Trina Spear: Thanks, Dana. Okay. So, from a sourcing strategy perspective, we’re developing new supplier relationships and really leveraging their capabilities to help us continuously up our game and continuously execute on new ideas. And that comes in the form of fabrication styles, details that our healthcare professionals need to do their jobs. And it really comes from the lens of bringing product that solves problems for people. And so, that’s where we’re focused. And to your point about lead times, we do believe the optimization of lead times will help us. It’s going to create a lot more flexibility, being able to deliver and respond to what we’re seeing with our community and what they want and what they need and deliver that in a more timely – in a more timely way.
So, we’re excited about that as well. And we’re also aligning with sourcing partners across geographies, from Asia to the Middle East to LatAm. And yes to diversify and get better lead times for sure, but also to access the best-in-class manufacturing talent and to mitigate risk through geographic diversity. And so, we’re really excited about the shifts that we’re making. Our ethos around gross margin is unchanged. And so, as this strategy unfolds, we’re going to be focused on leveraging our high-margin core to drive more innovation, while maintaining an extremely strong margin rate. As relates to marketing, we’re continuing to execute on our strategy of driving bottom-of-the funnel tax gains and taking those gains and investing in top of the funnel.
And so as we reach tipping points in cities across the U.S. And now in some of our international markets as well, we see word of mouth driving our tax down. And so, we have to take those gains and invest in top of the funnel, driving brand awareness, driving more healthcare professionals into the family. And so, that’s why, our – we’re able to maintain our efficiency and you’re seeing that quarter after quarter.
Dana Telsey: Thank you.
Operator: Our next question is from John Kernan with TD Cowen. Your line is now open.
John Kernan: Good afternoon. Thanks for taking my question. How should we think about the long-term margin structure of the business? Gross margin has been very stable in a fairly volatile macro. I guess when we think about G&A and selling expenses, what are the opportunities long-term to see some leverage on these line items? It sounds like selling has some – has some expenses coming on for next year for distribution. I’m just curious, how do we think about both those expense line items going forward. Thank you.
Daniella Turenshine: Thanks, John. So, we continue to believe that we will get to a high teens adjusted EBITDA margin. I think it’s helpful to think about kind of the different components of what needs to happen. You spoke to our really strong gross margin rate. I think we’re going to continue to deliver that very strong gross margin. Trina spoke about evolving our supply chain to drive greater innovation and quality. We’re also expanding our layering system. And so, both of these items, we might see some short-term fluctuations, but really we’re positioning the business for the longer-term. And we have a lot of confidence that these changes that we’re making are really going to enable us to be better positioned three to five years from now and also gain a lot of efficiency over time as we scale.
Particularly to selling, so, we do expect 2024 to be burdened with fulfillment project costs, but we are expecting to move past that in 2025. In the near-term, we may see a higher cost per order as we invest behind customer experience, but we’re going to plan to leverage that as we scale. In addition, in selling we do expect to see a higher penetration of international which does carry duties and higher shipping costs and that’s going to have a short-term impact on selling expense. But once we open a Canadian DC in 2025, we should be able to drive significant cost savings related to duty and shipping expenses. And over time, we believe we can leverage G&A and continue to remain really efficient in our marketing as we always have been. I think just taking a step back, right, we have a strong balance sheet, strong cash flow generation to really invest in our future growth now.
And so, we really want to take advantage of our leadership position to capture the opportunities across global healthcare.
John Kernan: Understood, and thanks for the very thorough answer. Just maybe one quick follow-up on the previous thing, it was Brooke’s question on inventory. Do you expect inventory to grow in line with sales next year or should we still be cycling down year over year in inventory?
Daniella Turenshine: I think in the first half, we will still be working to get to that 16 to 20 weeks of supply. Looking into the back half of 2024 is when we would expect to see inventory grow more in line with sales once we’re in that normalized place.
John Kernan: Got it. Thank you.
Operator: Our next question is from Alice Xiao with Bank of America. Your line is now open.
