InfuSystem Holdings, Inc Q3 FY2024 Earnings Call

Good day, and welcome to the InfuSystem Third Quarter of 2024 Financial Results Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Joe Dorame, Managing Partner. Please go ahead.

Good morning, and thank you for joining us today to review InfuSystem's third quarter 2024 financial results ended September 30, 2024. With us today on the call are Rich Dilorio, Chief Executive Officer; Barry Steele, Chief Financial Officer; and Carrie Lachance, President and Chief Operating Officer. After the conclusion of today's prepared remarks, we will open the call for questions. Before we begin with the prepared remarks, I would like to remind everyone, certain statements made by the management team of InfuSystem during this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Except for the statements of historical fact, this conference call may contain forward-looking statements that involve risks and uncertainties, some of which are detailed under Risk Factors in documents filed by the company with the Securities and Exchange Commission, including the annual report on Form 10-K for the year ended December 31, 2023. Forward-looking statements speak only as of the date the statements were made. The company can give no assurance that such forward-looking statements will prove to be correct. InfuSystem does not undertake and specifically disclaims any obligation to update any forward-looking statements, except as required by law. Now I'd like to turn the call over to Rich Dilorio, Chief Executive Officer of InfuSystem. Rich?

Thank you, Joe, and good morning, everyone. Welcome to InfuSystem's third quarter 2024 earnings call. Thank you all for joining us today. I'll get things started this morning with an overview of the recently completed quarter. Next, Barry will provide more detail on our third quarter financial results, and then Carrie and I will discuss our focus moving forward and provide additional context around some key developments in the business. So kicking things off, I hope everyone agrees that InfuSystem delivered a very good third quarter. Revenue, profitability, and cash flow were all up significantly. The third quarter delivered strong sequential growth with revenue above $35 million for the first time ever. There was strong year-over-year growth with revenue up 11% from the third quarter of 2023. We delivered improved profitability with adjusted EBITDA margins taking another big step up to 22.3%. And we had very strong cash flow in the quarter, allowing us to pay down debt by $6.4 million and repurchase $700,000 of stock under our buyback program. Additionally, over the last few months, we have signed and launched three new initiatives, each of which has the ability to add to our growth heading into next year. The first of these, announced in our press release in August, is the new distribution agreement with Smith & Nephew relating to negative pressure wound therapy. The second initiative, which we announced in September, is the exclusive North America distribution agreement entered into by our joint venture with Sanara MedTech relating to the Chemo Mouthpiece. And the third, which Carrie will speak to in a few minutes, is the on-site biomedical services agreement entered into with Dignitana relating to their scalp cooling system, which is used by oncology patients to reduce hair loss related to chemotherapy treatments. These new agreements are excellent examples of how we're expanding and diversifying InfuSystem's business. Generally, this involves taking a device-agnostic and patient-centric approach. Our mission is to increase access to quality healthcare by wrapping our services around the advanced medical devices and products of our partners. We are the safe, smart, and trusted device solutions company, solving problems throughout the treatment cycle, lowering costs and improving results for manufacturers, healthcare providers, patients, and payers. And now I'll turn it over to Barry to walk us through the third quarter results.

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 and 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 of 2024, our net revenue totaled $35.2 million. This was another all-time record and represented nearly 5% sequential growth and an increase of 11% over the prior year. The Device Solutions segment led the way, reporting a 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% 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, net of noncash 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 Healthcare 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 and 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 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 is 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 adjusted 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 three and half 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.

Thanks, Barry. Good morning, everyone. Today, I'll start with a little background refresh on our strategy in Biomed. InfuSystem has long had world-class biomedical service capabilities because our core businesses involve owning and deploying a very large fleet of medical devices. Maintaining this equipment ourselves saves costs and creates 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 emphasize that our goal has not been to maximize the revenue potential of working with GE, but rather to leverage that experience in 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 U.S. 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 its 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. Healthcare 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 & 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.

Thanks, Carrie. I'm going to start with a quick update on developments in pain management and then provide context around the recently announced exclusive distribution agreement for Chemo Mouthpiece. On our pain business, for much of the last two years, we sought to communicate two key points about this business. First, while we are 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 pain's trajectory is the NOPAIN Act, which requires that a reimbursement code be created for non-opioid alternatives to treat postsurgical pain starting in 2025. We said we needed 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 are 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 elastomeric pumps and nonelectronic pumps. While we are looking at the possibility of modifying our service offerings to accommodate the initial regulations and feel optimistic about the state of our current pain business and our customers, positive developments in other parts of our business continue to emerge and push pain 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 2,000 cancer centers in the U.S., 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 at Chemo Mouthpiece is happy to have a partner with these existing relationships and resources. About the product itself, Chemo Mouthpiece was developed by a cancer survivor that suffered through a very difficult case of oral mucositis and believed 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' chemotherapy 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 in this goal. We are going to distribute Chemo Mouthpiece through 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 and oral cryotherapy utilizing the product will become common for cancer patients receiving chemotherapy. It's a big opportunity, and we're going to prioritize it with all the effort and focus it deserves. We expect to update shareholders every quarter on 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 4 from me as I've put a 10b5-1 in place to sell a small portion of my shares this month for tax planning purposes. I 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.

We will now begin the question-and-answer session. At this time, we will take our first question, which will come from Jim Sidoti with Sidoti & Company. Please go ahead.

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 maintain that business?

It's definitely operational and stable. We've engaged with all the devices probably close to two times now, and this marks our second full year, which is encouraging. However, it will never run on autopilot. Managing the team, including their locations and travel durations, requires significant effort. That said, it is quite stable. For those of us on this call, it's not demanding much of our focus at this point; it's primarily about the team executing as needed, which is positive.

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

Yeah, it's under $1 million. So it's not 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 didn't have to add people to execute on it. The good news is you should see more of these, both inside GE and outside of GE like Dignitana, deals that range from $0.5 million to $2 million or $3 million. 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.

All right. And then the last one for me. With regards to cash flow, 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?

What I would say, Jim, is that we certainly had a good quarter because our working capital didn't grow and didn't need to grow since we had already grown it in the first half of this year. The aspect of working capital will fluctuate as we grow, and our top line will need to increase, which means we'll use cash to support that. Additionally, our profitability at the bottom line is improving along with our operating profit, and we expect this to continue increasing in the future.

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

The operating cash flow will definitely fluctuate, but it has always remained positive. Free cash flow could be negative depending on how quickly we expand in certain areas. For instance, if our oncology business grows by 20% in a quarter, we would experience negative free cash flow due to the need to purchase a significant number of devices. However, this growth will lead to improved cash flow in the following period. It’s important to be cautious with the calculation of free cash flow because the timing of our capital expenditures and the factors influencing our growth can have a significant short-term effect. Generally, as we continue to grow our revenue, both operating cash flow and free cash flow have been increasing over the trailing twelve months. Furthermore, as our capital expenditure needs decrease, the free cash flow generated from our revenue is improving at a faster rate.

And our next question will come from Brooks O'Neil with Lake Street Capital Markets. Please go ahead.

Thank you, good morning. Can you hear me okay?

Sure can.

So I just want 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 ebb and flow. But would you expect to continue to need whatever it was, $10 million, $12 million of equipment purchases to sustain the growth opportunity you're seeing out there in that business?

This quarter, actual equipment purchases were only $2.8 million, which is significantly lower than last quarter. It's important to remember that we have to acquire devices in advance, and we are still experiencing growth. For instance, oncology grew by about 10% this quarter, requiring us to have devices to support that growth. In the next quarter, we won't need to purchase devices for the additional revenue generated, meaning it will contribute positively to our cash flow. Additionally, we have invested in devices for the negative pressure program through our partnership with Smith & Nephew, and even our pain management segment is seeing slight growth, allowing us to buy some devices for that area as well.

Okay. That makes sense. Should I take Carrie’s comments about the Biomed business, which I find very exciting, to mean that the pipeline for potential future opportunities in that area is quite strong?

I believe that's a valid way to understand it. About a year ago, we had decided to hold off on pursuing other opportunities as we were focused on stabilizing the GE program. Now that it is operational and the team is executing well, we are in a position to explore deals similar to Dignitana and other opportunities within GE, which are still available. My expectation, Brooks, is that Dignitana will be the first deal you see. We also have a pump remediation project for a significant manufacturer in the works, bringing us to two developments in the last quarter. We don't anticipate five of these transactions each quarter as they are relatively large, but when they do come in, they will be highly profitable and straightforward to execute. The team is ready to manage these. There is indeed a pipeline of opportunities ahead. We will keep you informed about the scale of each deal and the timing of their closures as they unfold.

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.

We don't have a specific internal expectation established yet. Looking at the total addressable market, it’s significant, estimated at around $500 million if we calculate the number of potential patients multiplied by the device price. We see great potential moving forward, but we still need to understand how reimbursement will work for physicians, how well customers accept the product, and whether patients will respond as positively as we anticipate. There’s still much to be done, but initial feedback from customers has been very encouraging. Regarding the potential impact, it's likely not in the hundreds of thousands but could reach the millions if successful, though we have a long way to go before achieving that. As I previously mentioned, once we receive more information and observe progression in that regard, we will certainly share it. This opportunity is remarkable due to the nature of the product, the reimbursement available for customers, and the absence of a real gold standard, aside from ice chips that are ineffective. All the components are in place for a significant opportunity; we just need to see if they align properly.

Yeah, makes sense. Congratulations on a terrific quarter. And thanks for all the information.

And our next question will come from Kyle Bauser with B. Riley Securities. Please go ahead.

Thanks for taking my question. Maybe just following up on Chemo Mouthpiece there. I know there's still a decent amount to learn here, but any sense to kind of timing on when things could become material? And maybe more importantly, the kind of expected margin profile, right, I imagine it would be accretive to the business or at least kind of in line. Just kind of curious.

Sure, let me address those points in reverse. The margin will certainly enhance our EBITDA, even after sharing it with Sanara through the joint venture. Regarding timing, we don’t anticipate anything this year, so our current guidance does not include Chemo Mouthpiece. It will take some time for us to engage with customers and secure purchase orders. We expect it to contribute a modest amount next year, perhaps a couple of million dollars, if it performs well. It has the potential to be larger, but that remains uncertain. It will factor into our numbers next year. By the time we provide guidance in late winter or early spring, we will have a better understanding of the situation and can include it appropriately in our projections. So, we anticipate it will contribute next year, although we’re not entirely certain yet.

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

Ice chips are really the first line of defense against this, which is why a nurse will bring some and have the patient hold them in their mouth. There are mouthwashes available, but they are generally used after sores develop, and by that time, it's painful and there's a risk of infection. Hydration and nutrition issues can arise as well, leading people to pause or stop treatment. It's not just a single mouth sore; there are multiple sores, and they're quite uncomfortable. Currently, there is no good standard of care beyond the ice chips. The concept we have does a much better job of cooling the oral cavity and constricting the blood vessels, preventing chemotherapy from reaching the mouth and creating sores. We believe in this approach and have been in discussions about it for some time, thinking it could become the standard of care. We need to observe how it is adopted at the practice level, but the opportunity is certainly there, and the need is significant for patients. This is not a minor side effect of chemotherapy; it's a major issue affecting nearly everyone undergoing treatment, not just our core colon cancer patients in oncology.

Got it. Yeah. That sounds good, and a pretty exciting product. So I look forward to additional updates there. Maybe on the margin side of the business, so you're on track to delivering some nice expansion and hitting your goal of close to 18% or north of that for the year. And it looks like most of that should come from margin expansion on gross margin side of the business as opposed to kind of OpEx leverage. We've seen 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 gross margin expansion over the balance of the year?

We don't exactly view it that way because some of our businesses have considerable variable costs in G&A. For instance, in our third-party payer business, we need to invest as we grow to enhance our billing capacity. However, there are fixed costs in G&A that we can leverage based on our growth areas. Some of our DME businesses, like the rental segment, have minimal G&A, which allows for potential leverage. Therefore, we prefer to consider this more in terms of a positive product mix as we progress.

Okay, great. I’ll jump back in queue. Thank you for the update.

And our next question will come from Matt Hewitt with Craig-Hallum. Please go ahead.

Good morning. 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 be reporting the operating profit? Or how will that flow through the income statement?

Sure. It's products 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 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, the equity investment line with Sanara, a line item that we do not have currently in our P&L, but we'll have in the future as we get revenue from this product.

Got it. Super helpful. And then maybe one, and I apologize if this was asked, but does the outcome from the elections have any impact on your business as you think about a shift in maybe a greater push towards home healthcare and the needs that are kind of ramping for that sector? Does this election change anything there? Does it maybe put more of a focus on it? Just any thoughts post-election on how that could impact your business? Thank you.

Sure. So I don't think the election impacts that. I think COVID had a bigger impact. It was already kind of moving that way to get people out of the hospital and then COVID just put a big spotlight that a lot of these patients, not just our patients, but a lot of patients still 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 kind of things. People have cancer regardless of who the President is and who's in the Senate and who controls it. So we're relatively shielded from those types of macro things, which is nice. Our business is just our business, and we don't have to worry about those kinds of things.

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

Sure. Aaron, so I think with Sanara, there's three pieces to that joint venture. To your point, the initial products, the BIAKOS and HYCOL, which are the antimicrobial and collagen products. 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 piece of it for sure. But there are a lot of products that patients need to treat their wounds. If you look at wound care for us, there's the BIAKOS and HYCOL, 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 Sanara, they brought us Chemo Mouthpiece, they brought us Radiaderm, which we talked about 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 relationship is as good as it's ever been. Those guys are phenomenal at finding these types of products and opportunities. But the good news is, at least in Advanced Wound Care and with Chemo Mouthpiece and Radiaderm, those are all either already launched or launching and all growing, which is nice.

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

We expect Wound Care to make a significant contribution next year, with considerable growth anticipated. We are currently working on the budget for next year, but Wound Care is expected to be a major driver of our growth, possibly the majority of it. In 2024, the Advanced Wound Care segment has performed very well, effectively replacing the lease revenue from 2023, which amounted to a few million dollars. They have successfully navigated those comparisons and are expected to grow beyond that. Overall, this business is projected to be in the mid-millions in 2024, around $5 million to $7 million, but we expect it to more than double next year.

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

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.

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