Q4 2020 Medavail Holdings Inc Earnings Call
Yeah.
[music].
Ladies and gentlemen, welcome to the Med Azo 2020 Q4 earnings Conference call. My name is Terry and I'll be the operator for today's call.
You will have the opportunity to ask a question today and you can do this by pressing star followed by one on your telephone keypads and.
I would now like to hand, the call over to Caroline Paul. Please go ahead Carolina.
Thank you and thank you all for participating on today's call.
<unk> me and kill right, Chief Executive Officer, and Ryan Ferguson, Chief Financial Officer.
Earlier today and not availed holding is released financial results for the full year ended December 31, 2020.
A copy of the press release is available on the company's website.
Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Any statements contained in this call that relate to expectations or predictions of future events results or performance or similar statements are forward looking statements.
All forward looking statements, including without limitation those relating to our operating trends and future financial performance the impact of COVID-19 on our business and prospects for recovery.
Expense management expectations for hiring growth and our organization and reimbursement market opportunity and expansion and guidance for revenue and gross margin and operating expenses and 2020 are based upon our current estimates and various assumptions.
Also management May make additional forward looking statements in response to your questions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements and do not guarantee future performance.
Accordingly, you should not place undue reliance on these statements and should not rely on them and making an investment decision without considering the risks associated with such statements.
For a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section and our current report on form 8-K filed with the Securities and Exchange Commission and SEC on November 18th 2020.
This conference call contains time sensitive information and is accurate only as of the live broadcast today March 32021, and I've got holdings disclaims any intention or obligation except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise and with.
I will turn the call over to Ed.
Thank you Caroline and good afternoon, everyone and thank you for joining US today I'm pleased to welcome you to <unk> first earnings call to review our fourth quarter 2020 results. Joining me today is Ryan Ferguson, our Chief Financial Officer as many of you know, we completed a reverse merger and concurrent private placement and.
Remember raising approximately $84 million and new cash proceeds I would like to express my sincere appreciation to all the parties, who supported and assisted us and consummating those transactions and this is.
Our first call as a public company I will use the first few minutes of this call to provide an overview of <unk> and how we are transforming the pharmacy market as some of you are new to our story and then I'll move to an update on our fourth quarter accomplishments and then Ryan will take over and add some additional commentary on our financials and then.
And we will open up the call for questions.
We think about our business and two distinct segments, namely retail pharmacy services and pharmacy technology.
Our retail pharmacy services segment, which comprises the majority of our revenue consists of our technology enabled retail pharmacy business operating under the brand spot Rx pharmacy.
We employ our own pharmacy team purchaser on medications and deploy our proprietary technology. The med center directly into primary care clinics, who are servicing mainly Medicare recipients.
This is an end to end turnkey technology enabled solution, bringing retail pharmacy directly into the clinic.
Our pharmacy technology segment comprises the remainder of our business, we sell and license our hardware and software to large clients, who have their own pharmacy operations and we'd like to utilize our technology to meet their pharmacy opportunities and challenges in this case, we are serving as the healthcare it.
Vendor.
Now, let's dive a bit deeper into a retail pharmacy services segment operating as spot Rx pharmacy.
We are focused on disrupting the pharmacy experience for the Medicare market in the United States. Our mission is to significantly improve medication adherence and reduce the cost of care of the Medicare recipients, we serve by partnering with their primary care providers directly in the clinics where.
They receive care.
We're medication adherence is a leading cause of hospitalization and increased cost of care per member and sadly debt.
Studies have shown that when patients are adherent to their medications there per member per year cost may be reduced by approximately 1000 to $8000.
That was many of you know there is no shortage of retail pharmacies in the United States. So the question is what are we doing differently than traditional retail pharmacies.
The answer is we believe that while most traditional retail pharmacies are trying to attract people to their physical locations. We through our proprietary net center technology are turning that model upside down and deploying prescription medication dispensing capability directly into the clinic.
As close as we can get to the customer.
We view this as a very coveted position.
And that any retail pharmacy would love to have.
Our solution combines our centralized pharmacy hubs with our proprietary Med center technology through which we provide live audio visual access to our central pharmacy team to counsel and dispense the required medications directly to the patient.
In addition to point of care dispensing of medications through our physical kiosk. We also provide free courier home delivery for those customers who choose it.
All of these capabilities are reinforced by <unk> on site.
Alkine clinic account managers, who support the clinic staff and their patients with regards to our pharmacy service.
Very importantly, this daily presence in the clinic allows us to become an integral part of the care team Unlike retail pharmacies.
We are able to proactively share data with the doctors and the clinic staff regarding patient status and assist and ensuring that patients are adherent and staying healthy.
Our hub and spoke model.
And clinic dispensing through our proprietary technology.
And clinic account manager.
Centralized hub pharmacy team and free carrier home delivery is not only extremely unique and relevant to our target client, but also highly scalable.
Which we expect will allow us to grow our footprint aggressively across the states, where we currently operate as well as opening new states.
Over the past few years, we have demonstrated our value by driving above five star medication adherence scores for our cohort of patients while achieving an amazing net promoter score of 90.
As you can imagine this high touch service drives outstanding responses from our patients and the clinics.
Share a few with you.
Recently, we were able to help a clinic partner streamline the refill process for a patient during this process the clinic staff rather than the retail pharmacy was essentially trying to obtain and multiple prior authorizations through different pharmacies are onsite clinic account manager saw this as an opportunity.
And to inform them that they could forward all of these prescriptions to spot Rx so that we could handle the prior authorizations for them instead.
As a result, the patient wound up transferring numerous medications, including specialty therapies to spot Rx.
Patient indicated that they were very thankful that spot Rx was able to simplify everything for them and our clinic account manager was of course delighted that they were able to make this experienced quick and convenient for the patient.
And another sputter ex site at patient contacted the clinic to order one of their medications and ultimately wound up ordering all of their medications through spot or ex upon reviewing all of their prescriptions, we were able to identify a number of significant cost saving opportunities as compared to their current pharmacy patient.
Patient was so thrilled with the experience that they transferred all their medications and ask the clinic to make sure their preferred pharmacy was set to spot Rx within the clinic EMR system.
Experiences like these occur regularly at our spotter ex locations.
The embedded nature of our solution has become the true differentiator for <unk> in the pharmacy market.
We are laser focused on partnering with those health care providers, who service the Medicare market.
Many of our enterprise clinic partners operate and a value based care model and are looking for a pharmacy partner with a complimentary business model that is spot or ex pharmacy.
We have adopted a very thoughtful approach to the opportunity with these enterprise clinic partners. We are currently focusing on six initial states, Arizona, California, Michigan, and Florida, Texas, and Illinois within the six states. We estimate there are approximate.
At least seven.
And clinics that fit our model, which generate over $16 billion of annual prescription and revenue.
We view this as clearly a very large market and growing.
Through our onsite clinic presence and marketing, we acquire customers and over time, we expect a transfer of their entire medicine cabinet to our pharmacy from the pharmacy. They are currently utilizing.
We would expect the result to be improved revenue and margin per patient over time.
Customers, usually utilize our service with an initial prescription fill.
And after experiencing the differentiated service, we are providing often transfer the balance of their medications to sputter ex.
Many of these Medicare patients are on multiple chronic medications that we expect to take advantage of our in clinic pickup capability or our free Courier home delivery.
Our goal is to ramp a clinic to a $1 million per year pharmacy revenue business over approximately a 12 months period.
I would note that the COVID-19 pandemic has impacted our ramping time and several cases face to face visit volumes were reduced and clinic workflows were altered.
Both have extended our rent period to the $1 billion target.
Also more of our customers took advantage of our free courier home delivery, increasing our delivery costs, resulting in some impact on our gross margin.
Facing these challenges, though our business delivered exceptional growth.
During the fourth quarter, we deployed 14, new in clinic med centers, representing growth of 75% compared to deployments and the same period of the prior year.
This brings our total cumulative deployments at year end 2022, 57, and our adjusted retail Pharmacy services revenue was $2 6 million for the fourth quarter of 2020, representing a 98% year over year increase.
Pharmacy technology revenues increased year over year to $568000 and and aggregate adjusted sales grew to $3 2 million, which equates to a year over year increase of 117%.
And through the COVID-19 crisis in 2020, we demonstrated an ability to grow our pharmacy revenue quarter over quarter.
Now recently, we were pleased to announce further expansion with memorial care in Orange County, Cigna Medical group, and Phoenix, and TMC, one and the greater Tucson area.
We also entered the Michigan market in late 2020, opening our central pharmacy, and our first two spotter ex in clinic deployments in the state with Oak Street Health.
We see this momentum in our spot Rx pharmacy business continuing through 2021.
Additionally, we continued to expand our pharmacy technology business through new agreements with Texas Health resources, Kaiser Permanente and a recent expansion of our existing deployments with Sam's club.
Texas Health resources has licensed our technology to deploy within their current urgent care clinics and emergency departments.
At the end of 2020, Texas Health resources had deployed 11 sites with an additional five planned and the first quarter of 2021.
Our recent agreement with Kaiser is a full systems integration project, meaning that they have contracted with us to integrate our software with their corporate pharmacy management system, providing end to end integration and operation of our med centers.
<unk> has acquired their first two med centers to be operationalized post the integration work and.
And lastly, Sam's club recently added its ninth site. This is a cashier less site in Texas, providing a fully automated self service pharmacy offering to their members using our technology.
As we look ahead in 2021, we are very excited about the opportunity to maintain our momentum as demand for our solutions remains strong and.
And the states, where we are currently operating including Arizona, California and Michigan.
We have previously stated that we will be opening our first hub pharmacy, and Florida by mid 2021, which is on track.
And to ensure we are ready to move quickly we have had our business development team active and Florida for some time and are working to build a strong pipeline of value based care clinics, who operate within that market.
Florida is clearly a priority for our company.
Give you a view into the first quarter, we are experiencing strong growth and expect sequential net revenue growth of approximately 20% relative to the fourth quarter of 2020.
We also expect to see a first quarter gross margin improvement compared to the fourth quarter of 2020.
Now again that said the impact of COVID-19 will persist for some time.
While the progress on vaccination should help us return to some level of normal as you can imagine our customer base of Medicare focused clinics and large health systems have turned much of their resources and attention to vaccination programs, which does present a.
Short term challenge for us.
With these caveats in mind, our expectation is to continue to deliver quarter over quarter revenue growth with a full year net revenue outlook of 27% to $34 million of revenue.
Overall 2020 was a great year for <unk>.
We exited 2020 with strong momentum and are seeing that continue through the first quarter and expect it to continue through 2021 now.
And with that I'll turn the call over to Ryan and provide a review of our fourth quarter results.
Thank you Ed as mentioned during the fourth quarter, we deployed 14 med centers compared to eight and the fourth quarter of 2019.
Net revenue for the three months ended December 31 2023.
And $3 1 million, a 112% increase from <unk>.
And $1 5 million in the same period of the prior year.
These results include the impact of a year and accrual adjustment of 75000 related to service fees charged for adjudicating medication claim and adjusted bad debt Reserve.
Excluding this impact adjusted non-GAAP net revenues were $3 2 million and increase of 117% compared to the same period of the prior year.
Adjusted net revenue growth was driven by a 92% increase and retail pharmacy services sales and a 292% increase and our pharmacy technology sales.
While our top priority is the continued growth of our retail pharmacy services business, we do expect our pharmacy technology business to represent approximately 20% of our revenue over the long term.
I would also note that pharmacy technology sales can be variable from quarter to quarter due in large part to customer purchasing pattern.
Now turning to gross margins.
They had highlighted earlier gross margins for newly launched sputter ex location and to trend.
Lower long term target and the initial months and then gradually expand as we focus on transferring stealing and synchronizing delivery of these patients for prescription medication Larry.
Gross margin for the fourth quarter of 2020 was negative 8% as compared to 18% and the corresponding prior year period.
Gross margin includes the impact of one time expenses totaling 352000 and.
And which were primarily driven by a non cash inventory adjustment related to the evaluation of Med center inventories to match declining manufacturing costs and our current retail price.
And included a write down of prescription medication inventory value due to obsolescence.
Excluding the impact of the onetime expenses adjust.
Adjusted non-GAAP gross margin for the fourth quarter of 2020 was 6% as compared to 18% and the corresponding prior year period.
The decline and adjusted gross margin during the fourth quarter was primarily attributable to reimbursement volatility and the quarter as experienced throughout the retail pharmacy industry.
Additionally margin was partially impacted by a higher mix of home deliveries due primarily to increased telehealth utilization.
Total operating expenses for the fourth quarter of 2020.
11, 4 million and 97% increase from $5 8 million and the fourth quarter of 2019.
Excluding stock based compensation and non recurring expenses, primarily related to the merger transaction and becoming a public company.
Our total fourth quarter adjusted non-GAAP operating expenses were.
<unk> $8 9 million, a 42% increase over Q4 of 2019. This expected increase in operating expenses was driven primarily by investments and personnel facilities and other expenses necessary for the continued build out of our operating footprint.
Including the launch of our operations and Michigan.
Additionally, we made accelerated investments to automate additional workflows and important to our customer service capabilities.
Adjusted EBITDA, which we calculate by adding back depreciation and amortization stock based compensation and exclude nonrecurring expenses and other income to net loss was negative $8 7 million and the fourth quarter of 2020 compared to negative $4 9 million and the fourth quarter.
Of 2019.
We ended the fourth quarter of 2020 with $58 million of cash and cash equivalents, primarily as a result of the financing we completed in early November.
We now have approximately 31 9 million shares of common stock outstanding and we expect to have a weighted average share count for the first quarter of 2021.
<unk> 31 9 million shares.
Over the long term, we expect our economic model to enhance our free cash flow generation.
When we enter and the new clinic side, we typically ramp of clinic from zero to an average run rate of $1 million per year as we exit the first 15 to 16 months due to COVID-19 impact.
Now turning to our outlook of 2021, we are cautiously optimistic about the remainder of the year, although some uncertainties remain.
As Ed mentioned, we expect net revenue growth of approximately 20% and gross margin improvement and the first quarter of 2021 compared to the fourth quarter of 2020.
As the pandemic subsides, we anticipate continued quarter to quarter revenue growth with net revenue is expected to be and the range of 27% to $34 million.
For a full reconciliation of non-GAAP financial measures to GAAP measures. Please see the tables captioned reconciliation of non-GAAP financial measures included in our press release.
And with that I'll turn the call back over to Ed for closing comments.
Thank you Ryan in summary, we remain extremely enthusiastic about our company's future and our ability to generate value for all stakeholders for the patients we deliver superior levels of satisfaction and adherence for the clinic operators, a true pharmacy partner aligned with their business goes.
And for our shareholders and extremely large market for us to continue to grow our business we.
We've assembled a team a very dedicated colleagues, who I feel privileged to work alongside as we continue down this path of growth and innovation.
We look forward to updating you on our business in future quarters, and with that we will now open it up to questions operator.
If you wish to ask a question. Please press star followed by one on your telephone keypad now and if you change your mind and make sure and maybe Youll have from Nicky. Please press star followed by.
Preparing to speak please ensure that your line is on mute lately.
Our first question comes from Charles <unk> from Cowen. Please go ahead.
Yes, thanks, guys and congrats on the quarter.
I wanted to start with.
A little bit what youre seeing here.
And related to Covid as we're kind of coming out I know some of the states like Michigan and have been reporting on increase in and cases.
Ron you gave sort of the first quarter outlook still pretty solid sequential growth.
Just wanted to get a sense.
And what Youre seeing in terms of that impact in the pharmacy operations.
Sure.
So Charles Great and here for you Ted.
A couple of things that I would touch on first of all the interest in our solution remains extremely high.
And all of the markets that we're participating in and and planning to open as we've touched on and Florida.
The vaccination programs in place are truly pulling a lot of resources away from our clinic teams too.
To get the vaccinations on which is obviously absolutely the right thing to do which in some cases is impacting our ramps and.
And especially for new sites. So we're seeing anywhere from a 30% to 45 day differ.
Deferral as clinics are working through this vaccination process.
Again, 100% agree with what Theyre doing and.
And we will have some headwind on us as we move into the balance of the year and then the last thing I would say is on the technology side.
Similarly, because most of our customers are large pharmacy chains or health systems, and they've not only focus their pharmacy teams and health care teams on vaccination processes and advancing that but also their technology teams because you see a lot of work done on the scheduling systems online system. So again.
Similar type of impact, but none of these are.
Are causing people to cancel anything it really is a deferral.
And Thats helpful.
And.
Can you talk about sort of what youre seeing now in terms of the mix. Obviously you have the med center in the clinics office, but you also do home delivery and <unk>.
Corey as well.
It is sort of right now the mix of.
Sort of how.
Patients are picking up their medications.
What percentage is coming from.
From the met centers and maybe what that mix between first fill and refills look like and is this sort of what do you kind of expect going forward now that you've had more experience with these deployments.
With regards to delivery I.
I think Ryan and I, both mentioned, we're seeing more customers take advantage of delivery.
<unk> of Covid, They don't want to go out and again, we're dealing with mainly the Medicare population. So it's not not surprising to us so were running higher than we would've expected and the model.
As we had pointed out and that is and our cost of goods sold. So it does have some impact but I would also say that we are beginning to see at this point increase and face to face visits occurring and the clinics and so that's encouraging as we look forward.
I mean from a normalization I would expect to see.
Reduction in home deliveries and an increase in Med center pickups, as we move forward, but as we've told people before the vast majority of the scripts we fill for our customers are delivered via our carrier network.
With with regards to the chronic versus first fills the vast majority again here of our medications are chronic medications as we get customers to convert their medicine cabinet and over to us.
Although when we go into new clinics, and it's an important point.
We tend to be filling acute meds initially.
And with the patients that are at the site and Thats, usually a mix of commercial and Medicare patients. So over time, we get those those Medicare customers converted over.
Hope that helps.
Yeah, and just to clarify when you say that you expect mail order to kind of revert back is that because people who are on mail order now are switching back or is it just over time the mix of other patients are not going to necessarily go to mill going in person.
And just remember Charles we don't we don't do mail order rate, we either deliver via courier or you pick and I'm sorry delivery on deliver current yes, that's what I've got.
Correct and so what we saw was customers who normally would pick up at the clinic because they were regular visitors at the clinic switch.
Switch to two courier delivery because of Covid, we fully expect them to be switching back because they are frequently at the clinic and.
And quite frankly, it's a real value add that we can ensure the patient gets their medication in their hands well there at the clinic.
And really demonstrates that.
It's dispensed and the patient absolutely hazard.
Great.
For me just wondering what are the assumptions for deployments in 'twenty, one that underlies the guidance I know you have the contract manufacturer catch on and kind of coming on line and Youre expecting deliveries and the second quarter.
And just maybe if you can just remind us on what your expectations for deployments over the rest of the year looks like.
Yes, we actually didn't provide guidance for deployments of med centers for the full year and we're not providing net right now I would say, though that in the discussions we did have for exactly the reason you pointed out that.
Our deployments were back half loaded as we move through 2021 and that remains.
The situation.
Great I'll jump back in the queue. Thank you.
Thanks Charles.
The next question on the line comes from Brooks and now from Lake Street Capital markets. Please go ahead.
Hey, good afternoon, guys. So I have a couple of questions too I guess.
You commented about the.
And the Q1 and some of them.
And expected growth kind of sequentially after that.
Would you say that you expect the business overall to be.
Faster growth and the back half of the year.
So perhaps the response from Covid diminishes and you get more deployments out there.
And how we should think about it.
Yes, I would I would think Brooks and by the way day care for me I would say that.
Certainly in the back half of the year, we expect the it's back end loaded as we've talked about I would say that with the focus of our clinics and.
And the health systems in the first half and doing the vaccination programs that they may that may slowdown, our first half slightly but we expect it to be back half loaded.
Cool and then you obviously talked about the.
Ramp of med centers, and how that's being affected by the <unk>.
Various things and the marketplace right now are you prepared to help us think about what kind of a number the ramp might look like in 2020 one and.
I think I heard you say youre not moving away from the longer term guidance about the ramp to $1 million per machine, but tell me, how you're thinking about that right now.
And so we're not moving away from our expectation that we can ramp sites to the $1 million.
We did comment that with Covid debt that ramp has slowed for all the reasons I think we're all aware with regards to face to face visits and change and workflows et cetera.
And we're not commenting on the number of sites, but as we did comment we do.
Outlook for the full year and net revenue of 27% to $34 million. So that's how we feel about our ability to deliver through 2021.
Great and then maybe the last one.
Kind of ex.
Weighted about your opportunity.
Operations like Oak Street.
And you give us any sense for how it's going so far and the initial <unk> deployment and.
Any feedback you're getting from them about how it's working.
I won't make any comment on oak streets point of view.
I would say that that were pleased with.
And with how things are going to we're excited about that.
Deployments, there, but as I mentioned, we're also very excited about the opportunities that we're seeing and Florida.
Because we've had our business development team very active as we line ourselves up to get.
Our first pharmacy opened in Florida and in mid 2021, and as we know Florida is a very very heavy Medicare advantage state. So we're very excited about the Florida opportunities.
Greg Thank you very much and I'm looking forward to 2021.
Thanks Brooks.
The next question is a follow up question from Charles <unk> of Cowen. Please go ahead Charles.
Great. Thanks.
Just wanted to.
Think about the guidance.
When we think about.
Going into the back half of the year or does the guidance assume a return to relatively normal pre COVID-19 levels by the end of the year or are you still assuming that we are probably still impacted somewhat by COVID-19.
Throughout the course of this year.
Charles I would say that that we see COVID-19 impacts continuing.
Through the year, although with vaccinations and hopefully mitigating.
We understand the potential impacts.
Covid and we.
And that's how we've thought through our guidance on the 27% to 34.
Great and then also maybe talk about and.
And the potential impacts from a weaker flu season, as well I think for now.
It does not have as much of an impact on your population in general because I know there's been some discussion January February has been relatively weak from a flu perspective and that tends to be over a retail pharmacy issue I was wondering how FX with you.
It really doesn't impact us again, our focus is Medicare patients on multiple chronic medications.
And again many of our value based care clients. Their model is too frequently be interacting with the patient whether they are well or not well.
And you know that some of our clients about how they.
Bring people into the clinics for health Checkups, and so our focus is those chronic patients multiple chronic meds, they always need those meds and so we're focused on ensuring we continue to deliver those where do we have to do it through picking it up at the clinical or home delivery through our Courier service. It is an ongoing recurring requirement of the patient to.
<unk> to fill those so I don't see the flu season, having really and impact on our business.
Okay. Thank you. Thank you for clarifying that.
Wanted to ask obviously the model that you guys are really focused on here is the Medicare market, particularly in the clinic setting.
Very focused strategy and I get that.
Always thought about retail has another opportunity you're talking about Sam's club earlier.
Greens and January they announced an investment and IAA.
And for automation, and particularly I think it and their retail centers.
On.
And I know theres not an area of focus for you at the moment, but what does that and what do you think that does for the outlook for maybe potentially and the retail market for you.
How do you kind of see that maybe potentially playing out down the road.
So what I would say is that in.
And our comments, we mentioned that Texas Health resources had deployed 11 sites to the end of last year and plan to do five for the first quarter of this year.
And their urgent cares and their emergency departments, we signed an agreement with Kaiser.
Which is a <unk>.
<unk> systems integration agreement for Us and we obviously have other discussions going on so I think theres, a very clear view and the market debt if you will.
Want to extend pharmacy reached through automated technology that meets or.
Boards of pharmacy requirements.
We are the answer and so.
So we expect that we will continue to engage and these large health systems and some retailers who are either looking again to increase availability of pharmacy services.
And ours or potentially control cost by putting self service capabilities and so I think it bodes well for us.
That opportunity continues to exist for our business.
Okay. Thank you and maybe just last one Brian you gave us a revenue assumptions can you give us any kind of directional thoughts on operating expenses.
Maybe cash burn for the year anything around that so we can kind of think about the expense side. Thank you.
Yeah, Hey, Charles Thanks for the question.
We haven't provided any guidance on.
Operating expenses at this point, we're obviously focused on.
How are we.
Take advantage of our growth initiatives and opportunities in front of us and we're constantly assessing the market opportunities and growth there.
Yeah.
To build out our.
Footprint as we've indicated and we did in Q4 around investments too.
Accelerate into places like Florida, as Ed mentioned that the key place for us and so.
We'll continue to make the right investments.
For our growth trajectory, but haven't provided any specifics on cash burn numbers or opex numbers at this point.
As the fourth quarter, a good kind of proxy then to build off of and grow from even into the first quarter or anything about fourth quarter that was kind of one time.
Catch up or some type of one time expense that doesn't necessarily repeat as we as we enter into this year.
Yes, as I mentioned and.
The prepared remarks, we did make some accelerated investments and we will continue so I would say that as a good.
Baseline for you to think about.
Think about things that we're doing to invest in our customer service capabilities in terms of automation and synchronizing medications and running our playbook to.
Prove gross margin and service to our customers and so.
There were investments made of that nature that will continue.
As we execute on our growth strategy. So Q4 is a good indicator on how and how we think about that one thing I would mention is.
The investment in <unk>.
New central pharmacies will be lumpy at times and.
And come on ahead.
Ahead of <unk>.
Particular location ramping or a geographical location ramping such as Florida and early days, we will obviously have some higher pharmacy staff members and then quickly launch clinics close to that time of the launch period of the central pharmacy, and so and we think about new central pharmacy is coming on.
And as we've mentioned before it will be a key area for us and and the upcoming quarters of this year and so keep that in front of you as you think about your model.
Okay, I'm, sorry, and then lastly, when we think about Florida.
Florida, The Florida opportunity right now is already in the backlog, let's say versus what Youre thinking about in terms of signing new clinic partners.
For the end of this year or thinking further out.
Do you on it.
And we haven't commented on the backlog.
But I would say that we've been very active with our business development team selling since late 2020.
And we are very positive about the pipeline that we've built up.
Great. Thanks, a lot guys.
Thanks Charles.
We currently have no further questions and I'll hand back to Ed for any closing remarks.
I just wanted to say thank you all very much for attending our first public company conference call and we look forward to further calls and the upcoming months and quarters have a great day.
Ladies and gentlemen, this does conclude today's call. Thank you for joining you may now disconnect your lines.