Cheryl Blanchard: Yeah. Let me start Jim on that and then Mike may have some comments to add. I mean for a product launch is as significant as a new implant system, there are a number of things. The first thing is right now with the limited release we are getting feedback around the instruments, the instrument trays and how they’re deployed. I think you heard me talk about the fact that we’re really excited about this streamlined two tray design. It’s highly differentiated and drives a lot of efficiency. But with that, we want to make sure we really get it right. So we’ll get that feedback. And then for full launch, we’ve really got to build enough instrument sets to get them out in the field. In parallel with that though, we will be talking about the system with surgeons.
We will be doing training on safe and effective use so that they feel comfortable adapting it when instrument trays and implants are fully ready to be deployed towards the end of this year. So there will be expense dollars that we’ve got factored in relative to the training activities and on the instrument and inventory build. And Mike, I don’t know if you have anything you want to add to that.
Mike Levitz: Yeah. The only thing I would add is just as I mentioned before, Jim, we do expect CapEx to be above depreciation this year. And last year, it was essentially in line with depreciation, but did include some of those instruments that so we could move into this limited release. We will be adding more instrument sets and we are encouraged by the strong demand and great feedback that Cheryl mentioned. So we do expect CapEx depreciation for the instrument sets. We also have investments in production capacity. A good amount of our CapEx also has to do with the legacy business and the need to make sure that we’ve got the production capacity for what we’re seeing there as well. So a bit of a higher level of spending this year, but it’s all in support of our multiyear growth targets.
Jim Sidoti: Thank you. That’s it for me.
Cheryl Blanchard: Thanks, Jim.
Operator: Our next question comes from the line of Mike Petusky with Barrington Research. Please proceed with your question.
Mike Petusky: Hi. Good evening. Cheryl, you mentioned being laser focused on multiyear growth targets. Are you guys wanting to sort of define that because I’m not sure I completely understand that there is a target out there for a specific year? Thanks.
Mike Levitz: Mike, I’m happy to respond to that. So as I said in my remarks, a couple minutes ago, so the specific multiyear growth targets that we have are the same ones that we’ve been talking about, which are $230 million in revenue and 70% adjusted gross margin, both of those in 2025. And our EBITDA, adjusted EBITDA target of 20% which we expect in 2026 and that timing is impacted by the outsized EU MDR efforts related to the new regulatory regime.
Mike Petusky: Got it. I don’t feel like we’re tracking any of that, but okay. And also Mike, I guess I wanted to understand stock comp it’s elevated. I’m just curious, is it going to stay at these levels going forward?
Mike Levitz: Yeah. So Mike, let me clarify. So one of the things that’s happened over the last couple of years is, there’s been a lot of management transition as you would expect in this type of transformation. And so one of the things that happens in the stock-based comp run rate is, as executives who have been around for a while leave you get their forfeitures, which artificially lowers stock based comp. And that was happening a lot more in the last couple of years. And so when you look at year-over-year comparisons, that’s one of the things that you need to keep the mind. So no, we don’t expect — I mean, we’ve got the team to drive the growth in this business. And that the team that we’ve attracted is highly energized around doing that. We have had to spend some more money and stock-based comp in line with market compensation just to make sure that we have the right people to realize the significant opportunity in front of us.
