So, again, a true tech play, tech enablement of helping pharma connect directly to consumers. And what we love about this is, as you know, David, we’ve been working on the consumer patient side for a while. We hadn’t figured it out right. We met this company and saw how well they did and thought, okay, channel partnership enabled. We know that kind of business. We really like that kind of business. They can measure it true connectivity. We know that’s a key variable. They also have a patent on the process which as we’ll get into in subsequent quarters will be very relevant relative to the reliance on the cookie going down or away into next year in 2025. So we think we’re going to have a competitive advantage there. So think about what pharma is dealing with.
It’s very hard to get to the consumer. It always has been a challenge. Adherence is one of the largest challenges they have. But our hope is we will be messaging to the doctors, we will be messing to the patients. And when the two come together, you get a higher outcome, you get a good communication path between the two, which just means the patient’s more likely to start and stay on therapy. Let me hand it over to Steve. Relative to the first part.
Steve Silvestro: Yes. I mean some of the synergy that we saw immediately in terms of revenue potential was Medicx. Sort of a jewel in the crown of the Medicx business is the audience creation component. So they’re using a methodology very similar to ours that’s tech enabled to create the audiences of patients that they want to subsequently target and message. What we’ve done on our side, David, as you know with DAAP, is we’ve done that same creation of audiences, but it’s dynamic, meaning it’s real time, it’s refreshing on a real time basis. So bringing those two methodologies of audience creation together with disparate execution capabilities is really the unlock in the business. So I think that’s where we see it. On the pharma side, the DTC spend so the patient marketing dollars generally are four to five times that of HCP.
And so we see know we’re getting that growth back. Now on the HCP front, we’re encouraged by the capability and the opportunity we see on the DTC front. And as you heard Will say really now we’re communicating in a closed loop fashion. Meaning we’re communicating from the same audience structure or technology to the HCP to the patient and then measuring the transaction between those individuals in a feedback loop that enables us to optimize the communication going forward and again in real time. So I think it’s really an exciting time for the business on the product front, the marketing front and the revenue potential growth is really exciting.
David Grossman: And just to be clear, Steve, so are the decision makers on the DTC versus the ATP side within the brand? Are they different infrastructure, same organization or different?
Steve Silvestro: It’s so within a brand you’ve got an HCP marketing lead and you’ve got a patient marketing lead. Both report generally to the P&L owner of the brand and so at a high level. As you know, we’ve been dealing mostly with brand managers, not HCP marketers. That’s been a deliberate choice on the OptimizeRx front. We’ve seen, obviously, the growth now from that. The good news is that’s the same decision maker that would make the decision on the patient front, albeit they’ve got a delegate in the patient marketing spot, but it’s those three folks that you want to engage in the conversation.
David Grossman: Got it. And just one, sorry to ask one more question here, but just for Ed, just on the cost side, I think maybe Will, you had said that you were halfway through the cuts. Need to mention at all what kind of cost tailwind we have in 2024 versus 2023.
Edward Stelmakh: Yes. So as Will said, we’re more than halfway done with the cost cutting initiatives. We’ve got the rest of it figured out and well on its way to be pulled through this year. It’s all baked into our current projections for next year. So the guidance of being 10% or better adjusted EBITDA has that baked in.
David Grossman: Got it. Okay, guys, thanks again.
Steve Silvestro: Thanks, David.
William Febbo: Thanks, David.
Operator: Thank you. Our next question is from the line of Neil Chatterji with B. Riley. Please go ahead.
Neil Chatterji: Good morning, guys. Thanks for taking the questions. A lot of mine were already asked, but just in terms of gross margins, we saw some improvement there in the quarter. Maybe just how should we think about gross margins kind of closing out the year and into 2024 post the acquisition?
William Febbo: Yes. Hey, Neil, good to hear your voice. Because of the pick up on the DAAP, which has some architectural work up front, we had a nice positive impact on gross margin. We should see that through the end of the year. And I would say we will stay within our current ranges on gross margin just because at this stage when we’re starting to see growth come back, it’s going to be important to do what the clients need. But if we look at the seasonality, I think you’re going to see a very similar trend. We’ll have a lot started going into Q1, which is great, and then we’ll probably start more in Q2 on new clients that come out of the RFP season but really happy with the improvement to the range we’re in with gross margin and obviously see it drops right down. We also think and Medicx should have a positive impact as well, but it’s still early on that one.
