“As we look ahead, we expect these capital dynamics to continue for the foreseeable future.”

In context

“er number of SI systems in the installed base available for trade-in and macro-related headwinds creating pressure on the hospital capital spending. Capital placements in more mature markets are a function of procedure demand that is moderated by system utilization growth and trade-in opportunities. While trade-in opportunities have declined, the core demand for procedures continues to be healthy and system utilization has been increasing. With a three-year compound annual growth rate in procedures of 16% from Q2 of 2019 to Q2 of 2022 and installed base growth of 11% over the same period, utilization of installed systems has continued to increase through the pandemic and first half of 2022. This is increasing the value derived from the existing installed base for our customers and for us. As we look ahead, we expect these capital dynamics to continue for the foreseeable future. Turning to gross profit. On our last call, we forecast our 2022 full year pro forma gross profit margin to be within 69% and 70.5%. We are now refining our estimate of pro forma gross profit margin to be within 69% and 70% of net revenue. Given the ongoing impact of higher input costs related to supply chain and the impact from a stronger U.S. dollar, we would expect to be towards the lower end of that range. Our actual gross profit margin will vary quarter-to-quarter depending largely on product, regional and trading mix, fluctuations in foreign currency rates and the impact of new product introductions. With respect to operating expenses, on our last call, we forecast pro forma operating expense growth to be between 23% and 27%. We are refining our estimate and now expect our full year”