Please stand by. Good morning, ladies and gentlemen, and welcome to the Teleflex fourth quarter 2022 earnings conference call. At this time, all participants have been placed in a listen-only mode. At the end of the company's prepared remarks, we will conduct a question-and-answer session. Please note that this conference call is being recorded and will be available on the company's website for replay shortly. Now I will turn the call over to Mr. Lawrence Keusch, Vice President of Investor Relations and Strategy Development.
Good morning, everyone, and welcome to the Teleflex Incorporated fourth quarter 2022 earnings conference call. The press release and slides to accompany this call are available on our website at teleflex.com. Please note that webcast viewers have the ability to advance the presentation slides on their own. Simply follow along with the presentation as we proceed through the call. As a reminder, a replay will be available on our website. Those wishing to access the replay can refer to our press release from this morning for details. Participating on today's call are Liam Kelly, Chairman, President, and Chief Executive Officer, and Thomas Powell, Executive Vice President and Chief Financial Officer. Liam and Tom will provide prepared remarks, and then we will open the call to Q&A.
Before we begin, I'd like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined in the slides posted to the investor relations section of the Teleflex website. We wish to caution you that such statements are, in fact, forward-looking in nature and are subject to risks and uncertainties. Actual events or results may differ materially. The factors that could cause actual results or events to differ materially include, but are not limited to, factors referenced in our press release today, as well as our filings with the SEC, including our Form 10-K, which can be accessed on our website. During this conference call, you will hear management make statements regarding intra-quarter business performance.
Management is providing this commentary to provide the investment community with additional insights concerning trends, and these disclosures may not occur in subsequent quarters. With that said, I will now turn the call over to Liam for his remarks.
Thank you, Larry. Good morning, everyone. For the fourth quarter, Teleflex revenues were $758 million, a year-over-year decline of 0.5% on a reported basis and an increase of 3.7% on a constant currency basis. Compared to the prior year period, revenue under the manufacturing and supply transition agreement associated with our prior divestiture of the respiratory assets negatively impacted growth by 0.6% in the quarter, implying underlying constant currency growth of 4.3%. Adjusted earnings per share declined by 2.2% year-over-year to $3.52. In reviewing the quarter, our fourth quarter constant currency revenue growth remained durable despite an unexpected sub-component supply chain issue in our surgical business that resulted in an approximately $3.5 million headwind during the quarter.
The solid performance in the quarter continues to demonstrate the benefits of Teleflex's diversified portfolio that has been purposely built to target the care of critically ill patients. Of note, our interventional, surgical, and OEM product categories generated double-digit constant currency year-over-year revenue growth during the fourth quarter. Encouragingly, we witnessed improving monthly growth on a sequential basis, with December representing the strongest month of the quarter as healthcare utilization continues to normalize. From a geographic perspective, Asia generated strong results and continues to be an important growth driver for Teleflex. Raw material inflation and supply chain challenges remained headwinds for the business during the fourth quarter. Tyvek continues to be in short supply and has primarily impacted our vascular and interventional businesses. Turning to the full year of 2022.
When adjusting for the divestiture of the respiratory assets and one less shipping day, constant currency revenue growth was 4.3% for 2022 as healthcare utilization improved through the year and demand for Teleflex products accelerated. Our high-growth revenue portfolio maintained momentum across the majority of growth drivers. Although UroLift constant currency revenue declined 5% year-over-year in 2022, the remainder of products in the high-growth portfolio continued to show healthy gains with approximately 14% constant currency growth for the year. Moving over to durable core revenues. In 2022, durable core revenue grew approximately 5% on a constant currency basis as compared to the prior year period, reflecting improvement in procedural volumes, strong global execution, new product introductions, and positive price.
Our other category, which includes our respiratory and drainage catheter business as well as revenue from the MSA we entered into with Medline in connection with the sale of our respiratory business, declined just under 10% year-over-year in 2022. Let's turn to a deeper dive into our fourth quarter revenue results. I will begin with a review of our geographic segment revenues for the fourth quarter. All growth rates that I refer to are on a constant currency basis unless otherwise noted. Americas revenues were $458 million, which represents 1.7% growth year-over-year against a tough comp in the year ago period. Excluding the impact of the year-over-year decline in MSA sales, Americas revenue grew 2.7% in the quarter.
Interventional and surgical recorded double-digit growth, offset by declines in other areas of the business, including interventional urology. EMEA revenues of $147.8 million increased 1.4% year-over-year. We continue to see procedure volumes improve year-over-year. Now turning to Asia. Revenues were $78.5 million, increasing 13.3% year-over-year. We saw strength across the region, with all geographies posting solid growth during the fourth quarter. China growth approached 7% despite COVID-associated disruptions towards the end of the quarter. Let's now move to a discussion of our fourth quarter revenues by global product category. Commentary on global product category growth for the fourth quarter will also be on a constant currency basis. Starting with vascular access. Revenue increased 0.5% to $186.4 million.
As we anticipated, the performance in the quarter demonstrated a return to growth for vascular access despite a tough comp for central venous catheters due to the year-over-year reductions in COVID patients in intensive care units in the United States. Although we made sequential progress on back orders, supply chain is still not yet back to normal. As previously discussed, the vascular business has the greatest exposure to Tyvek packaging for our kits and trays. Tyvek shortages are anticipated to improve in the second half of 2023 as additional supply for the industry comes online. Over the long term, we remain confident that our category leadership in central venous catheters and midlines, along with our novel coated PICC portfolio, continue to position us for dependable growth. Moving to interventional access. Revenue was $125.1 million, up 13.4% year-over-year.
We saw sequential improvements in constant currency revenue growth through 2022 as procedures moved back to pre-pandemic levels. In the quarter, our diversified portfolio served us well with balloon pumps, OnControl and MANTA all contributing to growth. Turning to anesthesia. Revenue was $99.6 million, up 2% year-over-year. Of our larger franchises, hemostatic products, LMA single-use masks, and endotracheal tubes all had strong performances in the fourth quarter, partially offset by regional anesthesia. In our surgical business, revenue was $110.4 million, representing another solid performance with 10.4% growth year-over-year, despite the aforementioned supply chain disruption due to a specific sub-component supplier. Among our largest product categories, skin stapling and our ligation portfolio contributed to growth.
In other developments, we closed the acquisition of Standard Bariatrics early in the fourth quarter, and Titan stapler revenue drove a significant portion of the year-over-year growth in the surgical business. For interventional urology, revenue was $89.2 million, representing an increase of 13.1% sequentially and a decrease of 3.6% year-over-year. Interventional urology continued to be impacted by a year-over-year decline in patient visits to urologists and staffing shortages. Although the overall environment for elective BPH procedures has not yet returned to normal, there were signs of improvement during the fourth quarter.
Third-party data indicates that overall patient visits to urologists were down in the 3%-4% range year-over-year in the fourth quarter, which marks a sequential improvement from the high single-digit year-over-year decline witnessed in the third quarter of 2022. OEM revenues increased 12% year-over-year to $73.7 million, despite a very difficult comparison to last year. Our order book remains well-positioned as customers recognize our broad competencies with competitive capabilities, including fast growth markets for thin-walled interventional micro catheters to access small vessels and fine wire for sensing and ablation technology. Fourth quarter other revenue declined 7.1% to $73.6 million year-over-year. We continue to expect all MSA revenues to cease at the end of 2023. That completes my comments on the fourth quarter revenue performance.
Turning to some commercial and clinical updates. As mentioned earlier, we completed the acquisition of Standard Bariatrics early in the fourth quarter of 2022. Standard Bariatrics commercialized the Titan SGS Stapler for use in sleeve gastrectomy procedures to treat morbid obesity, and we are excited to have the product in the Teleflex surgical portfolio. We are proceeding with our integration activities and remain on track with our objectives. Of note, we have completed the training of the Teleflex sales force on the Titan Stapler, enabling us to double the size of the selling organization as compared to Standard Bariatrics on a standalone basis. We also recently announced that Teleflex was rewarded a group purchasing agreement with Premier for the Titan Stapler. The agreement will make the Titan Stapler available to surgeons affiliated with Premier and provide access to this innovative technology for use in gastric sleeve surgeries. Turning to UroLift.
We reached our objective to convert the vast majority of users to UroLift 2 during 2022, which will free up time for our sales organization to dedicate increased time to market development activities in 2023. Training of new physicians continued in the fourth quarter, and we reached our targets for the year. Of note, the number of physicians trained in 2022 remains largely consistent with historic levels, implying continued interest in adding UroLift to the BPH treatment paradigm. To support new physician onboarding for UroLift, we hosted live BPH summit training sessions in the U.S., Australia, and Japan during 2022. Our direct-to-consumer program remains an important investment and achieved its pre-specified performance metrics for 2022. We will continue to invest in DTC initiatives for UroLift, including a refreshed television and digital campaign that launched in February of 2023.
Moving to an update of our international strategy for UroLift. We made considerable progress in the geographic expansion for UroLift, with entry into several new markets during 2022, including Japan and China. Starting with Japan, we had strong launch execution, with UroLift gaining sequential traction through 2022. Revenues exceeded our expectations for the year, we see continued momentum into 2023. Turning to China, we initiated UroLift cases in the fourth quarter as anticipated. We will be methodical in our launch activities, follow a similar playbook to the one that has served us well in Japan. We will spend 2023 training surgeons, building our presence in key cities, and continuing to engage with the Chinese Urological Association to build acceptance. For an update on Vascular business.
The Vascular business unit continues to align its portfolio and clinical education offering with the evolving customer needs. Today, Teleflex is well positioned to serve as a trusted partner with Vascular access clinicians in their goal of zero catheter-related complications. We are helping to standardize outcomes by providing protection during and after Vascular access procedures and establishing a predictable insertion process across the hospital. This approach continues to solidify our significant market share in CVCs and drive revenue growth through the highly successful launch of the CVC ErgoPack Complete portfolio, offering a complete Vascular access insertion system designed to help clinicians comply with current guidelines and standards. We also continue to prioritize growth in the PICC and midline categories, with the most recent advancement being the launch of the new Arrow Pressure Injectable Midline portfolio in North America in the fourth quarter of 2022.
The new offering is designed to help alleviate risk associated with line misidentification. Without quick and easy identification between midlines and PICCs, medication may mistakenly be infused through midlines that should only be infused through a central venous access device, potentially causing complications and disruption in patient therapy. We are still in the early phase of the launch but have seen a great level of interest from customers thus far. Additional innovation in PICC placement and positioning devices can be expected in 2023 as we continue to drive toward growth and share gain in this segment. Turning to the Interventional Access business. I am pleased that the relaunch of the Langston catheter has progressed through the fourth quarter with product availability in the U.S., Canada, Australia, and New Zealand.
The Langston catheter is a unique diagnostic tool that helps clinicians determine the degree of aortic stenosis, which might result in a subsequent TAVR procedure. Our clinical and medical affairs team works to re-educate the market on this product, including through a panel discussion at TCT and a webinar held in December. The Langston catheter continues to build value for our customers, enhance our engagement with clinicians in TAVR, and demonstrates our relevance in the structural heart space. We expect further product launches in our interventional business over the coming years, including complex catheters in the structural heart market. Some comments on the outlook for 2023. We've witnessed improving stabilization in healthcare utilization over the course of 2022, and would expect a further sequential stabilization in healthcare utilization in 2023.
Indeed, the majority of the procedure markets that we serve are now back at or above 2019 levels. Conversely, some of the more deferrable disease states reflect patient visits to physicians that remain below pre-pandemic levels, including urology. We anticipate that as COVID has become increasingly endemic and staffing shortage bottlenecks gradually ease, patients will increasingly seek medical interventions during 2023. Turning to the macro environment. 2022 had its share of operational challenges, including inflation and supply chain disruptions. For 2023, we are prepared for some level of continued volatility, although we would expect incremental inflation to be at levels lower than 2022 and supply chain challenges to improve through the year. We remain focused on our global operations and will look for ways to become more efficient as we work through the macro environment. That completes my prepared remarks.
Now I would like to turn the call over to Thomas for a more detailed review of our fourth quarter financial results. Thomas?
Thanks, Liam, and good morning. Given the previous discussion of the company's revenue performance, I'll begin with margins. For the quarter, adjusted gross margin totaled 60%, a 120 basis point increase versus the prior year period. The year-over-year increase was driven by price, foreign exchange, and mix, partly offset by incremental inflation. Of note, our price strategy maintained its traction during the fourth quarter, enabling us to drive more than 50 basis points of year-over-year price improvement for 2022. During the quarter, we continued to see an improvement in sea freight costs in line with our expectations. Conversely, raw material and supply chain disruption remained elevated and have yet to normalize. Adjusted operating margin was 27.9% in the fourth quarter.
The 30 basis point year-over-year increase was the result of higher gross margin and disciplined expense management of non-revenue generating expense, partly offset by deleverage across our expense base from lower revenue year-over-year, inflation in our expense base such as wages, and planned investment in the business for our growth drivers. Net interest expense totaled $18.7 million in the fourth quarter, an increase from $11.8 million in the prior year period. The year-over-year increase in net interest expense reflects higher interest rates versus the prior year and increased borrowings on a revolver to fund the purchase of Standard Bariatrics, partially offset by a reduction in average debt outstanding. Our adjusted tax rate for the fourth quarter of 2022 was 13.6% compared to 13.8% in the prior year period.
The year-over-year decrease in our adjusted tax rate is primarily due to further enhancements in tax efficiencies of our global structure, partly offset by tax expense arising from the new provision of the U.S. tax law requiring the capitalization of certain R&D expenses. At the bottom line, fourth quarter adjusted earnings per share was $3.52, a decrease of 2.2% versus prior year. Turning now to select balance sheet and cash flow highlights. Cash flow from operations for 2022 was $342.8 million compared to $652.1 million in the prior year period.
The decrease was primarily due to lower operating results, higher tax payments, higher payroll and benefit-related payments, and unfavorable changes in working capital driven by an increase in inventory purchases to maintain high customer service levels during a period of elevated global supply chain volatility. Moving to the balance sheet. Our financial position remains healthy. At the end of the fourth quarter, our cash balance was $292 million as compared to $445.1 million as of year-end 2021. The reduction in cash on hand is due to $240 million of payments on our senior credit facility and $73 million for the acquisition of Standard Bariatrics. We borrowed $100 million under the senior credit facility for the Standard Bariatrics acquisition.
Net leverage at quarter end was approximately 1.8 times, which remains well below our 4.5 times covenant. Turning to our 2023 guidance update. We expect 2023 constant currency revenue growth of 4.75% to 6.25%. Foreign exchange is expected to be a headwind of approximately 0.5 points in 2023. Concerning the foreign exchange headwind, we expect reported revenue growth of 4.25% to 5.75% for 2023, implying a dollar range of $2.91 billion-$2.952 billion. We continue to expect revenue from Standard Bariatrics to be within a range of $30 million-$35 million.
Turning to middle of the income statement. We expect gross margin for 2023 to be 59%-59.5%. Our gross margin guidance range reflects the positive impacts of year-over-year manufacturing efficiencies, product mix, and price, largely offset by inflation. Although we saw a moderation in sea freight costs during the second half of 2022 in line with our forecast, raw material inflation was greater than expected at the time of our May 2022 Analyst Meeting. For 2023, we have assumed that macro volatility will persist and continued inflation in raw materials, labor, and utilities to represent headwinds to our gross margin this year. Moving to operating margin. We expect a range of 26%-26.75%.
Our guidance reflects the flow-through of gross margin, headcount and employee related expenses, investments to grow the business, and the inclusion of Standard Bariatrics, partly offset by the positive impact of restructuring. Turning to items below the line. We expect an adjusted tax rate in the 10.25%-10.75% range for 2023. Net interest expense is expected to approximate $67 million for 2023. The majority of the year-over-year increase in our net interest expense outlook reflects higher interest rates, partially offset by debt repayment. Moving to earnings. Our adjusted earnings per share guidance for 2023 is $13-$13.60, which represents a 0.5 point year-over-year decrease at the low end and a 4.1% increase at the high end.
When considering your models for 2023, foreign exchange will be a meaningful headwind to revenue in the first half, and then increasingly turn to a tailwind in the second half of the year, assuming foreign exchange rates as of the beginning of 2023. However, as a result of how foreign exchange flows through our inventory, there will be headwinds to EPS through the third quarter, and then it would become neutral in the fourth quarter. We also note that while there is no year-over-year difference in the number of shipping days in 2023 versus 2022, there will be 5 extra shipping days in the first quarter and 5 less shipping days in the fourth quarter of this year. Historically, the benefit or headwind to our year-over-year GAAP revenue growth from a shipping day change is approximately 1% in a fiscal quarter.
Although we do not provide quarterly guidance for your modeling purposes, we would expect a constant currency revenue growth range in the first quarter of approximately 5.5%-6.5% when excluding the benefit from five extra shipping days of approximately 5%. I'll provide some commentary on our long-range plan. We remain confident in the foundational pillars of our durable growth strategy that we provided our May 2022 analyst meeting. Our 2023- 2025 long-range plans remain anchored on discrete drivers for revenue and EPS growth, as well as margin expansion. We are long-term focused on achieving our objectives for 2025 and continue to see the opportunity to drive greater scale, improve profitability, execution on a disciplined capital allocation strategy, and strong cash flow generation for Teleflex.
With that said, the macro environment has been highly dynamic. There have been a number of unanticipated headwinds on our business in the period since May 2022 Analyst Meeting. First, in the second half of 2022, inflation has been persistent and at a higher level than we projected at the time of our 2022 Analyst Meeting, in particular from raw material costs and their related impact on gross margin. Second, although we anticipated a sequential improvement in the procedure environment for UroLift throughout 2022, headwinds persisted through the year. In particular, patient visits to urologists were down year-over-year in 2022. Staffing shortages remained a bottleneck for procedures, especially in the office setting. Third, foreign exchange was a larger headwind than was expected as the dollar strengthened against a broad basket of currencies in the second half of 2022.
Interest rates also increased dramatically in the second half of 2022 and are expected to continue rising in 2023. Although we have not recast the entirety of the LRP provided in May 2022, we have updated assumptions related to inflation, foreign exchange, and interest rates. In addition, we are now assuming a 3-year CAGR in the 8%-9% range for global UroLift revenues. Finally, since we acquired Standard Bariatrics early in the fourth quarter of 2022, we have incorporated the business into the long-range plan. We continue to view the LRP targets provided at the 2022 Analyst Meeting as the vision for Teleflex in 2025.
With 2022 as the base year and incorporating the updates, we now believe that we will deliver at the low end of the ranges for 2023 through 2025 total revenue CAGR and margin expansion. For the high-growth portfolio, which represented a little more than 25% of revenues in 2022, we expect approximately a 12%-13% CAGR for the LRP. For the durable core, which represents slightly over 60% of revenues in 2022, we expect to grow at approximately a 5% CAGR. With respect to the remaining portion of the total revenue, which we refer to as the other category, we expect a negative 6%-7% CAGR through the LRP. That concludes my prepared remarks. I'd now like to turn it back to Liam for closing commentary.
Thank you, Thomas Powell. In closing, I will highlight our three key takeaways from the fourth quarter of 2022 and our 2023 outlook. Our fourth quarter results were solid and driven by an improving end market for the majority of our businesses. We are confident in our outlook for 2023. Our outlook reflects the diversification of the Teleflex portfolio through the combination of our growth drivers and stability of durable core revenues. Importantly, we will continue to focus on investment in our future growth drivers to enhance long-term value creation. We are focused on achieving our objectives in 2025. We have a balanced approach to top line growth as we invest in our growth drivers and optimize the performance of the durable core. We see opportunities to drive margin expansion through mix shift, restructuring and price.
Finally, we will remain disciplined in our capital allocation strategy with a focus on executing on our M&A strategy. That concludes my prepared remarks. Now, I would like to turn the call back to the operator for Q&A.
Thank you. If you'd like to ask a question, please press star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We do ask that you limit yourself to one question and one follow-up. If you would like to ask additional questions, we invite you to add yourself in the queue again by pressing star one. Our first question will come from Cecilia Furlong with Morgan Stanley. Please go ahead, Cecilia.
Great. Good morning, and thank you for taking the questions. Liam, I wanted to start with 2023 guidance, if you could walk through relative to the updated LRP and those CAGRs, how we should think about contributions both from the durable core, high growth assets in UroLift and specifically on UroLift with the 8%-9% CAGR, how you're thinking about cadence over the next 3 years.
Cecilia, thank you for the question and good morning. I'll start with our overarching guidance for 2023 on revenue, which is 4.75%-6.25% with a midpoint at 5.5%. This represents an improvement over 2022, which had an underlying growth rate of 4.3%. As regards cadence within the year, you obviously heard in Tom's prepared comments where the quarter one will be 5.5%-6.5% with a midpoint of 6%. Therefore, obviously seeing an improvement right out of the gate in core revenue. As a company, we're continuing to focus our efforts on high growth and durable core to the other parts of your question.
The natural evolution for Teleflex is to guide these buckets as they contribute to the overall growth rate of the company. Our guidance assumption for 2023, Cecilia, assumes that high growth will grow 8%-11%, durable core will grow 4.5%-5.5%, and the other bucket will be flat to declining in 2023. As you know, we're an incredibly transparent company, and while we will not be guiding specifically to UroLift, we will report interventional urology revenues every quarter, consistent with all our other product categories. The exception to this year will be Standard Bariatrics and the Titan stapler, as we have guided the full year at $30 million-$35 million. This is consistent with our past guidance principles of giving guidance to an acquisition within the first year.
obviously for UroLift, we would expect an improving environment in 2023. That would carry on, into 2024 and 2025, Cecilia.
Great. Thank you, Liam. If I could follow up on gross margin as well, just the outlook that you put out for 2023. If you could walk through both what you're expecting from continued inflation, benefit of pricing, and then also just UroLift 2 conversion impact that's having on gross margin alongside Standard Bariatrics?
Okay. I'll just cover the conversion of UroLift 2. Tom will cover the rest of the topics on margins, Cecilia. UroLift 2, we have the U.S. market pretty converted at this stage to the UroLift 2. Tom will go through your other questions on the gross margin line.
Okay. For 2023, our guidance is $59- $59 and a half, or about 5 basis points at the midpoint. For 2023, we expect to realize meaningful margin accretion from the combination of mix, price, manufacturing cost improvement programs and our footprint restructuring programs. However, as we've spoken about in 2022, we continue to expect inflation largely to offset these gains. Additionally, we're expecting a modest gross margin headwind from foreign exchange. If we were to look at, you know, what are the drivers of the accretion, you know, the largest being cost improvement programs accounting for, you know, some 40% of the positives and then mix price and the footprint about 20% each of the increase.
As we look at what is offsetting that, it's largely the inflation which accounts for 80% of the offset. As mentioned, it's a little bit from foreign exchange as well and some miscellaneous other items. Really it's a story of really good underlying margin expansion opportunities. You know, as we've mentioned, you know, we still feel very good about the long-term prospects.
Inflation is having an impact and largely offsetting those nice gains in the underlying business.
Our next question comes from Matt Taylor with Jefferies. Matt, please go ahead.
Hey, thank you. This is Mike Sarcone for Matt today. Good morning, everyone.
Good morning.
Good morning. Two follow-ups on Cecilia's questions. Just first on the UroLift growth CAGR of 8%-9% over the next three years. You know, by any chance, could you parse out how you're thinking about U.S. growth versus OUS growth?
Yeah. I will tell you that when it comes to the guidance for UroLift, for, during the LRP, over the coming years, we are assuming that UroLift will grow 12%-13%. Two comments on that. The high growth will grow 12%-13%, and within that, UroLift will grow 8%-9%. A couple of comments on that. First is that nothing has changed our international assumptions. We still are confident in the rollout of the product in Japan. As we said in our prepared remarks, we've begun in China. There are other geographies coming on board, such as Brazil, Taiwan, India, France, Italy, Spain, and ultimately Germany, as you go through the LRP cadence.
I would also say that, you know, 2022 played out a little bit differently than we anticipated in the U.S. with procedural recovery, a lot slower than we had anticipated due to patient flow and staffing shortages. I think overarching, if you, if you look at Teleflex as a company within that high-growth bucket, in 2022 it's 25% of our company growing at 12%-13%. By 2025, it'll be a third of our company still growing at that 12%-13%. I think this, along with our growth within UroLift, will position Teleflex as for attractive long-term durable growth as a company.
Got it. That's very helpful. Just one follow-up on the gross margins for 2023. Do you think you could help us think about the quarterly cadence through the year, and just, you know, how we should flow gross margin through?
Yeah. I'd say there's, you know, some pluses and minuses with how foreign exchange comes in and others. What you should expect is a relatively stable gross margin for the first 3 quarters, and then expect to see some margin expansion or further expansion in the fourth quarter as a result of a higher volume, more attractive mix expectation.
Our next question comes from Shagun Singh with RBC. Please go ahead. Your line is open.
Great. Thank you so much for taking the question. Just on UroLift, the LRP guidance is about 8%-9%. Isn't single digit a reasonable ballpark for this year? You know, I just wanted to get your thoughts on, you know, what gives you the confidence that patients will return? You know, do you have a backlog to tap into? You know, it is encouraging that physicians are continuing to train. Then with respect to my second question, on EPS, it's a pretty wide range. What gets you to the top versus the bottom end? And what are the biggest swing factors here? Thank you for taking the questions.
Okay, Shagun, thank you for the questions. I'll let Tom answer the EPS range in a moment. Let me begin with UroLift. Obviously we feel confident on the 8%-9%, for UroLift, in, within our LRP. We do believe it will be improving as we go through the LRP. As I said earlier, nothing has changed in our assumptions for the international markets. We continue to anticipate that the international markets will do well. We do feel good about the global growth for the UroLift franchise based on all of that and based on the improving environment that we anticipate, as we said in our prepared remarks. This gives us the confidence in the LRP growth of 8%-9% CAGR between now and 2025.
With regard to your question regarding patient returns, there's two elements I think, Shagun, that need to be taken into account, is patient returns and staffing shortages. We have seen in the fourth quarter, we saw 13% sequential improvement from Q3- Q4. We did see across all of our businesses an improvement as you went through the fourth quarter, as we said in our prepared remarks. That was also true of UroLift. As you went through that fourth quarter, you saw improvements as you went through the three months of the fourth quarter.
Ultimately, we beat the UroLift, our expectations for UroLift by in excess of $3 million in the fourth quarter, which is the first time we've done that in a couple of quarters now, which gives us some encouragement as we move forward. I was out on the road last week. I spent a few days with our urology sales force, with UroLift and meeting with customers. While we're seeing some improvement in staffing levels in hospitals, we're still not seeing it in the ASC and in the office environment. I do anticipate that that will improve as we go through this year, 2023. I also believe that patient flow will begin to return to the office. We're going to help that by continuing to train urologists.
We trained close to around 400 urologists last year. Everything that's within our control, we're managing, I think, really, really well. We're gonna continue with our DTC campaign, and we have a new ad that we just launched. Let's not forget, BPH isn't going away. 12 million men with BPH are still there. It's deferrable, but it's not gone. We remain the premier product for the treatment of BPH. We are in effect, the market leader in the treatment of BPH, which gives us confidence for that CAGR for UroLift over the LRP.
With regard to EPS, the $0.60 range, which is a little bit less than, you know, 5%, top versus bottom. The drivers that could push us to the top end of the range would be favorable mix in our sales for the year, as well as inflation, you know, staying at a certain level. If I were to characterize what would be the swing factor in there, probably the largest swing factor is gonna be foreign exchange rates, which have been proven to be pretty volatile over the past year, as well as just where does inflation go. Those are probably the two biggest swing factors in the guide.
The next question comes from Mike Polark with Wolfe Research. Please go ahead, Mike.
Good morning. Thank you for taking the questions. I have two on the updated comments around the LRP, revenue first and then margin. On revenue, I heard low end. The prior CAGR was described as 6%-7% at the company-wide level, so let's call it a 6%. My question is, are there any additional kind of unannounced acquisitions considered in that update? Or is it the base plus Standard Bariatrics now and no unannounced M&A contribution?
Mike, thanks for the question. You are absolutely correct. It is the base with the revised UroLift CAGR and the inclusion of Standard Bariatrics. That is the only change that we've made.
Okay.
That's accurate.
Cool. The follow-up on margin as it relates to the updated LRP commentary, just to level set, low end for the prior goals on gross and operating margin expansion, jumping off from 2022. 2022 on gross margin, 59.2. If I add 250 basis points, I'm just south of 62% in 2025. On operating margin, 27% plus 200 basis points, I'm 29% in 2025. Have I done the math correct?
You have.
Okay, thank you.
Thanks, Mike.
Next question comes from Jayson Bedford with Raymond James. Jason, please go ahead.
Good morning. I wanted to ask about operating margin in the fourth quarter was strong, but the 23 op margin guidance was a bit softer. The heaviness seems all to be in the operating line, OpEx. It implies a pretty sharp step-up in OpEx, and I assume some of the restructuring helps this line. I guess my question is, where is the reinvestment occurring and how much of this is kinda structural inflation driven or discretionary?
Well, to your point, I think as we look at the op margin for 2023, the first point is that just given the inflationary pressures in foreign exchange, we're getting a lesser gross margin benefit than we would typically get. We're starting off with less benefit from the gross margin. As you look at the OpEx, there's a couple things that are, I guess I would characterize them as structural in that there are headcount-related expenses that we're adding back in in 2023, that were not there in 2022. Variable compensation was lower than target, and there were a number of open positions, quite a few that took a while to fill given the tight labor market environment.
We've filled those positions and we're resetting the variable comp back to 100%. There's a pretty big structural kind of. Part of that's in gross margin, part of it's in OpEx and, you know, some is in 2023 and the balance in 2024. About two-thirds of that restructuring will benefit 2023. I would say, you know, overall the biggest impact is just that structural, putting the cost back into the OpEx that were not there in 2022. That's part of the reason why we benefited in 2022 with a higher margin was these costs were not in the cost structure.
Right. What's the expected dilutive impact from Standard Bariatrics in 23?
That's as we stated before, Jayson, it's $0.10. It was $0.10-$0.15 for this year, and it was $0.10 in last year.
Our next question comes from Lawrence Biegelsen with Wells Fargo. Lawrence, please go ahead.
Good morning. Thanks for taking the question. One on 23, one on the LRP. Just on 2023, Tom, maybe help me with the math here. The midpoint of that Q1 guidance, day adjusted 6%, I think constant currency. It's slightly below the rest of the year. Just, you know, why would the growth for Q2 through Q4 be lower than Q1, if I'm doing the math correctly?
I'll take that one instead of Tom, if you don't mind, Larry. Really, you have a year-over-year comp is one of the reasons for it. If you recall, there was Omicron last year, which had a slight impact on some of the procedures that were getting done. We also expect in Q1 to see a good, solid performance as in the overseas markets and in OEMs. Just because of that impact in the prior year period. That's why it's a little bit front-end loaded in that regard, Larry. I, and I think most investors would prefer to see a front-end loaded revenue plan than a back-end loaded revenue plan, in my experience at least.
I think coming out of the blocks, pretty well at a 6% growth, with the guidance that, with the midpoint of our full year guidance at 5.5%, I think should be seen as a positive for the investment community.
Okay. Yeah. No, I agree with that on the front-end loaded comment, Liam, thanks. On the LRP, I guess maybe two-part. One, if I'm just thinking about the math right, the 5%, I think the midpoint for revenue, it's about 5% organic this year in 2023, if I'm thinking about that right. 6% now for the LRP, so it implies an acceleration in 2024 and 2025, if I'm thinking about that right. On the margins, to follow up on the earlier question, you know, people are gonna now look at this operating margin, for example, at 26.3 at the midpoint for 2023, and approximately 29% goal in 2025. That's a pretty big step up of about 300 basis points.
You know, basically, you know, what gives you the confidence in both of those, if I'm thinking about the revenue acceleration in 2024 and 2025 correctly here. On the margins, basically 150 basis points a year, in 2024 and 2025, what gives you that confidence? Thanks for taking the questions.
Okay. I'll cover the LRP, and Thomas Powell will cover the margin question. I know what Thomas Powell's answer is. It's going to be really focused on inflation, Lawrence Biegelsen, which should be no surprise to anybody given the environment that we're in. Let me cover the revenue. It's all constant currency. What I'm going to talk about is constant currency. The first year of the LRP will be 5.5%. We're guiding to the low end of our LRP, which is 6%. You are correct. There is a modest uptick in revenue as you go from this year, 2023, into 2024 and 2025. Why is that?
One of the main reasons for that is the improving macro environment that we expect to see beginning as we go through 2023 and continuing into 2024 and 2025. The second factor that will help that is the international expansion of some of our high-growth portfolio. Not just UroLift, but also the international expansion of PICCs, the international expansion of the Intraosseous portfolio, the international expansion of the hemostatic products that will bring accelerated growth in the, in the latter half of the LRP. We feel pretty confident in that. It's not a mammoth step up. We're going from 5.5%- 6% CAGR over the horizon of the LRP. I think the other comment that I will make that nobody has picked up on so far in their questioning is Durable Core was 4%-5%.
While we've been micro-focused on one element of Teleflex, the Durable Core has been improving all this time. Now the Durable Core for the LRP is now 5% at the upper end of the original guide of 4%-5% through excellent execution by the businesses globally. The margins on a high portion of that Durable Core are fairly substantive and helpful to Teleflex. You know, it's a $14 billion global TAM for the high growth, and we're only 5% penetrated. The opportunities for us to continue to grow into that are significant. I'll let Tom address the margin question that you had, Larry, thanks for the questions.
Sure, Larry. The driver of the op margin expansion is really gonna come from, largely from the gross margin. As you break that down, we're expecting, you know, continued margin accretion due to mix and price. Additionally, we have the MSA with Medline, which ends at the end of 2023, and that adds close to a full point of margin as a result of that. Then the third area is that, you know, typically we have enough productivity in our operations to more than offset inflation. That wasn't the case in 2022. That's not the case in 2023. We do expect to see that, some improvement as we go into 2024 and 2025 on inflation. As a result, operations productivity once again becomes accretive to gross margin versus dilutive in 2022 and 2023.
Those are kind of the key drivers of the gross margin. We also expect to see some leverage in the operating margin as a result of increasing revenues allowing us to leverage that cost structure. If I think about, you know, the key components, that would be the four points I would reference.
The next question comes from Mike Matson with Needham & Company. Mike, please go ahead.
Yeah, thanks. I wanna ask one on pricing. I think you said you've had over 50 basis points. I think that was for the full year of 2022. You know, what have you kind of assumed in the guidance for 2023? Is it kind of remaining at that level? Could it even be higher maybe?
We began the year in 2022 expecting 50 basis points of positive pricing, and we exceeded that goal in 2022, Mike. We came in comfortably above the 50 basis points. We will expect again to be above 50 basis points and to deliver a minimum of 50 basis points of pricing this year. We have a pathway to that. We have some carryover from the prior year, and we have some additional pricing opportunities that some of which we've already executed.
Okay. Got it. Thanks. I think Tom did call out some restructuring, in his comments on the margin. Is that existing programs or are you planning anything new there?
You know, that is existing programs. We have a number of footprint programs that are still finalizing, will be largely done by 2025. We introduced a new program in the fourth quarter of 2022 that will be complete by 2024. Everything I spoke about are known and existing programs that, you know, frankly, we're managing to expectations.
The next question comes from Matthew O'Brien with Piper Sandler. Matthew, please go ahead.
Morning. Thanks for taking the question. Liam, as I think about UroLift, and this new 8%-9% CAGR through the LRP, I think that's about $9 million-$100 million of incremental revenue through that timeframe, by 2025. If I remember correctly, Japan and China were supposed to be pretty sizable contributors, I think, in the out years, maybe half of that $90 million-$100 million bucks, maybe a little bit more than that. It would imply some fairly modest improvement here domestically. First of all, am I right about that? Secondly, you know, how conservative is that? Does it make sense to be doing these DTC or making the DTC spend if you don't think the domestic business can really accelerate over the next several years?
Matt, your overall math is, it's fairly good, with regard to the growth in UroLift over the 3-year horizon. I think that we still are reliant on the U.S. to drive the bulk of the growth just because the overseas markets aren't big enough. Clearly overseas and international, we're encouraged by what we're doing. By the time we get to the end of 2025, it'll be a bigger portion of the revenue. Of course, on a smaller base, the percentage growth is going to be much better. We've done a really good job in Japan. We're gonna do a really good job in China, Taiwan, India, France, Spain, Italy, Germany, Brazil, and so on and so forth.
They're just not big enough to carry the growth to get us to that, the CAGR of 8%-11%. I think that the DTC does make sense, down to the other part of your question. If you go back to 2022, based on our expectations, the number of impressions were up by 27%. The number of responses were up double, very strong double digits. We feel that that is an encouraging factor. Every time I talk to a urologist, the same was true last week when I was out on the road, patients are coming into them, asking them for UroLift based on the ad campaigns that they see.
I think we will continue with the DTC campaign, and we believe that 8%-11% is very achievable for us as a company.
Okay. Appreciate that, Liam. As far as the high-growth portfolio goes as well, you know, coming down a little bit from, I think it was 14-15 before to about 12-13, still implies the rest of the portfolio outside of UroLift is strong. Can you talk about some of those components, what you're seeing from MANTA, EZ-IO, PICCs, et cetera, that are giving you the confidence to reiterate the strength in that segment of the business over the next several years? Thanks.
The high growth is doing really well. In the fourth quarter, it grew approximately 14%. The full year, it grew approximately 14%, ex the contributions of UroLift. Obviously there are elements within the high growth that are above the average that we expect, and there are elements of the high growth that'll be slightly below it. Obviously now the Titan, which comes from Standard Bariatrics, will be the fastest growing. You have MANTA, which will grow above the average. We feel really good about the high-growth portfolio. We feel really good about being able to deliver the high growth at 12%-13% over the LRP, and we feel really good about being able to deliver 8%-11% from the high growth in 2023.
The performance of all other aspects of the high growth, except for one, have been right in line, if not ahead of our expectations for the entirety of 2022. There's nothing better than momentum, as you know, Matt, as you head into 2023, 2024, and 2025, as you continue to build that out. I know we talk a lot about international expansion with UroLift, but it is also the same for the rest of the high growth. There is international expansion as well as domestic sales growth as we tap into that market. The encouraging thing is, as I said earlier, all of this high growth is growing into a massive market TAM, where we're very under-penetrated, but significant opportunities for growth.
Our next question comes from Anthony Petrone with Mizuho. Please go ahead, Anthony.
Thanks. Hope everyone's doing well. Maybe just in the LRP Standard Bariatrics, just to kind of clean that up a bit in terms of the top-line contribution, it rolls into organic, I would assume, sometime later this year or early next year. Maybe the contribution from Standard Bariatrics within the LRP. Can that actually be margin accretive by the end of the LRP? I'll have a couple of follow-ups.
Yes, and we're all well, Anthony. Thanks for asking. I'll answer the last part of your question first. Yes, it will be margin accretive by the end of the LRP. We expect it to become margin accretive as we exit 2024. What you should expect from Standard Bariatrics is that it will deliver between $30 million and $35 million this year, as we stated in our prepared remarks. As we said previously, it should add approximately 50 basis points of growth to Teleflex year-over-year thereafter from an organic perspective. That's what you should expect from Standard Bariatrics. Rough math should be around $60 million by the end of 2025.
Quick follow-up, two I'll throw in there, and I'll get back in queue. One, just on UroLift. You know, when we think about it through 2025, obviously we saw some shifts in patient behavior. You know, at what point do you think things sort of normalize here? You know, is there a path to normalization, let's say, at the end of this year, early next year? I'm talking about U.S. patient behavior. Maybe just your updated views on the M&A landscape. You know, sort of what level of discussions is Teleflex having and just maybe your high-level views on M&A. Thanks.
Yeah, sure, Anthony. I expect the overall environment for urology patients and staffing to continue to improve as we go through 2023. When it's going to be 100% normal, Anthony, it's difficult for me to actually pinpoint that right now in all fairness. I do anticipate it to continue to improve. Why do I say that? The staffing levels in hospitals began to improve in Q4. I expect that to continue into Q1 this year. Once staffing levels start to improve in hospitals, it will ultimately then begin to improve in ASCs and ultimately in offices thereafter. I think the patient flow, as I said earlier, there's still 12 million men suffering from BPH.
If you walk into a urologist office and there's 100 men in the urology waiting room, 40 of them are there because they got BPH, roughly. It's still the number one reason why a man goes to the urologist. The size of the market is a significant driver to my belief that it will return to normal as we go through the LRP at some stage. With regard to M&A, clearly we have the most important thing that you need. We have a very strong balance sheet for M&A. We're about 1.75 times levered at the end of the fourth quarter. We are active out there looking at opportunities. We have a lot of lines in the water.
We're fishing hard, Anthony. Very difficult for me to say when we're gonna get a fish on the hook and into the boat. There are targets out there that we are interested in. There are targets out there that we are actively pursuing. We do believe that we are an attractive acquirer, and there are assets that we feel would fit very well in the Teleflex family.
Our next question comes from Craig Bijou with Bank of America Securities . Craig, please go ahead.
Good, good morning, guys. Thanks for taking the questions. One, let me just start with UroLift. I did wanna ask, I know Japan was better than expected. I mean, was Japan in the quarter, was the 89 versus the 86 that was implied by your guidance, was that Japan? I guess if you could just kinda, you know, comment on what drove the $ few million beat, was that, you know, U.S. or on the international side?
We saw improvement in both sides of the Atlantic. I keep getting back to the point that the international markets at this stage are not substantive enough to carry the can for the overall UroLift growth. We would not have been able to beat by $3.3 million, Craig, without the U.S. delivering a good proportion of that. I am encouraged, though, as I said earlier, on what we're doing in regards to the expansion overseas. Japan has gone exceptionally well. We did our first cases in China. We're starting to roll out in India and other geographies.
I won't go through them all again, but we are encouraged by what we see with regards to that rollout.
Got it. Thanks, Liam. On your comments on the durable core, and appreciate that, how that's kind of moved up in terms of the LRP growth. You know, maybe, I mean, what are some of the products, the categories that are really driving that and that you see driving that, you know, LRP growth, you know, for the next several years?
Yeah. I think, as I look at, where we see an improvement and improving environment, first of all, what you have to understand is. In 2022, we had a lot of supply chain issues. We had shortages at Teleflex, shortages of subcomponents and so on and so forth. That's gonna drive some of the early, improvements that you're gonna see. You should see, an improvement in our vascular business, as you go through 2023 and then beyond. Vascular grew, in the entire year, about 1% constant currency. The normal growth for that business is in the mid-single digits. I also believe that interventional access, we've got a lovely suite of new products coming through in interventional access, and that's the lifeblood of that business. Interventional access, we would anticipate, will continue to accelerate.
One of our, I guess, no more than the durable core, one of our underappreciated assets is our OEM business. We bought this company called HPC a couple of years ago. It does thin walled catheters. That and on top of the rest of the OEM business has continued to grow in the high single, low double digits from a business that historically used to grow around 3% or 4%. I anticipate that OEM will continue to flourish, will continue to accelerate its growth over the LRP and be a real contributor. Never forget, it's accretive to our operating margin and will drive that. Obviously, APAC is a key growth franchise for us.
We have a lot of products that we are launching into the APAC region, that we believe will be very successful there. Those are some of the key areas that I believe will continue to grow. As I said earlier, as we go through the LRP, we would anticipate that interventional urology would also improve as we go through the LRP.
Our next question comes from George Sellers with Stephens. George, please go ahead.
Hey, thanks for squeezing me in here at the end. I'll just ask one quick one. Could you give us a little color on what you're seeing in terms of private market valuations and how those have trended here recently? Maybe how confident are you that you could potentially deploy some capital here in the near term? Thank you.
George, as you know, it takes two to get married. We're a willing groom or bride, whichever way you wanna put it. It's a question of finding the other party. I will tell you the valuations from the heady days of 2021 have moderated somewhat, and high quality assets are still not inexpensive, but that's why they're high quality assets, and those are the assets that we're going after. You can... We will remain disciplined, George, and investors can expect us to remain disciplined. We will look for assets that are accretive to our top line growth. We look for assets that are accretive to our growth margins.
We look for assets that will become accretive to our op margins and earnings pretty quickly after we acquire them. We will, we're very disciplined on our return on capital and, you know, getting above our internal cost of capital by at least year 5. We've always been able to do that in year 4, but the hurdles will remain the same for Teleflex in finding good assets, bringing them into the family and integrating them into Teleflex. Obviously, assets that are unique in the marketplace and segments that are growing faster than their core segments within Teleflex.
Our next question comes from Matt Mishan with KeyBanc. Please go ahead. Your line is open.
Great. Thank you for taking the questions. Just a quick clarification from me, and then I have a follow-up for Tom. On the low end of the 6%-7% from 2022-2025, does that include the inorganic contribution of Standard Bariatrics in 2023?
As we said in our prepared remarks and as I said a couple of times already, the changes that we're making is we're revising the high growth bucket and the urologist component of that high growth bucket, and we're adding Standard Bariatrics. That, like, that's it. That's correct.
Okay. Then just for Tom on the tax rate, the, you know, 10 and a quarter to 10.75% for 2023 is pretty low, especially compared to historical standards. What's driving that for 2023? How should people think about the sustainability of that tax rate, moving forward into the next couple of years?
Well, I would say that, you know, as you look at 2023, there's 2 drivers of the tax rate. 1 is the change in the tax law related to the capitalization of R&D expenses will start to provide some ability to amortize in 2023. We have a less of an expense impact as a result of that. The other driver would be the IT consolidation projects or consolidation projects that we've undertaken will begin to show a higher benefit in 2023. Those benefits will continue throughout the LRP timeframe. You should think about the rate as being sustainable. I would say that there is 1 caveat in that the EU is currently assessing a minimum tax.
If that were to become legislation, that could have an adverse impact on our, on our tax rate.
Matt, I just.
I should say that's contemplated for 2024. No 2023 impact.
Sorry, Tom. Yeah. Matt, I just wanna circle back on the Standard Bariatrics question. The difference between proforma and Standard Bariatrics as is isn't that significant, given that the product is only recently on the market, and the growth has been driven by Teleflex following the training of our sales force. We've doubled the sales force. It isn't that significant a difference one way or the other, Matt, is what I would tell you.
Those are all the questions we have time for today. I'll now turn the call back to Lawrence for any concluding remarks.
Thank you, Emily, and thank you to everyone that joined us on the call today. This concludes the Teleflex Incorporated fourth quarter 2022 earnings conference call.
Thank you everyone for joining us today. Our conference call for today is now concluded. Thank you for your participation. You may now disconnect your lines.