Q3 2024 biote Corp Earnings Call
Welcome to the BioT third quarter 2024 earnings conference call.
Speaker Change: All participants are in listen-only mode. If you need assistance, please dial star zero to signal an operator.
The End of the World
Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would like now to turn the conference over.
Speaker Change: to Szymon Serowiecki from Investor Relations. Please go ahead. Thank you for joining us today.
Szymon Serowiecki: This afternoon, FASI published financial results for the third quarter and the September 30th, 2024.
Szymon Serowiecki: This news release is available in the investor relations section of the company's website.
Szymon Serowiecki: Terry Weber, Chief Executive Officer, and Bob Peterson, Chief Financial Officer, will host today's call.
Speaker Change: Before we get started, I'd like to remind everyone that management will make statements during this call. Ben put forward-looking statements regarding, among other things, the company's financial results.
Future Performance, New York Opportunities, Business Outlook, Strategies, Goals
Speaker Change: Research and Development, Manufacturing and Commercialization Activities, Competitive Physician, Regulatory Process Operations, Benefits of the Solutions, Anticipated Impact of Macroeconomic Conditions on Business, Simplified Operations, Venture Conditions, and Other Matters.
Speaker Change: These statements are not guaranteed to feature performance. They are subject to a variety of risks and uncertainties, some of which are beyond the company's control. Actual results could differ materially, but my interpretations reflect any forward-looking statements.
Speaker Change: These statements are subject to risks, uncertainties, and assumptions that are based on management current expectations as of today. The body undertakes no obligation to update them in the future. Therefore, these statements should not be relied upon as they are representing the company's views as of any subsequent date.
Speaker Change: To discuss risks and other important factors that could affect their actual results, please refer to our SEC filings available on the SEC's website and the Investor Relations section of our website, as well as risks and other important factors discussed in the earnings release.
Speaker Change: Management will also refer to adjusted EBITDA, which is a non-gap financial measure to provide additional information to investors.
Speaker Change: Reconciliation of the non-gap-to-gap measure is provided in earnings rulings, with the primary differences being stock-based compensation, fair value adjustment to certain liabilities, transaction-related expenses, and other non-operating expenses.
Speaker Change: Please refer to our third quarter 2024 earnings release for your consideration of adjusted EBITDA to net income to close this comparable gap measure. I will now turn the call over to Terry Weber.
Terry Weber: Thank you, Szymon, and thank you all for joining us. On the call with me today is Bob Peterson, our Chief Financial Officer, who will review our financial results and discuss our outlook for 2024.
Terry Weber: Mark Beer, our Executive Chairman, is also on today's call to help answer your questions during the Q&A session following our prepared remarks.
Terry Weber: BioTea delivered strong financial performance in the third quarter, highlighted by double-digit growth in both revenue and adjusted EBITDA. Revenue was driven by continued growth in procedures and a strong return to growth in our dietary supplement business as we continue to drive improvements in our Amazon channel.
Terry Weber: We also generated solid improvement in both our gross profit and adjusted EBITDA margins, realizing cost savings from the vertical integration and effective management of our operating expenses.
Terry Weber: As a result, our third quarter adjusted EBITDA improved approximately 15% compared to the same quarter last year, and adjusted EBITDA margins exceeded 30%.
Terry Weber: During the quarter, we continue to focus on driving growth from our top tier accounts who consistently generate the majority of our revenue.
Terry Weber: Over the past year, we have strengthened engagement with our top practitioners.
Terry Weber: By expanding our offering and treatment protocols, we can more comprehensively serve the needs of our providers and their patients.
Terry Weber: Additionally, we have further enhanced our research, training, and educational programs to meet the growing demand for evidence-based medicine. In doing so, we believe we have further enhanced our position as the leading authority in hormone optimization and therapeutic wellness.
[inaudible]
Terry Weber: Since launching this program, we have found that clinics that achieve quick-start status generate stronger performance over time.
Terry Weber: As a result, we continue to assist our new practitioners to efficiently build and promote their hormone and therapeutic wellness practices.
Terry Weber: We believe BioT's patient data sets and proprietary algorithms are key advantages in the marketplace.
Terry Weber: In the third quarter of 2024, we introduced targeted enhancements to our proprietary clinical decision support software, further strengthening our position in the marketplace.
Terry Weber: The enhancements we introduced reinforce our commitment to patient health and wellness as we advance the BioT method by following the latest evidence-based medical literature.
Terry Weber: Importantly, our clinical decision support software now makes recommendations across an expanded range of our product portfolio, enhancing patient care with highly personalized therapies.
that can include hormone optimization, therapeutic wellness, and dietary supplements.
Terry Weber: Additionally, our updated software strengthens our practitioners' capabilities to serve a broader range of patients, expanding our long-term market opportunity.
Terry Weber: As we introduced these enhancements in the third quarter of 2024, we experienced a temporary disruption in procedure volume as our practitioners adjusted to the updated software and workflow in their clinics.
Terry Weber: To facilitate this transition, we're assisting our practitioners with additional workflow support and training.
Terry Weber: Although we're seeing some residual impact in the fourth quarter of 2024, we have begun to experience a rebound in procedure activity over the last several weeks.
Terry Weber: And as we look ahead to next year, we anticipate procedure revenue growth will reaccelerate in 2025.
Terry Weber: We are confident that our enhanced clinical decision support software strengthens our competitive position and supports our growth objectives.
Terry Weber: Our refined dosing considerations expand patient treatment options while better positioning bioteeth to attract a broader range of practitioners.
Terry Weber: Additionally, our advanced software allows for a greater range of data input, empowering practitioners to more precisely tailor care to a broader base of patients.
Terry Weber: Over time we believe the deeper patient data set provided by our enhanced software will enable us to leverage traditional and AI driven analytics to identify new growth opportunities in hormone optimization and therapeutic wellness.
Terry Weber: We continue to take a measured approach to expanding our footprint of BioTRX, ensuring that all enrolled clinics maintain consistent access to our personalized therapeutic wellness solutions.
Terry Weber: As of the third quarter, the total number of BioTRX enrolled clinics throughout our network exceeded 1,100.
Terry Weber: In addition to new product offerings for sexual health, weight loss, and preventative wellness, the BioTRX Marketplace features a comprehensive portfolio of advanced technical tools, support, training, and educational resources.
Terry Weber: While our BioTRX program currently provides a relatively small direct revenue contribution, the BioTRX formulary is expansive and essential to enhancing our competitive offerings in the marketplace.
Terry Weber: I would note that our BioTRX formulary is not dependent on any single category of therapeutic treatments, including GLP-1s.
Terry Weber: In the third quarter, we continued the integration of Asteria Health into our operations. Consistent with our strategic objectives, the vertical integration of our manufacturing has strengthened our supply chain and has yielded expected cost savings.
Terry Weber: As we continue to vertically integrate our pellet manufacturing, we are narrowing our current vendor network to better manage our supply chain.
Terry Weber: On a longer term basis, we believe Asteria Health will strengthen our 503B manufacturing expertise, enabling us to develop and provide a wider range of high quality compounded medications.
Terry Weber: In the near term, we remain focused on expanding exterior health licenses to additional states.
Speaker Change: I will now turn the call over to Bob to discuss our third quarter financial results and provide our outlook for 2024.
Bob Peterson: Thank You Terry and good afternoon everyone. Total revenue in the third quarter was $51.4 million up 12.8% from the prior quarter period.
Procedure revenue growth increased 7.1%
Bob Peterson: primarily reflecting growth of established top-tier clinics and contribution from new clinics.
Speaker Change: As Terry noted, we experienced a temporary disruption in procedure volume towards the end of the third quarter as we introduced enhancements to our clinical decision support software.
Speaker Change: To a lesser extent, Hurricane Helene caused clinic closures in several of our four states, slightly impacting third-quarter procedure volumes.
Speaker Change: We estimate the associated impact of these headwinds as approximately two and a half percentage points on our year-over-year procedure revenue growth rate in the third quarter.
Third-quarter dietary supplement
Speaker Change: dietary supplement sales benefited from continued transition of a portion of our business as we continue to drive improvements in our Amazon business.
Speaker Change: Third quarter gross profit margin was 17.5 percent, a hundred and sixty basis point increase from the third quarter of 2023.
Speaker Change: The year-over-year improvement in gross profit margin reflected cost savings from the vertical integration of Asteria Health
as well as continued cost management.
Speaker Change: These gains more than offset the impact of revenue mix shift towards dietary supplements.
Speaker Change: Selling, general, and administrative costs were $24.0 million, compared to $23.8 million in the third quarter of 2023.
Speaker Change: As expected, third quarter SG&A expenses moderated on a sequential basis from the second quarter of 2024, as certain investments were incurred in the first half of the current year.
Speaker Change: Driven by strong sales growth and increased gross profit, operating income increased to $12.2 million, up from $7.6 million in the prior year quarter.
Speaker Change: Net income was $12.7 million, inclusive of a $7.2 million gain due to a change in the fair value of the earn-out liabilities.
Speaker Change: Third quarter income was 33 cents per diluted share, an increase of 38% on a year-over-year basis.
Speaker Change: Adjusted EBITDA was $16.2 million with an adjusted EBITDA margin of 31.5 percent.
Speaker Change: In the comparable quarter of 2023, adjusted EBITDA was $14.0 million, with an adjusted EBITDA margin of 30.8%.
Speaker Change: The increases in adjusted EBITDA and adjusted EBITDA margin reflected improved sales, higher gross profit margin, and effective operating cost management.
Speaker Change: Biotea generated strong cash flow from operations in the third quarter and on a year-to-date basis.
Speaker Change: The nine months' year-to-date cash flow from operations totaled $32.9 million, compared to $19.9 million for the nine months ended September 30, 2023.
Speaker Change: Cash-in-cash equivalents at the end of the third quarter of 2024 were $38.2 million.
Speaker Change: up from $26.4 million at the end of the second quarter of 2024. The sequential increase in cash and cash equivalents from the second quarter of 2024 was primarily due to increased cash flow from operations.
Speaker Change: Turning to our financial outlook. We are adjusting our previously reported 2024 financial guidance as we navigate two temporary headwinds impacting our fourth quarter results.
Speaker Change: First, we anticipate some residual impact on fourth quarter procedure revenue as we assist our practitioners with additional workflow support and training on our updated clinical decision support software.
Speaker Change: Second, and to a lesser extent, both Hurricanes Helene and Milton caused clinic closures in several of our four states, delaying certain procedure revenue into early 2025.
Speaker Change: As a result of these factors, we now forecast 2024 revenue of $197 to $201 million and adjusted EBITDA of $58 to $61 million.
Speaker Change: This compares to our previously reported guidance of $200 to $204 million in revenue and $60 to $63 million in adjusted dividend.
Speaker Change: Our updated 2024 Revenue Guidance reflects our expectations for continued growth within our top-tier accounts.
Speaker Change: the continued expansion of our network and a growing contribution from clinics that achieve quick start status.
Speaker Change: We also anticipate continued year-over-year growth in dietary supplement sales in the fourth quarter of 2024.
Speaker Change: From a cost perspective, we remain focused on driving incremental savings from vertical integration.
Speaker Change: We expect that these cost savings, along with our ongoing cost management efforts, will generate continued strength in both gross profit and adjusted dividend margins in the fourth quarter of 2024.
Speaker Change: I'll now turn the call back to Terry for her closing comments.
Terry Weber: Thank you, Bob. Over the course of this year, IOT has achieved significant progress against our strategic priorities and has laid the foundation for accelerated growth.
Terry Weber: We are confident our updated clinical decision support software represents a true game changer, further differentiating BioT from our competitors while enhancing patient health and supporting our long-term growth objectives.
Terry Weber: With the introduction of BioTRX, we have leveraged our leadership in hormone optimization to expand our growth opportunity into that broader category of therapeutic wellness.
Terry Weber: At the same time, we've strengthened our capabilities through the acquisition of Asteria Health.
Terry Weber: We have also enhanced our dietary supplement business as we continue to drive improvements in our Amazon business.
Terry Weber: Throughout this journey, we have provided our growing network of practitioners with unparalleled leadership in education, training, and research to further advance patient health and well-being.
Terry Weber: BioT remains focused on driving profitable growth and building long-term value for all stakeholders as we widen our competitive moat.
Speaker Change: Now I would like to open the call for questions. Operator, please begin the question and answer session.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.
Speaker Change: Our first question comes from Jonah Kim from Collin, please go ahead.
over time and also just the profit.
Speaker Change: profile, margin profile of that business will be helpful as well. And then just a follow-up, would love any color on how the Amazon storefront is progressing versus your expectations and how you think that business will trend next year. Thank you so much.
Speaker Change: Oh, thank you, Jonah. So I'll cover your first question. As we talked about BioTE at Rx, if you remember, it was a next-generation platform or a marketplace that offers all these enhanced tools and products.
Speaker Change: So it really covers an expansive range of products, but it was always done as an addition to this core business we have. It was an access platform that allowed our providers to find the products that we had recommended in our software platform.
Speaker Change: So it is a, at this point, a small amount of income, but it is a large value in the competitive areas to provide that access all through one platform.
Speaker Change: and it is basically not, it's a transfer price. We don't manufacture those products. We simply provide them very effectively to one platform.
Speaker Change: So, it's a modest contribution from BioTRX in 2024, and even a smaller, greater, though still minor, contribution expected in 2025.
Speaker Change: Because it's the transaction fees until we start creating more of those products internally in our 503b
Speaker Change: and then I'll have Bob address the Amazon. Sure. And, uh, hi, Jonah. The one thing that I would say is, uh, we definitely made the right decision.
to change our distribution channel model.
Speaker Change: and I can tell you the exciting piece for us is that as we start the conversion process.
Speaker Change: and working through competing in the new Amazon market with us in control. It is going according to plan and we do see line of sight into accelerated growth. So I would just say as we expect to continue that growth into Q2 or Q4, sorry, and then into 2025.
Speaker Change: I don't see any major makeshift changes, but yeah, I think that is probably the biggest area. You'll start to see that real benefit in 2025.
Thank you so much.
Speaker Change: The next question comes from Jeff Van Sinderen of B. Reilly.
Please go ahead.
Speaker Change: Hi everyone and let me say nice work on the P&L leverage and re-accelerating the supplement business.
Speaker Change: Was it, it sounds like you're through most of that and I think you said that.
Speaker Change: You're seeing, I guess, the impact of that abate as we're getting through Q4. Can you just, I mean, I guess give us a sense of kind of what happened there and now that you're doing the enhanced training and support.
Speaker Change: how you're getting those clinics that struggled kind of up to speed on that.
Speaker Change: No, good question. So when we first talked at the end of Q2, we had forecasted accelerated growth and we were on the path to that accelerated growth.
Speaker Change: We had created these enhancements to the clinical decisions software that were such game changers. We felt the need to get them out in the marketplace and get them to our 7100 clinics.
Speaker Change: So what we saw was a workflow adjustment. So essentially, there were two headwinds in Q3. One was this workflow adjustment with the new CDSS.
Speaker Change: change in the last few weeks where we're getting back to the regular workflow at those clinics. So we've really seen the benefit. There's so many compliments on the enhancements here and how it really expands our competitive moat. And I can go over that.
Speaker Change: They've also added and expanded the number of patients we could treat. We could now treat paramental positive patients very effectively with this decision support software, which no one else has in the industry. And then we expanded that base of providers where we're a very attractive option for them.
Bob Peterson: but it did have that workflow adjustment. We're seeing that recovering and rebounding. We know it will have a small impact in Q4 as well. And let me pass it to Bob to talk about the exact impact. Yeah, excellent. Thanks, Terri. Looking at the workflow, we're working to assist those practitioners through training as you mentioned, as Terri mentioned.
Bob Peterson: I think the big thing to highlight is the impact that we saw was around two and a half percentage point increase in growth.
Bob Peterson: which obviously hurt us. But, you know, back to your original point, Jeff, as we begin to see the trends post-launch, we are starting to see a bounce back over the past several weeks.
Bob Peterson: But I have to stress that there is still still work to be done But let me just be really clear the patient demand remains solid and Practitioner loyalty remains strong and at the end of the day we would have hit guidance if not for the CDSS
Bob Peterson: but we are excited about getting this back on track and having procedure and future revenue growth in the future.
Speaker Change: Okay, so it sounds like, I mean, the net of that, as I'm thinking about how you've portrayed it, is really that maybe a little bit more of a learning curve associated with adoption of that software, but the net result should be very positive.
Speaker Change: the net result will be excellent. It really enhances our abilities. It updates these algorithms in a way that's not seen anywhere in the industry and really broadens the appeal. And I think that kind of gives us that comfort that we would have had this accelerated growth in this Q3 had not that headwind of the workflow as well as the hurricanes.
Speaker Change: and we would not have changed guidance without that minor interruption.
Speaker Change: Bob, do you want to talk a little bit about 25? No, no, no. I think with all the things that you mentioned, all the enhancements, the additional recommendations across the expanded regional product portfolio, the algorithms, I think it sets us up for a solid 2025. Yes.
Speaker Change: Okay, great to hear. And then if I could squeeze one more in, was just curious on the exterior health.
Speaker Change: getting the the state licenses there. I know you said you've made progress, just wondering kind of where we are in that process. Just anything else you can tell us about that?
Speaker Change: As you know, the vertical integration is key to us. We've said that for several quarters. We now are at a point where we're around 30 licenses.
Speaker Change: And so that's a big piece of the puzzle. And also in Q3, we saw about 100 base points of margin improvement.
Speaker Change: So just to put the bow on it, I'm proud of the team, I think we've been able to meet the demand through expanding the capacity that we have. So far, so good.
Speaker Change: Okay, great to hear. Thanks for taking my questions. I'll take the rest offline.
Thank you.
Our next question comes from Kamil Gajarwala from Jeffreys.
Please go ahead.
Speaker Change: Hey guys, I'll take the bait, Terry, on your tease. Do you want to share maybe some more specifics on what specifically this new software is going to offer or I guess is offering but what you're going to be able to do that you weren't able to do before once it's Once everybody is sort of accustomed to using it
Speaker Change: Yes, so what we've done is really taken where the science has advanced over these years and there's new tests available, lab tests available, a lot of specificity in exact patient, every individual patient. So now what this software does is it treats to that very specific patient. So all the algorithms are now built with the other opportunities. So we now are treating patients from the early 40s all the way to 100. We had two patients turn 100 this month. And so this new enhanced software delivers that whole guidance through the decades of somebody's life.
Speaker Change: It also makes recommendations across the whole product portfolio, so something that may not be ideal for a patient. Where we've talked about, we're not just a pellet company, we've absolutely delivered on that promise. We now offer these various education, but we also offer the products.
Speaker Change: So this clinical decision support software tells you how to dose and what are your options for that patient sitting in front of you. So it greatly enhances what that practitioner offers to their patient base now.
Speaker Change: And it really broadens the appeal of the BioT method to more mainstream doctors. So this is not just products, it's expanded patients and also a new base of providers.
Speaker Change: and it creates this competitive mode. I couldn't say enough about the fact that these practitioners have never seen this kind of detail and guidance.
Speaker Change: on that very complex patient who's sitting in front of them.
Speaker Change: And we all know as people age, you know, you're way too young to know, but as you age, there are so many comorbidities that need to be taken into account when treating hormone optimization in the whole patient for healthy aging. So we have done a very expanded job to deliver an exceptional product.
Speaker Change: Okay, great, and then may I ask a bit about what's going on your on GLP-1 and your ability to compound and offer it? Obviously there's some back and forth with what the FDA is or isn't going to allow over time, so just any update there would be nice.
Speaker Change: Yeah, and I think we're all getting used to it in the market. Our providers are getting used to it, we're used to it, and I think what
Speaker Change: Our BioTRX platform offers is what's available legally for our providers. We keep them right in step with regulations. So we currently are offering the two main products that are on the shortage list.
Speaker Change: So we're offering both the Trisapatide and the Semiglutide injections, and as long as they stay on those shortage lists, we'll be able to provide them for all of our providers in the states where it's allowed.
Speaker Change: Bio TRX, and if we do it for competitive reasons and don't really worry about the comings and goings, we'll provide you know, obviously access for prescription when it becomes only prescription.
Speaker Change: So we don't really see it having an impact on our business. And then I would just add to that, Camille, that this is immaterial to our overall business.
Okay, got it. Thank you.
Speaker Change: Our next question comes from Les Salewski from CHUIS Securities. Please go ahead.
Les Salewski: Good evening. Thank you for taking my questions. So I have three. First on the hurricane impact, is there a number of clinic closures?
Les Salewski: And then do you expect all those to reopen and essentially the patients that perhaps had a delay in some of the procedure, will you expect those all to come back? And then second, on the, you know, you mentioned some competitive pressure, I guess.
Les Salewski: When you look at the GLP-1 space, have you lost or have your prescriber network lost any patients to GLP-1?
to those clinics that specifically I guess cater to GLP-1.
gained some traction. And then third,
Les Salewski: Have you identified any certain product offerings specifically as to buy your TRX? Maybe it's a little early, but are you thinking about any of those offerings that you'd like to bring in-house?
Les Salewski: or perhaps broadly on M&A plans, any particular products that your practitioner base has requested that you'd like to, I guess, seamlessly fit to your current offerings. Thank you.
Great questions. I'll let Bob start with the first one.
So, on the hurricane impact, I would just say, our...
Please, please. Thank you.
procedures don't go away.
Les Salewski: These procedures, while we did see closures, we do expect most of these procedures to start to come back over the fourth quarter and early next year. As you know, many of these docs have busy practices and getting into clinics could be of a challenge in these types of situations.
Les Salewski: But, you know, I would just say that we're monitoring this closely. We're starting to see that bounce back, but there's still some work to be done there.
Great. And Les, repeat your second one.
Thank you.
Les Salewski: It was regarding the GLP-1 offerings that potentially have other clinics or other prescribers have that you didn't have. How competitive is this to you? Do you expect that, I guess, you know, pressure from those patients not coming to the clinics that you currently have in the network?
Speaker Change: We've done well on the GLP-1 offering, and they find it very competitive to work with us, so we haven't lost anything at all.
Speaker Change: to a weight loss clinic or something else like that. These providers are integrating it very well into their practices just as our current weight loss clinics are enhancing their hormone optimization as we expand the CDSS.
Speaker Change: So, we're seeing an overall positive on that axis. The other thing is that we added five more states, six more states to BioTRX.
in the last month.
Speaker Change: So those whole states will now have access to those GLP-1 products as well.
Speaker Change: and so that's an enhancement. So I see us in a very positive.
providers are looking for.
Speaker Change: And then, good question on the innovations, because when we look at these innovations, I think the ones that
Speaker Change: we're most focused on is what do our providers use in their practices on a regular basis. So those innovations would be
Speaker Change: We've added these creams and things, so any type of innovations where we look at what products we can offer into that expanded hormone optimization area. The other one that everybody's asking for is formulations for how to step people down off of GLP-1s.
Speaker Change: So, as we look at those patients and how they use testosterone to gain their lean muscle mass, what are the products we can bring? So, we're innovating in that special area where we've got the sweet spot of owning that aging patient.
Speaker Change: from both the Hormone Optimization, Therapeutic Wellness, and that includes stepping them down effectively from GLP-1. So I plan to see some interesting innovations on the products that we recommend in 2025.
Speaker Change: Great caller. Maybe I can squeeze one in if you don't mind. On the EBITDA margin front, is 3Q kind of a good proxy moving forward or is there additional room for improvement there as your vertical integration efforts take hold? Thank you.
Speaker Change: Our next question comes from George Kelly of Roth Capital Partners.
Please go ahead.
Everybody, thanks for taking my questions.
Thank you.
Speaker Change: So most have been asked and answered. Maybe just a couple follow-ups to some of the prior questions. First on Asteria, Bob you just mentioned it sounds like maybe there's a little bit of uncertainty on on the state licensing like where you could end this this year with respect to state licensing and percent of volume.
Speaker Change: I mean is it something that could sort of go into next year? What are you sort of anticipating around those two issues?
Speaker Change: Yeah, so here's what I would say. I would just say that we've obtained the licenses of approximately 30 states.
Speaker Change: We're on track, I would say, to continue to obtain licenses and throughout the remainder of the year. And I think the biggest piece that I would tell you is we continue to progress well on obtaining new licenses. And I think that's the – that is – and it's –
right in line with where we thought we would be.
Speaker Change: So, you know, our goal is to participate in the 50 states long term, but I think we are on track and we are in the process of converting, so I don't see a lot of risk in the second half as far as expansion.
Speaker Change: And I think we've really made excellent progress, George, on those licenses. And I think you've just got some outliers like California that can visit late, right? We just have to wait for them to visit. And so I think we've made great progress on the larger states.
Speaker Change: and really being able to provide an accelerated integration and are excited about it, but you can wait on California for a while.
Speaker Change: Yeah, I think the states we've obtained really overlay our core states quite well and some of our larger Expansion states so and we're able to meet the demands at this point. So this is yeah
Speaker Change: Hopefully that answers your question. Yeah, yeah it does. And then second question
Speaker Change: In the press release and a few times here in the conference call, you've commented that you're still expecting procedure revenue growth to accelerate and I think you said that it sets
Speaker Change: sets you up for a solid 2025, you know, once this software issue is resolved.
Speaker Change: I was curious if you could be more specific at all, just high-level, like, you know, is double-digit growth something that you think is achievable? What gives you confidence that it's going to reaccelerate? Just any more commentary around the 2025 outlook would be helpful.
Speaker Change: I think I can comment from a qualitative and then pass it to Bob, because before that launch of the CDSS and those two hurricanes, the enhanced CDSS, before that, we were seeing that accelerated growth that we had committed to, so we were very comfortable with that Q3 and Q4. What happened was those two headwinds, and we've got a good handle on the headwinds, but as you remember, George,
Speaker Change: A lot of our clinics, it's two to three months before you can work a new patient in. So that has to work through the system and that's why we're talking about that comfort level in 2025. We're really seeing that recovery with the CVSS.
Speaker Change: This whole patient demand is there, this is an excellent market to be in, you know, our new clinics are.
Speaker Change: So I think that's where we're so comfortable with that accelerated growth in 2025 and know that we'll be coming out of this in the end of the fourth quarter of 2024. Yeah, George, the only thing I would add to that is I kind of look at it as almost that three-step process. One, we've got to work with our practitioners to smooth that transition.
Speaker Change: Number two, as Terry said, logically, we believe these customers haven't gone away. And the demand, the patient demand is there, the practitioner loyalty is there. And I would just stress that leading up to this...
Speaker Change: point where we were turning on the CDSS, we were performing quite well and
Speaker Change: We need to ensure that we remain focused on our four key drivers of growth, which is growing our top-tier clinics,
Speaker Change: accelerating the revenue ramp from those newer clinics including Quick Starts.
expanding our geographic expansion.
Speaker Change: and then continuing to leverage our Nutri Brands. And I think if we can do all of that, it sets us up very well for 2025.
Speaker Change: And I think, George, what we really wanted to do in changing and looking at that guidance for the whole year was to make sure we were totally transparent.
Speaker Change: with what we anticipated and then what happened with the CDSS and those hurricanes. And I think that's what's most important to us, is to have you feel comfortable with the trust of this management that we're on top of this and are keeping you well-informed.
All right, I'll hop back in the queue, thanks.
Thank you for watching!
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Terry Weber for any closing remarks.
Terry Weber: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.