So it’s not like it’s going to be gone. It’s just — we’re not going to see that kind of burst of revenue every quarter forever. But we will continue to place leases.
Alex Nowak: Okay. All right. No that makes sense. And I know we’ve talked about this in the past, but the revenue from the Sanara JV when can we start to say that’s contributing to top line in a meaningful way. Is that a 2024 time period.
Barry Steele: Yes. So the leases were kind of really a part of the joint venture so we could say now. But any revenue that we have going forward will be booked on our top line and then those were buying — the JV actually is just a purchasing vehicle where we can share the profit that’s built into the supply chain.
Q – Alex Nowak: Okay. Okay. Got it. Got it. All right. That makes sense. So then the gross margin, it’s been impacted in the last couple of quarters here and you walked through all those sort of operational improvements you’re going to be making. So, that’s very helpful. I guess as you get into the middle of 2024, do you get back to a high 50s gross margin or is it really we got to wait until end of 2024 or 2025 until we can start to see the leverage there?
Barry Steele: Yes, I don’t know that we get necessarily back to high 50s. Keep in mind, that some of that additional business is just lower gross margin say the biomed, for example. The nice thing is that it doesn’t add a lot of G&A. So from an EBITDA margin perspective, we’re getting — we’re approaching back to the 20% margin and we should be able to break through that next year at some point as we continue to be more efficient on delivering those services.
Q – Alex Nowak: Okay. Got it. And then on the revenue guide, I appreciate the conservatism. There’s a lot of factors that play here outside to control. So, what’s at a level that we can beat. But on the flip side, 11% growth that gets you to the lowest four it would essentially put your Q4 at the lowest quarter of the year, which based on the commentary I don’t think would be necessarily correct. So maybe just the puts and takes there? I mean it seems like more like 12% 13% growth is more the likely scenario.
Rich DiIorio: Yes. So I think I think you’re right that we shouldn’t have the lowest quarter of the year, in the fourth quarter. I would look at the 11-plus percent is that we just moved the floor up, right? So we still expect to beat that number. I can never guarantee a number, but we should be able to beat 11-plus percent. How much more we beat it by? Is there’s timing issues? Are there other leases that come in that replace, what happened in the third quarter and prior quarters? I think Barry went through the $500,000 in GE just on the timing of the on-boarding of new devices and the leases in Q3. Outside of that, I don’t have line of sight into anything else that’s going to bring us down that far. But we’ve also had the experience in the last two years where things that we didn’t have line of sight into, hit us in the fourth quarter that we didn’t expect, right?
We had Omicron in December of 2021. Last year, we had the supply chain issue that we had an order for and couldn’t get the devices out the door. So we’re just giving ourselves some space. So, if something like that happens, we can still hit the number, because that’s one thing, that we’re going to do is we’re going to hit numbers when we put them out there. We just want to make sure, we can account for things that we don’t even know, yet.
Q – Alex Nowak: Totally understood and great to hear. Appreciate the effort, thank you.
Rich DiIorio: Thanks, Alex.
Operator: [Operator Instructions] The next question comes from Jim Sidoti with Sidoti & Company. Please go ahead.
Q – Jim Sidoti: Hi, good morning and excuse me – Thank you for taking the questions. So first one on SG&A. You don’t typically see a company grow the top line 17% and have lower SG&A. Now I know, you did reduce some of the sales teams slightly in 2023. But were there any other onetime expenses in 2022 that haven’t come back? And do you expect to continue to be able to leverage this SG&A line in 2024?
Barry Steele: Yes. So there are some seasonal things. So Q1 is a little bit higher in the selling cost as some of our sales meetings and some of our shows and things, we do. So you should expect that to come up a little bit. I think that the stock comp bounces around, a little bit. So you have to be careful about that. You’ll be able to see that amount in the adjusted EBITDA table, so you can kind of pull that out of the sort of the trends if you will. I think that’s our theme is to try to leverage the fixed cost built into G&A as best we can, by growing a little faster on the top line. So I think you should hope to see that we can improve margins somewhat, by leveraging our SG&A.
Q – Jim Sidoti: All right. And then can you talk a little bit more about, how you’re preparing with Sanara. Obviously, you’re getting the pumps out there in 2023. But have you started training with those people or are you ramping up for anything specific in 2024? Just give us some color on how that all plays out.
Rich DiIorio: Yes. So the team is pretty well trained up, and ready to go. They’ve been filling the pipeline now for months. I would say, once we got the accreditation and licensing that we needed earlier in the year. The team is starting to kind of talk about the products in the market. Then, we got all the back-end systems built, I mean all the way down to like what the document looks like that the doctor has to fill out. I mean is that type of detail we have to get to. That’s largely done at this point. So the reps are now able to go out, talk about the product again, try to close some deals that are in that pipeline. We’ve already seen a patient or two come in and go on the supplies from Sanara. So, as that starts to roll out, it should accelerate relatively quickly.
But sales cycles can take six to 12 months and that’s why we really think it will be the back end of next year where we really start to see it ramp. But we’ll see some revenue early on next year we should. But the team is ready to go. There’s — and actually to Brooks’ point earlier with the traveling physician groups, our guys have been talking to those groups already. So when we’re ready to turn the faucet on, it should go pretty well fairly quickly.
