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Barry Steele

Thank you rich and thank you everyone on the call for joining us today.
I'm going to focus on two topics including the main drivers for the current quarter's results in our current financial position and how it changed during the quarter. Now let me start with our financial results for the period.
For the third quarter 2024 our net revenue totaled $35.2 million. This was another all-time record and represented nearly 5% in sequential growth and an increase of 11% over the prior year.
The device solutions segment led the way reporting year over year quarterly increase in net revenues totaling $1.9 million or 15.3%. The patient services segment was not far behind with increased net revenue of $1.5 million or 7.7 %.
The growth in device solutions included a $1.1 million increase in sales of medical equipment which was primarily attributable to a large sale to one of our rental customers totaling $1 million. Rental revenues made up most of the rest of the increase for device solutions and included higher volumes related to a new rental customer added at the end of this year's first quarter.
Higher net revenue for the patient services segment included increased oncology net revenue totaling nearly $1.8 million or 11% due to higher treatment volumes and strong per billing cash collection results and higher wound care treatment revenue totaling 530,000 or 215%.
These increases were partially offset by lower negative pressure wound therapy equipment sales, due to a difficult comparison that included a surge in equipment leases in the prior year.
Gross profit for the third quarter of 2024 was $19 million which was $3.4 million or 22% higher than the prior year third quarter, our gross margin percentage was 53.9% representing a 5% improvement over the prior year third quarter amount of 48.9%.
This improvement was mainly driven by favorable revenue mix involving higher margin revenue such as oncology and rentals and lower negative pressure wound therapy equipment sales.
Selling general and administrative expenses for the third quarter of 2024 totaled $15.8 million representing an increase of $1.9 million or 13%. as compared to the prior year.
The increase which included higher accrued short term and long-term incentive compensation, and the first expenses related to our information systems upgrade, was mainly attributable to increased personnel and other costs associated with higher revenue volume.
Adjusted EBITDA during the 2024 third quarter was $7.9 million or 22% of net revenue which represented an increase of over $1.7 million from the prior year third quarter. The amount also was much higher than this year's second quarter amount of $6.1 million.
Turning to a few points on our financial position and capital reserves. Our operating cash flow for the third quarter totaled $9.8 million.
This amount was more than twice the amount for the prior year third quarter period and was more than four times the amount for this year's second quarter.
This increase was due to higher operating income that of non-cash expenses and a reduction in our working capital levels as compared to the prior year period when our working capital increased.
The increase for the prior year, you may recall was partly due to a high amount of sales type lease revenue for negative pressure wound therapy equipment. And due to the growth of a contract asset associated with the onboarding of the GE health care contract.
Our net capital expenditures were $2.9 million during the 2024 third quarter, which was higher than the $300,000 that we spent during the third quarter in 2023 but was less than half the amount for this year's second quarter.
The amount during the current period was focused on the purchase of infusion pumps needed to support increased volume in oncology and device solutions, rental businesses.
And for new negative pressure wound therapy devices needed to support revenue growth for our wound care business, all of which are expected to contribute to revenue growth during the 2024 fourth quarter and beyond.
We continue to anticipate that our overall capital spending requirements will moderate as compared to amounts required in prior years as the sources of our future growth will continue to be more weighted towards less capital-intensive revenue sources such as biomedical services, advanced wound care products and from initiatives, we have been pursuing to increase pump utilization including reducing the number of lost pumps.
We continue to be positioned well to fund continued net revenue growth with the growing cash flow from operations backed by significantly significant liquidity reserves available from our revolving line of credit and manageable leverage and debt service requirements.
Our net debt decreased by $6.4 million to $27.6 million during the 2024 third quarter and is $1.3 million lower since the beginning of the year.
This despite having spent nearly $1 million this year under our stock repurchase plan, our available liquidity continued to be strong and totaled nearly $47 million at the end of the third quarter.
Our ratio of total debt to adjust EBITDA was a modest 1.15 times at the end of the period.
Our debt consists of borrowings on our revolving line of credit with no term payment requirements, nearly 3.5 years in remaining term and with $20 million of the outstanding balance locked in at below market rates by an interest rate swap having the same expiration.
I will now turn the call over to Carrie.

Carrie Lachance

Thanks Barry. Good morning, everyone. Today, I'll start with a little background refresh on our strategy in biomedical system has long had world class biomedical service capabilities.
This because our core businesses involve owning and deploying a very large fleet of medical devices. Maintaining this equipment ourselves, saves costs and create significant efficiencies. Several years ago, an internal study indicated that our then quite small third-party biomedical business delivered ROIs amongst the highest of all of our revenue streams.
This launched an initiative to grow that activity and we soon acquired two small biomedical service companies to expand our capabilities.
Then in 2022 we were presented with the opportunity and entered into the Master Services Agreement with GE that work has further extended our capabilities. And in 2023 our biomedical services revenue increased significantly.
We have and continue to emphasis that our goal has not been to match maximize the revenue potential of working with GE but rather to leverage that experience and the national biomedical services network that it allowed us to build. To win smaller concierge service deals, higher margin work emphasizing our white glove services approach.
We are glad to be announcing progress in developing this strategic initiative. Last quarter, we announced the start of a substantial biomedical device remediation project for one of our largest device manufacturer partners. And today we are announcing another project leveraging the expanded capabilities.
This one is a field services agreement with Dignitana involving their scalp cooling system deployed in US chemotherapy infusion centers.
The work we will perform for Dignitana is similar to the work we do for GE under the MSA. Annual preventative maintenance and periodic service and repair of equipment in medical facilities. Often the same facilities already covered by our existing team of regional Biomed technicians.
This is a win win partnership for Dignitana and InfuSystem.
Dignitana gets an immediate and comprehensive solution for field service needs, obtaining best in class single source and highly responsive biomedical support. InfuSystem gets increased utilization of its national network with this leading not only to increased revenue but also to improved margins and profitability in our biomed business.
I'll make one more point before turning the mic back to Rich. Dignitana is the latest example of how InfuSystem is increasingly deploying its platform services model to grow its business by solving complex problems for its partners.
Health care companies are increasingly adopting such outsourcing and asset light models, and that is why InfuSystem is seeing so many opportunities to deploy its platform services. Other recent examples include Smith and Nephew coming to us for a last mile and billing solution for its negative pressure wound therapy offerings.
And Sanara partnering with us for the initial purpose of extending its advanced wound care products distribution into third party payer billing channels.
Back to you. Rich.

Richard Dilorio

Thanks Carrie. I'm going to start with a quick update on developments and pain management and then provide color around the recently announced exclusive distribution agreement for Chemo Mouthpiece.
On our pain business for much of the last two years, we've sought to communicate two key points about this business.
First, while we're seeing more success in pain than at any time in the past, the long-term potential we see in pain has been surpassed by the newer opportunities, particularly those we have been developing in wound care and biomedical services.
Second, one thing with the potential to change pains trajectory is NOPAIN Act which requires that a reimbursement code be created for non-opioid alternatives to treat post-surgical pain starting in 2025.
We said we need to see how big the reimbursement would be and how doctors reacted to it along with everyone else expecting their business to be impacted by the NOPAIN Act. We're still waiting on final decisions. But the current view is that we will not be seeing a positive impact at the start of 2025.
Among other things, the initial regulations define approved devices to include a laster pumps and not electronic pumps. While we're looking at the possibility of modifying our service offerings to accommodate the initial regulations and feel optimistic about the state of our current paying business and our customers.
Positive developments in other parts of our business continue to emerge and push paying to the back of the list of priorities amongst these emerging priorities is the recently announced distribution agreement with Chemo Mouthpiece.
Chemo Mouthpiece has the potential to be a huge opportunity for InfuSystem. The agreement signed and announced in September via our joint venture with Sanara MedTech is a great example of how the JV works and why InfuSystem is seeing more and more opportunities to wrap its platform services around other companies, products and services. InfuSystem is an ideal partner for chemo Mouthpiece.
We already have deep relationships with approximately 2000 cancer centers in the US, and we will begin to leverage our exceptional access to get the product in front of the decision makers inside these cancer centers quickly,
We also have the warehousing and logistics capabilities necessary to support the product, and the team of Chemo Mouthpiece is happy to have a partner with these existing relationships and resources.
About the product itself, Chemo Mouthpiece piece was developed by a cancer survivor that suffered through a very difficult case of oral mucositis and believe there had to be a better solution that led to his developing his company's product, which received 510-K clearance earlier this year and received an initial CPT code for reimbursement for the practice in July of 2024.
Chemo Mouthpiece is an oral cryotherapy device used to reduce the incidence and severity of oral mucositis in patients undergoing chemotherapy treatments. These painful sores can not only diminish the quality of life but can also interfere with patients chemo treatment by creating difficulties eating, drinking or taking medication.
All of which may lead to nutrition and hydration issues and potentially pause their treatment.
People familiar with chemotherapy probably have seen that patients are frequently given ice chips to help cool down their mouth during and after their treatment.
The intent is to reduce blood flow and thereby reduce the delivery of chemo to the mouth. Hopefully reducing the incidence of oral mucositis.
Unfortunately, ice chips often fall short of this goal.
We are going to distribute Chemo Mouthpiece to our existing sales team in oncology, supplemented by additional resources coming from device solutions and pain sales teams.
We have begun a phased approach, beginning with the largest cancer centers in the country.
This approach will allow us to focus and learn best practices for introducing the products to clinics and physicians.
We believe that once providers understand the health benefits and get comfortable with the billing processes and rates. Chemo Mouthpiece will see broad adoption in oral cryotherapy, utilizing the product will become common for cancer patients receiving chemo.
It's a big opportunity and we're going to prioritize it with all the effort and focus it deserves. We expect update shareholders every quarter in our progress as we begin to see customer acceptance and customer reimbursement experience.
That said as we are just beginning to market the product and educate customers on its efficacy. It is far too early today to know how quickly the opportunity will develop and how big it ultimately will become for us.
As we finish the year with strong momentum, we are reaffirming our annual guidance for the full year 2024 with net revenue growth estimated to be in the high single digit range and adjusted EBITDA margin to be in the high teens exceeding last year's margin of 17.8%.
Before we go to Q&A, I would also like to mention that you will see a form four for me is I put a 10 B5 one in place to sell a small portion of my shares this month for tax planning purposes. I without question, remain as confident as I've ever been in InfuSystem, our strategy and our future. Operator we are ready for the Q&A portion of the call.

Question and Answer Session

Operator

(Operator Instructions) Jim Sidoti Sidoti, Sidoti & Company. Please go ahead.

Jim Sidoti Sidoti

Hi, good morning. Thanks for taking the questions. With regards to the GE business, would you characterize that as being on autopilot right now, or is there a lot more of your attention that's needed to, to maintain that business?

Richard Dilorio

It's certainly up and running, You know, and stable. We, we've, we've hit all the devices now, probably almost twice now that this is the second full year which is good news.
So, you know, it'll never be on autopilot. It's a lot of work right to, to manage the team and where they go and, and how long they travel for, but yeah, it's pretty stable. I mean, it's, it doesn't take, you know, the people on this call, it's not taking a lot of our focus. Now it's just the team to go execute, which is nice.

Jim Sidoti Sidoti

And with regards to Dignitana, can you give us any sense on, on the magnitude of that, on, on the size of that revenue?

Richard Dilorio

Yeah, it's, it's under. A million dollars. So, it's not a huge, a huge deal in itself. I think what's nice about it is we get to utilize the existing team that we already have in place, so we don't have to add people to, to execute on it.
The good news is you should see more of these, both inside and outside of GE like Dignitana, you know, deals that range from, I don't know, half a million dollars to $2 or $3 million. Right? They're nice, they're profitable. We can leverage a lot of the team we already have. So this is kind of the first one, hopefully of many.

Jim Sidoti Sidoti

And then the last one for me, with regards to cash flow, you know, I have to look back to prior to 2019, to find a quarter where you reported this high of a free cash flow. Do you think this is the trend going forward or do you think this quarter was kind of an anomaly?

Barry Steele

But I would say Jim is that we certainly had a good quarter because our working capital didn't grow, didn't need to grow because we grew in the first half of this year. So that element that will ever flow our working capital as we grow, the top line will have to increase. And so, we'll use cash to do that. But I think one of the other things that is the benefit is that our just our profitability at the bottom line is growing our operating profit. And so that's we would expect to continue to increase the element of it. We'll, we'll continue into the future and get better.

Jim Sidoti Sidoti

So, it may not be you know, $6 million a quarter, but you expect a positive free cash flow going forward.
That is that right?

Barry Steele

Yes. Well, well, that's the operating cash flow for sure will ever flow but always has been positive, free cash flow depending on the how, how quick we're growing in certain areas could get be negative. For example, if we grew our oncology business in a order at 20% we would have negative free cash flow because we have to buy a lot of devices. But that means that right after that quarter, we would have really, really good cash flow. So you gotta be careful on that free cash flow calculation because the timing of our CapEx and the drivers from what growth we're experiencing has a dramatic short term impact.

Jim Sidoti Sidoti

Got it. Thank you

Barry Steele

But, but, but generally speaking, as we're growing the top line, we're definitely, if you look at a trailing 12, both operating cash flow and free cash flow are growing and our, and our model of free cash flow that we get out of the revenue because the capital expenditure requirements are decreasing is improving faster.

Jim Sidoti Sidoti

All right. Thank you.

Richard Dilorio

Thanks Jim.

Operator

Brooks O'Neil, Lake Street Capital Markets.

Brooks O'Neil

Thank you. Good morning. Can you hear me? Okay.

Operator

Sure can. Good morning Brooks.

Brooks O'Neil

Good morning everyone. So, I just wanted to follow up on Jim's line of questioning there. I was a little surprised by the magnitude of equipment purchases this quarter.
Obviously, as Barry said, that's going to happen flow, but would you expect to continue to need whatever it was $10 to $12 billion of equipment purchases to sustain the growth opportunity. You're, you're seeing out there in that business.

Barry Steele

Yeah. Brooks that like the actual equipment purchases this quarter was only 2.8 million. You're probably looking at the full year-to-date number. So it was much, much lower than it was last quarter. Yeah, it was much lower than last quarter. And keep in mind we have to buy devices in advance. So and we're still growing. I mean, oncology grew nicely. It's like 10% this quarter. So we have to have devices to support that additional growth. Which then next quarter, we won't buy devices for that particular revenue we added and that will then become just good solid new cash flow that we get. So, the other thing is that we, that we bought some devices for the Negative pressure program. We have the Smith and Nephew relationship that you may recall us talking about. And then even your pay management is growing a little bit too. So, we buy some devices for that business.

Brooks O'Neil

It makes makes total sense. Should I interpret? I I was listening to carry talk about the biomed business, which I personally think is very exciting. Should we interpret the comment to, to suggest that the pipeline of potential future opportunities is pretty robust in that area?

Richard Dilorio

Yeah, I think that's a good way to interpret it, you know, we, we had held off, I think we had mentioned on these calls that about a year ago, we were still holding off on other opportunities because we're still trying to get the GE program stable to Jim's point earlier.
So now that that's up and running and, and the team is executing on it, and we have our feet under us. Now, we can go add the Dignitana the type of deals as well as other opportunities within GE that's that, you know, they're, they're still there as well. So, you know, my expectation Brooks is that Dignitana is the first one you'll see.
Actually, we had the pump me for a big manufacturer too. So, there's really two in the last quarter or so. You know, we won't get five of these a quarter, you know, they, they're, they're relatively big deals, but when they come in, they'll be very profitable, easy to execute the teams already in place. So, yeah, there is a pipeline of these behind, you know, the magnitude of each deal and when exactly they, they close, we'll let you guys know and give you some visibility into that as it happens.

Brooks O'Neil

Great. And then the last thing and I might have missed this, I'm jumping a little bit here this morning. But did you give any parameters on the size of the potential Chemo Mouthpiece opportunity? I think when we talked about it in the past, I was quite surprised at how big that could potentially be for you. I know it's not going to happen immediately but just want to think appropriately about what the long term opportunity might be for you in that area.

Richard Dilorio

Yeah, so we, we don't really have an internal expectation yet that we've talked about. I think if you look at the TAM, it's huge, it's, you know, half a billion dollars kind of thing. If you just multiply the number of patients that, that could use it times the price of the device, you know, we, we think the potential is huge, moving forward.
What we don't know yet is, you know, how reimbursement comes in for physicians, how the customers accept the product. How do you know, do patients like it as much as we think they will? So there's still a lot to be done. But the initial reaction and response from customers has been great. So what does that potential mean? I don't know, it, it's not hundreds of thousands. If it works, it's in the millions, but we have a long way to go before we get there. And I think I said in my prepared remarks, you know, as soon as we get information and we start to see that process move, we'll give you guys visibility to that for sure. But it's, it's, it's, it's an unbelievable opportunity just because of the type of product there reimbursement for the customer. There is no real gold standard besides ice chips that really just don't work.
So, you know, all the pieces of there to be able to have a tremendous opportunity. We just have to see if they all fall into place.

Brooks O'Neil

Sure makes sense. Congratulations on a terrific quarter and thanks for all the information.

Richard Dilorio

Thanks Brooks.

Operator

Kyle Bauser, B. Riley Securities.

Kyle Bauser

Great. Thank you for taking my questions, maybe just following up on, on Chemo Mouthpiece there, I know there's still a decent amount to learn here, but in any sense to kind of timing on, on when things could become material and, and maybe more importantly, the kind of expected margin profile, I imagine it would be a creative to the business or at least kind of in line. I just kind of curious.

Richard Dilorio

Yeah. So let me let me take those in reverse. So, margin should be accretive to our EBITDA for sure, even even after we split it with Sanara through the JV, I think on the timing, we expect nothing this year, so nothing in in our current guidance is key, a multi piece related.
It'll just take us a little while to get customers and get, you know, sit down with them and get purchase orders. We expect it to contribute not a significant amount next year, but it's, it's not insignificant either. You know, probably a couple million dollars kind of thing next year. If it launches, well, it could be, much bigger than that. We just don't know. So it'll be part of our number next year because by the time we give guidance in the spring, late winter, early spring, we'll, we'll have our feet under us a little bit and we'll start to see what's going on.
And we'll put it in appropriately at that point. So it should contribute next year. We just, we're not 100% sure yet.

Kyle Bauser

Got. It makes sense. And, and it sounds like the, the standard of care is just ice chips. So there's really no direct competition out there for this product. Is that correct?

Richard Dilorio

Yeah, ice chips is really the, the first line of defense against this. And you know, that's why a nurse will come over with a couple of them and, and have the patient just have, hold them in their mouth.
There are some mouth washes that people can use. A lot of those tend to be kind of after the sores develop and, you know, at that point, it's painful. You have risk of infection. Like I said, there's hydration, nutrition issues, people have to pause or stop treatment.
I mean, these things are, you know, it's not just one mouth sore, there's multiple and they're just, they're not fun, so there really is no good standard of care beyond the ice chips to start. It's the same concept, right? This just does a much, much better job of cooling down the oral cavity and constructing the blood vessels so that the chemo never really gets to your mouth to create the sores and that's the concept behind it.
So, we believe in it, we've been talking to these guys for quite a while, and we think this this could become the standard of care. We just have to see how the adoption is from the practice level. But the opportunity is there, the need is there for sure for patients. This is a, this is not a minor side effect of chemotherapy, it's a massive side effect and it affects almost everyone on chemo. It's not just kind of our core colon cancer patients and oncology in theory, anyone that's taking chemo could be affected with this.

Kyle Bauser

Got it. Yeah, that, that sounds like a pretty exciting product. So look forward to digital updates there maybe on the margin side of the business. So, you're on track to delivering some nice expansion and hitting you got your goal of, you know, close to 18% or north of that for the year.
And it looks like most of that should come from a margin expansion on gross margin side of the business as opposed to kind of OpEx leverage. Let me see, increased third party payer collections and scale and sales mix. I mean, is that fair in order to kind of march towards this goal, which you're doing nicely, it's probably going to be more a function of growth margin expansion over the balance of the year.

Barry Steele

Actually, we, we don't exactly look at it that way because some of our businesses have quite a bit of variable cost down in G&A, for example, all of our TPP business, we have to spend money as we grow it to improve our volume of keep our, our capacity for billing insurance.
So, but I think there are fixed costs down in G&A that we definitely will leverage depending on what we're growing in. Some of our DME businesses like the rental business has very little G&A so that's where you could get some leverage. So, I think we would look at it more in, in, in positive product mix as we go forward.

Kyle Bauser

Okay, great. I'll jump back in queue. Thank you for the. Update.

Barry Steele

Thanks Kyle.

Operator

Matt Hewitt, Craig-Hallum Capital.

Matt Hewitt

Good morning and congrats. Excuse me, congratulations on the quarter. Maybe just one more question and I apologize if I missed this. But regarding Chemo Mouthpiece, as it's a joint venture, will you be recording the revenues or will you, you know be reporting that, you know, operating profit or how will that flow through the income statement?

Barry Steele

Sure, because it's a product coming through the partnership, but we are selling it. So all the revenue will be in our top line. You'll see a little bit of gross margin for us to pay certain bills that we can, we take on like commissions and things down in SG&A.
But then ultimately the bulk of our profit will be shown on the equity line, equity investment line with a line item that we do not have currently in our P&L but we'll, we'll have in the future as we get revenue on this product.

Matt Hewitt

Got it super helpful and then maybe one and I apologize if this was asked, but it does, does the outcome from the election have any impact on your business? You know, is if you think about, you know, shifting maybe a greater push towards home health care and, and the needs that are kind of ramping for that for that sector, does this election change anything there?
Does it maybe put more of a focus on it and just any thoughts post election on how that could impact your business? Thank you.

Richard Dilorio

Sure. So I I don't think the election impacts that. I think COVID had a bigger impact, right? It was already kind of moving that way to get people out of the hospital and then COVID just put a big spotlight that, you know, a lot of these patients, not just our patients, but a lot of patients don't need to be sitting in a hospital for various reasons.
So, I think everything was already moving there. I think from an election standpoint, we're pretty shielded to those kinds of things. You know, people have cancer, regardless of who the President is and who's in the Senate and who controls it. So, we, we're relatively shielded from those types of macro things, which is nice, right? Our business is just our business, and we don't have to worry about those kinds of things.

Matt Hewitt

Got it. All right. Thank you.

Richard Dilorio

Thanks, mate.

Operator

And our next question will come from Aaron Warwick with breakout investors. Please go ahead.

Aaron Warwick

Hey guys, congratulations on the great quarter. I had a question as it relates to the scenario, joint venture. Obviously, people are excited about this Chemo Mouthpiece for good reason, but just, you know, that wasn't the initial product that you guys were talking about with them. Can you, can you give some update as to like how the that initial business with them is going? What you expect as, as we start to turn the calendar to 2025 and, and the growth opportunities there?

Richard Dilorio

Sure, good morning, Aaron. So, I think with scenario, there's, there's three pieces to that JV to your point, the initial products, the BICOS and Highcos, which are the antimicrobial and the, and the collagen product. I think it's going great. We have those as part of our advanced wound care product line.
That's how kind of we refer to it internally. So, it's not just those two, those two are phenomenal products and a, and a piece of it for sure, but there's a lot of products that patients need to treat their wounds. So, we, you know, if you look at wound care for us, there's the, there's the BICOS and high call, there's other products needed to treat the wound and then there's negative pressure kind of all mixed in. But in addition to that with scenario, you know, they brought us Chemo Mouthpiece, they brought us radio, which we talked about, I think in August to treat radiodermatitis.
And then there's obviously the third piece, which is their tissue health plus initiative that I think is launching next year. So the the relationship is as good as it's ever been. Those guys are phenomenal at, at finding these types of products and opportunities, but the good news is at least in advanced wound care with chemo mouthpiece and radio.
Those are all either already launched or launching and all growing, which is nice.

Aaron Warwick

And, and how much have have those contributed to 2024? And, and what do you expect in terms of growth opportunities within in 2025?

Barry Steele

Yeah. So they're going to contribute quite a bit next year. We expect wound care to grow considerably. We're still working through the budget process now for next year. But, but it should be a big part of our growth will be in wound care if not the majority of it.
I think in 2024 the advanced wound care piece, they've done a really good job. Our team has done a good job of replacing that lease revenue we have from 2023 which was a few million dollars. So they had to overcome those comps, which they have and it will grow beyond that. So that business as a whole is still, you know, mid millions, right? $5 to $6, $7 million. But that should more than double next year.
That's the expectation, right?

Aaron Warwick

Yeah, that's what I kind of thought based upon your previous guidance and just wanted to clarify that since you had such a strong quarter and sounds like there's some huge opportunity in, in 2025 there as well. So that's great. And then in terms of the margins, you know, really impressive, even the margin. What are, what's our expectations be? I mean, I see the guidance for the year, obviously, there were some, it, it was weaker than that in the previous quarters than what we had in Q3, but on a go forward basis, you know, is there going to be that kind of inconsistency with the EBITDA. Should we start to see it get more in that 20% range moving forward or higher even?

Barry Steele

Would you try to take that?

Richard Dilorio

Sure. Yeah. So, so yeah, yeah, definitely. We were higher this quarter. As we look at the guidance, that sort of implies basically just slightly beating last year, which was a 19.7%. We would, we would point out that it is very typical for us to be lower in the first quarter generally because the way the business works, there's some seasonality to how we get paid. And how much revenue we can book on that couch in our TPP level business. And we have some expenses that sort of are heavier in the first quarter. So, you, so you should always look for the first quarter to be a little bit lower than say what we just reported in the, in the, in the third quarter or even the, the, the fourth quarter.

Aaron Warwick

Okay. Thank you.

Operator

And this concludes our question-and-answer session. I'd like to turn the conference back over to Richard Dilorio for any closing remarks.

Richard Dilorio

Thank you, Joe. I want to thank everyone for participating on today's call and we look forward to our call to update everyone on our results for the fourth quarter and full year in the spring. Thank you. Have a great day.

Operator

The conference has now concluded. Thank you for attending today's presentation, you may now disconnect your lines.