Michael Polark: First topic, the comments on modifying incentive compensation for your field force to focus on higher utilization as existing centers. I guess, can you level that, is this a notable change? Is it a subtle change? What did the framework look like before what does it look like now, and I guess why make this change for 2023?
Tim Herbert: Absolutely, well, first off, it’s a important part of the compensation for the field and especially the territory managers, but the management team shares in the same compensation structure. So they’re all very consistent. We have different groups of people. We have the area business managers, as you know, that focus on opening new centers, and the territory managers are responsible for cultivating the existing centers to increase utilization. In the past, we used to compensate more — everybody gets their base comp, and of course they get the commissions based on implants and revenue and unit sold, but we have added components, in the past years, it’s been based on what we call patients expecting therapy are more around patients in the prior authorization process.
But as we continue to mature, it’s important that we shift that from individual patient count to more utilization at site. So, we’ve kind of switched over the parameter starting this year to really focus more on the utilization site. So I think, we just presented it at the national sales meeting just a week ago, and team is very excited about the progress that they made last year, as well as the prospects moving forward.
Michael Polark: My second one, if I may leverage related question. You report SG&A in a consolidated line. I don’t see a breakout in filings or the like of S&M versus G&A. I’m just curious as you assessed kind of a leverage that you’re seeing in the model? Is there a variance worth calling out as to how your G&A spend is getting leveraged versus S&M? Just if you could frame up like, where G&A is as a portion of total, and is that getting materially better versus S&M? Or are they about trending the same? Any color there would be, great. Thank you so much.
Rick Buchholz: Hey Mike, it’s Rick. So, we have demonstrated leverage across all those line items, R&D, G&A, and sales and marketing, as over the fourth quarter and throughout the year in 2022. Again, we’re going to lose that in Q1 with seasonality. But even R&D, we’re continuing to make investments. R&D was 19% of revenue in the third quarter. That was 15% in the fourth quarter. G&A is in that 10% to 12% range. And we expect to continue to be in the — in that ballpark, in that range going forward. So cross all line on you.
Operator: Thank you. Our next question comes from Chris Pasquale with Nephron Research. You may proceed.
Chris Pasquale: I want to follow up on the question about the shift in incentive comp. So the guidance for this year implies we add about as many sites in ’23 as you did in ’22. Just wanted to see like how you square that with where you’re incentivizing your team to spend their time. Maybe we’re reading too much into that comment, but it seems like that could mean fewer center ads this year.
Tim Herbert: Well, I think, we left the guys consistent from ’22 to ’23, because we still have our training team and the area of business managers to be able to focus on adding new centers. And we’re going to continue with that. We also previously talked about how the — our growth has really been driven predominantly by increased utilization, same store sales versus the contribution from new centers. And I think, what we’re kind of highlighting is we’re going to continue down that pathway. And we want to keep focusing on growing utilization, because centers that are able to do more procedures, they can better outcomes. They’re more proficient in the procedure and proficient on managing the patients, they’re better at patient flow, they’re better at submitting the proper codes to get proper reimbursement.
So centers that have high utilization are just so much more efficient and have higher patient outcomes. So we’re going to continue with that trend and continue having territory managers, ideally managed less centers that are doing higher utilization.
Chris Pasquale: Okay, that makes sense. And then 70,000, physician contacts driven by our DTC effort, it is very impressive, you treated about 16,000 patients last year, so one out of every five people who raise their hand, are actually getting an implant. Where are the stumbling blocks today that are causing patients to fall out of that funnel? And can you talk a little bit more about the digital scheduling tool you mentioned? And whether that’s part of the solution for trying to improve that yield?
Tim Herbert: Well, you want to talk about physician contacts. There’s another sentence in there that talks about patients getting direct referrals from their own health care providers. That’s not part of that number. And so, there’s always a little bit of specificity on where exactly the patients come from, and is it truly one in five from the Advisor Care Program, but how many patients see the ad, they’ll go to the website, there’ll be educated. But rather than going through the Advisor Care Program, they will contact their own healthcare provider or their own sleep physician, saying, what do you think about the spiral will this work for me, and they actually will become a direct physician referral, and that not coming through from the Advisor Care Program.
So that’s really an important part of the business as well. So we have to continue to educate the physician. On the other side, we need to continue to improve the efficiency of the Advisor Care Program. And we do have a pilot out there right now to be able to log directly in to the scheduling at physician’s office. So, when the Advisor Care Program, talks to a potential patient determines that excuse me, they’re a good candidate that they can directly schedule in. So we have a handful of face up and active. And we’re really looking to further expand that program earlier in the year.
Operator: Thank you. Our next question comes from Matthew Mishan with KeyBanc. You may proceed.
Matthew Mishan: So, I think this might be a little bit early to ask, But I think investors are encouraged about the improvements with the Inspire 5 once that gets through approval. Do you think as it gets closer, like some physicians will wait for it to be approved where it might actually delay, start some implants?
Tim Herbert: Great question. I don’t think so. So we see this in the past with a new remote with Bluetooth with going to silicone leads going to Inspire 4 from the Inspire 2, now that’s back in 2018. But we just don’t see that slowdown once we have a patient flow and the patient could schedule was a standard pathway. Inspire 4 going 5, while it puts the something inside the can, it doesn’t have a dramatic impact such as like when we go into future generations with adults 50 tact or with adults titration. So, we don’t expect to see any kind of slowdown and we know that demand continues to be strong.
Matthew Mishan: And then follow-up just a PREDICTOR study with initial readout in 2023, I think you mentioned that an industry presentation earlier this year that there was some data published from another study? Can you comment on what that showed? And why that would be encouraging for the readout for PREDICTOR?
