Operator: The next question comes from Vijay Kumar with Evercore ISI. Please go ahead.
Vijay Kumar: Thanks for taking my question. Just some cleanup questions here on the guidance assumptions. Mike, the 6% to 8% organic, it is what it is, but can you just remind us what are the incremental tailwinds — positive tailwinds here in ’23 and any incremental headwinds versus ’22? Some things I can think of FARAPULSE becomes organic, maybe China has a little bit of a headwind, but can you just go through some of those drivers? And again, on share count up 20 million, that seems are just given how we’ve seen share count progress throughout the year. Curious why — what’s behind the share count assumption for the year?
Dan Brennan: Yes, sure. On the share count, just to take that clean up quickly and then Mike can take your revenue question. It’s just a simple math of the converts that we have in — during the year. So the increase is from the share count that will increase when we convert the mandatory preferreds. Recall, we then lose the preferred dividend. So it’s neutral to EPS, but the share count increases as those preferred holders will get common shares. That makes sense, Vijay?
Vijay Kumar: That’s helpful. Yes.
Dan Brennan: Yes. So I mean the takeaway should be neutral EPS impact from share count related to the mandatory preferred conversion this year.
Mike Mahoney: Sure. And the headwinds and tailwinds, maybe just some of the headwinds: we like the fact we did 9% growth in ’22, but that’s a bit of a tighter tougher comp than normal. So that’s one. I had mentioned China would be expect double-digit growth, but likely not the same growth as ’22. And then also CRM coming off of a really exceedingly market growth quite a bit in ’22, likely to grow more in line with the market in ’23. So there’s a couple of the headwinds, clearly, a bunch of tailwinds. The company performed — continues to perform extremely well across the globe, Europe, LatAm, Asia-Pac and U.S. You saw really impressive growth across the company. WATCHMAN growing 24% for the year, Cardiology as a whole grouping grow 10%, PI grew 9%, Endo 8%, Euro 10%.
So we have just very strong momentum across the businesses, which is obviously a bit of a tailwind given the momentum we have commercially. And we have incrementally to that some of the questions today on EP. We expect to have a very strong year in EP in outside in Europe and in Japan. Potential tailwind would be depending on when cryo gets approved in the U.S. So I’m sure how much of an impact that will have in the U.S. depends on the approval date there. Other products like WATCHMAN continue to do extremely well. We’re really proud. We actually think we gained share in fourth quarter with WATCHMAN and ended the year just over 90% market share. So that business continues to do really well. And the one that gets very little discussion by analysts, but lots internally and by physicians is ACURATE neo2.
We now have a large size. That business is doing extremely well in Europe, actually building momentum each quarter. And we’re anxious to finish that U.S. trial shortly.
Vijay Kumar: That’s helpful. Thanks guys.
Operator: The next question comes from Travis Steed with Bank of America. Please go ahead.
Travis Steed: Hi, good morning, everybody. And thanks for taking my question. I guess I’ll ask a question on the Italy impact. Just curious why we’re only hearing about this from Boston. I don’t know if maybe it’s — you’re taking a more conservative approach in taking a reserve. And it seems like a big number. I know it seems like Italy wouldn’t be that big of a country, so maybe just calculated on more than a year of sales. And I just want to confirm no impact on 2023? And then I’ll ask my follow-up now as well, which is on op margins. I think you mentioned gross margin first half higher, lower in the second half on currency. And I just want to make sure there’s any puts and takes to consider on the op margin side first half versus second half? Thank you.
Dan Brennan: Sure, Travis. I’ll take the Italy one first. I can’t speak for other companies. I can speak for on behalf of Boston Scientific. It’s been an evolving situation, particularly over the last few weeks here, because what you have is the Italian government passed a provision back in 2015 with regard to what I mentioned to trying to claw back some excess spending over the allocated budgets within the public hospitals in Italy. But for the last 7-plus years, there’s really been — it’s been dormant. There’s been limited implementation guidance, there’s really been literally no activity around that. That changed, again, over the last few weeks, with some events that put a little more teeth into their desire to collect those monies.
And so we booked that incremental reserve. We had a reserve on the books, we booked an incremental reserve to cover what we believe will be the amounts that we’ll owe as part of that. We’re obviously challenging it vehemently through the Italian court system as our other industry participants, we disagree with it. But that outcome will be uncertain, but we picked a reserve that we think is a reasonable reserve given the timeframe.
Mike Mahoney: He also mentioned do you see an issue in ’23 with more reserves?
Dan Brennan: The ’23 amounts are included in guidance. So the amount of the reserve relates to prior periods, 2015 to 2022, anything that’s 2023 and beyond is included in guidance. With respect to op margin, actually, I’m glad you asked that question because it’s a bit of a juxtaposition with gross margin. So I mentioned that gross margin will be higher in the first half and lower in the second half, which is a bit of a buck the trend we normally have, which I wanted to make sure I got that point out there. Relative to operating margin, though, I think you’ll see a similar trend where it builds throughout the year. So the gross margin higher in the first half, lower in the second half, but through the rest of the P&L and netting down to operating margin, I would expect you’d see a very similar trend starting in Q1 and building to higher amounts as you go first half, second half. So hopefully, that’s clear, Travis.
Travis Steed: Yes. Thank you.
Operator: The next question comes from Cecilia Furlong with Morgan Stanley. Please go ahead.
Cecilia Furlong: Good morning. And thank you for taking the question. I wanted to ask on WATCHMAN, specifically what’s underlying the double-digit growth outlook that you called out for ’23? How you’re thinking about market growth as well as Japan and China contributions? And then just a quick follow-up on ACURATE neo2 with the Prime XL registry. How are you thinking about approval time lines at this point in the U.S.?
