So the mix is better. The pricing is stronger, which is great. And then as you saw on our comments with gross profit, we’ve outgrown some of the fixed allocations and COGS. So the margin is improving. So we have a better yield per script, Oren. We would expect to see that continue, if we can continue to deliver on the retail mix. And then we would expect our COGS to continue to improve as we just become more variable, if you will, in COGS. We’ve outgrown those things. So it was nice — as I commented in my talk, we’re throwing off a margin now. That’s starting to get pretty significant. And that’s why we continue to see us zooming in on throwing off cash in this business, so that’s a nice thing. So as our revenue grows, our COGS become more efficient.
And then we continue the partnering model that Amy built, hopefully the OpEx stays referral [ph] to the zip code we’re in. And that’s why we can close the gap. That’s why we feel the top line and also our ability to start generating cash off this business.
Oren Livnat: You anticipated my next question —
Al Altomari: Every metric is looking better more and everything is kicking in nicely.
Oren Livnat: You actually anticipated my next question which is can you just remind us sort of how your fixed cost base on the COGS side, the magnitude of that, such that even though regardless of your weighted — and even if you had a flat net value per cycle, how fast your gross margin can grow just with sales as they increase. What’s your quarterly underlying fixed, I guess, emporium commitment versus your variable costs? And just to layer on to that — sorry, just to interrupt, and a fact that you mentioned performance-based incentives. I’m just wondering as that non-retail channel grows, do they get a bigger piece of the gross to net?
Al Altomari: Yes. So let’s do COGS first. As we mentioned, we’ve reduced our — if you look at — one of the most impressive things I think on our P&L is if you look at our OpEx spending six months ago, the first six months of last year versus the first six months this year, I think it’s eye opening how much OpEx we’ve taken off the board. So that’s the model Amy described. But also, Oren, we’ve been able to reduce our fixed costs internally that we were allocating in the COGS. What we’re allocating in the COGS is people cost here to help run the business. So look, we’ve been able to reduce that too. So the effort to reduce OpEx hit not only the SG&A lines, but it also hit COGS. So the good news is there’s not much allocations going forward, going gone in the COGS anymore.
There’s a little bit, but for the most part, it’s going to be variable. That’s why we’re signaling and that’s going to continue to improve. The reductions in — the incentives Amy describes in our relationships with people like Afaxys are offsets of sales. So they run through the net sales line. So that’s where you’ll see that so. The cheaper ones are — the GPO business on the Afaxys relationship, that’s becoming less of a big portion of our mix, as Amy brings on people like FPA and grows the retail. So that’s what I’m referring to as mix. So all those incentives are running through the reduction of sales, so even with those, we’re then able to increase our yield per cycle, if that makes sense. So the model is becoming efficient, Oren. I’ll leave you with that.
It’s just becoming efficient. Just everything we’re doing now gets even more efficient as this model really takes shape. Our partners, as Amy mentioned, are incentivized to grow our business or they don’t get paid. It’s just that simple for the most part. And so their incentives are aligned with ours. And in the meantime, we can keep our fixed costs in general across the whole P&L leaner.
