Kurt Workman: Yes, that’s a great question. One of the — there are several complexities or challenges with introducing BabySat into the market, including shipping and fulfilling a medical device to and through providers, how you handle prescription verification and insurance verification, how do you help customers get the right prescription for the product. Those are all kind of significant challenges. And Owlet has interviewed lots of different partners in the space. We feel like we have one that can help significantly reduce that complexity and will not only help us kind of manage the back-end process of all of those pieces and make it really seamless for the consumer, but also will help us increase our distribution faster with providers and hospitals as a take-home monitor.
So we’re really excited about it. The opportunity we’re sitting on in the near term with BabySat is that there are existing insurance codes for home monitoring, and so it’s not the creation of a new code. They’re already sending babies home with these big bulky wired monitors that are intrusive in the parents’ lives. Owlet’s, it’s less expensive, it connects right into your smartphone, it’s wireless. There are a lot of benefits. And so we — the BabySat will be eligible for existing reimbursement codes and this partner is helping us manage that with all of the different insurance carriers and companies across the United States out of the gate. So we’re excited about that. There’s — will be more to come, but it’s not creating a new code. It’s really taking advantage of the market that’s in place right now, to start.
Charles Rhyee: Got it. And sorry, one last for Kate. You kind of mentioned. Are we still on track then for sort of EBITDA breakeven early — end of this year, early next year?
Kathryn Scolnick: That’s our focus absolutely on an operational basis. And in terms of the operating expense profile we’re at a steady state runway, we’re still looking for places where we can optimize both in terms of how we’re running things on the operations side, whether it’s on the margin or cost of goods, but also within the business. We’ve been status quo in terms of employee costs. We’ve been very measured in terms of marketing, as we’ve talked regularly about, getting over the hurdles in terms of our clearances is important as we’ve been putting kind of additional focus there based on our regulatory, there’s been costs related to that. So that’s our — the next piece for us to manage to. But — and we want to continue going through 2024 there. So that’s going to be the major focus in 2024, is growing and growing profitably beyond as we start talking to what our business model looks like in the next phase at our next earnings call.
Operator: We will now turn the call over to Mike Cavanaugh to ask questions that came in via e-mail. Mike?
Mike Cavanaugh: Thank you, operator. Kurt and Kate, first question that we received is, now that Owlet has a medical and consumer product, how does that play into your go-to-market strategy with the retailers that are expanding into health care, such as Best Buy, Amazon, which has been mentioned, and Babylist with the purchase of a DME?
Kurt Workman: Yes. Thanks, Mike. So the gap between consumer and medical technologies and channels continues to shrink. And I think timing could not be better for Owlet with big box, your e-commerce sites and specialty baby all moving into the DME opportunity. It’s kind of the perfect overlap of existing channels with our new medical focus. So Babylist recently acquired a DME to expand its breast pump offering, and Best Buy is significantly expanding its capabilities into health care. We’re having active conversations with each one of these players to roll out BabySat and Dream Sock next year in addition to exploring new channel opportunities that BabySat opens up.
Mike Cavanaugh: Great. Next question. Are you expecting to see a revenue lift from your FDA clearances this year in 2023? Or are they 2024 events? And what you need to spend differently to support the launch of those products?
Kathryn Scolnick: I can take that question.
Kurt Workman: Kate, do you want to take that one?
Kathryn Scolnick: Yes, sure. We were planning on making both the BabySat product and the FDA clearance features available before the end of the year. I think at this point, where we are, we’ll see minor or modest revenue improvements this year, but really, the majority of the benefits are yet to come in 2024 and beyond. And in terms of supporting those opportunities, those will really be — the support will come primarily in 2024. But as we’ll see with the support of Dream Sock, it will really be within — it’s a software opportunity and so that will be readily available before the end of the year.
Mike Cavanaugh: Great. Thanks, Kate. The next question is, are you experiencing any impact from your competitor launching a consumer monitoring product at select retailers?
Kurt Workman: Yes. So Owlet is the clear leader in this category. We’ve invested millions of dollars into establishing this category. And Owlet’s de novo FDA clearance sets a new standard for our category, that other pulse oximeters and health monitors are going to have to adhere to. This is a clear benefit to Owlet in terms of our market leadership, and availability moving forward.
Mike Cavanaugh: Great. The next question is, given your recent FDA clearances and future entry into remote patient monitoring, what is the current long-term vision for Owlet? And has that changed at all?
