Pacira BioSciences, Inc. (NASDAQ:PCRX) Q3 2023 Earnings Call Transcript

Pacira BioSciences, Inc. (NASDAQ:PCRX) Q3 2023 Earnings Call Transcript November 2, 2023

Pacira BioSciences, Inc. misses on earnings expectations. Reported EPS is $0.72 EPS, expectations were $0.84.

Operator: Good day, and thank you for standing by. Welcome to the Q3 2023 Pacira BioSciences Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand over the conference to your first speaker today, Susan Mesco, Head of Investor Relations. Please go ahead.

Susan Mesco: Thank you, Julie, and good morning, everyone. Welcome to today’s conference call to discuss our third quarter 2023 financial results. Joining me are Dave Stack, Chairman and Chief Executive Officer; and Charlie Reinhart, Chief Financial Officer. Ron Ellis, Chief Strategy Officer, is also here for today’s question-and-answer session. Before we begin, let me remind you that this call will include forward-looking statements based on current expectations. Such statements represent our judgment as of today and may involve risks and uncertainties. For information concerning risk factors that could affect the company, please refer to the company’s filings with the SEC, which are available from the SEC or our website. With that, I will now turn the call over to Dave Stack.

Dave Stack: Thank you, Susan. Good morning, everyone, and thank you for joining today’s call. 2023 has been a year focused on execution amidst both opportunities and challenges. While we continue to be encouraged by improving trends and near-term opportunities, today, we are adjusting our full year EXPAREL sales guidance to reflect an updated view of the remainder of the year. All of the financial guidance remains intact. We established guidance based on historical data alongside current and projected market conditions. We are now forecasting full year EXPAREL sales to be $535 million to $540 million. While we are disappointed to adjust EXPAREL guidance for the year and in no way impacts our confidence and the significant potential we have in front of us.

We remain strong — we’ve maintained strong conviction in the substantial and growing untapped prospects within the Pacira commercial portfolio, and we are laying the groundwork to unlock its full value. We have built an attractive patient-focused business, while maintaining financial discipline, enabling us to manage effectively in all environments. Third quarter revenues of $164 million, improving gross margins and ongoing operating discipline resulted in significantly positive adjusted EBITDA of $53 million. We also remain focused on deploying capital in a manner that we believe will maximize shareholder return. With significant and durable cash flows fueled by EXPAREL exclusivity through 2021, we are well-positioned to return to meaningful growth by advancing three priorities: one, improving gross margins; two, growing revenues through short and medium-term opportunities; and three, expanding reimbursement and access to non-opioid pain management across all sites of care.

I’ll start with gross margins, where we continue to make important progress with consolidated third quarter markets improving to 77%. For EXPAREL, our San Diego facility continues to exceed output targets and achieved third quarter EXPAREL margins of 86%. In addition, the significant quality improvements we implemented earlier this year at our Swindon, United Kingdom facility are now positively impacting margins. Top-line, we remain in good shape to exit 2023 with gross margins in the high 70% range, and we expect to maintain or improve upon these markets going forward. On the regulatory front, we recently submitted a supplemental application to the FDA for approval of our 200-liter manufacturing facility in San Diego. This positions us for an early 2024 approval and will also serve to further improve EXPAREL gross margins as it will allow us to decommission our two higher-cost 45-liter facilities in San Diego.

Turning now to more specifics on the commercial side of the business, starting with EXPAREL, where we saw third quarter average daily procedure volume grew by 5%. Our mission has not changed with the aim of providing a non-opioid alternative to as many patients as possible. We continue to educate our shareholders about the benefits of EXPAREL. Recently, we announced a new partnership with the American Society of Anesthesiology or ASA, to reinforce education and awareness ahead of key EXPAREL milestones. Our lower extremity nerve block PDUFA date action is coming up on November 13, and anesthesiologists are a key ally, who are aligned with our mission of improving patient care and optimizing patient outcomes. We had a meaningful and productive presence at the ASA’s annual meeting last month, with several additional programs are in development with a focus on building momentum around the anticipated launch of our new lower extremity nerve block indications.

To remind you, expanding our label with these two key lower extremity nerve blocks will significantly extend our reach within surgeries of the knee, lower leg and foot and ankle, which collectively represent more than 3 million annual procedures and annual sales expected to exceed $100 million within five years of launch. Immediately following approval, we will begin education and promotion with key accounts with a broad launch rolling out at our national meeting in January. We will be launching with an overwhelmingly positive body of data, supporting EXPAREL as the first and only single-dose product to safely demonstrate four days of superiority versus bupivacaine, achieving statistical significance and p-values of less than 0.01 for postsurgical pain, opioid consumption and percentage of opioid-free patients.

These positive outcomes were achieved with a lower 10 ml dose speaking EXPAREL [Indiscernible] nerve blocks, a very attractive value proposition to the anesthesia community for keen, lower leg and foot and ankle surgeries across all sites of care. Turning to market access. We are continuing to invest in programs to significantly expand the EXPAREL user base ahead of no pain. We believe these programs will help our customers offer non-opioid pain control, especially in hospital outpatient space, where the current lack of sufficient reimbursement greatly impede patient access to non-opioid sparing regimens, particularly for low-margin soft tissue procedures. With 75% of EXPAREL relevant market procedures taking place outside of the hospital inpatient setting, we continue to benefit from our unique product-specific code C9290 which is currently reimbursing EXPAREL at $1.44 per milligram in ambulatory surgery settings.

TRICARE, which covers 10 million government and military lives, also recently adopted the CMS Medicare reimbursement methodology and is now reimbursing EXPAREL VSC9290 in ambulatory settings. We see a significant growth opportunity ahead with no pain as it will mandate CMS reimbursement across all outpatient settings, providing a reimbursement pathway for nearly 20 million EXPAREL-relevant procedures. No pain will eliminate the cost barrier of performing lower-margin soft tissue procedures and outpatient sites of care by providing a non-opioid pain management solution that is fully reimbursed at average selling price, or ASP, plus 6%. We expect no pain will grow into a multi-$100 million opportunity, as commercial payers adopt Medicare reimbursement policies over time.

Our 340B pricing program is helping to alleviate cost challenges by offering a reduced price to eligible entities and low-income communities where patients are most vulnerable to opioid addiction. By investing in 340B, we are growing the EXPAREL user base and volumes with an existing new and new business, while maintaining a highly favorable gross to net for our industry of roughly 86%. We are also working to solidify our — and grow our business block and no pain. It is the right time to begin partnering with select group purchasing organizations, or GPOs, on the cost and value proposition of EXPAREL. Through these partnerships, which we are launching in 2024, we will be offering a broad network of hospitals and health care systems preferred EXPAREL pricing.

We expect this will have a mid-single-digit impact on our overall net selling price, while growing volumes over time. We believe by helping our hospital customers navigate ongoing financial pressures, we will significantly expand patient access, while staying true to our mission of making non-opioid pain management broadly accessible. Our GPO partners will also reinforce best practice postsurgical pain management and disincentivized hospital directives or cost-driven approaches they call for short-acting compounded illicit combination generic drug regimens and opioids that expose patients to serious health risks. The proliferation of outside compounders is a threat to patients and our health care system. As we saw with the recent GLP-1 legal and regulatory activities from Novo Nordisk and Lilly.

These pharmacy compounders employ misleading marketing practices without the benefit of any pivotal safety or efficacy data. They do not have FDA approval or a product package insert to support promotional activity. We are advancing a multipronged strategy to address the serious and illegal marketing activity. These include working directly with law enforcement and regulatory authorities as well as lawsuits seeking injunctive relief under the Lanham Act, similar to the recent legal actions taken in support of the GLP-1 products. To quantify the potential upside of these activities, our research shows that approximately 1 million of these products will be sold in the United States in 2023, a 25% conversion to the 10 ml EXPAREL dose would benefit sales by more than $40 million.

Through these programs like 340B and GPL partnerships, we are accessing a significantly larger pool of patients with our anesthesia and surgeon providers who want to offer superior opioid-sparing pain control. These programs are paving the way for us to leverage the NOPAIN Act by building an expensive EXPAREL user base ahead of the implementation in 2025. Switching gears to ZILRETTA and iovera, both products posted strong year-over-year growth in the third quarter with several milestones on track for the coming year. These include launching a label expansion study for ZILRETTA in shoulder osteoarthritis, expanding use of specialty pharmacy to benefit our ZILRETTA customers and their patients to reduce risk and administrative burden on orthopedic and pain management office practices.

Expanding the iovera cash pay market for a long-acting drug-free nerve block for osteoarthritic knee pain through targeted direct-to-consumer initiatives, initiating a registration study of iovera for the treatment of spasticity, developing new iovera Smart Tips for low back pain pediatrics, sports medicine, while generating new iovera data and rib fracture, foot and ankle, thoracotomy, and shoulder procedures to investigator-initiated studies. For the balance of the year and throughout 2024, we will be keenly focused on executing these value-creating strategies that we are confident will continue to grow the best-in-class commercial portfolio. With that, I’ll turn the call over to Charlie for his financial report. Charlie?

Charlie Reinhart: Thank you, Dave, and good morning, everyone. To remind you, I will be discussing non-GAAP financial measures this morning. A description of these metrics, along with our reconciliation of GAAP, can be found in the news release we issued this morning. I’ll start with an update on sales and margin trends, starting with EXPAREL. Third quarter EXPAREL sales were $128.7 million, average daily sales were essentially flat versus the third quarter of last year as volume growth of approximately 5% was offset by our investment in the 340B program and other contracting activities. With the market showing signs of elective surgery market normalization, we continue to expect the fourth quarter to be the strongest and the largest contributor to full year EXPAREL sales.

ZILRETTA and iovera both posted strong year-over-year growth. Third quarter with ZILRETTA sales increased to $28.8 million and iovera improved to $5.3 million. Turning to gross margins. On a consolidated basis, our third quarter non-GAAP gross margin percent came in at 77%. This is comprised of non-GAAP gross margins of 81% for EXPAREL, 66% for ZILRETTA and 72% for iovera. Our San Diego facility exceeded third quarter targets and swinging is back on track which leaves us optimistic that we will exit the year with margins in the high 70% range with additional improvements going forward. Turning to expenses. Non-GAAP R&D expense for the third quarter was $18.6 million, up modestly from $17.6 million last year. This year-over-year increase primarily relates to product development and capacity expansion costs for the 200-liter facility in San Diego as well as increased regulatory activities.

These increases were partially offset by lower clinical costs due to the completion of our two lower extremity nerve block studies. Non-GAAP SG&A expense came in at $58.9 million for the third quarter, which is up from last year due to new strategic partnerships with sports organizations, a $2.5 million educational grant to the ASA and legal fees associated with the Paragraph 4 and other litigation. Third quarter interest expense improved to $3.5 million versus the $9.9 million reported last year. This was driven by the interest expense savings associated with the retirement of our Term Loan B on March 31, using a new Term Loan A and cash on hand. And lastly, we delivered another quarter of significantly positive adjusted EBITDA of $52.9 million.

As for guidance, as noted in today’s release, we are updating our full year guidance for EXPAREL sales, which we now expect to be $535 million to $540 million. This update reflects our current view of market conditions and our actual results for the first nine months of the year. We are reiterating all other financial guidance ranges as laid out in today’s release with non-GAAP, R&D expected to be at the low end of the range and non-GAAP SG&A expected to be at the high end of the range. In summary, we remain bullish on our five-year outlook with EXPAREL returning to more robust growth with next year’s anticipated launch of lower extremity nerve block and normalizing market conditions, improving gross margins, minus year-over-year increases in operating expense and significantly adjusted EBITDA margins driving durable cash flows.

We are laser-focused on maximizing the value of our current commercial portfolio, and we will continue to be highly strategic in how we manage our operating spend. That concludes our prepared remarks. I’d like to now turn the call over to the operator to begin our Q&A session. Operator?

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question is from David Amsellem from Piper Sandler & Company. Your line is open.

Unidentified Analyst: Hi. This is Tim on for David. Thanks for taking our questions. Just a few from us. First, looking at manufacturing, your initiatives to fixed past issues, what’s the timing and extent to which you’d expect the margin expansion and operating leverage that you’re guiding towards? Second, given the improvement in the underlying search, when do you think that will translate into more robust volume growth for EXPAREL? Will that continue to be a steady grind? Or do you expect an inflection at some point, particularly with respect to soft tissue? And last, at what point do you discontinue devoting resources to iovera as a means of limiting spend? Thanks.

Dave Stack: Good morning, Tim, and thank you. The manufacturing, we are in very good shape. We had a strong Q3, and we see that extending into Q4. As we said in the script, we expect to get into the late 70%, high 70% range for Q4 and that as we continue to improve our performance at the Swindon UK facility, we expect that that will continue to improve. We have a couple of other things that will be inflection points for manufacturing. Importantly, once we put up the 200 liter in San Diego, we will have the opportunity to decommission the 245-liter facilities that are in San Diego that will have a material impact on our gross margins as well. So the plan going forward is to largely rely on these 200-liter facilities, and we’re in very good shape there, especially with a number of more modest, but important opportunities to improve gross margins in our ongoing initiatives in San Diego.

With procedures, we continue to see procedures grow in this 5% to 7% range. I mean, that’s what we forecasted for the year, and that’s exactly where we are. September was on the low end of that range, and we’re expecting that based on Q1 that Q4 should be in the high-end of that range. We’ll just have to wait and see whether that materializes or not. And so the steady grind that you’re talking about is, for sure, associated with procedure volumes, and what we see there is there’s a couple of things that are helping us, or should help us with tailwinds going forward. One, and historically speaking, there was a material impact of the pandemic and folks that had passed away as a result of the pandemic and those folks not being available for largely soft tissue procedures as we went through 2022 and 2023, we think that, that is largely behind us now.

And our own work here, the data for lower extremity nerve block and the p-values for lower extremity nerve block are really exquisite, and we believe that that will have a material impact on revenues for 2024. And then importantly, we raised the issue of these compounders, and during the call, we called out on the script that we expected that the market issues associated with the use of those products would add to a material improvement in EXPAREL sales and the number that we referenced if all of those conversions were turnout would be $40 million. And so we’ve got a number of things that lead us up to no pain, which will be the inflection point of all time in my mind. And all of the issues that we face in the marketplace are related to cost and access.

And with TRICARE with continuing C9290 for ambulatory surgery that we add No Pain, which will pay full and take the burden off of 340B as well, right? And we’ll go from a 24% statutory discount to full reimbursement of ASP plus 6 and we expect that, that will have a very material impact on procedure inflections. So appreciate your thoughts on that. In terms of discontinuing iovera nothing to be further from any thinking as I have iovera is a very important product going forward. The growth trajectory is material, although on a small end. But of all the things that we’re doing in our commercial — our commercial pipeline, iovera for spasticity is at least as important as anything else we’re doing. So we expect to see really material on a percentage basis growth for iovera next year and really important contributions over the five-year planning period for iovera as we get into spasticity, and we start to grow the opportunity.

There should be no mistake iovera is an unbelievably important and really valuable asset for us going forward.

Operator: Thank you very much for your questions. One moment, please. Our next question is from Gregory Renza with RBC Capital Markets.

Q – Unidentified Analyst: Good morning, Dave It’s Anish on for Greg. Thanks so much for taking the questions. Firstly, I just wanted to ask on the lower extremity nerve block expansion opportunity with the upcoming PDUFA, how should we be thinking about labeling? And second, if you would share an early assessment on the 340B strategy progress to date and expectations ahead? Thanks again.

Dave Stack: Yes. Thank you, Anish. The lower extremity nerve block, we believe — well, first of all, the data is strong as any that we’ve ever had for EXPAREL. And then really importantly, it’s a superiority label against bupivacaine. So this is data where these P values in some cases, 0.0001. for opioid reduction and pain control are compared to bupivacaine. So an important aspect that I’m not sure everyone understands. And we have 96 hours of pain control four days with a 10 ml dose. So we think that we address the — at least start to address the pain are the opportunity to use a lower extremity nerve block with a price that is very appropriate for the four days of pain control, and we think that starts to address the cost issue as well.

So we’re really excited about the lower extremity nerve block we expect that the PDUFA date is in play here, and we’re looking forward to the next couple of weeks and moving ahead on that. In terms of the early assessment of 340B, it’s done exactly what it was supposed to do in terms of patient growth in the 340B environment to the point where, especially in the first half of this year, the impact of 340B was greater than we had anticipated that it would be when we put the program into play. So what we’ve seen in the second half of the year with some growth in the nonparticipating accounts, the accounts that are new to EXPAREL as a result of 340B as well as understanding that we got the price increase from early in the year took effect for 340B in July.

We see that, that number comes back to something that’s much closer to the 20% discount that we anticipated in the first place relative to EXPAREL specifically. So it’s doing what it’s supposed to do. We will look at 340B again when we have no pain as we come up on no pain. One of the things that will be really important for us to do is see if replacing a 24% statutory discount with full reimbursement at ASP plus six really allows us to look only at the places where there may be certain patient populations that fall out of 340B that won’t be picked up and no pain. And we want to make sure that we have strategies to address those patient populations. Other than that, in terms of maintaining access and building the pool for no pain going forward, 340B is doing what it was supposed to do.

Thanks, Anish.

Q – Unidentified Analyst: Thank you.

Operator: Thank you for your questions. Our next question is from Balaji Prasad from Barclays. Your line is open.

Unidentified Analyst: Hey, good morning. This is Shao on Bajali and thanks for taking our questions. Just a quick follow-up on 340B. So EXPAREL volume growth, can you give us a bit of dynamics of what portion of that growth was from 340B — and what portion of the growth was from existing channels? Thank you.

Dave Stack: I don’t have that number specifically off the top of my head. I can tell you that one of the things that make the GPO contracting that we talked about today on the call, was the fact that the vast majority of our growth in 2023 has come from places where we have contracted business. 340B is a significant portion of that I can’t give you a number that goes with that. But what we see is where we have individual contracts or group contracts outside of 340B we do see growth and 340B also has provided growth. I’m sorry, I can’t give you a percentage, but it’s the places that we’re seeing the product growing have some form of price protection. And that’s why continuing with 340B and adding GPOs, we think provides — continues to provide access for EXPAREL in a very difficult cost environment for — especially for our hospital customers, but really for all customers. And so I’m sorry, I can’t give you a specific number, if that’s what you’re looking for.

Unidentified Analyst: No worries. Thank you.

Operator: Thank you for your question. Our next question is from Les Sulewski from Truist Securities. Your line is open.

Unidentified Analyst: Hi. This is Jeremy on for Les. Thanks for taking my questions. Firstly, any concern for how GLP-1s will impact ortho surgeries, but an overall health care population result in fewer elective surgeries. And then also, can you just walk us through the competitive landscape, specifically with ZILRETTA and other cheaper treatment options? And what type of impact have you been seeing from those? Thanks.

Dave Stack: Thank you. Very active surgery is very modest in terms of the GLP-1s for us. So on the downside, we really don’t see bariatric surgery impacting us in any way material or otherwise. On the other hand, we do have orthopedic surgeons telling us that because of the GLP-1s that there is some thought around patients with BMIs that are not appropriate for orthopedic surgery today, could well become candidates for orthopedic surgery going forward, because of the GLP-1 opportunities. And so we think, if anything, the GLP-1s are additive to the what we call procedures of ambulation, knee surgery and hip surgery, especially if these patients — these patients generally that have a high BMI are highly motivated, so the GLP-1s could very well help in that scenario.

The issue of ZILRETTA is really non-existent. Some of their contracted numbers and some of their pricing is such that it’s almost the same as generic cocktails. So it does really enter into any of our strategies in terms of any competitive things that we see going forward. The cocktail programs that we talked about today are a material issue. And you probably would have seen from the GLP-1 — on the GLP-1 topic again, that specifically Nobel, Nordisks and Eli Lilly were very aggressive in the compounders that we’re going after their GLP-1 brands. We see essentially the same activity for compounders putting combinations of generic drugs together. Generic drugs that are scheduled free controlled substances, compounds like Ketorolac and others that have black box warnings for patient safety.

None of those things are called out in any of these combinations. In fact, none of these products have any pivotal data, zero for efficacy or safety and none of them have package inserts. So there’s really no — they’ll wait for them to have a black box, because they don’t know have a package insert. So they are all being sold elicit and illegally, and we think that we are in a very strong position. All the way Eli Lilly and Novo Nordisks can on the GLP-1s we will follow some of those same strategies going forward. So when a site goes to bupivacaine alone or bupivacaine with epinephrine, essentially that allows them to buy this, seven, eight hours of pain control. In many places, they will add Dexamethasone or another steroid trying to get 10, 12 hours of duration.

But in all of these short-acting strategies, they are relying on Opioids. And so as we move forward here, our strategy is not only to be able to be cost conscious given the struggles of our customers, but also to be able to provide a long-acting product so that they can reduce Opioids. So none of these strategies that you’re hearing where people are going to lower-cost products allow them to have anything that works for more than 10 to 12 hours and all of those strategies rely on opioids. And we think that we can do better than that.

Unidentified Analyst: Thanks.

Operator: Thank you. Our next question is from Oren Livnat from H.C. Wainwright. Your line is open.

Oren Livnat: Thanks. I have a couple of questions. If I could just follow-up on Dave, your earlier comments about growth generally this year coming or maybe entirely coming from contracted customers, whether that’s 340B or other contracts or I guess, as you said, price-protected customers going forward in 2024 and beyond. How do you feel about organic growth? I guess you could call it across the entire book of business, including the non-contract business. Should we think that where you were able to penetrate, you’ve hit a ceiling that just is what it is without further price action or help or is it just a function of the market is still making to normalize? And next year, you do see growth across that book two? And I have a follow-up.

Dave Stack: No. Well, we believe that it’s a both. All right. Thank you for the question, by the way. We think lower extremity nerve block. Well, first of all, we think that the market normalization and the – it sounds more of it when I talk about it this way, but I don’t mean it that way. But the pipeline of patients will require largely soft tissue procedures as disease progression, largely in the cancer population goes forward, that population that I talked about earlier that was absent for 2022 and 2023 because of the mortality associated with the pandemic We think that, that’s fact. So we think procedure normalization means the procedures will grow at a slightly higher rate to start with. Then we add no pain to that — or we had a lower extremity nerve block to that, which should, by the way, be sponsored to a greater degree because of our relationship with the ASA.

We will have specific activities that are directed by the ASA, as a result of the neuro – lower extremity nerve block launch. And then as we get into 24 range, we have the combination of these cocktails and we believe that there will be some ability to take these products off the market, which will move more of these procedures back to EXPAREL, especially the lower dose of EXPAREL, and at the same time, our GPO contracts will provide a broader base of contracted business, which is where we saw the growth in 2024. So we really — I see it — we see it as 2.5 buckets. The half bucket is procedure normalization and the two buckets are lower extremity nerve block in combination with the ASA and the anesthesiologists having increased interest in a 10 ml dose, again, addressing the cost issue.

And then the whole opportunity to broaden our contract base with GPOs, eliminate some of the higher percentage rate, individual contracts that we have with specific health plans. And then at the same time, allow those folks to start to use EXPAREL against some of these cocktails, which as stated earlier, are not FDA approved that are only short-acting products in the best case, which require that they use opioids and really, the clinicians are not happy with those decisions at all. Those decisions are being made purely by kind of cost alone by pharmacy and in some cases, by C-suite initiatives.

Oren Livnat: Okay. And if I could just follow up on 2024, I know you’re not giving guidance today, and so I don’t expect any hard numbers. But can you just both help us understand just the push and pull. You mentioned expanded contracting, having a, I guess, a mid-single-digit impact projected. I guess, all else equal without lower extremity nerve block, adding on. Do you expect to see net growth in overall — in the balance of procedures versus price offsetting next year? And then, I guess, just when you talk about EBITDA and margins, are you committed to growing EBITDA, I guess, at a faster rate than sales next year? Or is it possible that the lower extremity nerve block investments in that launch could have, I guess, a short-term drag on profitability next year? Thanks.

Dave Stack: No, that’s a three-credit MBA, of course, that you just asked for. So a number of things. Let me start off with gross margin where we’re coming off a base, let’s just say, first quarter, right? Where first quarter of 2023, our gross margin was in the low 70s. We expect that, that will be materially improved over next year. And so we’re starting from a much better position. The impact of 340B will be relative to itself now relative to comparing 24 to 23. So we expect that, that impact it will be the same number, but on a comparison basis, it will be a better comp for us. The GPOs are in much less consequential to the bottom line than the 340B aspect of this is. And so it becomes then a question of how do we handle OpEx on a go-forward basis and coming up on no pain it is — it would be illogical for us to go aggressive at OpEx when we think that the grand opportunity of all time is right in front of us on 1,125.

So long ball to answer your question as a result of all the parts of this that I met you in the first question that you asked, we do expect that we will get tailwinds from not — well, you eliminated lower extremity nerve block that’s hard for me to do. I haven’t actually looked at what the year would look like if we didn’t get approval of lower extremity nerve block, which I guess is a statement of my confidence that we will get lower extremity nerve block in a couple of weeks. But I think as we said in the script, cocktails on material we expect to at least not to have a stable growth environment as the growth environment improves GPOs and 340B and TRICARE. So net-net, there should be an improvement and EBITDA next year, although it will likely be modest as we wait for no pain to come.

Oren Livnat: All right. Thanks so much for the color.

Dave Stack: Right. And I would say, Art, even if we look at through the quarter this year over the three quarters last year at the EPS line, it’s material. I mean, it’s a material improvement. And I think you’re starting to see some of these things come into play already.

Oren Livnat: And it will be remiss of me not to congratulate you on your announced retirement.

Dave Stack: So far, we see no evidence of that. But I’m looking forward to spending some time with a grand kid but actually do it some things. No, but I appreciate that. I mean it’s a bit bigger sweep. I mean, I love this place, but I’m going to be 73 in April and there’s something I can do about that. Thanks, Dan.

Oren Livnat: Take care.

Dave Stack: You too.

Operator: Thank you. I see no further questions at this time. So I would like to now turn it back to Dave Staff, Chairman, CEO

Dave Stack: Thanks, Therese, and thanks to all on the call for your questions and time today. We are excited about the opportunities that lie ahead of us. Throughout the balance of the year, we continue to build on our strong foundation to ensure we are well positioned for long-term success. The opioid epidemic continues to be a national crisis, underscoring the vital importance of our mission. Next up for us is JPMorgan and Miami, followed by Truist and Piper in New York. Thanks to you all, and stay well. Bye for now.

Operator: Thanks to everyone for your participation in today’s conference. This does conclude the program, and you may now disconnect.