Q4 2024 Lifeward Ltd Earnings Call
9 9 4
Lawless. Good day, and welcome to the Lifeward Inc. 4th quarter, 20th quarter, or any conference call. All participants will be in this early mode. Should you need assistance, please signal confidence specialist by passing the star key followed by zero.
After today's presentation there will be an opportunity to ask questions. So ask a question you may press start at 100 telephone keypad, and through a draw your question please press start at 2. Please note today's event is being recorded.
Speaker Change: and now I turn the conference over to Michael Lawless, chief financial officer, please go ahead.
Speaker Change: Thank you, Rocco. Good morning and welcome to Lifeward's fourth quarter 2024 earnings call. Michael Lawless, Lifeward's Chief Financial Officer, and with me on today's call is Larry Jasinski, our Chief Executive Officer, and our Magradar, our Vice President of Finance.
Speaker Change: Early this morning, Lifeward issued a press release detailing financial results for the three months and four-year-end in December 31, 2024, which, along with this call, discussed certain non-GAAP information.
Speaker Change: For the benefit of those who may be listening to the replay or the archive webcast, this call is held and recorded on March 7, 2025.
Since that day, Lifeward may have...
Speaker Change: It's subsequent announcements related to the talks discussed. So please reference the couple's most recent crash releases and SEC violence for the most updated information.
With that, I'll turn the call over to Larry.
Larry Jasinski: Thank you, Mike. Welcome everyone, and I appreciate you joining the call.
Larry Jasinski: I'd like to begin by commenting on my announcement in February regarding my retirement from the company later this year.
Larry Jasinski: I have been part of a remarkable, life-saving, changing journey with many incredibly talented people.
Larry Jasinski: and proud of the team and the company I've been a part of for the past 13 years.
Larry Jasinski: Today is a medical technology agent of change that has given people improved health and better lives.
Larry Jasinski: I think every person that has been a part of this journey.
Larry Jasinski: I have confidence that Lifeward's Board will find an excellent leader to advance Lifeward into the next phase of growth, and I am committed to ensuring a smooth transition.
Larry Jasinski: I look back at 2024 as a year of meaningful achievement that defined long-term access to our technologies and launched our pathway towards profitability.
Larry Jasinski: The key milestones were establishment of lump sum payment and a benefit category with CMS and Q1.
Larry Jasinski: Issuance of a CMS price of $91,032 in Q2 for the re-walk system.
Larry Jasinski: Daning a meaningful contract with Barmer in Germany that sets a standard for providing [inaudible]
Achieving you coverage and hungry.
Larry Jasinski: Beginning an initiative to expand penetration of the United States Workers' Compensation ensures for the re-locked system.
Initiating a National Accounts Program for the Altered E-Mine
Larry Jasinski: Discussions on expanding our contract to enable further penetration with the monocycle.
launching a new generation of all-per-g with the Neal product.
Larry Jasinski: Completing FDA usability studies and the full submission for the ReWalk 7.
Increasing Operating Efficiency by Closing to Locations
Larry Jasinski: The reduction of our head count by 35% to right size of the business for 2025.
Larry Jasinski: Annual Growth in 2024 of 85% with an 11.8 million dollar increase over prior year sales to reach 25.7 million dollars.
It's a lengthy list.
Larry Jasinski: that when taken synergistically places the company unsure footing for growth and for significantly reducing loss in 2025.
Larry Jasinski: We close the year with record revenue of $7.5 million in Q4.
Larry Jasinski: Our parallel focus for 2025 will be maintaining reasonable growth with equal emphasis on reducing our quarterly operating loss each quarter and achieving a loss at or below $1 million in Q4 2025.
Larry Jasinski: The reduction in our operating loss will be driven by targeted growth towards our best margin opportunities in operating efficiencies.
Larry Jasinski: Examples include the increase in workers' compensation placements which have a lower level of crop-socene expense and that pay-in-a-short-a-cycle.
Larry Jasinski: and the MyoCycle where each re-walk lead we develop can also be considered for a MyoCycle which has an improved margin and where we have gained expanded distribution rights to provide home units.
Further market penetration targeting, we walk with workers' compensation coverage.
and with submissions to U.S. commercial insurers.
Larry Jasinski: We will also expand penetration of clinic and home sales of a minor cycle and advancement of all refugee placements in national accounts.
The efficiencies are in product mix.
Larry Jasinski: near-term cost of goods reduction programs and tightly controlled spend levels to match our goals.
Larry Jasinski: Operationary for 2025, we have built a sustainable growth plan where we examine all aspects of the business and reduce costs to meet our goals.
Larry Jasinski: We also have favourable year-over-year factors that have been able to reduce expenses.
Larry Jasinski: The include completion of our significant investment to achieve industry coverage with the Center for Medicare and Medicaid Services or CMS.
Produced R&D exercises as we completed major R&D programs of altergy and Rework 7.
Larry Jasinski: The final consolidation activity is post-merger, which results in a full year with reduced
and more efficient manufacturing programs in the U.S. and Israel.
Larry Jasinski: In addition, our expectations for the UltraG and MyoCycle product offerings are that they will be accretive to our business in 2025 and beyond.
Larry Jasinski: The reward sales were below our expectations due to delays in some attrition of Medicare cases that we had expected we would deliver during the quarter were working to reduce the cycle times for getting leads processing claims and scheduling deliveries, we expect that the growing volume of qualified leads.
We are experiencing will bring more predictability to our quarterly performance in this product line.
Larry Jasinski: We delivered a strong fourth quarter for the ultra G product line with particularly robust performance from international customers spending by 26 in the U S is showing stabilization and that trend has continued thus far into the first quarter, giving us more confidence in our expectation for ultra <unk> sales growth in 2025.
Larry Jasinski: Next our pipeline metrics for the <unk> product line first let's talk about pieces in process.
Larry Jasinski: Our number of reward cases in process in the United States consists of more than 110 qualified candidates for future for future claims submissions while in Germany. We had 44 cases in process at the end of Q4.
Larry Jasinski: Active rentals also represented an important pipeline metric for reward systems. The current pipeline of active rentals consists of 27 cases, which is broken down with 24 in Germany and three in the U S. DHA hospitals. These we walk rentals with some attrition typically convert to sales within a three to six month period.
Next for Ultra G systems, we ended the fourth quarter with orders for 25 Ultra G systems in backlog. This figure shows the seasonal decline in backlog from the third quarter of 2024.
Larry Jasinski: 'twenty 'twenty four level as we cleared out as much as possible of the backlog and inventory to end the year.
Larry Jasinski: The lower backlog level at year end, we still see the market demand improving for LPG and we expect to drive growth in ultra G revenue or about 20% in the first quarter of 2025 versus the quarter of 2024.
Larry Jasinski: Moving to gross margin in the fourth quarter of 2024, our GAAP gross margin was 24, 4% compared to 35, 5% in the fourth quarter of 2023. This variance was primarily driven by the by the restructuring charge for the closure of the Fremont manufacturing facility and related expense reduction actions on a non-GAAP basis.
Larry Jasinski: Adjusted gross margin in the fourth quarter was 45, 4% of revenue compared to $46 nine <unk> of revenue in the fourth quarter of 2023.
Larry Jasinski: We finished the year with adjusted gross margins slightly below our expectations, primarily due to mix of products sold in the quarter.
Larry Jasinski: Particularly the higher mix of international <unk> sales, which carries a lower gross margin, which carried a lower gross margin in the quarter.
Larry Jasinski: GAAP operating expenses were $17 1 million in the fourth quarter 2024, compared to $8 6 million in the fourth quarter of 'twenty. Three this variance was largely driven by a $9 $8 million impairment charge on our intangible assets recorded as required by GAAP under accounting standards intangible assets with indefinite useful lives and goodwill.
Larry Jasinski: Must be tested for impairment at least annually or in this case the impairment was triggered by the market value of our equity compared with our book value.
Larry Jasinski: Accordingly, this is a noncash charge in nature and ultimately does not affect the operating performance of our business.
Larry Jasinski: On a non-GAAP basis, adjusted operating expenses were $6 7 million in the fourth quarter compared to 7.0 million in the fourth quarter of 2023. This improvement is primarily due to lower marketing general and administrative expenses, resulting from prior expense reduction efforts.
Larry Jasinski: Oh excuse.
Larry Jasinski: Excuse me, our GAAP operating loss for the fourth quarter was $15 2 million compared to an operating loss of $6 7 million in the prior year's quarter. This variance was largely driven by the aforementioned charges on a non-GAAP basis adjusted operating loss was $3 3 million in the fourth quarter, which improved versus the $3 8 million loss in the prior years.
Larry Jasinski: Quarter.
Larry Jasinski: Since the end of it.
Larry Jasinski: Since the end of the year, we excuse me we ended the year with $6 7 million in cash and equivalents and no debt subsequent to the end of the quarter on January eight we raised gross proceeds of an additional $5 million, which was added to our cash balance.
Larry Jasinski: As we will note in our Form 10-K, which we will file later today, we received a going concern qualification from our auditors as part of the 2024 audit process, reflecting their perception of the adequacy of our balance sheet to fund our business.
Larry Jasinski: We have already taken a number of actions to address this development first we initiated a sustainable growth plan that Larry described earlier to reduce our cash outlays, we believe prioritizing investment in higher margin near term sales will significantly reduce our quarterly non-GAAP operating losses and cash burn rate by the second half of 2025.
Larry Jasinski: Second we are putting in place an ATM facility that will allow us to opportunistically raise capital should we determined that we need to shore up our capital base. We're also exploring other non dilutive or minimally dilutive alternatives. So that we can resolve this issue.
Larry Jasinski: Turning to our financial guidance for 2025 wafer and expect full year revenue in the range of $28 million to $30 million with an adjusted gross margin between 47% to 49% following our efforts to rationalize our cost structure, we expect full year non-GAAP operating expenses of $22 million to $23 million down from.
Larry Jasinski: $27 5 million in 2024, we expect these factors to drive a full year non-GAAP operating loss of $7 million to $9 million.
Larry Jasinski: For a quarterly perspective on 2025, the first quarter is our seasonally lowest revenue quarter and will also have the highest operating expenses due to the timing of the fees in the savings initiatives under the sustainable growth plan after.
Larry Jasinski: After the first quarter, we expect revenue to grow sequentially in each successive quarter from a combination of greater traction and delivering reward systems seasonally stronger quotation and sales activity for ultra G products and a ramp of sales of miles cycles as we execute under the expanded distribution agreement with Mylan.
Larry Jasinski: We expect quarterly operating expenses decline through 2025 as the full benefit of the expense actions taken under the sustainable growth plan take hold.
Larry Jasinski: The fourth quarter of 2025 like Ford anticipates that the combined effect of the growing revenue and declining operating expenses will result in an adjusted operating loss of approximately $1 million.
Larry Jasinski: With that I'd like to turn the call back to Larry for further remarks.
Thank you Mike.
Larry Jasinski: Bloomberg has built a portfolio of complementary products.
Larry Jasinski: And certain other technological innovations achieved with the reward and the ultimate design has resulted in market leadership by addressing key unmet needs.
Larry Jasinski: Similarly, the mile cycle. It was a more effective and easy to use design that we expect will also develop at a leadership position.
Larry Jasinski: We believe the market access we have established with multiple avenues of coverage for Exoskeletons are efficient distribution channels that have now developed at a leverage level organizational footprint developed over the past two years has uniquely positioned to capitalize on the market market opportunity before us.
Larry Jasinski: We've charted the key tactical for us for our product offering in 2025.
Larry Jasinski: We want to build on our lead programs and expand penetration through internal and external partnerships.
Larry Jasinski: Late 2024, and 2025 to date, we have expanded our U S digital media program to obtain thousands of leads.
Larry Jasinski: We are also building needs with educational efforts and programs with key opinion leaders and to conduct in local clinic days, where we demonstrated we walk to potential users.
Larry Jasinski: From these U S based programs, we presently have greater than 110 leads that are qualified as a pipeline that supports our planned growth.
Larry Jasinski: These leads include individuals in Medicare.
Larry Jasinski: Of course compensation and with commercial players.
Larry Jasinski: We have so far focused on Medicare and the VA. The next stages, our expanded reach into workman's compensation, followed by selected submissions to commercial insurers.
Larry Jasinski: We announced this week our exclusive partnership with core life can provide supply and support for individuals covered by workmen's compensation.
Larry Jasinski: <unk> has an extensive national patient facing organization and we will be managing all leads and we will process claims for these patients.
Larry Jasinski: We work well deliberately systems and provide training is necessary.
Larry Jasinski: In the commercial payer segment, we had qualified leads in our pipeline and we'll selectively submit claims to Medicare advantage and commercial payers to request prior authorizations on a case by case basis.
Larry Jasinski: We also announced this week the expansion of our distribution agreement with modeling we have expanded our geographic reach and length of the agreement.
Larry Jasinski: The new structure allows for up to directly supply systems for home referrals from the clinics we working.
Larry Jasinski: Previously we focused on sales in the VA and NBA users for home placements.
Larry Jasinski: In parallel with increased volumes, we will gain a lower price and better margins.
Larry Jasinski: Our ultra deep focus is adding a deep deeper expansion in the U S national accounts due to the consolidation by those groups in the industry.
Larry Jasinski: We have established a pricing contract one of the largest national organizations and have pilot programs now active with two other groups.
Larry Jasinski: Beyond our efforts in our direct markets, we have moved to reestablish distribution channels that have not yet recovered and postal the period.
Larry Jasinski: Perfect targets include Australia, Japan, and the Middle East.
Larry Jasinski: Okay.
Larry Jasinski: Our path for 2025 is clear.
Larry Jasinski: First continuing sales growth with a mix that is most favorable with our margin goals.
Larry Jasinski: Implementation of the sustainable growth plan to reduce cost in all areas of the business.
Larry Jasinski: Third we maintain a reduction expenses from a full year post integration and no new large government policy initiatives, our major R&D programs.
Larry Jasinski: And fourth reduction in our loss each quarter in 2025 and at or below $1 million in Q4.
Larry Jasinski: This progress in 2025 and the subsequent path for 2026 is a tipping point for the company for long term financial health that was built off the investments and successes in 2024.
Larry Jasinski: We look forward to presenting our results each quarter.
Larry Jasinski: Thank you for your time today I'd now like to open the call for any questions operator.
Speaker Change: Thank you well now begin the question and answer session to ask a question Press Star then one on your telephone keypad.
Speaker Change: If a question has already been addressed you like to remove yourself from Hugh Please press Star then two.
Speaker Change: At this time, we'll pause for just a moment to assemble our roster.
Speaker Change: And today's first question comes from Yale Jen of Laidlaw <unk> Company. Please go ahead.
Speaker Change: Good morning, and thanks for taking the questions and Larry did a great job and congrats on all the best wishes for things are after.
Speaker Change: It really work.
Speaker Change: Our lifeblood and my first question is that for the 2025 guidance.
Speaker Change: How do you see the growth of each component.
Speaker Change: And is the guidance generally more conservative.
Speaker Change: I think that's a that's okay. So that's my first question then I have a follow up.
Mike Wallace: Yeah, Hi, Yes. This is Mike Wallace.
Speaker Change: Thanks for the question and I would say.
Speaker Change: For the most part the guidance is where flex across the board growth across our three major product lines, and we walk the altra G and the miles cycles.
Speaker Change: In general.
Speaker Change:
Speaker Change: I'd have to say that.
Speaker Change: The contribution is relatively consistent in terms of the three areas.
Speaker Change: Cycles are the smallest contributor right now to our revenue and probably going to show the biggest percentage growth because of this expanded distribution agreement.
Speaker Change: We're going to see.
Speaker Change: But we will definitely see growth in the other two.
Speaker Change: Product lines as well.
Speaker Change: Probably because of the sustainable growth strategy that we've taken is we tried to strike a little bit more of a balance between the top line growth and applying more spending discipline given that the spending was heavily.
Speaker Change: Oriented around driving the growth in the work business I'd say that the.
Speaker Change: The growth in reward is going to be concentrated more heavily on some of the segments of the business, where we think we're going to get paid more quickly and where we're going to have higher higher return and lower.
Speaker Change: Resource.
Speaker Change: Let's start with <unk>.
Speaker Change: Resource consumption so.
Speaker Change: But in general I would say across the board, we're seeing growth in all three product lines and.
Speaker Change: I think it'll be more were.
Speaker Change: More profitable and more efficient growth from those three from those two product lines.
Speaker Change: Okay, Great. That's very helpful. Maybe just one follow up here, which is for the core life a partnership you just Pennsylvania.
Speaker Change: He said go the question is that though what do you think the impact of that may have on the worker compensation path.
Speaker Change: <unk> is just a smooth.
Speaker Change: Increase the process.
Speaker Change: <unk> reduced the cost or maybe even increase the lead I just wanted to see any kind of sort of quantify is there any quantifiable way to look at this as a partnership in terms of the benefits and thanks.
Larry Jasinski: Yeah, Larry I think you are.
Larry Jasinski: Correlate program for US it was very important because historically, we had limited access to this really important and attractive segment.
Larry Jasinski: And given their size and scope they have great depth and experience in treating in <unk>.
Larry Jasinski: Working for this population. So it is a great opportunity for us to have a much larger conduit into workers' compensation.
Larry Jasinski: And they also can process. These very efficiently. So we don't have the expensive debt and we will get paid in reasonable cycle, but we're probably a 30 to 45 day payer.
Larry Jasinski: Overall, the workman's compensation market is about 6% of all spinal cord injuries.
Larry Jasinski: We didn't have access to so we're very excited about this agreement.
Larry Jasinski: And to get underway.
Speaker Change: Okay, maybe just attached to one more question that.
Speaker Change: I remembered the prior conversation that you would have the nextgen reward to be introduced this year would that still be the goal for this year and any color on that as well.
Speaker Change: Uh huh.
Speaker Change: We believe it will be a go for this year, we're ready with the product it's been through all testing and the final submission. After some questions from the FDA and one of the rounds were all completed.
Speaker Change: So that's submission went in early in this quarter.
Speaker Change: And we anticipate our clearance sometime in the first half of this year. So that next generation product our seventh generation, we're proud of that should be on the market.
Speaker Change: Sometime this year, we would hope, but no later than mid year.
Speaker Change: Okay, great. Thanks, again, and congrats on all the prognosis.
Speaker Change: Thank you.
Speaker Change: Thank you and our next question today comes from Ben Hayner with Lake Street Capital markets. Please go ahead.
Good morning, guys. Thanks for taking the questions just going back to the revenue guidance and some of the recent announcements the core likely in one in the <unk>.
Speaker Change: Ireland last cycle being another.
Speaker Change: Is there much factored in to the revenue guidance from those are recent announcements or what's the right way to think about balls.
Speaker Change: I think Mike and I are both address it a little bit I'll start we.
Speaker Change: We have factored it in but we back to Ya man conservatively.
Speaker Change: Because of the core life, it's a new arrangement for them and for us, but we think it has very good potential growth for us over the course of this year.
Speaker Change: And particularly as we go into future years.
Speaker Change: And on the Mylan, one we'd sold that product for years, but we've been very limited where we could go with it.
Speaker Change: And it has been a great partnership for us with that product and by having access to sell in all of the places in the clinics, where we're trying to place units. We now have the rights to go and sell to the people in those clinics at home, which is a bigger market, 80% of the market as the home of about 20% of its clinic. So we believe.
Speaker Change: There's a there's growth in both those areas as Mike what he believes we expect growth in all of them.
Speaker Change: We will learn how fast the uptake is for each of them as we go.
Mike: Yeah, Hi, Ben this is Mike.
Speaker Change: Just echo Larry's comments to say too that the for the workers' comp market. We have historically had some access but very limited access in that marketplace.
Speaker Change: Pardon me everyone does appear to have lost our speaker connection please standby.
Speaker Change: Your line here momentarily, we will get a call back underway. Thank you.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: And I remember, we have reconnected our speakers location. Please proceed.
Speaker Change: Hi, everyone, sorry about that we somehow got disconnected, we apologize for the delay I believe we weren't we were responding to Ben's question about the two contracts I was just going to add that the workers' compensation to echo with Larry lets say workers compensation market is a very attractive segment for US is one where we had limited access in the past but through this.
Speaker Change: Core life agreement, we have the conduit now into a much higher volume of workers' compensation cases, and from a standpoint of.
Speaker Change: You know the economics of it it is attractive to us because we have the opportunity now to be able to have these are all these cases processed on our behalf by core life. So we don't need to have the expenses.
Speaker Change: The expense in the resources necessary to have the claims processed by us internally.
Speaker Change: So looking forward to that and then again on the motorcycle side. The whole market is four times the size of the AR.
Speaker Change: Facility based market, where we've historically been operating so this gives us an opportunity for a much wider.
Speaker Change: More.
Speaker Change: Greater penetration of the overall Fas by market.
Speaker Change: Got it that's helpful and then on the.
Speaker Change: In the prepared remarks, you mentioned patient attrition for reward is there anything specific that you can point to there I mean is that the appeals process is that the patients arent suitable anything that any common denominators there or is it just kind of what you expect.
Speaker Change: I'll pick those up a little bit.
Speaker Change: They were it was a combination of seasonal.
Speaker Change: You know you're going into a period, where the clinics or.
Speaker Change: Maybe a little more busy around the holidays and trying to get things in.
Speaker Change: So some users didn't come.
Speaker Change: And a few of the others. These are essentially deferrals they weren't necessarily loss patients.
Speaker Change: But.
Speaker Change: Ah patients who either got the didn't deal well the day that they were supposed to come in or had some other minor.
Speaker Change: Issue that they had to wait.
Speaker Change: Wait until it was settled.
Speaker Change: So they were just deferrals that are not unusual in this particular patient population.
Speaker Change: For some of the challenges they face.
Speaker Change: I understand.
Speaker Change: And then quickly, but I think what we're sort of learning that there's there's.
Gonna be some as the volumes build in that business that product line, there's probably going be a fair degree of seasonality in the fourth quarter because of those factors. The Larry cited the just the availability of clinic time, and the fact that over the holidays you got several such a problem there.
Speaker Change: Yes.
Speaker Change: Sorry, we're getting a lot of feedback.
Speaker Change: Sorry about that guys.
Speaker Change: Thank you very much.
Speaker Change: Okay. Thanks man.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Sweden, Pacte law rubber conflict with H C. Wainwright. Please go ahead.
Speaker Change: Thank you.
Speaker Change: Morning, Larry and Mike and Larry Congratulations on your retirement.
Speaker Change: And you know as a toe marathon runner have been putting in steady energy behind our Xerox slashed lifelock and suddenly got him to the company to sustainable growth states. So congratulations on that end as well and I'm sure I'll be sitting around in the industry.
Speaker Change: Okay.
Speaker Change: So in terms of Hum.
Speaker Change: Our questions are my questions.
Speaker Change: Questions on.
Speaker Change: On the quarter and the year.
Speaker Change: So.
Speaker Change: Based on your experience.
Speaker Change: The reimbursements from the from the Medicare programs.
Speaker Change: So what are the learnings that you've gotten so far and do you think the cycle the reimbursement cycle as smooth as of now.
Speaker Change: And how.
Speaker Change: How are you taking this information in it.
To the private payers and you're discussing.
Speaker Change: Hum for reimbursement from them.
Speaker Change: Yeah.
Speaker Change: Okay, well, we've learned that the cycle with the Medicare groups.
Speaker Change: And then a little longer than we expected as they learn this particular industry and product quality.
Speaker Change: And we anticipate that cycle will shorten Oh, I think sometimes we get into the metrics of numbers of days that the mistakes and we are looking to too.
Speaker Change: Cut that down as much as we can.
Speaker Change:
Speaker Change: What we are done with the Medicare It has been a baseline which has.
Speaker Change: <unk> been helpful with us as we go to the privates because generally in the commercial payers.
Speaker Change: The quality of the package that we have to put together is extensive.
Speaker Change: So we're fighting with CNS for example, with our work with the top patients as a comparison that was one of the private groups.
Speaker Change: We have more than enough data for everything they need in their process, even more quickly on.
Speaker Change: On the commercial side.
Speaker Change: We anticipate over time, CNS will get more efficient and effective as they know the products.
Speaker Change: And I think on the commercial side that past seems to be a little bit shorter.
Speaker Change: Okay, and then I know.
Speaker Change: Sure.
Speaker Change: Commented, there's a I'll get asked two questions on on the workers' comp side of the.
Speaker Change: Business, but my question is a little bit on the strategy.
Speaker Change: I know you always had this part of the business segment, but it looks like your <unk>.
Speaker Change: I'm kidding.
Speaker Change: I'm getting to put more and more resources behind it in terms of trying to get these transactions done.
Speaker Change: Is this more of a long term strategy. So that you can buttress any losses, you know from from how the federal government is trying to ask expenses and so there is a potential for a loss on the Medicare side is that is that part of the strategy here or is this natural progression of the.
Speaker Change: The market itself that that you'll have an energy ability too.
Speaker Change: Yeah. This is a it's not a reaction to all of us in federal government pieces are we still see those working in our favor.
Speaker Change: It was really driven by opportunity.
Speaker Change: And having a portfolio of products, where two of them.
Speaker Change: Now accretive to the business allows us to build the business in a good way in an efficient way.
Speaker Change: <unk> team and organization, we have we've been able to leverage a lot of that with the three product lines.
Speaker Change: And the ability to.
Speaker Change: Grow both of those through the expanded agreement with Mylan, because its a product thats Fabulous and we believe.
Speaker Change: We're bringing much bigger resources when they had the ability to do so we will be able to grow it which will benefit both us and in Ireland.
Speaker Change: And on the Ultra G side.
Speaker Change: Yeah, we are seeing the market recover and we are also seeing that we had to change the structure to go after these national accounts and many of the chains.
Historically, it's been sold by individual cases, so by Resourcing that we believe we get that business on the track we expected it to be as an accretive part of the company to.
Speaker Change: To help get us to profitability.
Speaker Change: And combining the three product lines.
Speaker Change: Or is.
Speaker Change: Is the.
Speaker Change: Quickest and most effective path.
Speaker Change: For this company to get to breakeven.
Speaker Change: Thank you thanks for taking all my questions and a doctor or something.
Speaker Change: Thank you okay.
Speaker Change: Yeah. Thank you.
Speaker Change: And we do have a follow up from Yale Jen of Laidlaw and company. Please go ahead Sir.
Yale Jen: Oh, hi, Thanks, Paul I'll pick up the follow up question just a quick one here first of all in terms of the core life.
Speaker Change: Collaboration.
Speaker Change: Whats the term of the deal or in terms of that as well is that in terms of or the one with the mountain that you will be able to get to the home side.
Speaker Change: I love the business, which is a much larger but would that also increase your marketing expense or.
Speaker Change: 222, full lease or the lavage or explore that and thanks.
Speaker Change: Well the scope of the core life initially is strictly with the re walk workers' compensation.
And.
Speaker Change: Given their size and their depth of connection they're going places we can go at it certainly will not.
Speaker Change: Not increase our marketing expenses those will just be using materials directly and we will no longer be happen to pursue those who will actually reduce some of our expense because they'll be taking that on that they are an extensive national network. It is just about every major.
Area of the country for a workman's compensation.
Speaker Change: And they already have those relationships, so it's really going to be much more efficient for us.
Speaker Change: And the way the contract is worked at much more favorable to US financially. We believe then they're trying to do it ourselves.
Speaker Change: Would they also get certain profits or are their compensation.
Speaker Change: Otherwise it will go to you you guys Oh beforehand.
Speaker Change: They will well the processing with them is going to be more efficient with them because they have extensive they had these large group is already in place.
Speaker Change: And are the economics of it are we're quite happy with the terms of the deal we didn't go through the details of it.
Speaker Change: But we are we find that it is a more profitable segment for us overall.
Speaker Change: Particularly when you look at over the five year life of the product as are we.
Speaker Change: We see a focus with those groups and a willingness to pay for the things that are required to service and take care of the warranty of the product.
Speaker Change: Over a five year cycle. So it's it's a favorable financial outcome, both for us and for our core life.
Speaker Change: And just in terms of modeling that.
Speaker Change: With the expanded mop would expect.
With a product that offer with them.
Speaker Change: Much larger market.
Speaker Change: Would that increase your sort of marketing or sales expense.
Speaker Change: It will not increase sales and marketing expense it will increase our revenue.
Speaker Change: Okay. That's a good one.
Speaker Change: Yeah Yeah.
Speaker Change: It's a greatly simplified business model to work through core life as opposed to doing it ourselves as already mentioned so.
Speaker Change: The economics are.
Speaker Change: Some if not better than doing it ourselves.
Speaker Change: Yeah.
Speaker Change: Okay, Great. That's very helpful. Again, thanks for taking my follow up questions.
Speaker Change: We appreciate it.
Speaker Change: Thank you and this concludes the question and answer session I'd like to turn the call back over to Larry for closing remarks.
Larry Jasinski: Mr. Kaczynski do you have any closing remarks.
Larry Kaczynski: Yes, Thank you everybody and what I'd like to do is close a little bit on the 2025 plans.
Larry Kaczynski: In particular, our 2025 sustainable growth plan it strikes a balance between topline growth and spending discipline and we believe that's what's needed in this segment at this point.
Larry Kaczynski: We will be more selective and the growth we're thinking we'll prioritize our investments to generate revenue with higher margin and using more resources as examples what we talked about what correlate.
Larry Kaczynski: And as we develop the rework marker American further establish more third party relationships with the centers.
Larry Kaczynski: Will reaccelerate, our investments there to stimulate higher more efficient growth in the future. So we believe this is the right path, where we walk is today and.
Larry Kaczynski: In the short term, while this means a little less topline growth it measures into better bottom line performance, which is our key goal for this year.
Larry Kaczynski: With that I, thank everybody for joining us today, and I really do look forward to be able to present.
Larry Kaczynski: The results of what we were set out in the next quarter in the following quarters. Thanks.
Speaker Change: Thank you Sir This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
Larry Kaczynski: [music].
Larry Kaczynski: Yeah.
Larry Kaczynski: [music].
Larry Kaczynski: Yeah.
Larry Kaczynski: Yeah.
Larry Kaczynski: Yes.
Larry Kaczynski: [music].
Larry Kaczynski: Yeah.
Larry Kaczynski: [music].