Dan Chard: It includes our active whey protein supplement and fuelings. So both of them at a kind of program designated amount for a full month. And in addition to that, it includes the time from a coach, personalized coach, access to the community, access to the OPTAVIA app that includes the recipes, as well as weight trackers, which is integrated with a Wi-Fi scale and that also includes the access to the habits of health transformation system.
Linda Bolton-Weiser: Okay. Thank you. Can I also ask how much — in terms of the LifeMD use of the compounded product, has there been any change in availability of that compounded product? Because we know that at some point it may kind of go away. Is there any update on that? And what do you anticipate as a strategy if there is constraint of a compounded availability? Like if the drug becomes $1,000 a month for the customer, how does the customer afford to pay another $300 a month? What’s the strategic thoughts on that? Thanks.
Dan Chard: Yes. We’re working very closely with the LifeMD team, who’s very keyed into this key part of the questions. The strategy to date has been to offer a branded solution for those who are insured or who can afford to pay the out-of-pocket. There are cases either that they may not be insured or in some cases through the — because of the shortages the branded solutions are not available whereas the compound solutions have been readily available. In the case of how long this current structure will last, that I think will be determined largely by the FDA. As you know, compounders operate under an exception, which is that they’re allowed to offer a compounded solution when we’re in a period of scarcity. And we continue to be in this period of scarcity that’s projected to last, I believe, several years as the pharmaceutical companies build more capacity.
I think there are some other elements that will impact this as well, which could include how quickly insurance companies and Medicare cover the drugs beyond the current exceptions. So what I would say is, we feel confident and comfortable that the approach which is to offer both branded and a compounded solution where appropriate is — appropriate — is relevant for the short term and even the next several years.
Linda Bolton-Weiser: Okay. And then one of the issues, I guess, that is going to happen here is that, you have a large number of coaches, even though they’ve declined, just a moderate amount of new people wanting the drug, LifeMD only has a small number of clinicians. So I think it’s somewhere around 50, 50 clinicians that they have. How are that number of clinicians going to be able to handle such a large potential number of new customers for the script? Are they planning to ramp up the number of clinicians or can you give a little color on that? Thanks.
Dan Chard: Yes, LifeMD specifically uses physicians in their services that are licensed in all 50 states. So that helps with part of it. They can support patients across the country. They also have a very specific and focused hiring strategy which has allowed them to keep up with their demand and we work in close collaboration with them to ensure that they understand how our demand could increase. And at this point, we believe they have the capacity in the short term as well as the capability in the long term to scale that number of clinicians to support the growing demand.
Linda Bolton-Weiser: Okay. And then is there any — just on the timing difference thing that — the $9.1 million Can you just kind of explain what that is? Does that shift $9.1 million of revenue from first to second quarter or can you just explain more about that? Thank you.
James Maloney: Oh, that’s referring to — that’s actually referring — I believe what you’re referring to, Linda, is last year we did a change in revenue recognition. So there’s no impact to 2024. That was actually 2023 and it was in the earnings release we just were referring back to 2023. The reason for the change of the revenue recognition was due to the change that was made with the terms and conditions that we have with our customers. And that all occurred in Q1 of last year. So there’s — once we get past Q1, there’s no impact for the remainder of 2023 or going into 2024 at all.
Linda Bolton-Weiser: Okay. Got you. And do you have an anticipation of how much capital spending will be in 2024?
James Maloney: Yes, I mean, we’re looking at spending at the same levels or a little bit more than 2023. So, we didn’t really give guidance all the way for 2024, but I would say it’s going to be at least the same level as 2023, if not, a little bit more than that, just because of the investments that we’re making regarding the seamless offer in the technology spend that’s going to be hitting capital spend in those areas.
Linda Bolton-Weiser: Okay. And then finally, I just wanted to ask about gross margin. I guess that was the area of the report that was most below my modeling, but I kind of think I didn’t fully recognize the seasonality. Like usually, gross margins kind of lower in the first quarter anyways. But do you kind of foresee like stability in gross margin percent or like — for some reason I had modeled for the full year kind of flat-ish, but is there any color you can give to help us on that gross margin outlook?
