Good morning. Thanks for joining us again at the 24th Annual Needham Healthcare Conference. I'm Mike Matson, and I lead the MedTech and Diagnostics Equity Research Team at Needham. Please introduce OrthoPediatrics. With me today, I have President and CEO David Bailey and CFO and COO Fred Hite. Instead of a standard presentation, we're going to do a Q&A session or fireside chat. If you do have any questions you'd like to ask, you can submit them electronically through the Needham Conference website, or you can email them to me at mmatson@needhamco.com, and I'll do my best to fit them in. David and Fred, thanks for joining us. I'm going to go straight into the questions here.
I guess I'd like to start out, you know, just asking about, you know, kind of every year we have the respiratory infection season and, you know, things like flu, RSV, COVID. Seemed like, you know, the flu was particularly bad this year, particularly among children. I just wanted to ask what, you know, what you saw in the first quarter. You know, was it kind of better or worse than you had expected kind of heading in?
Yeah, first of all, Mike, thanks for having us. Appreciate the opportunity to present and participate in the Needham Conference. RSV and flu, as you know, typically spikes in the December, January, February timeframe. This year, February was a little higher than it was last year, but not nearly as high as it was two years ago. I think the thing for us that we really noticed is that the pediatric hospitals were caught off guard about three years ago with this when it first spiked, but they've really been able to deal with any increases much, much better as we've gone through the last couple of years. Yes, February was higher than it was last year, but the hospitals seem to have been able to deal with it better than they have historically.
I think less and less of an impact on our business as it continues to move forward.
Okay, got it. You know, just want to ask one on the guidance before we move on. You know, I'm not looking for you to reiterate or anything here, but just, you know, you're guiding to $235 million-$242 million, which implies 15%-18% growth for this year. By our math, I mean, you guys don't really give us organic growth, but we're kind of ballparking organic growth last year at around 21%. That's, you know, a decent slowdown from what you did last year. You know, just wondering if there's any reason to expect a slowdown, or is it just, you know, sort of you being conservative in terms of the guidance you're setting out there heading into the year?
Yeah, I would say pretty consistent with how we operate historically. Number one, it's still very early in the year. You know, we want to set expectations that are very, very achievable to take into consideration any variables in the marketplace. You know, we see three main factors that are really driving the outperformance of that type of guidance that we've delivered. Number one is execution and scaling of the OPSB business, which I'm sure we'll talk about, continuing to take share across the business and leveraging our prior set deployments that we've put out there over the last several years. Then really the ongoing success of our innovative product launches, both historically in the past couple of years, but more importantly, probably as the recent launches that are going to take place here in 2025.
We feel very good about where the business is, where we stand within the guidance that we've provided, and look forward to continuing to execute very strong growth across all business segments here in 2025.
Okay, got it. Yes, I do want to ask some on OPSB. I guess starting with your acquisition of Boston O&P, it's been over a year now. Maybe you could just start out from a high level, give us an overview of OPSB and kind of how, you know, Boston O&P fits in with that strategy.
Yeah, good question, Mike. Yeah, you're right. It's been just a little over a year now since the acquisition of Boston O&P. I think when you think about Boston O&P and then the acquisition of MD Orthopedics a few years ago, those two acquisitions combined with product development for products like DF2 have really put us on the map and on the specialty bracing business. I'm really pleased to see how just in a few years, we've built a big opportunity, a nice size business on the specialty bracing side that I think is going to be able to produce outsized growth in a pretty big TAM over the course of the next several years. You know, we talk about our customer base and about 80% of the time our customers spend is outside of the operating room taking care of kids from a bracing perspective.
We think that's a little different than the adult landscape where, you know, orthopedic surgeons on the adult side are primarily focused on surgery, whereas I think our customer base is really trying to avoid surgery. I think our thesis in partnering with pediatric orthopedic surgeons before care and before surgery, and then ultimately if it requires surgery, being there in the operating room with them to provide the products they would use there. Ultimately, when a kid comes out of the operating room having bracing products that support their recovery, I think that strategy, that thesis is playing out very well now that we're a part of the specialty bracing business.
I think just anecdotally, the feedback from our customers related to the Boston O&P acquisition and our incursion kind of into the pediatric specialty bracing space, it has been as positive, if not more positive than anything we've done over the course of the 18 years of our company.
Okay, great. Just the OPSB products that you're, you know, currently offering, you know, I was wondering how many of those are, I know a lot of them are custom, but maybe you can talk about kind of the mix between, you know, a truly custom fitted kind of brace versus something that's more off the shelf that, you know, maybe still has to be adjusted or something, but yeah.
Yeah, so you're right. The majority of what we do is custom. Obviously, it produces a higher ASP, a higher price point, and that gets customized either at the Boston facility or in one of our 34 clinic locations. I don't know the exact percentage, but you're accurate in saying the majority there is custom. Even devices that are a bit off the shelf, so the MDO clubfoot products, you know, obviously we manufacture and sell to our own clinics as well as sell around the world and sell to clinics that we don't own. There still does involve some customization sometimes with the patient to ensure that the product fits appropriately. Obviously, Mike, you can imagine, you know, these patients, these kids are getting their first brace while they're very, very young.
Oftentimes, you know, throughout their childhood, they're having multiple custom braces made or multiple fittings of those braces as they grow and additional braces as they grow. The whole process is fairly customized. That's why it drives, you know, pretty substantial reimbursements for us, pretty strong price points, particularly when we own the manufacturing revenue side and the manufacturing margin side, as well as in our clinics where we're doing the customization and ultimately the application of those devices.
Okay. Can you just remind us of the targets that you set for opening the new OPSB markets and, you know, kind of what you're targeting in terms of the number of, you know, clinics per market and whether, you know, I know you laid some of these targets out at the investor day last year. To what degree are you still, you know, on track to hit those numbers?
Yeah, yeah. We see at the high level within the U.S., at least a $500 million TAM within children's hospitals broadly. I think that's probably a low number, frankly. I mean, the more and more we get involved, the more we see kind of endless opportunities here for expansion, whether that's, you know, motion preservation devices, motion assist devices. You saw us partner with the company Move-D for that product. These are, you know, there's big TAM expansion opportunities even within, yeah, that $500 million. You could assume that over the very long term, Mike, our aspiration would be to be very similar to what we do on the implant side and that we cover every children's hospital. We, you know, every children's hospital in North America is a customer of OP.
Again, not overnight, but certainly over the course of history here, we would expect to be serving every children's hospital with a specialty bracing product and hopefully a clinic or multiple clinics in every jurisdiction where we sell implants. I think over the time horizon that we talked about at the analyst day, we talked about adding four clinics or four territories this year. I think we're already on our way there in terms of having three of those territories started. You could assume we, you know, we're on our way to having a successful year in 2025, accomplishing four. Three-year time horizon, we've said we want to have 27 territories of the 80 that we defined. I think it's pretty safe to say that we have plenty of opportunity here.
It's not an exaggeration to say we're bombarded at this stage with opportunities for clinics. It's more about, you know, how do we do this in, you know, a financially rational way that preserves capital, that, you know, we don't get too far ahead of ourselves. Again, we think we have this flywheel that's moving, it's small right now, moving very, very fast, but as we get momentum here, things get a bit easier and we see that certainly playing out over the course of the next several years.
Okay, thanks. You know, one question I've gotten from investors about this part of your company is just the competitive landscape. I think it's sort of more fragmented and a lot of kind of mom and pops running the clinics. Also, just, you know, maybe talk about that from a clinic perspective, but as well from a, you know, kind of the bracing manufacturing perspective. You know, how many companies out there are making some of these braces if it's, you know, something that's not, you know, completely custom made within the clinic itself?
Yeah, this is wildly fragmented. I mean, it would be hard to claim who the specific market leader is in the space. If there is a market leader that's so fragmented, they probably don't know they're the market leader because there's just, you know, these patients are going to a lot of different clinics that are not focused exclusively in pediatrics. There are some clinics that have a high focus on peds. They're generally, as you suggest, kind of a mom and pop or a one or two person clinic. Those are the kinds of clinics that we're keenly interested in in terms of our aqua hire strategy. Gets us a footprint for expansion in new jurisdictions that it just accelerates things.
You know, I think that the majority of these patients outside of Boston and outside of Philadelphia and places where we have a strong presence get a script for a brace. Oftentimes our customers say they don't really know where that patient goes. They're going to a person that spends the majority of their time, you know, fitting adult braces and not necessarily super familiar with the pathologies that the pediatric orthopedic surgeon is trying to treat. I think that, you know, there's a company focused exclusively there, just like we do on the implant side. You can see the competitive advantage and why our customer would be really interested in us continuing. I think on the actual product side, you know, a lot of local-made products, kind of a lot of one-off product.
Obviously, we see opportunities and you've seen us on the distribution side come up with distribution opportunities with, you know, with Ora Medical, for example, or the acquisition of, you know, Rhino for their hip bracing products. I mean, small, similarly like mom and pop types of shops that are supplying clinics around the United States, in some cases around the world. We see opportunity with those types of products as well as our own R&D initiatives to scale this globally. As we get more clinics, we get more powerful in that circumstance.
You know, we would aspire that if you ultimately want to bring a great product to market for, you know, pediatric bracing, that we would be the place that inventors and small companies would want to go, particularly when eventually we'll own the majority of the clinics and be powerful in each, you know, jurisdiction where there's a children's hospital.
Okay, that's helpful. You know, just how are you, as you plan to, you know, the markets and the territories, how are you determining kind of where to go first? Maybe just talk about that. You know, how many clinics per market are you typically planning?
Yeah. I think the first part of our strategy here was to scale the volume in some of the existing clinics, right? Boston started when we made the acquisition, there were 26 clinics. I think now we're up to 34. One of the things that we focused on that really costs no money is to ultimately use our selling organization to ensure that there's just awareness that in areas outside of the immediate Boston or Philadelphia area, we do have clinics and to make sure that those clinicians are well partnered with the children's hospitals. We've seen success there. Obviously, the next phase of expansion from a clinic's perspective is more jurisdictions where it was fairly easy to enter. We had a clinic in Ohio, for example. We were licensed and had reimbursements in Ohio.
That is why you saw us step into, you know, our first real big expansion at Nationwide Children's, you know, one of the highest volume children's hospitals in the United States. We are positioned inside the hospital. You know, then Ohio has a reciprocity with the state of Indiana. Now we have opened up our Riley Children's Hospital, our Indianapolis facility in the north part of Riley. You know, some of it is ease of entry. Ultimately, you know, we have really strong demand. We're getting hit up from surgeons to, "Hey, can you put a clinic here? Can you put a clinic here?" While that's great, we are trying to determine, you know, how easy it is to enter the market, what do the reimbursements in those marketplaces look like?
Frankly, can we get space inside the children's hospital versus having to create a number of facilities in the satellite locations? I think to ask your second question about the number of locations, I think we expect that's probably one to four in each one of the children's hospital locations. Certainly, that depends on the number of just the population and the population density. In Boston, I think we have six clinics. Boston is a tough town to navigate with just a few clinics. We make it easy for patients and our physicians to get to a clinic. In Indianapolis, it's unlikely that we would need, you know, six locations. There's a few major children's hospitals and our, you know, one or two clinics will be centrally located. Same thing with Nationwide Children's.
I mean, we are in Nationwide and that's where the majority of the patients are seen. It doesn't require as many clinics.
Okay, got it. You know, one of the bracing products I think has done really well is this DF2 brace. Can you maybe just talk about applications there where it's used and, you know, why it's been so successful?
Yeah, so the DF2 brace is first indicated for fracture fixation or fracture management of patients under the age of eight. That has historically been done nonsurgically with a device called a Spica cast. I'm sure, you know, people on this call probably have nightmares about that happening to them or their own kids. This is essentially a nipple line body cast that goes down over your leg that holds traction on the leg. It becomes very difficult for patients and families to move a kid who's in a cast like that for, you know, four to eight weeks. The DF2 is actually a fracture brace where you can put this device on. Frankly, you can put it on in clinic, not even having to take the kid to the operating room.
Light sedation could be put on clinic, could be put on in the emergency room or patient taken to the OR. It eliminates the need to take a kid and put them under anesthesia and have, you know, essentially a non-operative procedure that requires anesthesia done on a patient. It is much easier to remove the device when you need to bathe or, you know, mom and dad need to transport the child. It is quickly replacing Spica cast faster, I think, than we had estimated. That is good. We also then got expanded indications from the FDA more recently for postoperative management. Oftentimes when we do hip osteotomies or certain deformity correction procedures, our surgeons postoperatively put on a Spica cast to immobilize the child for a particular period of time and let the surgical site heal and the bone heal.
We're starting to see applications for the device in non- or postoperative management, which we think frankly could be even a larger indication than we originally set out for.
Okay. And then, you know, finally, I just want to ask about the, you know, I think part of the appeal of OPSB is the financial profile of the business. You know, I think it's, you know, the margins are good, but it's much less capital intensive than the implant side, I think. I don't know if you can maybe elaborate on that, Fred or David.
Yeah, absolutely. I think it's important to understand this is almost a combination of two businesses. We get the manufacturing margin when we're making these custom braces. We also get the retail and the service revenue and margin when we're applying the braces. Overall, the OPSB business has slightly lower gross margins than our overall business, but higher contribution margins than our overall business because there's a very low sales and marketing component of this business, which is really attractive to us. To your point, it also does not require consigned implant sets into the hospitals. There is really no consigned inventory at all in this business. The ROI on it is very, very attractive.
We'll continue to make investments in this area, but it does enable us to increase EBITDA for the business and to increase the cash flow of the overall business as well, which is very attractive to us right now.
Okay, great. I want to touch briefly on your enabling technologies business. I think investors are probably familiar with kind of 7D and Firefly at this point. There were a couple newer things that were talked about at the investor day last fall. That is, you know, Playbook and this cochlear implant robotic system. Maybe just give us an update on kind of those two things. You know, I'm not sure that either has been launched yet, but when do you expect to launch them? You know, how can that kind of impact the business, you know, from a revenue perspective or margin perspective?
Yeah. Definitely Firefly and 7D, both doing really well. The enabling technology team, we got a small sales team now, three people that are helping with this 7D side in particular. I think that's why we are starting to see more and more deployments of 7D and why you're seeing some of the increasing growth on the fusion side of our scoliosis business. I think enabling technology as a whole really doing a nice job of driving some of the capital sale side of our business, an area that we didn't have experience in otherwise. I think the next step here is some of our own kind of homegrown products here in terms of getting Playbook available. We launched Playbook, which is really a digital workflow management tool, data collection tool intraoperatively for surgeons.
It has a preoperative component that ultimately a surgeon can take that preoperative planning component and bring it with them intraoperatively and manage workflows for all of the surgical procedures, not just ortho but all the procedures done in children's hospital and then gives hospital leadership analytical data to support, you know, how long these procedures take, what types of steps that we can use to drive efficiency. This is something that we see pretty commonly in, you know, commonly used in the adult side of orthopedics, but has really never been launched on the pediatric side. We have to think that long term there's really great opportunity for the Playbook technology. We launched it to the sales force really in a kind of a beta form here at our sales meeting in February.
We are now starting to work towards implementations of this in a few beta sites in the U.S. You can imagine again, this is not a big revenue driver for us in 2025, but when we start to get to 2026, 2027, again, super capital friendly, super high margin opportunity, very sticky, right? It's very, very sticky. You see the trend here. We're surrounding the surgeons, surrounding the children's hospital with bracing and digital tools and implants because we aspire obviously to be quite sticky. On the iotaMotion side, you're right, it isn't fully launched. This is a partnership that we have with company iotaMotion . It's a robot that actually places the lead for cochlear implants. We're not in the cochlear implant business, but certainly these are procedures that are done in adjacent ORs in the children's hospital where our reps are.
Their current situation with iota is they're pending or waiting for the pediatric indications for the robot. They have indications down to 12 and are seeking indications down to six months. We haven't really fully launched iota , but when we do, we think this is a really great opportunity both on the capital equipment sale side as well as there's a disposable. Again, there's no inventory. It's a very cash friendly business for us as well.
Okay, got it. Playbook, just to be clear, so is there a fee to your customers to use that?
There is. Yeah. So, it's both a small capital upfront capital, although this isn't a large machine, but it is a small machine that ultimately goes into the operating room. And then, so web-based application that anybody within the Playbook ecosystem could access and then ultimately would be sold as a, you know, software as a service model going forward.
Okay, got it. All right. I want to move on to the implants part of the business. You know, starting with trauma and deformity, maybe you can talk about the P3 plating system. I think this is a pretty big platform that's going to kind of be a multi-year launch. Maybe just provide an overview. You know, is it replacing, I assume it's replacing an older plating system that you had. Then you just kind of talk about like the different components and when you plan to launch them.
Yep. 3P, I think, is probably the biggest product endeavor that we've taken on on the trauma and deformity side in our company history. Yeah, it is a, I would say, a big deal. We currently have the first iteration of the product, the hip system, in front of FDA and are expecting FDA approval kind of imminently. We would expect to launch in a bit of a beta form, you know, not blowing it out in terms of total sets in this first year, but we're hoping to launch that here summer, early fall, being able to get some procedures and get some feedback. You're right, Mike, it is really a succession of launches that we expect will take probably over the next five years.
We'll start with the 3P Hip, then we'll move to the small frag, mini frag, and then really taking different kinds of anatomical portions of the body like the knee and like the tibia, ankle, you know, upper extremity and just continue to work through that. It does in part replace our PediFrag System . PediFrag System has kind of been our bread and butter plating system, but I would say there's a number of indications that PediFrag doesn't accurately, doesn't credibly treat. And so, surgeons are required to, who want to use PediFrag , they're required to keep around maybe some Synthes product or some competitive product.
The idea here would be ultimately to have the kind of landmark pediatric specific plating system that covered all of the, you know, both commoditized types of indications as well as the very, very specialized indications and have a system that is extremely modern. We are extremely excited. It's a big growth driver for us over the course of the next five years.
Okay, got it. Any other products, new product launches in Trauma and Deformity that you'd like to highlight?
Yeah, I think it's just important to note that on the PNP tibia side, I know we've talked about that now for over a year, but we're probably 30%-40% through the launch. It has become a big product for us. You know, the majority of the trauma and deformity sets that are going out this year are focused on that product system. It's extremely well received. We like everything about what PNP tibia is doing. It's still kind of the highlight in terms of the launching of new products that are going to drive our growth for 2025. DF2, as you talked about, that falls within that T&D category.
Those two are, you know, big, you know, big product drivers that are, you know, starting to scale a little bit and will have an impact in this year and probably for the next several years.
Okay, got it. Just moving on to the spine side or scoliosis part of the business. You know, you've had RESPONSE, the RESPONSE System for a while. It's done well. Maybe you can give us an update there. I think you've got a next generation fusion platform coming. Maybe just talk about, you know, what sort of improvements that's going to offer over RESPONSE?
Yeah. This is kind of an odd one. I mean, we're moving from good to good here with this product launch because, I mean, our RESPONSE S ystem is growing extremely rapidly. I think part of that is because of the increasing adoption of ApiFix, which is exposing more pediatric, you know, spine surgeons to our product line, as well as the adoption of 7D on these contracts, which is going extremely well. We're seeing RESPONSE, you know, do really well, but this is, I think it's the 11th scoliosis season that we're heading into. You know, in the U.S., there's an opportunity, I guess, to modernize some of the instrumentation. We're working on next gen. It's probably a year or so out. We think that next gen will be, we think, going to be the premier system in pediatric spine surgery.
I mean, it's developed exclusively with pediatric orthopedic surgeons. I think we're going to have very unique rod reduction instrumentation and derotation instrumentation and the opportunity for surgeons to customize what they need in the operating room such that they drive efficiency. There's right now RESPONSE, there's a lot of inventory. Fred knows that all too well when we have to order those sets. We'd like to bring only what is required by a specific surgeon. The customization effort here to make this maybe from nine sets in the operating room to three or four sets in the operating room has a pretty big impact on physician, hospital, and efficiencies.
Particularly when you partner this with Playbook, for example, and preoperative planning tools that essentially tell the surgeon what implants they're going to need or the surgeon knows what implants they're going to need before they walk into the OR, the opportunity to streamline with very elegant instrumentation and implants is something that we've struggled with with RESPONSE that I think is definitely going to happen with the next gen system.
Okay. All right. You did just mention ApiFix. I want to ask for an update there. You know, I think it's maybe been a little slower than investors were hoping over the last few years, but, you know, it sounds like it kind of continues to chug along and build momentum. Maybe just give us your latest view of the product and how it's doing.
Yeah. ApiFix, I think what we've seen with ApiFix, obviously you acquire ApiFix in the middle of a global pandemic was not, didn't help us in terms of getting our first few hundred surgeries in the registry and get moving. Now that we've done that and we're starting to see, you know, one year, two year, and now even three year results, I think that it is giving surgeons confidence that they can tell a patient what they could expect from the ApiFix experience. You know, in certain patients, you can expect that, you know, young patients who are flexible, you may need two ApiFix cases because you're going to grow off the device. It's going to get, you know, you're going to grow tall and it grows long and sooner or later you have to put a new one in to allow that growth.
That's a win. Before, surgeons really struggled with being able to tell patients what exactly to expect. I think what we're seeing is that we've got enough data that surgeons are able to determine for themselves what patient population makes the most sense in their practices. We're moving from maybe a thought that, you know, some surgeons are going to be wildly high volume to surgeons, basically every pediatric orthopedic surgeon having ApiFix as a tool in their toolkit. We're seeing, I mean, quarter to quarter to quarter new customers online, new customers using ApiFix for the first time. I think we're able to give them much, much more clear data as to what to expect from the patient experience and the surgical experience with ApiFix. That's why it's driving growth.
I think that growth is ultimately driving, you know, this scoliosis fusion, the scoliosis business as a whole because ApiFix growth is outpacing some of the growth that we see from other products.
Yeah. Okay. And then, you know, one final thing I wanted to touch on in the scoliosis business is the EOS or early onset scoliosis products that you're developing. I think you have kind of three different things here, VerteGlide, eLLi, and the Rib and Pelvic system. I know it's, you probably spent the whole 40 minutes we have just talking about these things, but, you know, just can you give us a quick overview of the three products and kind of the timing on them and, you know, the market opportunity?
Yeah. Early onset scoliosis is a segment of pediatric spine surgery, very complicated. These are very, very complicated patients that require care. It generally requires care because their scoliosis is so severe and it's so early in their life that it's compromising their cardiothoracic output. Their heart and lung aren't able to produce the way that they would normally and then ultimately develop normally. This is an area that our surgeons really struggle with. There are very, very limited solutions here. A lot of things have been tried. We launched the RESPONSE Rib and Pe lvic System, which is, as you can imagine, attaches to the pelvis and the ribs and allows for chest wall expansion. That product has launched and is still launching this year. Really good responses from customers.
Again, opening us up to doing procedures with surgeons that we have not done procedures with historically on the scoliosis side. Hot off the presses today, sorry to catch you off guard, Mike, but we just launched a press release this morning that we did in fact receive FDA approval for VerteGlide here very recently. We expected VerteGlide was going to take some time with the FDA. Fortunately, after a number of debates with the FDA, it seems like we have come out with a win here. Maybe a bit of a tailwind for us in the second half of the year to start doing VerteGlide cases. VerteGlide is a technology we licensed from Medtronic several years ago.
It is another way that from a posterior perspective, surgeons can allow the patient's growth to direct the early onset scoliosis procedure and ultimately open up the chest wall as well. The last product is called eLLi. That is the device that we have breakthrough device designation from the FDA. It is still probably a year or more out in terms of getting it through the agency and ultimately into patients. We are very excited. I think, again, this is a new TAM for us. Essentially, it opens up a new segment of the surgery that we have not done. I will say, I think it is driving our fusion business already. This is an area that is incredibly underserved. The highest end pediatric orthopedic surgeons doing the highest volume are doing these procedures and they are not well served oftentimes by the larger orthopedic companies.
We come in and do this, I think it goes well noticed by our customer base.
Okay, got it. We have a few minutes left. I want to make sure I touch on some of the financial questions. You know, I have to ask one on tariffs. It seems like, you know, the orthopedics industry, you know, it seems to me like it should generally be more protected because there's a lot of U.S. manufacturing and you're not, you know, to the degree you're buying some raw materials, you're not using as many, you know, semiconductors and stuff coming out of Asia necessarily. Maybe Fred, you can just talk about kind of, you know, where the exposure is. You know, I don't know if I'd imagine some of the metals and things like that are coming from outside the U.S. You know, is this something that can have a material impact on the business?
Yeah, obviously we continue to monitor this very, very dynamic situation to say the least. I think most of our metals are coming from the U.S. They're specialty metals that are coming from the U.S. As we do the analysis, about 95% of our products within our cost of goods sold are coming from the U.S. There's no impact at all. On the small 5% that is coming from outside of the U.S., we're obviously looking at those to see what is the impact and what we can do to minimize those going forward. I think we are very fortunate in that our whole business model is structured around a domestic, primarily domestic supply base.
Okay. I mean, is there any risk that your, you know, products you're selling into Europe or other places could have tariffs on them?
Yeah, at this point, we don't see that. We're continuing to monitor things as it changes daily. That is something that we're looking at right now. We don't see or haven't quantified that impact. We don't think so, but it's too early to determine.
Okay. All right. We're almost out of time, but I just want to ask one on, I guess, on gross margin. You know, what's the outlook for gross margin? There's, you know, some moving pieces here in terms of the product mix between the different businesses we already talked about. You know, I know your gross margin was a little lower in the fourth quarter, but I think there were some kind of one-off factors there that drove that. You can comment on that.
Yeah, absolutely. I think it's important to look at the full year of 2024. The gross margin is in that 72%-73% range. That is consistent with our forecast for the future. For the next three years, we would anticipate our full year gross margin to be in 72%-73%, just like it was in 2024. It's also important to focus on the contribution margin of the OPSB business, which is higher than the legacy business.
Okay. Got it. I think we're going to have to wrap up there, but thanks, guys. Appreciate it. Hope you have some good meetings at the conference.
Thank you. Thank you, Mike. Appreciate it.
Great day planned. Thank you.