MedAvail Holdings, Inc.

Ladies and gentlemen, welcome to the MedAVIL 2020 Q4 earnings conference call. My name is Terry and I will 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. I would now like to hand the call over to Caroline Poole. Please go ahead, Caroline.

Thank you, and thank you all for participating in today's call. Joining me are Ed Kilroy, Chief Executive Officer, and Ryan Ferguson, Chief Financial Officer. Earlier today, MedEvail Holdings released financial results for the full year ended December 31st, 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 in our organization and reimbursement, market opportunity expansion, and guidance for revenue gross margin and operating expenses in 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 in 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 in our current report on Form 8-K, filed with the Securities and Exchange Commission, SEC, on November 18, 2020. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, March 30th, 2021. MedEvil 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 that, 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 Medivale's 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 our reverse merger and concurrent private placement in November, raising approximately $84 million in new cash proceeds. I would like to express my sincere appreciation to all the parties who supported and assisted us in consummating those transactions. As this is our first call as a public company, I'll use the first few minutes of this call to provide an overview of Medavail and how we are transforming the pharmacy market, as some of you are new to our story. 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 we'll open up the call for questions. We think about our business in two distinct segments, namely retail pharmacy services and 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 SpotRx Pharmacy. We employ our own pharmacy team, purchase our own medications, and deploy our proprietary technology, the MedCentre, 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 would like to utilize our technology to meet their pharmacy opportunities and challenges. In this case, we are serving as the healthcare IT vendors. Now let's dive a bit deeper into our retail pharmacy services segment, operating as SpotRx 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. Poor medication adherence is a leading cause of hospitalization and increased cost of care per member and sadly death. Studies have shown that when patients are adherent to their medications, their per member per year cost may be reduced by approximately $1,000 to $8,000. Now, as many of you know, there's no shortage of retail pharmacies in the United States. So the question is, what are we doing differently than traditional retail pharmacies? Well, the answer is we believe that while most traditional retail pharmacies are trying to attract people to their physical locations, we, through our proprietary med 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, one that any retail pharmacy would love to have. Our solution combines our centralized pharmacy hubs with our proprietary MedCenter technology, through which we provide live audiovisual 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 kiosks, We also provide free courier home delivery for those customers who choose it. All these capabilities are reinforced by Medaville's on-site, full-time 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 in ensuring that patients are adherent and staying healthy. Our hub and spoke model of in-clinic dispensing through our proprietary technology, in-clinic account manager, centralized hub pharmacy team, and free courier 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. Let me 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 multiple prior authorizations through different pharmacies. our on-site clinic account manager saw this as an opportunity to inform them that they could forward all of these prescriptions to SpotRx 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 SpotRx. The patient indicated that they were very thankful that SpotRx was able to simplify everything for them And our clinic account manager was, of course, delighted that they were able to make this experience quick and convenient for the patient. At another SpotRx site, a patient contacted the clinic to order one of their medications and ultimately wound up ordering all of their medications through SpotRx. Upon reviewing all of their prescriptions, we were able to identify a number of significant cost-saving opportunities as compared to their current pharmacies. The patient was so thrilled with the experience that they transferred all their medications and asked the clinic to make sure their preferred pharmacy was set to SpotRx within the clinic EMR system. Experiences like these occur regularly at our SpotRx locations. The embedded nature of our solution has become the true differentiator for Medivale in the pharmacy market. We are laser focused on partnering with those healthcare providers who service the Medicare market. Many of our enterprise clinic partners operate in a value-based care model and are looking for a pharmacy partner with a complementary business model. That is SpotRx 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, Florida, Texas, and Illinois. Within these six states, we estimate there are approximately 7,000 clinics that fit our model, which generate over $16 billion of annual prescription 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 they transfer 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 SpotRx. 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-month period. That said, I would note that the COVID-19 pandemic has impacted our ramping time. In several cases, face-to-face visit volumes were reduced and clinic workflows were altered. Both have extended our rent period to the $1 million 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 in the same period of the prior year. This brings our total cumulative deployments at year-end 2020 to 57. 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 $568,000, and in aggregate, adjusted sales grew to $3.2 million, which equates to a year-over-year increase of 117%. 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 in Phoenix, and TMC One in the greater Tucson area. We also entered the Michigan market in late 2020, opening our central pharmacy and our first two SpotRx in-clinic deployments in the state with Oak Street Health. We see this momentum in our SpotRx pharmacy business continuing through 2021. Additionally, we continue 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 in 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. Kaiser has acquired their first two med centers to be operationalized post the integration work. And lastly, Sam's Club recently added its ninth site. This is a cashierless 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. In 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 in Florida by mid-2021, which is on track. To ensure we are ready to move quickly, we have had our business development team active in 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. To 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 vaccinations 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 Meadowville. We exited 2020 with strong momentum and are seeing that continue through the first quarter and expect it to continue through 2021. Now with that, I'll turn the call over to Ryan to 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 in the fourth quarter of 2019. Net revenue for the three months ended December 31, 2020, was $3.1 million, a 112% increase from $1.5 million of the same period of the prior year. These results include the impact of a year-end accrual adjustment of $75,000 related to to service fees charged for adjudicating medication claims and adjusted bad debt reserve. Excluding this impact, adjusted non-GAAP net revenues were $3.2 million, an increase of 117% compared to the same period of the prior year. Adjusted net revenue growth was driven by a 92% increase in retail pharmacy services sales and a 292% increase in 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 patterns. Now turning to gross margins, as Ed highlighted earlier, Gross margins for newly launched SpotRx locations tend to trend below our long-term target in the initial month and then gradually expand as we focus on transferring, filling, and synchronizing delivery of these patients' full prescription medication list. Gross margin for the fourth quarter of 2020 was negative 8% as compared to 18% in the corresponding prior year period. Gross margin includes the impact of one-time expenses totaling $352,000, which were primarily driven by a non-cash inventory adjustment related to the valuation of MedCenter inventory 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 one-time expenses, adjusted non-GAAP gross margin for the fourth quarter of 2020 was 6% as compared to 18% in the corresponding prior year period. The decline in adjusted gross margin during the fourth quarter was primarily attributable to reimbursement volatility in 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 were $11.4 million, a 97% increase from $5.8 million in 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 $8.9 million, a 42% increase over Q4 of 2019. This expected increase in operating expenses was driven primarily by investments in personnel, facilities, and other expenses necessary for the continued build-out of our operating footprint, including the launch of our operations in Michigan. Additionally, we made accelerated investments to automate additional workflows important to our customer service capabilities. Adjusted EBITDA, which we calculate by adding back depreciation and amortization, stock-based compensation, and exclude non-recurring expenses and other income to net loss, was negative $8.7 million in the fourth quarter of 2020, compared to negative $4.9 million in the fourth quarter of 2019. We ended the fourth quarter of 2020 with 58 million of cash and cash equivalent, 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 of approximately 31.9 million shares. Over the long term, we expect our economic model to enhance our free cash flow generation. When we enter a new clinic site, we typically ramp a 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 impacts. 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 in 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 revenues expected to be in the range of $27 to $34 million. For 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 goals. And for our shareholders, an extremely large market for us to continue to grow our business. We have assembled a team of 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?

Thank you. If you wish to ask a question, please press star followed by one on your telephone keypads now. If you change your mind and wish to remove yourself from the queue, please press star followed by two. And when preparing to speak, please ensure that your line is unmuted locally. Our first question comes from Charles Rye from Cohen. Please go ahead.

Yeah, thanks, guys, and congrats on the quarter. I want to start with A little bit what you're seeing here related to COVID as we're kind of coming out. I know some of the states like Michigan have been reporting an increase in cases. You know, Ryan, you gave sort of the first quarter outlook, you know, still pretty solid sequential growth. Just wanted to get a sense, you know, what you're seeing in terms of that impact in the pharmacy operations.

Sure. So Charles great to hear from you at TED. A couple things that that I would touch on first of all the interest in our solution remains extremely high in all the markets that we're participating in and planning to open as we touched on in Florida. The vaccination programs in place are truly pulling a lot of resources away from our clinic teams to get the vaccinations done, which is obviously absolutely the right thing to do, which in some cases is impacting our ramps, and especially for new sites. So we're seeing anywhere from a 30- to 45-day deferral as clinics are working through this vaccination process. Again, 100% agree with what they're doing, and we'll 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, they've not only focused their pharmacy teams and healthcare 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 systems. So again, similar type of impact, but none of these are causing people to cancel anything. It really is a deferral.

And that's helpful. You know, can you talk about sort of what you're seeing now in terms of the mix? Obviously, you have the med center in the clinic's office, but you also do home delivery and courier as well. What is sort of right now the mix of, you know, sort of how patients are picking up their medications? You know, what percentage is coming from the med center's And maybe, you know, what that mix between first fill and refills look like. And is this sort of what you kind of expect going forward now that you've had more experience with these deployments?

With regards to delivery, I think Ryan and I both mentioned we're seeing more customers take advantage of delivery. Because of COVID, they don't want to go out. And, again, we're dealing with mainly the Medicare population. Right. it's not not surprising to us so we're running higher than we would have expected in the model as as we had pointed out and and that is in 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 in face-to-face visits occurring in the clinics so that's encouraging as we look forward I mean, from a normalization, I would expect to see a 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 courier network. With regards to the chronic versus first fills, the vast majority, again, here of our medications are our chronic medications as we get customers to convert their medicine cabinet over to us. Although when we go into new clinics, and it's an important point, we tend to be filling acute meds initially with the patients that are at the site, and that's usually a mix of commercial and Medicare patients. So over time, we get those Medicare customers converted over. I 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 mail because they're going in person?

Well, just remember, Charles, we don't do mail order, right? We either deliver via courier or you pick it up.

I'm sorry, deliver courier.

Yeah, that's what I meant. Yeah. Correct. And so what we saw was customers who normally would pick up at the clinic because they were regular visitors at the clinic switched to courier delivery because of COVID. We fully expect them to be switching back because they are frequently at the clinic. And quite frankly, it's a real value add that we can ensure the patient gets their medication in their hands while they're at the clinic, which really demonstrates that it's dispensed and the patient absolutely has it.

Great. One last for me, just what are the assumptions for deployments in 21 that underlies the guidance? I know you have the contract manufacturer, Kitron, kind of coming online and you're expecting deliveries in the second quarter. Just maybe if you can just remind us sort of what your expectations for deployments over the rest of the year looks like.

Yeah, we actually didn't provide guidance for deployments. deployments of med centers for the full year and we're not providing that 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 the situation great i'll jump back in the queue thank you thanks charles

The next question on the line comes from Brooks O'Neill from Lake Street Capital Markets. Please go ahead.

Brooks O' Thank you. Good afternoon, guys. So I have a couple of questions, too. I guess you commented about the pace in the Q1 and some expected growth kind of sequentially after that. Would you say that you expect the business overall to be you know, faster growth in the back half of the year as perhaps the response from COVID diminishes and you get more deployments out there? Is that how we should think about it?

Yeah, I would think, Brooks, and by the way, great to hear from you, I would say that certainly in the back half of the year, we expect it's back end loaded as we've talked about. I would say that with the focus of our clinics and the health systems in the first half in doing the vaccination programs, that may slow down 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 various things in the marketplace right now. Are you prepared to help us think about what kind of a number the ramp might look like in 2021. And I think I heard you say you're not moving away from the longer-term guidance about the ramp to a million dollars 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 million dollars. We did comment that with COVID that that ramp has slowed. for all the reasons I think that we're all aware with regards to face-to-face visits and change of workflows, et cetera. We're not commenting on the number of sites, but as we did comment, we do outlook for the full year a net revenue of $27 to $34 million. So, you know, that's how we feel about our ability to deliver through 2021. Great.

And then maybe the last one. I'm kind of excited about your opportunity with operations like Oak Street. Can you give us any sense for how it's going so far in the initial Oak Street deployment and any feedback you're getting from them about how it's working?

I won't make any comment on Oak Street's point of view. I would say that we're pleased with how things are going. We're excited about You know, the deployment's there. But, you know, as I mentioned, we're also very excited about the opportunities that we're seeing in Florida because we've had our business development team very active as we line ourselves up to get our first pharmacy opened in Florida 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.

Great. Thank you very much, and I'm looking forward to 2021.

Thanks, Brooks.

The next question is a follow-up question from Charles Rhee of Cohen. 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, does the guidance assume a return to relatively normal pre-COVID levels by the end of the year, or are you still assuming that we are probably still impacted somewhat by COVID throughout the course of this year?

Charles, I would say that, you know, we see COVID impacts continuing through the year, although with vaccinations, you know, hopefully mitigating, but, you know, we understand the potential impacts of COVID and, you know, that's how we've thought through our guidance on the 27 to 34.

Great. And then also maybe talk about any potential impacts from a weaker flu season as well. You know, I think for, you know, does that have as much of an impact on your population in general? Because I know there's been some discussion, you know, January, February has been relatively weak from a flu perspective and that tends to be over a retail pharmacy issue. I'm wondering how it affects 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 to frequently be interacting with the patient, whether they're well or not well. And you know that some of our clients, but how they bring people into the clinics for health checkups. So our focus is those chronic patients multiple chronic meds they always need those meds and and so we're focused on ensuring we continue to deliver those whether we have to do it you know through picking it up at the clinic or home delivery through our courier service it is an ongoing recurring requirement of the patient to continue to fill those so i don't see the flu season having really an impact on our business okay thank you thank you for clarifying that um

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. You know, we always thought about retail as another opportunity. You talked about Sam's Club earlier. You know, Walgreens in January, you know, they announced an investment in IA for automation, particularly, I think, in their refill centers. You know, I know this is not an area of focus for you at the moment, but, you know, what does that, you know, what do you think that does for the outlook for maybe potentially in the retail market for you? You know, how do you kind of see that maybe potentially playing out down the road?

So what I would say is that, you know, in our comments, we mentioned that Texas Health Resources had deployed 11 sites to the end of last year and planned to do five for the first quarter of this year. in their urgent cares and their emergency departments. We signed an agreement with Kaiser, which is a significant systems integration agreement for us. And we obviously have other discussions going on. So I think there's a very clear view in the market that if you want to extend pharmacy reach through automated technology that meets or to pharmacy requirements, that we are the answer. And so, you know, we expect that we will continue to engage in these large health systems and some retailers who are either looking, again, to increase availability of pharmacy services, extend hours, or potentially control cost by putting self-service capabilities in. So I think it bodes well for us that that opportunity continues to exist for our business.

Okay, thank you. And maybe just last one for Ryan. You gave us the 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 we take advantage of our growth initiatives and opportunities in front of us. So we're constantly assessing the market opportunities and growth there to build out our footprint, as we've indicated, as we did in Q4, around investments to accelerate into places like Florida. As Ed mentioned, that's a key place for us. And so, you know, we'll continue to make the right investments for our growth trajectory, but I haven't provided any specifics on cash burn numbers or OPEX numbers at this point.

Is the fourth quarter a good kind of proxy then to build off of and grow from even into the first quarter? 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?

Yeah, as I mentioned in the prepared remarks, we did make some accelerated investments and we will continue. So I would say that is a good baseline for you to think about as we 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 improve, you know, 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, you know, how we think about. Now, one thing I would mention is, you know, the investment in new central pharmacies will be lumpy at times and come on ahead of a particular location ramping or a geographical location ramping, such as Florida in the early days will obviously have hired pharmacy staff members and then quickly launch clinics close to that time of the launch period of the central pharmacy. And so as we think about, you know, new central pharmacies coming on, as we've mentioned, Florida will be a key area for us in the upcoming quarters of this year. And so keep that, you know, in front of you as you think about your model.

Okay. I'm sorry. And then lastly, when we think about Florida, you know, how much of the Florida opportunity right now is already in the backlog, let's say, versus, you know, what you're thinking about in terms of signing new clinic partners? you know, either for the end of this year or thinking further out.

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, so I will hand back to Ed for any closing remarks.

I just want to say thank you all very much for attending our first public company conference call, and we look forward to further calls in the upcoming months and quarters. Have a great day.