Michael Polark: Thank you.
Operator: Thank you. The next question is from the line of Suraj Kalia with Oppenheimer. Your line is now open.
Shaymus Contorno: Hey. This is Shaymus on for Suraj. Thanks for taking our questions. I’ll just ask both up front. For the Philippines IDTF, can you guys quantify what percentage of scripts are being sent there so far and what percentage of your commercial payer mix has agreed to be moved to the Philippines IDTF at this point? And then kind of following up, in the guide, can you give a little bit more color to the adjusted EBITDA build for 2024? What are you assuming in terms of stock-based com, transition costs, et cetera? Thank you.
Quentin Blackford: Yeah. So I’ll hit the first one with the Philippines. Brice can jump in on the second one. The Philippines, we set up that Global Business Services Center really focused on the back office more so than the clinical ops function, if you will, right? So think about that as finance, HR, IT, customer care, leveraging a bit of outsourced capabilities there. But that’s really the intent of the Global Business Services Center. To your point, a lot of what we continue to process from a CCT or an IDTF perspective continues to be back here in the States. Unless we do get a consent from a payer, then we can leverage an offshore capability or a third-party capability. So Philippines is primarily those other back office functions and we’ve had great success getting that stood up, great success in terms of their focus on quality of work and the process excellence that they bring.
And as Brice pointed out earlier, it’s driving a nice improvement in the margin profile for us already here in 2024 and we’ll continue in 2025.
Brice Bobzien: Perfect. And maybe I’ll take the second one there on the adjusted EBITDA build. This is the way we think about it. If we think about just walking down the P&L, gross margin, I gave in the prepared remarks, the 68% to 69%. When you get to midpoint, it’s about 120 basis points or so of benefit that you’re seeing from gross margin. On the OpEx side, it’s about 250 basis points and then if you start to do the math, where does the rest come from? The rest really comes from depreciation and amortization, and most notably, depreciation and amortization, which is up in our standard operating expenses. However, it’s non-cash. That’s growing at a rate much north of what the rest of our operating expense is. So that’s effectively 100 basis points, though that comes out of adjusted EBITDA — from a pure adjusted EBITDA margin calculation.
So the other thing I would say, as you think about stock-based comp in 2024, we expect that to grow about in line with the rest of operating expense, maybe a point or two north of that. Again, it’s removed from adjusted EBITDA, but that’s the way I think about stock-based comp. The other piece is, as I think about business transformation, we are exclusive — we’re effectively finished with our Philippines IDTF and there’s nothing specific that we’re calling out from a business transformation expense standpoint that we’re expecting to remove from results in 2024. So no specific guidance there. We don’t see much in the way of need at this point. However, we’ll certainly bring you up to speed should anything change there.
Operator: Thank you. At this time, we have no further questions remaining in the queue. So I will turn the call back over to the team for final closing remarks.
Quentin Blackford: Great. Well, thank you for joining us today. 2023 was a transformational year for us and I want to thank our team members for their hard work in transforming our company as we build the foundation to capitalize on the opportunities that sit in front of us. We couldn’t feel better about how we are positioned as we head into the year of 2024. We’ve got numerous tailwinds that exist in the business, including primary care, the sleep pilot, our Know Your Rhythm pilots, asymptomatic screening, a full year of monitor, ramping international growth and CAMELOT continuing to become more and more popular in the marketplace. Our future has never been brighter. We look forward to connecting with many of you over the next couple of months and we’ll talk soon. Take care.
Operator: That concludes today’s conference call. Thank you all for your participation and you may now disconnect your lines.
