to the unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

See notes to the unaudited condensed consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. When used in this report, the terms, "we," "us," "our," and "the Company" mean Boston Scientific Corporation and its divisions and subsidiaries. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three and nine months ended September 30, 20182019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.2019. For further information, refer to the consolidated financial statements and footnotes thereto included in Item 8 of our most recent Annual Report on Form 10-K.

Amounts reported in millions within this report are computed based on the amounts in thousands. As a result, the sum of the components reported in millions may not equal the total amount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers in dollars. Prior year balances were subject to rounding.

To meet the reporting and disclosure requirements of FASB ASC Topic 842, we implemented a new lease administration and lease accounting system in 2018 that tracks all of our material to our financial position or results of operations.

Our unaudited condensed consolidated financial statements include the operating results for acquired entities from the respective date of acquisition. With the exception of the acquisition of BTG, which was completed on August 19, 2019, we have not presented supplemental pro forma financial information for acquisitions given their results are not material to our unaudited condensed consolidated financial statements. Transaction costs for all acquisitions in 2019 and 2018 were immaterial to our unaudited condensed consolidated financial statements and were expensed as incurred.

On June 11, 2019, we announced the closing of our acquisition of Vertiflex, Inc. (Vertiflex), a privately-held company which has developed and commercialized the SpaceOAR™ HydrogelSuperion™ Indirect Decompression System, a minimally-invasive device used to helpimprove physical function and reduce common and debilitating side effects that men may experience after receiving radiotherapy to treat prostate cancer.pain in patients with lumbar spinal stenosis (LSS). The transaction price consistsconsisted of an upfront cash payment of $500$465 million and upcontingent payments that are based on a percentage of Vertiflex sales growth in the first three years following the acquisition close. We estimate the sales-based contingent payments to be in a range of 0 to $100 million inmillion; however, the payments contingent upon revenue-based milestones. We are inuncapped over the processthree year term. Vertiflex is part of integrating Augmenix into our Urology and Pelvic HealthNeuromodulation business.

On August 8, 2018,January 29, 2019, we announced the signingclosing of an agreement to acquire VENITI,our acquisition of Millipede, Inc. (VENITI)(Millipede), a privately-held company that has developed and commercialized the VICI VENOUS STENT™IRIS Transcatheter Annuloplasty Ring System (VICI stent system) for treating venous obstructive disease.the treatment of severe mitral regurgitation. We have been an investor in VENITIMillipede since 2016the first quarter of 2018 as part of an investment and acquisition option agreement, whereby we purchased a portion of the outstanding shares of Millipede, along with newly issued shares of the company, for an upfront cash payment of $90 million. We held an interest of approximately 2520 percent immediately prior to the acquisition date. The transaction priceIn the fourth quarter of 2018, upon the recent successful completion of a first-in-human clinical study, we exercised our option to acquire the remaining shares of Millipede. We remeasured the fair value of our previously-held investment based on the implied enterprise value and allocation of purchase price consideration according to priority of equity interests. The transaction price for the remaining stake consistsconsisted of an upfront cash payment of $108$325 million and up to $52an additional $125 million payment upon achievement of a commercial milestone. Millipede is part of our Interventional Cardiology business.

We accounted for our 2019 acquisitions of Vertiflex and Millipede as business combinations, and in payments contingent uponaccordance with FASB ASC Topic 805, we recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition dates. The preliminary purchase prices of our acquisitions of Vertiflex and Millipede, presented in aggregate, were comprised of the following components:

We recorded immaterial purchase price adjustments to the preliminary purchase price allocations of previous acquisitions during the measurement period in the third quarterfirst nine months of 2018. We are in the process of integrating VENITI into our Peripheral Interventions business.2019.

On August 2, 2018, we announced the closing of our acquisition of Claret Medical, Inc. (Claret), a privately-held company that has developed and commercialized the Sentinel™ Cerebral Embolic Protection System. The device is used to protect the brain during certain interventional procedures, predominately in patients undergoing transcatheter aortic valve replacement (TAVR). The transaction price consistsconsisted of an upfront cash payment of $220 million and an additional $50 million payment for reaching a reimbursement-based milestone that was achieved in the third quarter. We are in the processquarter of integrating2018. Claret intois part of our Interventional Cardiology business.

On July 5, 2018, we announced the closing of our acquisition of Cryterion Medical, Inc. (Cryterion), a privately-held company developing a single-shot cryoablation platform for the treatment of atrial fibrillation. We have been an investor in Cryterion since 2016 and held an interest of approximately 35 percent immediately prior to the acquisition date. The transaction price to acquire the remaining stake consistsconsisted of an upfront cash payment of $202 million. We are in the processCryterion is part of integrating Cryterion into our Electrophysiology business.

On April 30, 2018, we announced the closing of our acquisition of NxThera, Inc. (NxThera), a privately-held company that developed the RezûRezūm™ System, a minimally invasive therapy in a growing category of treatment options for patients with benign prostatic hyperplasia (BPH). We held a minority interest immediately prior to the acquisition date. The transaction price to acquire the remaining stake consistsconsisted of an upfront cash payment of approximately $240 million and up to approximately $85 million in payments contingent upon commercial milestones over the next four years. We are inyears following the processdate of integratingacquisition. NxThera intois part of our Urology and Pelvic Health business.

On April 16, 2018, we announced the closing of our acquisition of nVision Medical Corporation (nVision), a privately-held company focused on women’s health. nVision developed the first and only device cleared by the U.S. Food and Drug Administration (FDA) to collect cells from the fallopian tubes, offering a potential platform for earlier diagnosis of ovarian cancer. The transaction price consistsconsisted of an upfront cash payment of $150 million and up to an additional $125 million in payments contingent upon clinical and commercial milestones over the next four years. We are inyears following the processdate of integratingacquisition. nVision intois part of our Urology and Pelvic Health business.

In addition, we completed other individually immaterial acquisitions in the first nine months of 2018 for total consideration of $50$158 million in cash at closing plus aggregate contingent consideration of up to $10$62 million.

We allocated a portion of the aggregate purchase priceprices to specific intangible asset categories as follows:follows for our 2018 acquisitions as of September 30, 2019:

Our technology-related intangible assets consist of technical processes, intellectual property and institutional understanding with respect to products and processes that we willintend to leverage in future products or processes and will carry forward from one product generation to the next. We used the multi-period excess earnings method, a form of the income approach, to derive the fair value of the technology-related intangible assets and are amortizing them on a straight-line basis over their assigned estimated useful lives.

Goodwill was primarily established due to synergies expected to be gained from leveraging our existing operations as well as revenue and cash flow projections associated with future technologies and has been allocated to our reportable segments based on the relative expected benefit. Based on preliminary estimates updated for applicable regulatory changes, the goodwill recorded relating to our 20182019 and 20172018 acquisitions is not deductible for tax purposes.

Changes in the fair value of our contingent consideration liability were as follows:

As of September 30, 2018,2019, the maximum amount of future contingent consideration (undiscounted) that we could be required to pay was approximately $780 million.$747 million, which includes our estimate of maximum contingent payments of $100 million associated with the Vertiflex acquisition described above. The maximum amount of future contingent consideration (undiscounted) decreased approximately $540$126 million compared to the amount as of December 31, 20172018 primarily due primarily to the expiration of certain contingent consideration arrangementsarrangement which is now accounted for as a guarantee in connection with our transaction with Varian as discussed in the third quarter of 2018.BTG section above.

The recurring Level 3 fair value measurements of our contingent consideration liability include the following significant unobservable inputs:

Projected contingent payment amounts related to some of our research and development (R&D), commercialization-based and revenue-based milestones are discounted back to the current period using a discounted cash flow model. Projected revenues are based on our most recent internal operational budgets and strategic plans. IncreasesSignificant increases or decreases in projected revenues, probabilities of payment, discount rates or the time until payment is made may resultwould have resulted in a significantly lower or higher fair value measurements.measurement as of September 30, 2019.

As of September 30, 2018,2019, the carrying amountcost of our aggregated equity method investments exceeded our share of the underlying equity in net assets by approximately $321$308 million, which represents amortizable intangible assets, IPR&D, goodwill and deferred tax liabilities and goodwill.liabilities.

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill are as follows:

We test our goodwill balances in the second quarter of each year for impairment, or more frequently if impairment indicators are present or changes in circumstances suggest an impairment may exist. In the second quarter of 2018,2019, we performed our annual goodwill impairment test for all of our reporting units and concluded that the fair value of each reporting unit exceeded its carrying value.

In the third quarter of 2018,2019, we performed our annual impairment test of all IPR&D projects and our indefinite-lived core technology assets using the optional qualitative assessment approach and determined that therethe assets were no impairment indicators. In addition, wenot impaired. We also verified that theirthe classification of IPR&D projects and our indefinite-lived core technology assets we continue to recognize on our unaudited condensed consolidated balance sheets as indefinite-lived assets continues to be appropriate.

We address market risk from changes in foreign currency exchange rates and interest rates through risk management programs which include the use of derivative financial instruments. We operate these programs pursuant to documented corporate risk management policies and do not enter into derivative transactions for speculative purposes. Our derivative instruments do not subject our earnings to material risk, as the gains or losses on these derivatives generally offset losses or gains recognized on the hedged item.

We manage concentration of counterparty credit risk by limiting acceptable counterparties to major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to individual counterparties and by actively monitoring counterparty credit ratings and the amount of individual credit exposure. We also employ master netting arrangements that limit the risk of counterparty non-payment on a particular settlement date to the net gain that would have otherwise been received from the counterparty. Although not completely eliminated, we do not consider the risk of counterparty default to be significant as a result of these protections. Further, none of our derivative instruments are subject to collateral or other security arrangements, nor do they contain provisions that are dependent on our credit ratings from any credit rating agency.

The success of our currency risk management program depends, in part, on forecast transactions denominated primarily in Euro, Japanese yen, Chinese renminbi and British pound sterling, Euro and Japanese yen.sterling. We may experience unanticipated currency exchange gains or losses to the extent the actual activity is different than forecast. In addition, changes in currency exchange rates related to any unhedged transactions may impact our earnings and cash flows.

Our interest rate risk relates primarily to U.S. dollar borrowings partially offset by U.S. dollar cash investments. We use interest rate derivative instruments to manage our earnings and cash flow exposure to changes in interest rates. Under these agreements we and the counterparty, at specified intervals, exchange the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. We designate these derivative instruments either as fair value or cash flow hedges underin accordance with FASB ASC Topic 815.

The following table presents the contractual amounts of our derivative instruments outstanding:

The remaining time to maturity as of September 30, 20182019 is within 60 months for all designated forward currency contracts and generally less than one year for all non-designated forward currency contracts.