Shelley Thunen: As we’ve said before, our goal for capital equipment is to get a margin of 20% to 30%, right? A reasonable margin for the company, but not so high that it holds customers out from purchasing the LDD. Today, we’re well underneath that 20% and that’s really been driven by the fact that we’ve had these tremendous supply chain shortages and of course then people are charging more for the material. And the LDD is very material intensive in terms of its overall cost. What we expect with the lower cost to manufacture LDD is that we would be able to get our gross margin into the 20% to 30% range again, which is pretty normalized. But we don’t expect much benefit from that in 2023. I think we’ll get the full benefit of that in 2024.
Craig Bijou: Great. Thanks for taking the questions and congrats on a strong year.
Shelley Thunen: Thank you, Craig.
Operator: Thank you. One moment while we prepare for the next question. Our next question is coming from Robbie Marcus of JPMorgan. Your line is open.
Robbie Marcus: Great. I’ll add my congratulations. Nice job. Maybe to start, Shelley, I just want to be clear on the seasonality comments. Do you expect first quarter 2023 to be up sequentially versus fourth quarter?
Shelley Thunen: Typically it is, but you wouldn’t see a large step up. And that would really primarily be driven by LALs, but you typically would not see much of anything in the first quarter just because LDD sales are anticipated to not be as heavy as they are in the fourth quarter and they’re a bigger ticket item.
Robbie Marcus: Got it. Okay. Maybe to follow-up on Craig’s question, maybe I could push you a little bit on how to think about LAL versus LDD because you’ve been seeing a little bit of sequential increase on LDD revenues each quarter. So one, tell me if it’s a correct statement that your LDD growth will be well below the 60-something-percent growth implied in guidance? And then, if that’s correct and it will predominantly come from LAL given the margin commentary, how do you think about where you’re going to be exiting the year in terms of utilization, whether it’s by account or by LDD? What does that represent for the average practice that you’re at? And how high do you see that in, let’s say, your top third of accounts or however you can segment it now? Just so we can get a sense of, is that a reasonable assumption? Thanks a lot.
Shelley Thunen: I’m going to answer the first question and then kind of turn over how we manage our accounts to Ron a little bit. We do expect to have increases in our LDD sales. But like 2022, obviously the acceleration was primarily in LAL and that’s very typical of any kind of razor and razor blade model as well. And it’s a large focus for the company to continue to make our customers more and more successful. In the fourth quarter, our average customer, and of course, there’s a lot of variability in that number, right? It’s a macro number. They were doing about nine LAL implants per month during the first €“ during the fourth quarter. And we have pretty good sequential growth in that metric, but really where we focus the businesses on the individual practice and how we can help them become more successful.
And I also think one of the things Ron talked about was our strong clinical staff as well. What we’ve seen is, is our new customer’s continue get to the same places our existing customers, customers who might have signed in 2020 and 2021 faster. They kind of get to the same place, they end up in the same range, but they get there a little faster. And we think part of it is just that we continue to learn things, best chips and best practices. And so our goal, while we don’t stay the specific goal that way, it is to increase the volume at each practice. Do you have anything to add to that Ron, in terms of how we do that or anything like that?
