Jason Clemens: Yes. I’d say to take that last part first. It’s probably up a point or two. So the 79% that we just reported, we think it’s up a couple of points as we exit 2024. Regarding pumps, the tubeless pumps that we are putting out, which are Omnipod 5s as well as a new entry, Beta Bionics, I mean, we’re running those through the pharmacy. I mean, we’re tapping our pharmacy capability and running those through the pharmacy channel today. So there really is no differential versus like a DME channel because those products are really going through pharmacy.
Pito Chickering: So what percent of your revenues for diabetes are pharmacy versus DME? And I guess if you’re guiding the whole sector to be flat for the first half of the year and the growing loads in the back half the year. Any sort of color on, how would you think about DME growing versus pharmacy?
Jason Clemens: Yes. I’d say, Pito, we haven’t. We’re not ready to put out a split of revenue on pumps – tubeless versus pump here, I am sorry, tubeless versus tube-based. But I will say for the quarter our new starts, it was outweighed in tubeless and so that will take some time as you get a pretty long length of stay for pump patients. That will take some time for that to start equalizing. In terms of getting back to growth in the second half, really you got two factors. You got the pump pressures we think will be heavier in the first half and lighter in the second half. And then secondly, in CGMs, we think growth will be lighter in the first half as sales team starts ramping, and then we’ll deliver in Q4, so Q3 and Q4. So we think the second half is going to be stronger than the first.
Pito Chickering: Okay, great. And then sort of – two more sort of quickies here. The other revenues are sort of pretty big driver in the quarter. Can you just remind me what other is? And then free cash flow conversion, is this like the right ratio for the next couple of years about sort of 24% free cash flow conversion versus just an EBITDA?
Jason Clemens: Yes. On free cash, that’s an easy one. And the reason is we think that conversion from EBITDA down to cash flow from operations and then just better CapEx efficiencies, you’re getting to that same place. And I’m sorry, Peter, the first part of the question was related to…
Pito Chickering: It’s revenues in other, I guess can you just [indiscernible] this quarter?
Jason Clemens: Yes. So historically and currently other included items such as e-commerce, hospice, orthotics. So it’s kind of a grouping of various lines of business. Since July, it also includes the PMPM revenue from capitated agreement. And so that’s why you’re seeing a large growth in Q4 over Q3 sequential.
Pito Chickering: Makes sense. Thank you very much.
Jason Clemens: Thanks, Peter.
Operator: Thank you. We’ll take our next question from Kevin Caliendo with UBS. Your line is open.
Andrea Alfonso: Hi, good morning, everybody, it’s Andrea Alfonso in for Kevin. Thanks so much for taking the question.
Andrea Alfonso: I actually, just as a follow-up to those last set of questions. I guess on free cash flow, you talked about some of the moving parts there that underlie your expectations for 2024. If you sort of just single out certain improvements like cash collections for example, how do you think about the next tranche there of capturing some of those benefits? And maybe if there are any working capital commitments from the ramp of Humana, how do you balance those improvements against that? And then I had another follow-up question.
Jason Clemens: Sure. Andrea, good morning. I’d say firstly in terms of DSO and kind of on the AR side of things, I mean, we brought DSOs down considerably over the last 12 months. And as previously discussed, that was really a result of big investment in technology, particularly in claims editor engine that we built as proprietary tech that we own and operate. And that was just a home run of an investment. And that’s really the people and the processes within the rev cycle have brought down DSOs. We are not anticipating much of a shift in DSOs versus the 2023 by quarter. We are however actively investing in particularly the denial management portion of rev cycle. We’ve got big tech and new process going in there and so we’re not ready to talk about it.
But again, we’re investing millions and we will expect DSO improvement from that point. But you’re really looking more 2025. When you look at the other areas of working capital, you’ll know inventory a little better job in inventory management over the course of 2023, particularly at the end of 2023. We’re expecting that, whether you call it inventory management or CapEx improvement, we’re expecting half a point better on revenue over the course of 2024.
Andrea Alfonso: Thanks. And just again, a follow-up question on Pito’s prior question about the other revenue line. So if I look at kind of that $77 million or so that you reported on the sales line. Is that – how do we think about the cadence going forward? Was there some sort of a capture of an accelerated benefit that’s not expected to recur? Thanks so much for taking my question.
Jason Clemens: Sure. So that other revenue category, if you look at the third quarter of 2023 sales other, we reported $64 million of revenue, and that’s now up in Q4 to $77 million of revenue. So again, the PMPM revenue from capitated agreements is inside of that category. And so as we far outpace the patient transitions that we committed to as part of a key agreement in Q4, those cap deductions came down significantly. And that’s a top line and bottom line impact. So both good guys. So that’s the predominance what you’re seeing there in that sales other growth.
