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spk00: My name is Shelby and I will be your conference operator. At this time, I'd like to welcome everyone to the RVL Pharmaceuticals fourth quarter and full year 2022 financial results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. At that time, if you have a question, please press star and one on your telephone keypad. As a reminder, this conference call is being recorded today, March 20th, 2023. It is now my pleasure to turn the floor over to Ms. Lisa Wilson, Investor Relations for RVL Pharmaceuticals. Please go ahead.
spk03: Thank you, Operator. Welcome to RVL Pharmaceuticals' fourth quarter 2022 financial results and commercial update call. This is Lisa Wilson, Investor Relations for RVL. With me on today's call are RVL's Chief Executive Officer, Brian Markison, Chief Operating Officer, J.D. Schaub, and Interim Chief Financial Officer, Mike DiPietro. This morning, the company issued a press release detailing financial results for the three months ended December 31st, 2022. This press release and a webcast of this call can be accessed through the investor section of the RVL website at rvlpharma.com. Before we get started, I would like to remind everyone that any statements made on today's conference call that express a belief, expectation, projection, forecast, anticipation, or intent regarding future events and the company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to RDO's management as of today and involves risks and uncertainties, including those noted in this morning's press release and the company's filings with the Securities and Exchange Commission. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. RVL specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. During this call, we refer to non-GAAP financial measures, such as adjusted EBITDA. For reconciliation of adjusted EBITDA to net income or loss from continuing operations, please see the tables at the end of today's press release. The archived webcast of this call will be available for one year on RVL's website, rvlpharma.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on Monday, March 20th, 2023. Since then, RVL may have made announcements related to the topics discussed, so please reference the company's most recent press releases and SEC filings. And with that, I'll turn the call over to RVL's CEO, Brian Markison.
spk07: Thank you, Lisa, and thank you, everyone, for joining our call this morning. Last year was a transformational year for RVL Pharmaceuticals. We launched into medical aesthetics and clearly created a new category in ocular aesthetics, a round-up NIC, for the treatment of blepharoptosis or droopy eyelid. We also opened two new commercial channels or customer segments. More specifically, we launched direct-to-practice sales in medical aesthetics and Two quarters later, we entered into two telemedicine partnerships. We also wound down personal selling in eye care, and I am pleased to share that our sales in that channel remain stable with a high percentage of refills supporting underlying demand. In fact, we will still consistently see adding more than 100 new up-need eye care prescribers each week. Clearly at some point in the future, we will revisit the potential in the eye care segment. We have barely scratched the surface with APNIC. And later in this call, JD will give more color around our early growth and will provide a view as to the untapped potential of this brand. But what I'd like to highlight very briefly is that fourth quarter aesthetic sales were comprised approximately of 50% reorder customers, which gives us clear signals into the traction. within our accounts and it's very exciting. UpNIC is uniquely positioned as a first in class cash pay product with no competition. Our model is designed to optimize patient and provider access across multiple channels, eye care, aesthetics, and now telemedicine, which we believe caters to a segment of the population that is reluctant to visit a clinician. As we look ahead, we are heavily focused on two near-term imperatives. First, the rollout of Elevate, our next-generation e-commerce portal, where we will be introducing subscription options across our aesthetics and eye care segments. And secondly, business development. We have been able to attract an outstanding sales and leadership team responsible for growing Upnique, and we believe that it's only natural to leverage our footprint and see if we can bring more into this company. Before I turn the call over to Mike, I will briefly describe a refinement to our revenue methodology that we recently adopted. Since the inception of our direct dispense model, in which we ship to our customers through a third-party logistics company, or 3PL, we have recognized sales upon shipment from the 3PL. As the company has grown in size and scale, we will now refine our methodology to record sales upon receipt to the final customer destination, starting with the fourth quarter of 2022. Therefore, approximately 2.3 million of net product sales that were a part of the previously disclosed 12.1 million will now be booked in Q1 of 2023. The $2.3 million of sales are supported by firm, unconditional orders and have all been received by the end customer. With that, I'd like to now turn the call over to Mike for a further review of our fourth quarter financials.
spk05: Mike? Thank you, Brian, and hello, everyone. I'll begin by sharing comments on our results specific to the fourth quarter of 2022. A reminder that our quarterly and annual information and highlights can be found in today's earnings press release. We expect to file our annual report on Form 10-K later in the day. Net product sales relating entirely to UpNIC increased by $6.7 million to $9.8 million in Q4 from an increase in sales volume reflecting expanded commercialization through the year. Total cost of goods sold for Q4 increased by $1.5 million to $2.6 million. This increase was primarily driven by higher product costs due to volume growth. Our gross profit percentage from product sales was 75% in Q4, as compared to 58% in the prior year quarter, reflecting improved overhead absorption driven by higher volumes and for more favorable average selling prices. SG&A expenses for Q4 decreased by $6.1 million to $17.6 million. The decrease in SG&A was primarily driven by a $3.3 million decrease from debt and equity issuance fees unique to the 2021 period, a $2.4 million decrease from foreign currency translation, also unique to the 2021 period, and from $1.4 million in lower legal and other professional fees. R&D expenses for Q4 decreased by $0.2 million to $0.9 million, reflecting slightly lower year-over-year spending in support of medical grants. Unique to Q4 and classified among total operating expenditures, we booked a $13.3 million non-cash impairment charge. The write-down was against our IP R&D for Arbaclofen. an asset that treats the alleviation of spasticity in multiple sclerosis patients. The current quarter charge was triggered by an accounting revaluation after we received a potentially adverse response from the FDA in Q4. Notably in Q4, we again demonstrated our commitment to rationalize total operating expenditures and to keep spend in check. After adjusting for non-recurring or exceptional items such as the impairment, I'm pleased to share that Q4 OPEC spend was once again below the $7 million average monthly ceiling that we have so often referred to. Moving below operating income, total other non-operating activities in Q4 2022 contributed $5.9 million of income as compared to income of $3.3 million in the 2021 period. The year-over-year change is largely influenced by changes in the fair value of the company's debt and warrant liability, which have been remeasured through our earnings since October 2021. Our adjusted EBITDA loss for Q4 was $9.3 million, nearly 40% lower than the comparable EBITDA loss of $15.2 million in the prior year quarter. Next, turning to our balance sheet and liquidity. At December 31st, we held cash of $45 million, while total debt and financing obligations at year-end had aggregate principal amounts due of $75 million. Subsequent to year-end, there are a few developments to share regarding our liquidity. In February, we received $5 million in cash from Allura related to a contingent milestone payment. In March, we subsequently paid the $5 million to our lenders in satisfaction of mandatory repayment conditions under our debt. The repayment reduced the outstanding principal of our notes by $4.3 million. On March 8th, we entered into a second amendment of our debt solely to secure the immediate reduction of the minimum liquidity requirement from $15 million previously to $12.5 million going forward. Lastly, between January and March, the company received an aggregate of $4.1 million in federal tax refunds relating to income taxes paid in prior periods. The company is continuing to pursue the collection of $1.8 million of residual federal refund claims. As mentioned previously, there continues to be many variables in play that will likely influence our cash runway through 2023. Our near-term commercial development, in particular in the midst of changing and increasingly challenging macroeconomic conditions, will play a very important factor. With that, I'll turn the call over to JD for some added color.
spk08: Thanks, Mike, and good morning, everyone. As you heard from Brian, we made tremendous progress in 2022 across our business, most importantly with the growth of UpNIC. We are incredibly proud of the results and collective achievements and we'd be remiss to not acknowledge and thank the entire RVL team for their contributions. This past year was a critical step in our evolution as an organization, specifically the continued expansion of our market-building efforts with UpNIC. All told, the approximately 11 months with an aesthetic sales team in place delivered the most robust medical aesthetic product launch in recent history when measuring new location openings. Not only did the team introduce UpNIC to over 4,300 locations, but we were able to solidify and expand our talented sales organization because of growing provider and patient enthusiasm for UpNIC. Another important component to our success was delivering this year-over-year growth while decreasing OPEX. a testament to the discipline and operating leverage we can create with this brand. Turning now to some comments regarding Q4 momentum and general expectations ahead in 2023. The eye care segment continued to be a stable contributor in Q4, despite being the first quarter with no personal promotion. We continue to see a growing paid prescriber base, 18,414 as of year-end, an increase of 1,467, or 9%, over Q3, a steady flow of new prescriptions, and an ever-expanding base of refills. These factors, along with growing awareness, are expected to drive continued growth in 2023. Overall, we expect eye care to be about 20 to 30% of revenue largely dependent upon the ultimate growth from the aesthetic channel. Now, some updates on our medical aesthetic launch. As mentioned up front, 2022 represented the establishment of our aesthetic business and the introduction of UpMeet to a large and diverse new group of providers. What began as about 50 reps and 1,000 new locations in Q1 of 22 evolved into a stronger and more talented footprint of between 65 and 70 and over 4,300 locations with UpNIC by year end. We are extremely proud of the leadership and execution across this team. Throughout the year, this segment of our business has continued to grow quarter over quarter. And importantly, though not the focus, the composition of revenue from quarter to quarter was increasingly from reordering accounts, resulting in a Q4 aesthetic revenue contribution comprised of about 50% new, 50% reorder. As we move further into 2023, our strategic priorities are anchored in growth from this channel. Specifically, our sales effort is going to be more heavily focused on supporting the existing practices around integration, and ultimately realizing the true potential of upNIC in each practice. Having established a meaningful breadth of ordering locations, we believe this will be the greatest return on the team's time and effort. Conservatively, our data and market research continue to suggest a low end of 10 to 20 percent of patients within these practices as potential patients, which If you assume approximately 2,000 unique patients within the average practice, put somewhere between 200 to 400 patient starts per practice when providers are integrating UpNIC into their treatment protocols and patient assessments. Lastly, we are seeing and continue to expect new accounts to contribute. As a function of growing awareness and desire to carry the product, though to a lesser extent than the more than 4,000 new openings from last year. More recently, we strategically layered in a third channel of our business, which we call telemedicine. During the latter part of this past year and early part of Q1, we have partnered with two national providers of telemedicine to position the brand for broader access to a segment of patients who do not rely on traditional eye care and or aesthetic providers for treatments. Additionally, these channels serve to further enhance consumer awareness and education, which in turn supports our efforts of establishing this new market. Importantly, we view this channel as synergistic. Both retail pricing and patient base do not compete with our ongoing efforts within the practice and subsequently requires minimal investment from our P&L. The early quarters involve ramp-up and optimization on the part of our partners, and we expect this segment to contribute more consistently as the year progresses. Lastly, we do not anticipate expanding this effort through additional partners and feel confident we have the existing capabilities to deliver up neat via telemedicine with our current consortium. Beyond the segments that comprise our growth and revenue, we continue to believe in the under-penetrated yet outsized commercial opportunity for UpMeek. Just recently, we updated a consumer research study of awareness among adult women of UpMeek. Of this nationally projectable group of 1,500 adult women, only 4% had at least some knowledge of the brand, 1% very aware, and 3% a little aware. When coupled with the broad points of access established and a growing real-world repository of positive patient feedback and provider buy-in, we remain excited by what's in front of us and confident in our ability to continue to build. Lastly, we believe the strength of our business and unique model leaves us well positioned to capitalize on strategic opportunities to further scale through business development. We look forward to updating our progress throughout the year and continuing to deliver on our mission to establish UpNIC as a meaningful brand in the U.S. And with that, I'd like to turn the call back to Brian for any closing remarks.
spk07: Thanks, J.D., and thanks, everyone, for listening to our prepared remarks today. As you can tell, we are really excited about our progress with UpNIC. And with that, what I'd like to do is ask the operator to open up the line for questions. So operator, I'll turn it to you.
spk00: Thank you. At this time, if you would like to ask a question, please press the star and 1 on your touchtone phone. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star and 1 to ask a question. We will pause for a moment to allow questions to queue. We'll take our first question from Louise Chen with Cantor.
spk01: Hi. Congratulations on all the progress this quarter, and thanks for taking my questions here. So I had a few questions for you. First one I wanted to ask you is how do we think about revenues in 2023? Maybe the quarterly progression, if you could give a little bit of color, at least for the first quarter, given the change in accounting methodology for revenues. And then second thing is, um, you know, following on that, how we think about OPEX is the fourth quarter, 2022, a good proxy for, you know, building upon for the rest of the year. And then last question I had for you is just on impact of the economy and what it's meant for your business, but we've heard some conflicting views out there from other competitors, but just curious what you're thinking here. Thank you.
spk07: Yeah. Thanks. Thanks, Louise. And, uh, good morning to you and the team. Starting with the economy, I think, you know, bridging from JD's last comments, our view is that we're fairly under-penetrated across the board in aesthetics and even eye care. So while the economy is certainly headline news, you know, we believe that, you know, we're not seeing a material impact and we're too new as a category So it's hard for us to really judge based on what we're hearing from others as well. So, you know, we're putting our head down and basically just continuing to grow the brand. So I'm not really that focused on the economy with respect to our penetration into aesthetic accounts. As far as revenue build for the year, a couple of things of importance. In the first quarter, we're spending a lot of time working with the accounts that have previously ordered, getting them to work through the product, make it become an everyday part of their practice. And as JD mentioned, seeing nearly 50% reorders in Q4 gives us a really strong signal that traction is gaining here. But I think the way our revenue shapes up for this year is we see it more ramping up almost a reflection of how it looked last year because right now we're following the playbook where we're focused on the reorder customer to make sure we have traction and we're seeing it but the other you know the other thing I want to point out and it's really important is you can't look at this product like a toxin or a filler you can't compare us to those markets because we don't need to pay for market share we're not competing against anyone We're basically competing for a slice of the total market, not just a piece of a market. So while the toxin and filler markets certainly claim a lot of headlines, we're going at our own pace, which brings me to OPEX. I think Q4 is a fairly reasonable way to look at our OPEX for the year. We're going to be very disciplined in how we spend money. And we're looking to create leverage within the P&L right now because we're one and only and have no competition.
spk00: And we'll take our next question from Douglas Sal with HC Wainwright.
spk10: Hi, good morning. Just curious if you can help us maybe understand a little bit in the context of the shift in revenue from the fourth quarter into 1Q23, how we should look at that in terms of the growth trajectory. Because obviously now when we look at what the performance in 4Q versus 3Q, you know, we saw sort of basically flat revenues. And so just trying to understand how we should think about that. Thank you.
spk07: Yeah, and I think that's a fair question, Doug, and good morning. You know, the way we're looking at it is the change in our accounting or our revenue methodology is, you know, as I said in the prepared remarks, it's based on firm, unconditional orders, so it's real sales. And, you know, again, you know, and we'll be following up with everyone after the call to help in the refinement of modeling conversations, but, you know, I think it's fair to say that we will ramp in a similar manner to last year because right now in this quarter we're heavily focused on the reorder customer and making sure that we get traction because we don't want to you know end up you know sort of six months down the road from now and many people haven't really worked it into their practice so that's really important for us and i think You know, J.D., if you wouldn't mind, add a little more color if you could.
spk08: Yeah. Good morning, Doug. I don't think the change in revenue recognition is something that we view as impacting revenue growth and opportunity. You know, the way I would look at kind of Q4 to Q1, given some of the shift, is probably obviously We now expect a little bit better revenue performance in Q1 than we otherwise would have. I think traditionally there's a bit of a drop-off from Q4 to Q1. I think we would expect it to be better. significantly less with our business because of the revenue change. And then, you know, importantly, Doug, you know, we look at the business, the makeup of the revenue is a key area of focus for us. In other words, you know, the stickiness of revenue is one of the things we take closest attention to in terms of the health and forward-looking opportunity. And I think that's where this business is going to continue to drive as we move through the rest of this year. You know, we could definitely go out and continue to meaningfully expand points of sale, But as a new category, despite receptivity, we know that's not going to be something that becomes sustainable. We've got to help these practices take to the product and integrate it in a way that fits within each practice. And that's going to be the focus and how we drive this business moving forward.
spk10: But I guess sort of the question that I think i've gotten and trying to understand is how should we think about the performance and measure progress from q3 to q4 um in the context of the the sort of shift because obviously before it was easy we could say okay revenues were up 20 sequentially the question i've got now is you know revenues look flat so we get the one cue but how do we feel confident about the overall trajectory in the context of what, on the surface, looks like flattening. Thank you.
spk07: Mr. Yeah, Doug, I get it. And on the surface, with the change in how we're recording revenue, yes, it would look flat. But those orders were in the fourth quarter. Those sales occurred in the fourth quarter, and now they're being simply recorded um, in Q1. And again, we'll be more forthcoming later on the revenue trajectory. But the other, uh, thing to keep in mind is we're in a number of important business development conversations and any one of those are likely to have an impact on the near term future. So we don't want to get over our skis. Um, We like what we're seeing. We're going to be out later on with more information to help in the modeling. But again, as I mentioned to Louise, I think our revenue trajectory will look similar to how it did last year in growth. But again, in the first quarter, we're going to be careful because we are driving that reorder business, and we want to be mindful of that because we're not spending nearly as much as what the consensus would have out there because we have no competition. So there's no need for us to worry about bundled rebates to physician practices with this product. So we are developing leverage within the P&L so we can grow consistently and carefully.
spk10: Okay, great. Thank you.
spk04: Thanks, Doug.
spk00: And we'll take our next question from Greg Frazier with Truist Securities. Greg Frazier Good morning, guys.
spk09: Thanks for taking the question. Once a practice, an FAA's practice is on board and ordering, how much attention does practice require from the rep? Clearly, your focus is shifting towards supporting the current customers. I'm curious what percentage of time reps will be devoting to ordering customers going forward versus what they have been doing previously.
spk07: Yeah, once we see a cadence where we're getting, you know, few patients per day you know I think that can be roughly 10% of their time you know not a major you know part of their day but you know right now most of our practice ours aren't really giving us two a day or one a day so we spend a lot of time on events with them and trying to you know bring in their local influencers build the momentum and And then also we've got to train the practice, which is quite easy for this product. And quite frankly, we're getting a lot of help from the front desk in the assessment, which is unusual because it's very easy to diagnose, if you will, and look for a very interesting result with this product because we're happy to provide samples so there's no risk to the patients. So, you know, at the end of the day, it shouldn't require too much of their time. But right now, depending upon the size scale of the practice, you know, it could be a fair amount of their time driving it through and camping out for a while. But there's no replacement for the early boots on the ground here.
spk09: Got it.
spk07: Okay.
spk09: Can you talk a bit more about the runway and the options that you're considering to strengthen the balance sheet and then on business development? maybe some color on the types of things that you're looking at. And do you have to strengthen the balance sheet before moving forward with, you know, before moving forward with one of these deals that you're contemplating? Thank you.
spk07: Yeah, certainly from a cash and covenant perspective, we're comfortable for the year. I think, you know, when you look at single product companies, I think it's very clear that you need to leverage that base of expertise. And I think if there's one thing that is very clear is our sales organization has really crushed it in introducing a whole new category and carving out sales where there was nothing. So we really want to leverage that team, and we are in a number of conversations right now that I think give us a lot of confidence that we're going to get there.
spk00: And we'll take our next question from John Vandermosten with Zacks.
spk02: Good morning, guys. I thought I'd explore how the e-commerce platform is going and what are some of the hurdles, I guess, that you've seen so far with that and, you know, what do you expect going forward?
spk07: Yeah, John, thanks. And, you know, that's really a key part of our revenue build as we go through the year is And I'll let J.D. elaborate on it in a few moments. But, you know, this will be, you know, the sort of final piece that we were really missing from the very beginning of our launch, both into eye care and then into aesthetics. And that's the ability to create a subscription model, which is really what, you know, the telemedicine companies have down to a science. So, you know, J.D., you want to take it a little bit?
spk08: Yeah, yeah. And thanks for the question, John. So we are currently in the midst of ongoing testing. And I think that's been a really important part of the rollout for us. You know, anything technology driven, and we've seen this, you know, time and time again, across the industry, but we got to make sure that this is working, the bugs, the simplicity, the efficiency, et cetera, both from a provider or customer standpoint, but also from a patient perspective. And so we're spending time right now ensuring that all of that is working. And remember, this is a fairly unique and complex platform in the sense that we're able to connect patients that are coming into offices that we otherwise would not have direct visibility or line of sight in terms of walking out the door with an up neat prescription or box in our direct dispense model and giving our business, but also providers the ongoing connectivity to prescribe and allow our pharmacy to pull through refills and ongoing customer orders. So it's going well. We're excited about it. And I think it's going to add, and Brian touched on this, a completely different dimension to the scalability of our business because we know from the original business model where everything was coming through our pharmacy, which still constitutes a nice piece of the business, that patient behavior results in refills. But when we're able to be connected with new patients starts in that way, we're able to pull through refills. So it is going to be a meaningful addition and enhancement. And I think a value add to both patients and providers. Okay, thanks.
spk02: Thanks, Judy. Yeah, I'm getting the message throughout the whole business. It's really a big focus on the reorders and getting customers to stick with the product. You know, as I do my work, I frequently see your social media ads and want to ask about that. How are those campaigns doing, and how do you see the effectiveness of those? And, you know, is that the best place for your marketing dollar? What are your thoughts on that, and how do you sense that it's working?
spk07: Yeah, John, you know, great question. And I'm going to flip it to JD. But I think, you know, the social media is very interesting. Most of what you see is from our providers that are posting results within their own practices, whether it's on actually themselves, for the most part, or in fact, some of their patients and also its influencers that are, you know, managed or treated at the practices. But I think the real opportunity for us is in the total scheme of consumer awareness. I don't think people know this brand really exists yet. So, J.D., you want to add to that? I know this is a topic very close to your heart.
spk08: Yeah. And, look, I think, you know, one of the questions, John, is, you know, is that the most effective use? of marketing dollars. And, you know, I think you can tell, right, we're trying to create operating leverage here and be disciplined in our spend. And so one of the ways that we are able to do that is through providers driven social media, because that's not something that costs us a lot of money in terms of deployment of cash and investment. That's more of an organic investment. marketing tool that we can leverage based upon the experience and enthusiasm of this product being introduced to a practice. And I think where it really helps us is continuing to raise not just broader awareness in terms of patients that are going to new practices that are added and having the ability to learn about the product, but also the consistency of experience across a growing number of accounts. This is not something that is just a handful of practices that we're prompting to post great before and afters. This is becoming a routine part of how each practice introduces the product to their patient base, and I think it's helping. You know, at the end of the day, we've got to expand the top of the funnel and help practices pull through that expanded top of the funnel. And it's a little bit of the traditional push-pull concept. So we leverage their social media to introduce patients. And then we're in there rolling up sleeves. figuring out the most efficient way to make this a routine part of what they're doing because of the patient satisfaction and the results that we're getting as we continue to expand the new patient start piece of our business day in and day out. Great. Great.
spk02: Thanks for that. And also want to ask about gross margin. You know, we've seen inflationary pressures throughout, you know, the last couple of years. and your gross margin has been very strong. Where do you see that in the next year, in 2023, you know, as some of those pressures continue? Does that affect your pricing decisions at all? Or, you know, just maybe you can give us a rundown on how you're looking at that and what pressures you're facing.
spk05: Yeah, John. Hey, good morning. It's Mike DiPietro. Yeah, I think, you know, we're not seeing, you know, a tremendous impact from inflation. You know, our our primary costs are kind of locked in. So I think what you're seeing from us now, low to mid, you know, 70s from, you know, gross margin on our product sales, you know, I think that's mostly locked in at this point, you know, certainly in the near term.
spk07: You know, and on the pricing front, you know, I think when we roll out the e-commerce platform, Elevate, you know, I think we're going to have a lot of pricing options for the consumer. So while you know, we enjoy a pretty good price right now and the practices and the providers enjoy a very good margin, we will be able to reward continuing customers with many more price options, you know, if they find that price is an issue. So I think we really look
spk02: Okay, and just to follow up on that, if I may, if we look at the second, third, and fourth quarter gross margin, as you said, Michael, it's in the mid-70s approximately. Should we see 2023 levels flat with that, with the second, third, and fourth quarter, or might it go up or down a little bit from there?
spk07: It might improve a tiny bit, but not much. It's pretty much as we described. Okay, great. All right, thanks.
spk02: Thank you so much.
spk07: Appreciate it. Okay. Operator, next question.
spk00: Thank you. We'll take our next question from Balaji Arasan with Barclays.
spk04: Hi, good morning. This is Shell on the call for Balaji. Thanks for taking our questions. I remember you mentioned the 1,000 reordering account exiting Q3 and 600 exiting Q2. So maybe I missed a number, but what does this number look like for Q4? And do you expect similar updates for the rest of the year? Thank you.
spk07: Yeah, so I want to make sure we have it right. So, J.D., do you remember the new account growth that we saw in Q4 over – I'm not sure. Zhao had nearly 1,000 accounts.
spk05: It was from 3,500 to 4,300, I think, is the cadence in the new account openings moving from September 30 to December 31 in aesthetics.
spk07: Perfect. Okay, good. So I think as we look at 2023, we're going to be a little more careful in opening new accounts. I think we want to slow it down a bit. We're not in a race here. uh... with anything anyone but ourselves and uh... you know again we're going to be spending more time with the accounts driving it driving that sticky reorder business so we know we're adding new accounts every single day uh... this quarter uh... and when we come out with our first quarter results will be a meaningful uptick but i don't think it will definitely not be at the same pace as it was last year uh... Lots of people want the product, and we're just going to get to the people that are going to commit to us the most time and energy first.
spk04: Got it. Very helpful. Sorry for my confusion earlier. I need to say that, you know, you had like 1,000 reordering accounts exiting Q3 and 600 reordering accounts exiting Q2. So could I have the specific reordering account number exiting Q4? And that's the original question. Sorry for asking it in the wrong way.
spk07: Okay. Unless JD has it on his fingertips, we're going to have to follow up with you after the call on that specific number.
spk08: Yeah. We'll close the loop on the specific, but it's about the same absolute growth that you saw from Q2 to Q3. That's very helpful. Thank you. Right around, you know, 1400 or so.
spk00: And once again, if you would like to ask a question, please press star one. We'll take our next question from Glenn Santangelo with Jefferies.
spk06: Oh, yeah. Thanks for taking my question. Hey, Brian, I wanted to follow up on this telehealth business that you're sort of introducing here. Are you willing to disclose at this point who the two national providers are and And what I'm trying to get a sense of is how this business model is going to work. Are they going to send the scripts to you and you're going to do the fulfillment or are they going to do it? You know, I'm just trying to want to make sure I understand how the revenue recognition around, you know, this new initiative will work. And I'm kind of curious to get your thoughts if you think it can be meaningful here in 23 as you get it off the ground.
spk07: Yeah, Glenn. And good questions and good morning. I hope you didn't have to wake up extra early for this, but the two telemedicine providers that we're working with now are Skin Solutions MD and Roe. Both of them are very different. Both of them different in scale, scope, but have a meaningful presence and a bit of good history here in working in telemedicine. The way it works is we're treating telemedicine as an aesthetic account. So we are shipping to them. When they receive the product, we'll record the revenue, and then they will be selling it through their channel, through their providers to their patients. So, you know, the patient needs an assessment. That's done by the telemedicine provider, and they handle all the shipping. So In terms of efficiency, they may be our most efficient channel, if you will, because they handle fulfillment and shipping to the patient. But we treat them basically as a provider.
spk06: Okay. Maybe if I could just follow up with just two quick financial questions. I did want to follow up on the business development question because it seems to When you prepare the marks, you seem to suggest that, you know, something may happen in 2023. And I think, you know, we're looking at the cash on the balance sheet, you know, looking at the SG&A you reported this quarter and just wondering how would you expect to finance something like that? You know, would your covenants allow you to take on more debt or, you know, it's hard for us to think about the size of anything, you know, that you may potentially do. And then my last question is, is really around the lack of guidance. It sort of seems like the aesthetic business is up and running and, you know, now clearly established and, you know, maybe with a much better line of sight than what you had, obviously, last year. And so I'm just kind of curious as to what the logic is as to not provide guidance at this time. Thanks.
spk07: Yeah, and I think the main logic is it all circles back to some extent to business development and also the fact that we're a brand new category. So, While we're putting our head down right now, driving that reorder business, and again, all the metrics there from our perspective are really very promising. The other component of this is right now our sales force is spending 100% of their time driving up Neek. If we bring in new programs or new products to leverage the team, that will take a little bit of time off of Neek, and obviously they'll need to put it on the new program. And that's a lot of the conversation that's happening as well right now. There's also an opportunity in iCare where we are talking to people about do they want to go back into it with their platform because they're looking for the same thing we're looking for in aesthetics. And I think ultimately if the model looks good and it makes sense, we can talk to our lender about increasing the debt. But we don't want to increase debt and we don't want to do another offering. What we want to do is... operate as efficiently as possible, drive leverage off the P&L, and we're doing it right now, and bring in programs that can help absorb our basic model right now and with additional revenue streams. And, again, there's a lot of those conversations ongoing right now, so guidance for me at this point would be premature.
spk06: Okay, thanks for the thoughts.
spk07: Okay, thank you.
spk00: It appears that we have no further questions at this time. I will now turn the program back over to Brian Markson for any additional or closing remarks.
spk07: Brian Markson Thanks, Operator, and thanks, everyone, for listening in to our call today. You know, I think it's really important to keep front and center the fact that we are a unique product in the marketplace. We do not compete in the traditional aesthetic markets of fillers and toxins. We are a very simple product to administer, and we make everybody look better who gets it literally within minutes after they've received a sample. So we're excited about our product. We love the growth we're seeing, and I want to thank again everyone for sticking with us and listening to the call today. Thanks, operator.
spk00: That concludes today's teleconference. Thank you for your participation. You may now disconnect.
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