Jason Clemens: No, we and/or third-party suppliers do not rely on Change for either of those areas of patient.
Joanna Gajuk: Okay, good. And when it comes to diabetes and you just mentioned the pharmacy rollout and also on the last quarter, you talk about looking for a partner to ramp up your participation in this channel to talk back things that are happening there. So any update there in terms of finding a partner, are you doing it yourself?
Jason Clemens: Well, we’re continuing to do it ourselves. We are exploring a partnership as an outsourcing opportunity to compress costs on the back end, so we haven’t yet made a determination on that, but we are still evaluating. But the four markets I mentioned that have been opened up, that’s entirely organic and done with our own internal capabilities.
Joanna Gajuk: Okay, great. And as it relates to diabetes and the pharmacy channel, so maybe an update on any additional payer — is there still anybody left that could still shift when talking about managed Medicaid or Medicare Advantage maybe using the medical benefit or could shift to pharmacy benefit? Is there still out there? Or are you pretty much done with those?
Jason Clemens: Sure. It is still potential. I would say that our percent of government business is up 81% within diabetes for the quarter. And so we continue to drive more and more new start activity towards that channel, if you will, which we believe is better insulated from pharmacy shift risk. We say within the quarter, we detected three payer changes moving from commercial and make it more medical benefit to a pharmacy benefit. One of them was an upper Midwest regional company. The other two were state Medicaid offices. The four markets I mentioned where we’ve opened pharmacy operations is in one of those state Medicaid offices. So we’re working to continue to get after that business. So we didn’t see a material impact of pharmacy shift to our business in the first quarter of ’24.
Joanna Gajuk: So would you say you are in the aggregate, I guess, in your business when it comes to pharmacy versus DME benefits?
Jason Clemens: You’re asking what percent of our business — pharmacy versus — benefit?
Joanna Gajuk: Yeah.
Jason Clemens: It is very small. It’s still in the 5%-or-so range for pharmacy in the vast majority in medical benefit distribution.
Joanna Gajuk: Okay. And if I may just two more. So on CapEx, so you reaffirmed your free cash flow guidance, understandably some — in fact, from change about CapEx, right, so it’s of revenue down from year ago, but I guess about the full year guidance of more like a 10% rate. So is it just timing and CapEx still expected to be in the same ranges you discussed previously.
Jason Clemens: Yes, you’ve got it.
Joanna Gajuk: Okay. And last one. So you keep paying down debt, so that’s great and reducing your interest expense, so that’s great to help the cash flow. And I guess you have — and you’re targeting to even reduce further. And I guess that term loan maturity in January ’26. So any initial indication of what — how you plan to go about this? It sounds like you would have to address it later this year.
Jason Clemens: Yeah, good question. So for Q1, we exited at 3.12 times levered. We’ve said that we expect to be below 3 times, which is our stated leverage target before the end of 2024. And we do think we’ll deliver on that sooner versus later. Your correct, TLA is — it will come current in Jan ’25 that comes due January ’26. As you’d expect, our bank group has been activated. We’re working closely to start considering options. So we’ll do something this year, but we’re continuing to pay it down in the meantime and as we message for Q2, we’re going to continue to do that.
Joanna Gajuk: Great. It makes sense. Thank you so much for taking the questions.
Operator: And at this time, we have no further questions from our audience, I’ll turn it back to our management team for any additional or closing remarks.
Richard Barasch: Thanks, everyone, for joining our first quarter conference call. Jason and the team will be available as I see myself as well to answer any questions that you’ve got. Thank you.
Operator: This does conclude today’s teleconference, and we do thank you all for your participation. You may now disconnect your lines.
