And so that’s one reason why we acquired the company was the momentum they have the technology and the long-term market cater that we see based on the global opportunity. The market today is reasonable nearly all US. That’s something we’ll evaluate more in the future here as to would it make sense for us to bring this to select markets outside the US, given the data that we have? As you mentioned, we have a significant commercial channel in our Urology business through all of our different business units within Urology. So this is an ideal fit. It is an adjacency for us. We don’t have any competitive product in this area. So it’s a nice adjacency for us that will allow us to compete more comprehensively with Urology customers. But we aim to, you know, take Axonics to the next level, but that team has done a terrific job to date.
Patrick Wood: Amazing. Thanks for taking the question.
Michael Mahoney: Sure.
Operator: And just to verify, do we have time for one more question?
Lauren Tengler: Yes. One last question, please.
Operator: Okay. That question will come from Michael Polark with Wolfe Research. Please go ahead.
Michael Polark: Good morning. Thanks for sneaking me in. I’ll ask a gross margin question. Dan, I heard in the script for ’24 flat to maybe slightly down year-on-year in the guide. The world seems to be calmer on price cost, but as we all know, the Middle East is flaring. And so, I’m curious, one, have you built in any cushion for kind of cost-push from those events? And two, in real-time, are you seeing any impact in the field? And if so, what does that look like?
Daniel Brennan: Yeah, I can give you the short answer and a little bit longer answer. So the short one is that we’ve contemplated all that. Our team is super close to everything relative to our global supply chain network. And so there — everything that we have in the guidance that we gave contemplates what we know today and what — and the guidance that they’re giving us on that, which — the impact is minimal. Overall on gross margin, the little bit longer answer. You know, if you look at ’23, we came in pretty much right where we expected at that 70.7%. And then, as we said at the Investor Day in September, we said it would be a challenge to contribute to our margin expansion goals in ’24, right, which that’s probably going to prove out to be true because we’re saying we’ll be either at or slightly below.
But that’s okay, as there are many other areas of the P&L, and as you know, we have a pretty solid track record over time of managing all those lines of the P&L to drive margin expansion, most recently that 70 basis points last year. So for ’24, I’d kind of point to two headwinds and two tailwinds that will play out, and, again, have us at that kind of at or slightly below the 70.7% we put up last year. And one is inflation. And that’s probably a little bit of a tailwind, right? So the macro factors are improving, in general, relative to inflation and other things. But as a reminder, we entered into, you know, contracts for many elements of materials for 2024 already last year. So we don’t see that full benefit. But in ’25 and ’26, I’d like to believe there’s even more benefit there, not only from the macro side of inflation, but also for gross margin in total.
And then our mix, so you know, getting the FARAPULSE approval today, that’s exciting because that’s a great mix thing for the company, and many of our other launches are as well. And then on the headwind side, foreign exchange was a headwind in ’23, that continue in ’24. And as I said, at Investor Day, good problem to have, but we also need to make investments in manufacturing capacity to support the sales growth, you know, growing 12% last year and then 8% to 9% this year. But we’re absolutely committed to the 150 basis points over three years. Gross margin probably won’t pay a lot of bills for us in ’24, but I think it certainly will in ’25 and ’26. Recall, we used to be north of 72% back in 2019. And we are maniacally focused to get there and then to get the overall operating margin kind of, you know, on the doorstep of 28 when we get to 2026.
And that puts that 30% long-term goal that we’ve had kind of right in our line of sight as we’re in 2026.
Michael Polark: Thank you.
Michael Mahoney: Thank you.
Lauren Tengler: Thanks for joining us today. We appreciate your interest in Boston Scientific. If we were unable to get to your question or if you have any follow-ups, please don’t hesitate to reach out to the Investor Relations team. Before you disconnect, Drew will give you all of the pertinent details for the replay.
Operator: Thank you. Please note, a recording will be available in one hour by dialing either 1-877-344-7529 or 1-412-317-0088 using replay code 2394361 until February 7th, 2024, at 11:59 PM Eastern Time. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
