Douglas Bryant: Well, just generally, as I say, the orders are up. So really, what drives the growth rate after that is the speed with which we get the installs done and the customer — test of record. But we do expect a tick up in Q4 on the Labs business. And frankly, this is maybe a little bit too much detail, but every Friday, I see exactly what we closed. And I have seen a ramp up in terms of the order rates. So that’s my visibility to it.
Patrick Donnelly: Okay. That’s helpful. Appreciate guy.
Operator: Thank you, Patrick. Our next question is from Alex Nowak with Craig-Hallum.
Alex Nowak: Yeah. As I mentioned, we That actually just staying on that last topic there, the Labs business ramp in Q4. Is there any geography in particular that’s driving the outsized growth? Is it China perhaps? Obviously, a lot of focus there. Just what’s the thoughts.
Douglas Bryant: Yes. As I mentioned, we will be up around 25% in China alone. And for the year, I think we’re high teens in terms of growth 2023. So China clearly is back on track. It is a growth driver for us. And of course, the other major driver is the U.S., what happens in the US. because of the size is particularly important. So what we’re seeing and expecting to see is driven by China and by the US.
Alex Nowak: Okay. Got it. That’s all my side.
Joseph Busky: Yeah. Go ahead, Pura, I was just going to add that most of the regions are going to be up sequentially, Q3 and Q4. But the year-over-year growth, as Doug said, there’s a lot of it has to do with China and the lockdowns we saw last year, obviously, lifted.
Alex Nowak: Okay. Got it. Thank you. And then so on Savannah, what has been the feedback so far at the FDA? And I’m sure they’ve had questions around the submission. And I’ve honestly forgotten, is this going to be a 510(k) or an EUA that we should get the approval at the end of this year?
Douglas Bryant: Thanks for the question, Alex. We’re super confident that we’ll have approval for the box. And it will be approved 510(k). We’ll pursue CLIA waiver at our earliest opportunity. But it’s not going to be in EUA.
Alex Nowak: And that’s 500 for the RVP 4 as well, just to confirm.
Douglas Bryant: That’s correct. So RVP 4 would be cleared, HSV obviously is under active review as well.
Alex Nowak: Okay, perfect. And then just an update on the high-volume cartridge manufacturing line. Thank you.
Douglas Bryant : I don’t have a further update. We’re still targeting everything on track for midyear next year.
Alex Nowak: Excellent. Good to hear. Thank you.
Douglas Bryant : Thanks, Josh.
Operator: Our next question is from Jack Meehan with Nephron Research. Your line is now open.
Jack Meehan : Thank you. Good afternoon. First, I hope you feel better soon. I wanted to follow up on some of the fourth quarter guidance questions. Maybe just looking at the margin profile in the fourth quarter. I think the guide implies something like a 40% EBITDA margin. If I just look at the history of the company, it’s somewhat unprecedented outside of the COVID period. So I think I heard SG&A within more like 2Q. Are there other factors you can call out?
Douglas Bryant : I’m super happy that you asked that question, Jack, because no, we’re not going to do 40% EBITDA in the fourth quarter.
Joseph Busky : Yes, Jack, there must be a disconnect somewhere because it should be more like mid-30s. It would not be — and that’s pretty much — I think last Q4, we were at 32%, 33%. So it shouldn’t be size 40.
Jack Meehan : Okay. I’ll play with the model. But even getting to a mid-30s EBITDA margin, still pretty healthy kind of relative to the pro forma that if you put together the two companies, historically, just talk about going from 23% in the third quarter to that level, what drives the step up?
Joseph Busky : As I said before, is the increase in respiratory revenue, which carries high margins and then expense management. I said in the prepared remarks that the — we expect the SG&A in Q4 to come down to closer to where it was at Q2 levels. So we’re expecting a drop expense.
Douglas Bryant : Yes. And maybe this would be a good time to comment on this. We’ve talked before with everybody on the phone about the idea that we started with Harmonization. We went to integration we had two shots on goal with cost synergies, projects that we called Synergy 1.0 and 2.0. And some of those things are finally showing up in the fourth quarter. So that’s a factor. But Jack, after only 18 months as a combined company. We know what needs to be done. We understand the levers we need to pull, and we’re in the process of identifying the initiatives that we will need in order to execute moving forward. At the end of the day, we can run this business better, and we expect to run this business better, which will result in EPS growth over time.
And I think you’re seeing the beginning of it in the fourth quarter, and I would expect us to be able to report to you our expectations for the efficiencies that we will gain moving forward. But I can’t emphasize this enough. We know what needs to be done.
