Dan Brennan: Sure. I’ll start at the kind of the overall operating margin level. So if you say that we achieved the 26.4% adjusted operating margin goal for this year, the good news is there’s still a long runway of margin expansion journey for us, well beyond that 26.4%. We’ve said publicly many times that we believe that 30% plus is a very reasonable target for the company. There’s nothing structurally that prevents us from getting there. And to the extent that you have a durably, consistently growing top line, it just gives you a number of leverage opportunities to continue to grow that. So you have that kind of as a backdrop. Specific to areas of the P&L, I think the inflation piece is largely hitting gross margin. And we said that we had the $375 million of impact in ’22 versus 2019 in gross margin and, in this year, it’s basically stayed relatively consistent.
So it’s not a headwind or a tailwind versus last year, but obviously, a headwind versus that 72.4% margin that we were in 2019. So specific to your question around what happens going forward, I don’t think we’ll see a lot of inflationary abatement in ’23. I think the guidance that we’ve given assumes we’re kind of in — we are where we are for the year. But as we look forward to ’24 and beyond, yes, I mean, this year, the full year gross margin is — will be kind of approaching 71% for the year. So that’s a gap to where we used to be. And our goal, we’re maniacally focused on getting back to that level. We do need some macro help in that, as you mentioned. So some of the elements of it, freight, we do see that getting a little better, the inflationary impact of the cost of the inputs into our manufacturing process, we see that abating over time.
And then the consistency of the supply of the materials into our manufacturing process has improved. I mean, frankly, that’s improved, but it’s not back to where it used to be. So we still – it is choppier than we’d like to see it. And that does impact your ability to really run a really efficient manufacturing process. So I think ‘23 kind of, as I said, we are where we are. When you get to ‘24 and beyond, I think there is an opportunity for gross margin to continue to contribute. Frankly, I think all areas of the P&L can contribute, both areas in OpEx, SG&A and R&D, we can be more efficient. In R&D, we certainly can be more efficient overall in SG&A. And if gross margin can move north of that, approaching 71% that we have for this year, I’m excited about the opportunity for margin expansion going forward.
Matthew Taylor: Great. Thanks. I’ll leave it there. Thank you.
Dan Brennan: Thanks, Matt.
Operator: Our next question comes from Matt O’Brien with Piper Sandler. Please go ahead.
Samantha Kurtz: Hi. This is Sam Kurtz on for Matt. Congrats on a great quarter and for taking our question. I guess we would like to touch on the guidance again. And maybe could you tell us a little bit about where you’re most excited heading into the second half of the year and where we could potentially see that upside?
Mike Mahoney: Yeah. Thank you. I’m trying to be vague. It’s as you saw in the first half results, the results are really broad-based across the company and across each region. Excellent growth in Asia Pac and Japan and China, continued share taking in Europe and excellent performance in the U.S. So it’s really not one region driving it, which should give investors a lot of confidence in just the momentum and durable growth of the company. The standouts, there are a number of them. You continue to see WATCHMAN performance very strong. That market continues to grow well in excess of 20%. We continue to take a little bit of share in that category. And we’re very excited in the future about the launches of the distributable sheets and the next-gen WATCHMAN FLX Pro and the potential of these market-expanding trials, which will read out in a couple of years here.
