Good day, and welcome to the PetIQ Inc. 3rd quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Katie Turner, Investor Relations. Please go ahead. Good afternoon. Thank you for joining us on PetIQ's 3rd quarter 2023 earnings conference call and webcast. For today's prepared remarks, we will hear from Cord Christensen, Chairman and Chief Executive Officer, and Zvi Glasman, Chief Financial Officer. Before we begin, please remember that during the course of this call, management may make forward-looking statements within the meaning of the Federal Securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could differ materially from actual events or those described in these forward-looking statements. Please refer to the company's annual report on Form 10-K and other reports filed from time to time with the Securities and Exchange Commission and the company's press release issued today for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please note on today's call, management will refer to certain non-GAAP financial measures. While the company believes these non-GAAP financial measures will provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's release for a reconciliation of non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP. In addition, PetIQ posted a supplemental presentation on its website for reference. With that, I'd like to turn the call over to Cord Christensen. Thank you, Katie, and good afternoon, everyone. We appreciate you joining us today to discuss our record 3rd quarter financial results. I'll begin with an overview of key highlights, then Zvi will review our financial results for the quarter and outlook. Finally, Zvi, Michael, John, and I will be available to answer your questions. For the 3rd quarter, our financial results exceeded our expectations yet again. Our products and services team have been diligent and strategic in their execution of our initiatives to fuel top-line growth, invest in areas of our business where we are seeing favorable returns, and make decisions to improve our operations. I'd like to thank everyone for their hard work and dedication in helping us to achieve record net sales and Adjusted EBITDA. As a result of our better-than-expected Q3 and year-to-date results, we are pleased to be able to raise our full year 2023 outlook. A few key highlights from the 3rd quarter include: We reported net sales of $277 million, an increase of approximately 32%. The net sales result was above our 3rd quarter outlook of $220 -$240 million. We had strong broad-based growth across our business, with 200 basis points of gross margin expansion and improved leverage of our SG&A expenses, even with the significant increase in investments in advertising and promotional spend to support the growth of our manufactured product portfolio. This helped us achieve a record Q3 Adjusted EBITDA of $29.3 million, an 80% increase from Q3 last year, and ahead of our guidance for Q3 of adjusted EBITDA of $18-$20 million. Our higher earnings and improved working capital helped us achieve 3rd quarter record cash from operations, and we reduced the company's net leverage to 2.8x as of September 30, 2023. Turning to our product segment in more detail. The product segment contributed net sales of $239.7 million, an increase of 36% compared to the prior year period. The growth in Q3 of this year was broad-based across product categories. Net sales for products brands outperformed our growth expectations for the 3rd quarter of 2023 as compared to the prior year period, with an increase of 41.7%, including the acquisition of Rocco & Roxie, for an increase of 27% on an organic basis. Much of this growth was fueled by a continued exceptional season in the over-the-counter flea and tick category. When you look at all sales channels combined, we had one of the strongest seasons in the last 10 years for the over-the-counter flea and tick category. Pet parents are increasingly providing protection for their pets, and stable weather also helped fuel the category this year. In the 3rd quarter of 2023, the flea and tick category grew 7.1%, and PetIQ's brands increased 15.2%. In Q3 of this year, nearly 50% of the over-the-counter flea and tick category sales were generated online. At retail, PetIQ's flea and tick brands outperformed across 7 of the top 8 retailers, driven by PetArmor and Capstar brands. PetIQ's portfolio of brands continue to capture a disproportionate amount of this online growth and dramatically outperformed the broader category, as evidenced by our market share results. For the 12 weeks ended September 30, 2023, PetIQ manufactured brands captured 17.7% of the category dollars, which is an increase of 124 basis points versus the prior year period. On a unit basis, we gained an even greater amount of the share, up 192 basis points for the quarter. The pet supplement category also maintained its growth trajectory in the quarter, gaining 16.5% over the prior year period. This fast-growing category has now more than doubled over the last 4 years and has surpassed the OTC flea and tick business as the largest category we compete in within our manufactured portfolio. Our pet supplement products continue to see accelerated consumption growth in the 3rd quarter of 2023. Our product portfolio grew 22.1% compared to the prior year period. Strong household penetration trends, along with expanded need states in the pet supplement category, give us confidence that these double-digit growth rates should continue for many years to come, and PetIQ is positioned very well to continue to gain share in this important category. In addition, our pet dental and treat offerings outperformed in Q3. The Minties and Pur Luv brands both grew at 2 times the category, leading to meaningful share gains. The Minties brand grew 36% and gained 54 basis points of share. The Pur Luv treat brand posted strong category growth of 136%. The newest brand in our product portfolio, Rocco & Roxie, grew 10.1% for the 3rd quarter of 2023, ahead of our projections. Remember, we exited several non-core Rocco & Roxie offerings in the first half of 2023 that we determined were not a strategic fit for us. And yet our team has executed well, and we are very pleased to have grown the base business better than expected for Q3 and year to date. Our core Rocco & Roxie products are focused on the premium pet stain and odor category, and pet parents continue to look to Rocco & Roxie for their stain and odor needs in Q3. We believe the Rocco & Roxie brand can extend its growth in other premium pet categories like supplements and treats. We are very encouraged with the brand's initial success in these product categories and are excited about the potential for Rocco & Roxie to increase distribution of both its core and new premium pet offerings as we increase advertising and promotional investments to build brand awareness and consumption over the next several years. Across our PetIQ brands, we continue to see a great return on our enhanced advertising and promotional efforts in the 3rd quarter of 2023, as evidenced by our growth. Zvi will give more detail around our incremental spend in Q3 and expectations for Q4 as we continue to lean into prioritizing investments and initiatives that we expect to support the long-term success of our brands. We look forward to driving outpaced growth from these efforts into 2024 and beyond. Now, focusing on the services segment. Our services segment reported 3rd quarter 2023 net revenue of $37.4 million, an increase of approximately 12% as compared to the prior year period, with segment gross profit dollars and margins showing solid improvement from our operational initiatives. We have continued to test and learn from the six wellness centers that we converted to focus on hygiene. Our initial data remains positive. We are generating incremental pet traffic and enabling improved cost controls by matching veterinarian labor with demand. We are also excited to have collaborated with Walmart, an existing partner, on a new pilot wellness center that offers a variety of pet services, including veterinary care, grooming, and hygiene care. Both PetIQ and Walmart are committed to offering affordable and accessible pet products and services. With the opening of this location in late September, we are pleased to offer pet parents more ways to save money on their evolving pet health and wellness needs. We will continue to test and learn together and are pleased with the initial response thus far from pet parents. We are optimistic about the opportunity and the additional locations. As we announced in today's earnings release, late in the 3rd quarter, we initiated a services segment optimization to close 149 wellness centers in an effort to improve future profitability. We expect to generate approximately $6.3 million of net cost savings over the next 12 months, all of which we anticipate reinvesting into our future growth, focusing primarily on the growth of our mobile community clinics and sales and marketing initiatives for our manufactured brands. Our team came to a strategic decision after the financial and operational assessment of wellness centers since reopening after the pandemic, as well as the assessment of the veterinarian labor market in each geographic market. We also evaluated our ability to potentially convert these locations to a more hygiene-focused offering and determined that we would not be able to convert these locations in the future based on available square footage. In Q3, we closed 45 centers and expect to close the remaining in Q4 to end the year with 133 wellness centers. We believe this is the right decision for our total business and look forward to better aligning our future expenditures with the areas of our business where we experience the highest returns. In closing, we appreciate the hard work and dedication of our employees in our manufacturing and distribution facilities, as well as our corporate office, for their commitment to our mission and core values in helping us to achieve record results to date in 2023. We believe we have an incredible team that continues to execute a high level to help us end the year strong and position us well for continued success in 2024 and well into the future. With that overview, I'd like to turn the call over to Zvi. Thank you, Cord. Our teams across all areas of our business has executed extremely well to fuel our growth in net sales, expand gross margins, and leverage both our fixed and variable expenses to achieve better than expected profit results for the 3rd quarter. These results have driven our ability to raise our 2023 outlook. At the same time, we've made important strategic decisions to help us to increase operating efficiencies and focus our spending on the areas of our business where we are seeing favorable returns. We believe these efforts will position us well for continued success, increased profitability, and cash generation for 2024 and beyond. Now, shifting to our quarterly financials in more detail and our outlook for the year ending December 31st, 2023. We reported record Q3 net sales of $277 million, an increase of approximately 32% compared to Q3 last year, driven by an increase in sales from both the products and services segment, as well as the addition of Rocco & Roxie. As Cord mentioned, we had strong, broad-based growth across sales channels and product categories. Third quarter 2023 gross profit dollars increased 43% to $72.6 million, while our gross margin expanded 200 basis points to 26.2% from Q3 of last year. We benefited from operating leverage on the higher net sales, increased manufacturing efficiencies, as well as a favorable shift in product mix as compared to the prior year period. Our services segment also had a solid gross profit improvement from higher sales and increased operating efficiencies as compared to the 3rd quarter of 2022. SG&A expenses for the 3rd quarter of 2023 were $55 million, compared to $46 million in the prior year period. SG&A, as a percentage of net sales, decreased 210 basis points to 19.9%. Q3 adjusted SG&A was $51.9 million, compared to $42.5 million in Q3 last year. As a percentage of net sales, adjusted SG&A was 18.7%, a decrease of 150 basis points compared to the prior year period. The leverage in SG&A and adjusted SG&A was primarily due to continued leverage of costs and increased business expense efficiencies relative to the growth in net sales. It's worth noting that we continued to leverage SG&A in the quarter, while also growing our A&P investments to support the long-term health of our manufactured brand portfolio. We recorded restructuring and related expenses of $8.5 million for the 3rd quarter of 2023, related to the services segment optimization. We expect additional restructuring and related expenses of $6.1 million in the 4th quarter of 2023, resulting in a total of $14.6 million for the full year of 2023. Importantly, $11.3 million of the total projected restructuring charges are non-cash in nature, related to depreciation and amortization of $11 million and inventory reserves of $0.3 million. Accordingly, total cash restructuring costs recorded in the P&L are expected to be $3.3 million, and we expect to incur cash costs of $3 million to settle lease obligations, which will not result in an additional charge to our P&L, as the liabilities are currently reflected in the company's balance sheet, bringing total projected cash expenditures related to the optimization to $6.3 million, most of which we expect to pay in the 4th quarter. We expect to recoup our approximate $6.3 million of cash costs related to the optimization in approximately 12 months, as the expected EBITDA losses from the centers we are closing are projected to be approximately $6 million for 2024. From a profits perspective, we reported Q3 net income of $0.5 million, or EPS of $0.02, inclusive of the restructuring and related charges I mentioned. Adjusted net income for the 3rd quarter of 2023 was $12.6 million, an increase of $11.8 million from Q3 of last year, and adjusted EPS was $0.42 for the 3rd quarter of 2023. Q3 EBITDA was $24.7 million, an increase of 93.2% compared to $12.8 million in the prior year period. We reported record 3rd quarter Adjusted EBITDA of $29.3 million, an increase of 80% compared to $16.3 million in Q3 last year, representing an Adjusted EBITDA margin of 10.6%, an increase of 280 basis points compared to Q3 of 2022. Turning to our balance sheet and liquidity for the 3rd quarter, ending September 30, 2023, the company had total cash and cash equivalents of $124.6 million. The company generated $50.1 million of cash from operations for the 3rd quarter of 2023. This was driven by increased cash earnings, as well as $30.2 million from working capital benefits. On a year-to-date basis, we generated the highest cash from operations in the company history of $64.5 million. We expect to generate annual free cash flow at or above the top end of our $30-$40 million range for 2023, despite the approximate $6.3 million of cash expenditures we expect to incur related to our services segment optimization. The company's total debt, which is comprised of its term loan, ABL, convertible debt, and capital leases, was $447.9 million as of September 30, 2023. In addition to our cash on hand, the company's $125 million ABL is undrawn. Total liquidity, which we define as cash on hand plus debt availability, was $249.6 million as of September 30, 2023. While we have no intention of making additional borrowings, we would note that our liquidity is ample and our credit facilities are flexible. Our net leverage is calculated under the terms of our credit facilities at the end of the 3rd quarter of 2023 was 2.8, down from 4.3 in the prior year period, driven by higher earnings and improved working capital. Keep in mind, our net leverage will tick up a bit in Q4 of 2023 due to some expected changes in working capital, primarily potential timing of an increased inventory to position us well to start 2024. Now, turning to our guidance. For the year ending December 31st, 2023, we are raising our outlook, inclusive of the services segment optimization that we announced today and that Cord discussed earlier in our remarks. Note, I will reference the midpoint of the guidance ranges when discussing percentages, increases in net sales and Adjusted EBITDA as compared to the prior year. This is consistent with what is presented in today's press release and earnings presentation. We now expect net sales of $1.06 -$1.08 billion, an increase of approximately 16% as compared to 2022. For Adjusted EBITDA, we increased the range to $99-$103 million, representing an increase of approximately 30% as compared to 2022. We've had an excellent year so far with record results, and we expect to end the year positioned extremely well for a great 2024. Obviously, when you do the math on the implied net sales and Adjusted EBITDA for Q4 of 2023, it looks flat compared to Q4 of last year, and it reflects a few straightforward items. First, consistent with prior periods, the 4th quarter of 2023 will be the lowest contribution net sales and Adjusted EBITDA quarter of the full year. Second, as you think about our higher outlook for 2023 relative to the outperformance we had in Q3, there was approximately $15 million of sales and $3 million of EBITDA that we expected to occur in Q4 of this year, but we actually recognized in Q3 based on the timing of orders. Finally, as we mentioned last quarter, based on the success of our marketing initiatives, we are continuing to make strategic investments in A&P. We now expect to spend a total of $4 million in incremental A&P. This is an increase from the $2 million we stated on our Q2 call, of which $1 million was spent during the 3rd quarter of 2023, with the remaining $3 million to be spent in the 4th quarter of 2023 to support the continued growth and development of our brands and position us well for the start of 2024. Our growth would be up approximately 10% for both net sales and Adjusted EBITDA, were it not for these items. In closing, we reported strong record results for the 3rd quarter and first nine months of 2023, and our team remains optimistic about our opportunities for growth in 2024. At PetIQ, our team will continue to execute our strategic initiatives to deliver value for all stakeholders as we deliver on our mission of smarter, convenient, and affordable pet health and wellness for pet parents. That concludes my financial review. Cord, Michael, John, and I are now available for your questions. Operator? We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star then two. Our first question comes from Rupesh Parikh with Oppenheimer. Please go ahead. Good afternoon, thanks for taking my question, and congrats on a very strong quarter. So I guess I wanted to kick it off just, just with the overall pet category. So clearly some concerns out there of a slowdown, but that's clearly not showing up in your results. So we'd just love to hear what you're seeing overall in the pet category, and then even any commentary into, into October in terms of what you guys are seeing. Yeah, look, we don't compete in a lot of the categories that have had the slowdown with us, and we've seen strong, strong, strong numbers coming through, whether it's prescription, over-the-counter medication, or otherwise. So clearly, pet health is a priority for people, and we're not seeing that in our category. Michael could probably add a little bit because he watches the data a little closer than I do, but Michael, do you want to add anything to that? Yeah. Hey, Rupesh, it's Michael. You know, to Cord's comments, while some categories are starting to see some slowdown in pet animal health is not an area we're seeing that trend in. If you look at how the category performed in the quarter, I believe we've got it in the report from a flea and tick perspective, up over 7%. The balance of the categories we compete in are actually healthier than that. Pet supplements up healthy double-digit increases, as are dental treats. And if we look at October, which just updated, we're seeing continued momentum for those categories in our brand, even above and beyond the July, August, September window. Great, that's helpful. And then just related to the service center optimization, is there a way to quantify the lost revenue impact for Q4 and into next year, just from a modeling perspective? Do you want the exact numbers or? Yeah, go ahead, Zvi. Yeah. Yeah, look, so we expected sales of about $15 million next year and a loss of $6 million, where approximately $10 million of sales this year. And Q4 is always a seasonally lower part of the business. Okay, great. And then maybe one final question. I know you guys aren't ready to give your 2024 outlook, but just, you know, just curious in your comfort in lapping such strong growth this year, and then any initial puts and takes you could highlight for next year at this juncture? I think, Rupesh, look, we have obviously a situation where this year we had extremely strong weather. As we've seen, 3rd quarter have as strong a weather as we had in 2nd quarter. We never project for the weather to be that strong every year, and if it happens, it happens. So we'll definitely be conservative relative to that going into 2024. We also had, I think, some recovery of the base that we saw as inflation caused consumers to pull back, and we're gonna be more conservative there as we look at the next year. We'll see once we get into next year in the quarter, how we are performing at that, and we'll update that as we get into it. But in general, I think we've had a great year. We understand what the data is, we understand what the run rates are, and we'll be ready to give you the, you know, the updates and what our guidance is for 2024 when we get there. But in general, I think we've had a lot of things line up right, recovery of the base, weather, and other things that have led to an extremely strong year. And, you know, we're gonna dig in and have a great year next year. It'll definitely be a growth year again, but, we're definitely not gonna expect every year to have the kind of weather that this year, because it's been 10 years since we've had this kind of weather and performance in the OTC flea and tick category. Great. Thank you for all the color, Pass it on. The next question comes from Bill Chappell with Truist Securities. Please go ahead. Thanks. Good afternoon, and also congratulations on the quarter. Thanks, Bill.[crosstalk] First, just trying to understand the plans to both reinvest in A&P in the 4th quarter and reinvest kind of the cost savings from the rationalization into next year. With the 4th quarter, I'm just trying to understand, I mean, with flea and tick season largely over, where does that money go and why do it now? You know, why not kind of push it towards next year? Or is there some major program or a big promotion going on in the 4th quarter that could benefit sales, or am I missing something? Typically, Bill, we invest heavily in A&P, which drives sales and drives conversion. We started in Q3 to start investing in the top of the funnel to drive awareness and build brand awareness. We're going to push a little more of that into Q4 to be ready for next year, because as you know, once we get into Q1, we're starting to see the benefits of that. We're starting to see it working, and obviously, the numbers from this year obviously shows that we're definitely investing properly, we're tracking it properly. But we have an opportunity to really start to drive top of funnel, which will lead to, we think, our ability then to match that with AMP that goes into conversion next year. And we think will drive our ability to continue to build our brands in a very, very positive way. So that's, that's something that we're, again, fortunate that we're starting to get the momentum to where we can do it, and we want to continue to really support the brands and drive that top-of-funnel brand awareness and then drive the conversions we get into season. Got it. And then on... Yeah, go ahead. Just to build on that, Bill, I think it's important to note that flea and tick is our largest category, but it's close to 40% of our revenue, not all of our revenue. And when you look at Q4, it's closer to 30%. So there are categories we compete in that aren't with that seasonal profile. And if you look at the dog treat category, it's actually the inverse, where Q4 is actually the largest quarter of the year for that category, and it's an area where we have the most white space and brand building opportunities with our Minties portfolio that we will be leaning into as well. Got it. I'll make sure to get some Minties for my dog's stocking stuffer, so I understand. On the services side, on the rationalization, I guess, I had two questions. One, would you expect these locations? I mean, I assume some of them are in Tractor Supply stores or you know, in small pet stores to go back to mobile clinic locations, and so you can actually recoup some of that revenue down the road. And then also, the implication that the 133 left are available or are suitable for the hygiene model, would you expect that to start in earnest in 2024? Yeah, Bill, I think in general, first, we're extremely positive about how things are going. Things are going well. We're not ready to declare victory and start converting tons of locations, but those 133 stores that are left definitely have the ability to add more services and do that. If you look at the stores we're closing, there's a small percentage that we think can actually recoup the pets into the community clinic business, and so we'll definitely lose some of it permanently. But if we can't convert them to the hygiene model, if we can't get a veterinarian, if the financials coming out of COVID aren't great, we just had to do what we had to do to keep the money that we're investing and put it back into things that we know we get a better return. It's that simple. Got it. Thanks so much. Thanks, Bill. The next question comes from Jon Andersen with William Blair. Please go ahead. Hi, everybody. Thanks for the questions. Could you talk a little bit about... I guess by this time of the year, you, you've had quite a few conversations with retailers on the spring resets or early 2024 resets. Just wondering if you could comment on the kind of the tone of those discussions, what you're expecting in terms of perhaps incremental distribution? And anything on the innovation front that might be notable or worth mentioning as well? Thanks. Yeah. I'll let Michael talk about the retailer, the line reviews and where that's at, and then I can take them back to innovation for you, Jon. But go ahead, Michael. Yeah, I would, you know, say it depends by category. Right now, from a flea and tick category perspective, those line reviews are largely done. I'd say we're happy with our results. We do expect some moderate gains, some further penetration and distribution for some of our kinda tertiary brands and additional pack sizes. Health and wellness still a little bit in process, but very encouraged about how some of the retail partners are leaning into some of our new initiatives in that space. As you know, pet supplement's the biggest piece of that portfolio for us or that category. We primarily play in the value-oriented portion of that category today. We're very excited about a launch we have next year that'll position us well in the premium portion of the category, which is candidly where about two-thirds of the category volume lives, and we're very encouraged about the bets our retail partners are placing on that investment we're making in that innovation for 2024. And then in treats, we're seeing a lot of momentum behind the Minties brand in consumption. Customers continue to vote for that proposition in the market, and our retail partners are proportionately voting as they lay out their shelf allocation and space plans, promotional plans for 2024, on the Minties brand in that category. So some of the parts definitely a net positive for us as we think about how we'll be positioned to win with the customer and our retail partners in 2024. And Jon, I would just say, in general, we've been able to watch where we're winning, we're leaning in where we're winning, the innovation's been built around it, and we'll have a great year next year. Okay. And with the growth that you're seeing in your manufactured brand business, can you just remind us of, from a capacity perspective, any limitations or any incremental CapEx required to kinda support that demand? And then, finally, on services, you mentioned in the press release and in the prepared comments, the collaboration with Walmart. Could you talk a little bit more about, you know, what that is all about and how that maybe differs from what you've been doing up till now with Walmart, with the wellness centers, and why that might be a good or better economic model for you? Thanks. Thanks, Jon. Look, I think in general, we've always stayed in front of the capacity with very minimal capital investments to keep up with what we need to do that. When we get surprised and we have a run that's really strong in an area like the Minties brand, we've had to go out and aggressively pursue equipment and molds and things to keep up with that. But I would say we're in good shape going into next year with the amount of capacity we need to stay in front of the growth rates, with plenty of excess to stay in a place where we can keep up with what needs to be done. So we're in really good shape. Look, John, you're the closest to the Walmart project. If you wanna talk about it and give an update, that'd be great. Great. This is John Pearson. Sorry, I think he was referencing here. So, we entered into the partnership with Walmart. We've been working on this project for about a year now. Excited to have launched the initial pilot. The main difference is it's a Walmart-branded program, so they are the ones that are driving the pet parent to the location. On the external, they also made an investment in an external facade that really draws attention to the services. And we're partnering with them to be the operator to bring the veterinarian and the labor and staff and the equipment necessary. So that's the main difference with the model right now. John, what are your expectations for? I think it's in, is it in one location now? And how might this, you know, unfold if things go well over the next 12-24 months? Yeah. Right now, we're focused on the pilot of the one location, and we're not privileged to share any more information outside of that, but expect that, you know, we'll keep close on it, and as we see success there, we'll work close with Walmart on future decisions. Great. Thanks, and congrats on a good quarter. Again, if you have a question, please press star and then one. Our next question comes from John Lawrence with Benchmark. Please go ahead. Good afternoon. Thanks, guys, and congrats again on the quarter. Thanks, John. Could you, could you talk a little bit about just the stores you elected to close? Can you give just some kind of a rough what was the criteria? Was it regional? Anything, just, just across the board, was it just either not cash flowing or, or what would be the sort of the criteria for the cuts? I think, John, as you know, we closed all the stores during COVID. We came out of COVID with a very different market. We were patient to do what we could to run those locations, to get a good data set, to make good decisions. As we look at what has gone on in the veterinary market, labor and other things, we feel like we have a good handle on where that's gonna be for a long time. And if you couldn't be in a position to add the hygiene model to it, if you couldn't have good access to veterinarians because of the market, or financially, we just weren't seeing that it was gonna progress. It was time to do something different. That was the main criteria. So look, we have a lot of things going right, and when you're spending, you know, $6 million a year on something that's not providing the return, and we have other areas of the business where if we put $6 million into, we can accelerate and get a great return, we had to do something different. So I think that's really the, the crux. That's what it is. We just have places we can put the money and make a lot more money. Great, thanks. And secondly, when you look at, I mean, just a shot in the dark here, and you look at that model on the services side, would it be fair, something like, the new model is more like 70% of the revenue, but half the cost, compared to the old model? Is that anywhere close? Yeah, I wouldn't say that. I think in general, you know, what we're seeing is we have a really strong place in the market where we're able to, to marry up veterinary labor with demand for pets, with our mobile clinics. And we're truly trying to bring that model into our wellness centers. And when you add the, you, and you add the hygiene model, you have the ability to do that. And so we have a very unique ability to pay veterinarians extremely well, put them in the stores, when the labor or when the pets are there, and we have the ability to have the hygiene model with no vet there, keep the store building relationships, taking care of pets, making sure they're well, well taken care of, and do that. And so at the end of the day, when you look at the overall P&L, we think the P&L is very similar, but it's really we can do what the pet parent needs, when they need it, and have the labor there for what they need, for whatever the services they want to, you know, what they want for their pet. And that's really what it comes down to. Great. Last question for me. Zvi on the gross up 200 basis points, most of that is scale leverage, or is it product mix? Or just what's the main driver of that gross margin? It's efficiency. Part of the efficiency is on increased volume, but it's also efficiency just as we continue to look at making our operations, you know, operate more efficiently, to use a word to describe a word. And then it is some mix and some scale. Great. Thanks. Great, yeah. This concludes our question and answer session. I would like to turn the conference over to Cord Christensen for any closing remarks. Yes. Thank you, everybody, for joining us today, and thank you to all the PetIQ employees and partners that let us have such a great quarter. We appreciate the hard work. We appreciate, I think, our ability to deliver such a strong result. Thank you for everybody, and we look forward to, to reporting the full year when we talk to you after the first of the year. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.