Matthew O’Brien : Okay, okay, that’s great to hear and super encouraging. Just maybe back to that other point. I’m assuming it’s too early to be getting any kind of halo effect from Boston O&P, but the Pega numbers and some commentary about ApiFix and other areas seem like they’re kind of, the momentum there is extremely strong. So I’m just curious about just the core business or the more organic, historical business, where some of that growth is coming from and the durability of some of that growth, especially Pega. I mean, I know you’re not going to grow 150% of recorded with that thing, but just some of the durability that you’re talking about now and the more traditional orthopedic franchises would be helpful. Thanks.
Fred Hite : Yeah, I think what we’re seeing, first on the implant side of trauma and deformity. I mean, it’s no secret that we put out a lot of inventory over the course of the last few years. It’s also no secret that some of that inventory utilization has been maybe stifled a little bit just because of pure throughput inside Children’s Hospitals. So I think what we’re seeing is a combination of the fact that we’ve landed a lot of inventory and we’re starting to see a normalization almost back to normal in terms of the surgical market. So we’re seeing efficiencies in that inventory and you see, you might assume that we’re being pretty aggressive in terms of wanting to pull up some of that product launch into the first half of this year because we’re starting to drive real efficiencies and see real growth from the inventory that we put out in 2022 and especially 2023.
So it’s good to see a lot of that legacy growth come because, obviously we were betting on that when we put out that volume of inventory. I would argue that, we’re obviously seeing, the really the first returns of a lot of inventory of Pega. So still seeing great growth domestically, I think it was about 50% globally. So stronger international, much smaller business for us, but now that we have Pega in all of our agencies and converted to all our distributors, I mean, we do expect to see pretty strong growth from Pega outside of the United States for a long time. I would also say PNP Tibia is performing better than we had expected. Admittedly, I think we’re almost to our annual sales growth number forecast on PNP Tibia through April. So that’s a pretty strong indicator that that product is going to work for us.
I think it is also driving a bit of a rebirth in the usage profile of PNP Femur, which is our largest trauma product. So, those things really cranking. Then, I mean, the numbers don’t lie in terms of our ORTHEX growth. The Ex-Fix portfolio has grown ever since we made that acquisition, now what 3.5 years ago and to see 3.5 years later, that business growing at that rate and it’s still really now just starting to catch its stride outside of the United States. We think we’re a top two player in Children’s Hospitals, at least in the U.S. and the Ex-Fix market. So, and all of those things are working for us, and that’s a good momentum as we think about heading into the balance of the year. Last thing, ApiFix is, I think we’re starting to benefit from some better data.
We’re going to have longer term and better data going forward. But ApiFix is cranking and, the halo with ApiFix 70 driving response sales. That’s what we’ve been saying for a long time, and I think the beat continues there and as surgeons see as making investments in OPSB, surgeons see us doing the deal with Boston. I think it gives people a sense of permanence for our company. They can trust that we’re going to be around a long time. It also gives people a sense of, wow, these guys are putting their money where their mouth is that they’re very serious about continuing to advance the entire field of pediatric orthopedics. Of course, that creates a big halo across the whole business, not just a few products.
Matthew O’Brien: Got it. Thanks so much.
Operator: Thank you. Our next question comes from the line of Rick Wise with Stifel. Your line is now open. Q – Rick Wise Good morning, gentlemen. A couple of things for me. Very exciting quarter, obviously. But getting into the weeds a little bit. Fred, maybe you can help us talk us through how to think about gross margin progress for the year, sort of from a quarterly perspective. I heard what you said about some of the gross margin, if you will, mixed pressures in the quarter that took it a little lower than we were thinking. The OUS set sales and the purchase price variances, et cetera. Can you help us understand how that plays out over the course of the year? Does it step up sequentially? Are we understanding in the second quarter? Does it step up sequentially in some kind of way that sort of gets it back more to the 74%,75% range? Just help us — by quarter and the implications for the year now.
Fred Hite : Yeah, absolutely. So the gross margin rate really varies a lot based on volume. So over the last many, many years, the third quarter is typically the highest gross margin rate. I think it was like 77% last year. The second quarter is typically the second highest quarter. Then with the first and the fourth quarter revenues being much smaller, obviously, than those two quarters in the middle, the margin is typically a little lower in those quarters. So, yeah, I would expect an increase second quarter compared to first quarter, and then possibly another increased third quarter compared to second quarter.
Rick Wise : So still getting to mid 70s kind of area for the year, despite the start? Or ..
Fred Hite : Yeah [Cross Talk]. I think I mentioned 475 on the call last time.
Rick Wise : Great. Turning to the pipeline, obviously, Dave, you’re talking about really exciting pipeline. I can tell you’re excited about it. Maybe talk to us about a couple of things. Some of the organic product launches in a little more detail, which ones you’d have us focus on most and just a little — a little more sense of timing. You highlighted a couple of them, but maybe dig into a little more. As part of that, why this electromechanical Growing Rod opportunity is such a big deal and what the breakthrough designation might mean for launch expectations. A lot in there, but if you could just break some of that down.
David Bailey: Great. Yeah, sure. So, I think the near term opportunity, right, is with products that we just had launched here, or kind of kicked off in Q3 and Q4. So PNP Tibia, as I mentioned earlier, really doing well. I mean, we have, I don’t know, Fred, 15% of the sets that we’ll have out on PNP Tibia.
Fred Hite : Well maybe 10%.
