Joseph Woody: Yes. The whole DH business globally continues to deliver — the market itself is sort of mid-single digit growth. But excluding even the NeoMed performance, Digestive Health delivered high single-digit growth in Q3. I think it was roughly around 8-ish percent in that category, driven by a lot of growth in the core MIC-KEY business. So even though the market growth was 4% to 5%, we are confident between the innovation, bolt-on M&A that we do that we can deliver higher than the market growth. Although it will taper off from the double-digit, sort of mid-single-ish it could be to high single-digit in a given quarter. So very stable business with a good runway and a good M&A pipeline behind it and an international opportunity around that as well.
Kristen Stewart: Perfect. And then my follow-up for Michael. You had given last quarter some preliminary numbers around 2024. I was just wondering if you still feel confident in the ability to achieve those?
Michael Greiner: Yes. Thank you for that question, Kristen. Yes, yes, those are our targets for ’24. And we will further update those and provide color at the J.P. Morgan Conference in January around ’24.
Kristen Stewart: Okay. Perfect. Thanks. That’s it for me.
Joseph Woody: Thank you.
Operator: [Operator Instructions] The next question comes from Daniel Stauder with JMP Securities. Please go ahead.
Daniel Stauder: Yes. Great. Thanks. So just as a follow-up to that Digestive Health sustainable growth question. A few good quarters of double-digit growth here in a row. And again, you noted driven by convergence of benefit. So we just wanted to ask how many more of these conversions are there? And how sustainable is that and how much more space for growth do you have here? But it sounds like the rest of the business is moving along great, but any commentary on just the white space for continued conversions? Thank you.
Joseph Woody: Yes, Daniel. We’ve said it in the past, and I really believe it to be true. We probably have about another half a year of the ENFit conversion benefiting — benefit rather for NeoMed. But again, we have an international opportunity there. Team’s done a great job and the base business is growing high single-digit. We’ve got a number of bolt-ons and sort of semi-large, I’ll call them, M&A deals for us that we think along with that in innovation as it goes into ’24 and ’25, that can really help us bolster that. So we feel that’s a very consistent, sustainable, mid-single digit, yes, it might be high single-digit in the second half of the year, back and forth in any given quarter, but it’s a very, very stable business for us.
Michael Greiner: Yes. And just being very specific with the numbers here to Kristen and Daniel, your questions. If you remember, Q4 of last year, we had — for the first nine months of the year last year, we had Digestive backlog building from a supply chain standpoint. We had a really big Q4 last year in Digestive. So Digestive for Q4 this year is not going to be anywhere near double-digit growth, but that is not a product of any worsening macro environment for Digestive or anything like that. This is a 7%, 8% grower. We showed on Investor Day. It will continue to be that. But just heads up that in Q4, it’s going to be a low single-digit, mid-single digit grower in Q4 because of the year — because of the Q4 we had last year, where we had $4 million to $5 million of revenue gained because we finally had back order solved and we had such a big fourth quarter. So just mathematically be aware of that.
Daniel Stauder: Great. Then just one follow-up on the operating expense side. Made some progress this quarter, especially in the SG&A line. And thank you for the directional guidance for 4Q. But as we look a little further out, how should we think about — we know you’ll have some [indiscernible], but how should we think about operating expenses going into 2024? And more specifically, as you launch Diros in the U.S., how much more investment might that take as you start to ramp that up, especially in a different setting than your other ablation products? Thanks.
Michael Greiner: Yes, I think that it’s a great question. I’d point to what I just shared in the script on our expectations for Q4. And to Kristen’s question on our confidence in 2024, which we talked about in the last earnings call, I would point to those numbers as well. We’re very much on target OpEx wise with those numbers, both through the cost savings, transformation efforts, but also just through good discipline on where we spend, whether that be a new launch product, R&D, other areas. So we still very much are on target and are focused on the 38% to 39% long term SG&A as a percentage of revenue targets, and there’s nothing indicating that we should come off of those.
Daniel Stauder: Great. Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Joe Woody for any closing remarks.
Joseph Woody: So, thanks, everybody, for your interest in Avanos. And I think everybody understands our primary focus is on precise execution as we deliver the strategic plan that we outlined at our Investor Day. We’ve definitely successfully executed product exits, divested RH, acquired valuable technology in Diros and approved an additional share repurchase program and delivered most of our financial objectives. We really believe these results have established the foundation to deliver on our mid-term financial commitments, and we’re confident that our transformation priorities, coupled with our market-leading portfolio, and the attractive markets will position us well for sales growth, margin expansion, and meaningful free cash flow generation. So we appreciate, again, everyone’s interest in Avanos. Thank you. Thank you very much.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
