Q4 2019 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the enzyme group fourth quarter fiscal year 2019 earnings conference call. At this time, all participants are any listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During the session you will need to press star one.
On your telephone please be advised that today's conference is being recorded.
If you acquire any further assistance. Please press star Zero I would now like to hand, the conference over to your Speaker today, Chief Investment Officer, Chad Keetch, Sir. Please go ahead.
Thank you welcome everyone and thank you for.
Yesterday.
We filed our earnings press release yesterday and it is available on the Investor Relations section of our website enzyme group dot net.
A replay of this call will also be available on our website until five P.M. Pacific on Friday February 28 2020.
We remind any listeners that may be listening to a.
Play of this call that all the statements made our as of today February six 2020, and these statements have not been nor will be updated subsequent to todays call.
Also any forward looking statements made today are based on management's current expectations assumptions and beliefs about our business and the environment in which we operate.
These statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on todays call listeners should not place undue reliance on forward looking statements and are encouraged to review our SEC filings for a more complete discussion of factors that could impact our results.
Except as required by federal Securities.
Laws enzyme and its affiliates do not undertake to publicly update or revise any forward looking statements were changes arise as a result of new information future events changing circumstances or for any other reason.
In addition, the enzyme group Inc. as a holding company with no direct operating assets employees or.
News certain of our wholly owned independent subsidiaries collectively referred to as the service center provide accounting payroll human resources information technology legal risk management and other services to other operating subsidiaries through contractual relationships with such subsidiaries.
In addition, our wholly.
On captive insurance subsidiary, which we referred to as a captive provide certain claims made coverage to our operating subsidiaries for general and professional liability as well as for workers compensation insurance liabilities.
The words enzyme company, we our and us refer to the enzyme group inc. and its.
Solid subsidiaries.
All of our operating subsidiaries the service center and the captive or operated by separate wholly owned independent companies that have their own management employees and assets.
References here into the consolidated company and its assets and activities as well as the use of the terms, we us hour and.
Similar terms used today, our mountain not meant to imply nor should it be construed as meaning that the enzyme group inc. has direct operating assets employees or revenue or that any of the subsidiaries are operated by the enzyme group.
Also we supplement our GAAP reporting with non-GAAP metrics when viewed together with our GAAP results.
We believe that these measures can provide a more complete understanding of our business, but they should not be relied upon to the exclusion of GAAP reports a GAAP to non-GAAP reconciliation is available in yesterday's press release and is available in our form 10-K.
And with that I'll turn the call over to very poor our CEO Barry.
Good morning.
One.
We are thrilled to report another record quarter as we achieved our highest earnings per share in our history.
These record results were achieved even without the significantly positive contribution of the very healthy operations of the tenant group that we spun out in October our GAAP earnings per.
Share for the fourth quarter was 49 cents, an increase of 48.5% from the prior year quarter and our spin adjusted earnings per share was 60 cents, an increase of 39.5% over the prior year quarter and an increase of 33.3%.
Sequentially over the third quarter.
Our GAAP earnings per share for the year was $1.97 cents and adjusted earnings per share was $2.24 of 29.5% for the entire year.
Most of the improvement we experienced this year came from strong growth in occupancy.
In skilled mix days and revenue across same store transitioning and newly acquired operations. We are pleased to see our same store occupancy rise again to 80.3% an increase in 216 basis points over the prior year.
Similarly, we also saw.
The increase in our transitioning occupancy to 78.1% an increase of 279 basis points over the prior year.
In addition, this is the fourth quarter in a row, we have experienced an increase of over 150 basis points in occupancy in both same store and transitioning offer.
Operations quarter over quarter.
These results are made positive possible by the extraordinary local operational and clinical leadership teams and all of their field based in service Center partners, who put their heart and soul into their respective steward shifts every single day.
We are.
Especially impressed that these amazing leaders were able to achieve these record results in the midst of a of completing a transformative spin off transaction and implementing a brand new reimbursement system, both of which could have been.
Become excuses or distractions instead, our local leaders were able to pull ups.
Something truly remarkable with all of that going on we saw significant bottom line improvement. It all 21 markets in which we operate including some of our newer markets.
These results for the combination of the number of improvements on multiple fronts, including occupancy skilled mix self insurance programs and.
Sections. In addition, we made dramatic improvements to our transitions process and are very pleased with the performance. We saw from nearly all of our newly acquired buildings, while we have been making progress in each of these areas at different times. We are encouraged to see those efforts paying off as these improvements are occurring simultaneously.
In nearly every single market.
We also want to remind you that we can see tremendous organic growth potential and our 73 transitioning and newly acquired operations as well as our 140 same store operations. It often takes several years to truly transforming healthcare operation.
As the clinical reputation will and cultural transitions take time.
The improvement we had been expecting in many of our operations continues to materialize and we're very excited about our continued operational momentum and expected to continue into 2020.
As most of you know we just.
Completed our first quarter of operations under CMS is patient driven payment model or PDP in.
We are grateful to our team members, who have worked tirelessly to ensure that we are ready for the program. When it went live and continue to help each operation adapt we congratulate CMS for creating an excellent long.
Term patient centered program that rewards operators that serve high acuity patients and deliver high quality outcomes.
After adjusting for the recent Mark market basket increase we experienced a range of growth from approximately 3% for our transitioning operations.
To approximately 6% for our same store operations was generally serve a higher acuity patient as they mature into clinically complex operations.
As we pointed out in the past, there's a shift in the acuity and complexity as we build clinical strength and capability. So it's no surprise that our same store.
Buildings, reflecting a higher rate improvement.
Our locally driven model of improving our clinical capabilities has has always been focused on increasing our acuity, which has resulted in consistent improvement in earnings independent of the current rate environment.
While we experienced a model experienced a modest rate in.
Improvement in our first quarter under the new system. The Lions share of our performance during the quarter is totally unrelated to the PD PM impact we want to remind you. All that this is just one quarter and we believe it will take several more quarters to have a better sense for the long term impact of PD pm.
We are.
Our confidence that our performance in the past present and future are sustainable going forward independent of PDP EM.
Given the strength of the quarter and our expectations for continued improvement over the next few quarters, we're raising our 2020 annual earnings guidance by 12.4.
Went to $2 in 50 cents to $2.58 per diluted share an annual revenue guidance of 2.42 billion to 2.45 billion.
We're very optimistic that with the continued upside that has inherent in our portfolio and the attractive acquisitions on the horizon that.
We will be able to continue to meet or exceed our historic growth rates.
To underline this confidence the midpoint of our 2020 guidance represents an increase of 30.3% over the 2019 spin adjusted results, which was $1.95 cents per diluted share when adjusting for the full year.
Your impact of dependent spinoff.
In addition, this guidance represents an increase of 13.4% over our adjusted diluted 2019 results of two $2 in 24 cents, which includes pennant results for the first nine months of 2019.
In the fourth quarter, we more than rich plays to pendants historical earnings much sooner than anticipated and we expect that trend to accelerate into 2020, we're very excited about our performance. This year and are confident that as our local leaders continue to stay true to our operating model our strength will continue.
In the 2020 and beyond we have not even come close to reaching our full potential and to do so it will take a relentless commitment to our culture and a rigorous adherence to sound fundamentals and with that ill ask Chad to give us an update on our recent investment activity Chad.
Thank you Barry during the quarter, we paid a quarterly cash dividend of five cents per share representing an increase of 5.3% over the prior year.
This is the 17th consecutive year, we have increased our dividend, which we hope shows our continued confidence in our operating model and our ability to return long term value to shareholders.
Yes.
Also during the quarter incense, we announced the acquisition of one independent living operation in Utah that as part of a healthcare campus, we have been operating for several years.
Nine skilled nursing operations in Texas to health care campuses in Texas, and one skilled nursing operation in Arizona.
In total we added 58 senior living units in Utah, 1431, skilled nursing beds in Texas 194, senior living units in Texas, which were all part of campus additions.
And 160 skilled nursing beds in Arizona.
Of the 13 acquisitions.
Eight included the purchase of real estate.
We now own 92 real estate assets and continue to methodically add value to that real estate by improving the operating results in our owned operations and by acquiring additional real estate assets.
We remain very excited about the opportunities we have to unlock the value on our own real.
Let's sit in the future and cut and continue to evaluate various alternatives.
But whatever we decide to do with that real estate. Our focus has been and will always be to carefully consider the health of the operations and the long term value that can be created in both the operations and the real estate.
In the meantime, our focus is on continuing to build.
Equity value in these assets most of which were distressed at the time, we acquired them and are still maturing into enzyme caliber operations.
As we saw last quarter the pipeline for our typical turnaround opportunities and will price strategic deals remains strong.
We are still being very selective and are keeping plenty of dry.
Her on hand for what we believe we'll continue to be an attractive buyers market.
We're very excited to grow within our existing geographical footprint and we'll continue to do so as we see significant advantages to adding strengthened markets, we know well, including some of our newly newer emerging markets as they continue to mature and.
There for growth.
As I reminded you last quarter, our primary constraint the growth is not capital or pipeline, it's the availability of locally driven clinical and operational leaders.
When we evaluate each opportunity there are many factors, we used to evaluate our level of interest including the availability.
We have local leadership the buildings reputation and the long term return potential.
Our acquisition decision, making process relies on the local leaders and the health of their neighboring operations.
When they are strong if fuels our growth.
And because we see health across so many of our markets we have the.
Really to be aggressive in our growth when prices are right.
Whether it's one or two at a time or a larger deal that spans over several of our markets. Our transition process is scalable.
While we certainly have lots of room for improvement improvement, we continue to perfect. Our transitions and have been very pleased with the results we are.
We're seeing in all of our 2019 acquisitions.
We remain confident that there are and will be many opportunities to be had it right prices and are making the necessary investment in leadership talent that are all anxious to help us grow.
As our fellow shareholders tenant test the spinoff of pennant has.
Created significant value.
We're very pleased with the results of the spin off so far and are pleased to report that the separation of pennant group from enzyme has gone very well we continue to remain closely connected to our pennant partners and continue to work together as we seek ways to adapt to the ever changing needs of our patients payers.
And other providers within the continuum of care.
In the meantime, our unique entrepreneurial spirit remains alive, and well and we have several other companies that are in the very early stages of growth.
We look forward to foster fostering our entrepreneurial culture and applying proven ends on operational principles to each of those.
Mrs.
And with that I'll turn the call over to very very.
Thanks, Chad before Suzanne runs to the numbers, we'd like to share a few examples that represent some of the vast improvements that have been made over the quarter.
We have consistently highlighted our strategy of acquiring underperforming operations implementing CEO.
Caliber leadership, and improved and clinical capabilities and as we pointed out our operational improvements are almost entirely organic as facilities in our portfolio progress from newly acquired to transitioning to same store, we see dramatic changes for example in 2019 our.
Skilled mix revenue for same store operations was 51.2% compared to 44.9% for transitioning facilities, having that kind of revenue and margin expansion opportunity in such a large portion of our portfolio represents tremendous organic upside as those buildings.
Sure and expand their clinical expertise.
You get a better sense for this transformation, we'd like to provide some recent examples in June of 2019, we acquired Golden Palms rehabilitation and retirement 60 bed skilled nursing 51 bed assisted living and 99.
Bed independent living campus in Hardinge Heartlands in Texas.
This newly acquired healthcare campus was losing hundreds of thousands of dollars prior to our ownership led by executive director, Brad Edmunds and deal and 18 per as Golden Palms has undergone some rapid expansion and it's for seven months.
With a sharp focus on taking more complex and more complex patient profile Golden Palms has seen it has seen total occupancy grow by 242 basis points and skilled mix grow by 471 basis points when compared to its first full quarter of operations.
This has led to EBITDAR growth last quarter of 90.4% compared to its first three months of operation.
Golden Palms is well on its way to becoming one of the premier campuses and all South, Texas and has plenty of room to grow.
Desert Blossom Health and rehabilitation center is a.
106 bed skilled nursing operation in Chandler, Arizona that was acquired in 2017. It's a perfect example of how a transitioning facility improves in almost every conceivable way since acquisition.
Scott Petty and director of nursing.
Meredith balance being had worked.
Mostly with their managed care partners to build up their capabilities and grow the reputation in the community over the first three years of operation. They grew occupancy from 77% in year, 1% to 86.3% in year, two and finally to 90.7% in year three.
Police skilled mix days have grown from 34.3% to 36.6% to 40.2% in the first three years of operation.
As a result, EBITDAR has grown by 161% from 2017 to 2018.
With much more opportunity for growth over the next many years.
Finally, let me highlight as same store growth story.
Then would care center is a 99 bed skilled nursing operation in Oxnard, California acquired in November of 2003.
Executives.
Director, Tim Cooley, and CE COO, Sheryl Santos have continuously elevated performance in spite of being one of our flag flying operations.
Through improved partnerships with large managed care organizations local hospitals and dedicated physicians. They have developed a reputation as one of the most.
Trusted post acute providers and all of Enteric County.
Glenwood has never plateaued and their continued their team continues to improve and innovate in order to continue to grow accordingly, they have seen occupancy growth by 256 basis points and skilled mix revenue by 577.
Basis points, when compared to the same quarter in 2018, resulting an EBITDAR growth of 17.6%.
Our local leaders are the reason that Insein operations continue to set the standard for post acute care one operation at a time as these examples.
As demonstrate at a true enticing operation this progress injures for many years beyond acquisition.
This incremental improvement is at the heart of our story.
And with that.
Ill turn the time over to Suzanne to provide more detail on the Companys financial performance and our guidance and then.
All open it up for questions Suzanne Thank you Barry and good morning, everyone detailed financials for the year are contained in our 10 call on press release Fab yesterday Paul.
Additional highlights for the year and quite frankly the following.
Net income was 91.79.
Increase of 54.1% over.
Prior year spin adjusted net income for the year with 109, nine an increase of 40.5% over the prior year.
Same store in transitioning skilled managed care revenue increased by 8.4% and 15.7% respectively.
Consolidated GAAP revenues for.
The year were 2.9 billion on consolidated adjusted revenues for the year like 2.8, an increase of 20.4% over the prior year.
Other key metrics as of December 31st included.
Cash and cash equivalents at 59.2.
And 135 million of availability on our revolving line of credit.
We maintained our lease adjusted net debt to EBITDA ratio of 3.95 times at quarter end.
Decreased from 4.14 times when adjusting the prior period for the center.
This is particularly.
Really impressive given that we had a heavy quarter of acquisition, which tend to temper the raise the ratio or EBITDA from new acquisitions catches up.
Also our cash flow from continuing operations for the year was 168.9 million.
These improvements are attributable to the credit in our EBITDA from same store.
Questioning newly acquired operations and enhance cash collections.
We raised our previously announced 2020 and our guidance to between $2 and take you sense to $2 and get the eight cents participated chair and revenue between 2.4 billion and 2.45 billion.
The midpoint of.
2020 guidance represents an increase of 30.3% over 2019 spend adjusted results, which were $1.95 principally that share.
The increased 2020 guidance is based on.
Leader weighted average common shares outstanding of approximately 57.6 million.
Tax rate of 25% the inclusion of acquisition is expected to occur in the first half of the year the exclusion of losses associated with startup operations, which are not yet stabilized the inclusion of anticipated Medicare and Medicaid reimbursement rate increases product provider tax.
With the primary exclusion coming.
Stock based compensation.
Additionally, other factors that could impact our quarterly performance include variations in reimbursement system delays and changes in state budget.
Now the occupancy and skilled mix the influence of the general economy, and our senses and stopping the short term impact of our acquisition activity.
Variations and insurance accruals and other factors.
I'll turn the call back over the very sorry.
Thanks, Suzanne we want to again, thank you for joining us today and express our appreciation to our shareholders for their confidence in support we're also appreciative to our colleagues in the.
Field and the service center for Makings better every day.
We'll now turn the.
Turn to the Q and a portion of our qualities can you. Please instruct the audience on the Q and a procedure.
Yes, Sir.
Ask a question you will need to press star one on your telephone.
Draw.
Your question press the pound.
Please standby, we compile the Q on a roster.
Our first question comes from the line of Chad Vanacore Stifel.
Your question please.
Good morning.
Hey, more important chatting.
So just thinking about the increasing guidance given the state.
EPS guidance for 2020 by 12%.
How much of that would you attribute to accelerate acquisitions patient and how much toward internal performance.
Okay.
No I think.
Whenever we look at its really the vast majority of following long term performance Inc.
When we run out there in Q3, our work on acquisitions that we were going can take on pretty much everything that we including accomplished on Q4. All these acquisitions were now and it was just a matter of timing.
Hey, we're going to common and performer, they're going to comment on January inquiry for pickup.
In a little bit earlier.
The last majority of ill hop to dealer to second can you performance.
I think one other things that we continue to see that occupancy number okay go up.
Quarter over quarter over a 100 ticket.
Thank you applying for the last four quarters, we continue to see about Starplex drive. Unlike we haven't seen all year long answer just that continued confidence that we had gone to that next level maturity.
Mhm from anymore on the individual operations being greater than 80% occupancy gave us back into the company selling.
The earnings.
And just maybe add to that Chad that it's just it's also it also is a function of how the acquisitions have been transition over the last many quarters and how how they become more accretive earlier for us as well.
Okay.
And then just.
Looking at quarter rate seems to be the primary driver outperformance in the quarter.
I noticed skilled mix by days basically flat year over year, but skilled mix by revenue is up 110 basis points. So can you give us some more color on what drove that Medicare and Medicare advantage rate.
Were there any ended the year.
[music] ups or any one time items, we should consider.
Yes, absolutely talks about this a little Paul when you work.
Our number as a percentage.
The overall and so looking at Assortments as a percent is a little partner fleeting I think one inclusion you step back and look at.
I know we put these in our release of looking at the the increase on the whole day and hold dollar amount for revenue and so on a whole day that actually increase pretty substantially on the Medicare and managed care. Another skilled front, so skilled as a whole day and a whole revenue dollar increased.
So the the scope mix as a percentage out looks pretty flat, but when you look at the underlying data you actually we actually did see a driving those and you can see that because you could see that continued occupancy growth.
Turning to their rate portion of your question. Yeah. I think we continued to see as we always you in Q. for we are that's when Oliver rate's pretty much or in four fourth quarter, including the Medicaid Medicare rate and we have a couple of that managed care rates on that come in during the fourth quarter and so those are <unk>.
A combination of liberal patients.
Some people are on the rug system still they did not flip over to to the P.D.P.M. in a few of them put flipped over to the P.D.P.M.
Yeah.
Alright, well.
Right right P.D.P.M. impact.
What's your experience better terms or.
Call side of that and then maybe you can share with this how much carbon concurrent therapy or using nowadays in the Medicare population.
Yeah. Okay. So you got one show that you know.
So you know we when we look at how we performed.
Yeah.
You know if you look at it and break it out by because.
A little bit clearer story so.
3% improvement on race.
And when you when you factor out the the market basket increase 3% for transitioning and it's about six per cent per same store on the rate side and and obviously is as we said before.
You know our focus is on acquiring you know unsophisticated buildings in transforming transforming them into.
And a cute clinical powerhouse and so part part of that part of that transformation is is you know raising acuity and you see that in the difference in the rates between those two buckets.
I'll tell you that there are some security related expenses that also go up as well nursing costs go up a little bit.
As as we you know we you would expect to when we see an increase in acuity, but that increase in acuity didn't necessarily comes a function of P.D.P.M. Mccain as a function of our our increase in in in skilled census.
And so you know you you see some of the acuity related expenses also drive up as you see the rates go up the so so you know looking at the rate by itself. It's not a set of perfect picture of what's happened is a function of acuity, but but but if you look at them together. It is <unk>, they're definitely was.
As an improvement from from C.D.P.M. kind of.
We saw what happened.
With P.D.P.M. was a little bit of the opposite of what C.M.S.N. would happen, but but that it makes sense when you consider that.
Acuity drove our our acuity level drives our rates higher, but but also drives or expenses, a little bit higher as well.
So a chat and it just to add to that you know one thing I think we want to make sure. We we we underline is yeah well that's been our experience you know it's not a comment on other buildings, you know and and then the space. I mean are are are they acuity level in our buildings isn't necessarily representative.
Of of what you see in in for example, a building we're looking to acquire.
Alright, Hey, Chad just thinking about acquisition.
Yeah, I, knowing that you're opportunistic, but do you have more or less target deployment of capital for acquisitions. This year in mind.
We really don't chat I know that sounds odd, but we we agreed on our focus is to just you know the Barry opportunistic on that front and you know I will say that <unk>. Yeah. We have the capacity to to do you know more deals this year for sure both on the the.
The balance sheet side, but also you know just the strength of our operations. We have it's very mentioned, we we improved in all 21 of our markets in 2019.
And to the extent, they're strange you know in each of those markets their ability to grow follows with that so I think we have the the the the scope of geography that we're looking in this year might be a little broader than it's been in the past, but yeah. We we really don't have a dollar target. We're we're just going to take.
Each deal as they come you know one of the time and and use the the the the sound fundamentals that we we've always used to to evaluate each of them.
Alright appreciate the color thanks a lot.
Thanks chat.
Thank your next question comes from Scottsdale of Stevens Your line is open.
Hey, guys. Thanks. This is gerard on for Scott Yeah, just a couple of questions. Here I you guys called out you know growing in all 21 of your market. So I'm. Just curious you know what you guys are maybe seeing from in industry perspective or is that grows kind of you know primarily driven by your you know market share market share gains.
Seemed kind of tiny on your line gross you know in in just in just the overall industry.
Yeah, certain certainly we see a in good question Scott, we see we see improvements in our relationships in each of those markets with with pairs and a cue providers, but but really <unk>. It's it's a it's a function of our model Scott we our our our leadership.
Model is kind of coming to fruition then in most of our marketing maturing in a in a very healthy way, we see we we see each of of our our our markets improving on kind of similar fundamentals across the board, but really sound collections growth in total occupancy and skilled next across the board.
And and then it just improvements and all of kind of or.
You're lying of underlying business fundamentals.
Right now that that's helpful. And then maybe just a a separate question obviously talked a lot about hockey occupancy <unk> in the same store in transition buckets.
2019.
78% and over 80 per cent.
Can you help us think about the kind of incremental opportunity. That's that's left in those buckets and maybe you know kind of the majority of the facilities. You know I guess that would translate really more to that transitioning fucking you know kind of weird, though is facilities are along that along that timeline and at this point.
Yeah, It's a really great question I think really what you're trying to try that is you know is ever I guess <unk> m-. Each one of their pockets that we have how far as occupancy grabbed data and and.
Absolutely and the answer to that question you know when we <unk> 80 per cent on average we have is very high proportion.
I'm, sorry, I'm operation to aren't even close to that 80% and the same thing when you go down to the transitioning back into their pockets. There is a very large percentage of each one of those opera buckets, where the operations aren't even close to the average so it's not that we have most of them operating poppy average.
<unk> vast majority of them operating below average.
Great. Thanks, that's a that's all for me.
Yeah.
Thank you once again to ask a question. Please press star wanting your touch tone telephone on next question comes from Frank Morgan RBC capital markets. Your question. Please.
Hello, Hey, How're you called out the the rate growth differential between your same store in your transitioning portfolios and I'm curious.
How how yeah part of extra of my clinical mix, how long does it really take to to transform that clinical mix of a facility I mean, it is it fair to say that transitioning bucket could also have a a similar rate growth profile of it but but how long would that take.
Yeah.
You know really varies building my building, but that's that's that's the model that that we try to employ yes. It in some some some operations that can happen much quicker Frank another.
Other operations it takes a little longer really kind of depends on kind of the underlying.
You know clinical reputation and capabilities of building had in the past, but but you know the the the opportunity is definitely there when you when you're talking about the buckets as a whole the the opportunity for growth is there.
I I guess a question just looking at your consolidated margins I mean, when when I look at the the occupancy growth in the rate growth in in all those positive <unk>.
Look nice 50 basis points improvement in the consolidated margins, yeah, but it looks like I I almost want authority couldn't even more than they had is is is they're sort of a target market margin. You think you can get too, which you know you sort of more these transitioning get up to the same store level and maybe any kind of color.
What is that maybe not exact numbers, but just sort of what is the margin differential between the the the same store in the transitioning.
Yeah, maybe in just fill out a little bit to what bearing on the front that other questioner clinical I mean, there is a ton of that's I think he's out there in Kansas. Three example to hopefully try to demonstrate that and that.
<unk> that we have out there where we've got continued chronicle in prison over time I think he you know salary of added on to other Chronicle services to just to make sure you have a full picture of that there is this continuous cycle, while we can get more and more sophisticated than they can continue for the clinical outcomes and clinical services that we can provide.
Constantly comes out and then when you're looking at the margin portion of the business, obviously, if you're looking at consolidated especially under corner like we've been talking about where we had a very heavy acquisition period.
Going to bring that consolidated marching down pretty substantially because when we take those acquisitions on on their time acquisitions. They just aren't putting bringing a lot to the bottom line, we've gotten better but that doesn't mean I'll I'll have a sudden that they're putting it there's a ton of dollars heading to the bottom line. We accept that took celebrate based upon any processing and things.
We put in place and the strength that we have out in our markets, but and that's why you see that guidance got two is that we think that we can how about continued strength and more hit the bottom line throughout the corners coming up.
Gotcha and then you mentioned that are in the in the early prepared remarks about the noting the size of the growth in the the real estate portfolio and it you know you might be looking at considering something down. The road is they're sort of a benchmark level of facilities that you would want to get to before it actually is worth worthy of the time to.
To to to to consider some type of transactions. So like I said to my next question.
Yeah, Frank you know not really I think the the focus there is more about making sure that you know that equity value that I mentioned is is is not maximize but at least you know on its way to being there.
The most of those real estate assets are still pretty new at least you know to us and so you know our focus is more about you know turning the the operations around and making sure that they're they're coming on all cylinders before we were too you know try to unlock the value. We <unk>, we wouldn't want to do that too soon if that makes sense. So I would certainly there's a critical mass there with 92, but.
Yeah. It just keep in mind, how new those are to us.
Gotcha.
We are at the size now in terms of number of real estate assets that we were we spun off caretrust.
Right that was coming one of my questions. Okay. And then finally just in any updates you might have all the some of these potential proposals around Medicaid supplemental payments or just any thoughts are up they should have their and I'll hop off thanks.
Yeah look we we don't get too overly worried about what we see in in some of those you know obviously C.M.F.C.N.S. put out some some initial kind of.
Proposals that that we don't believe will will stand is that they were initially released we don't spend a whole lot of time worrying ourselves about that we know there's a lot of support behind making sure. You know, there's there's kind of a tempered approach taken by C.M.S. were actively involved in discussing.
Propose changes with C.M.S. The American <unk> Hospital Association is involved in that comment process as is the the the National Governors Association.
So there there's a lot of dialog happening and we expect that you know there there there will be some.
Some dialing back from what was initially put out there.
But but we're not we're not too overly concerned about it at this point.
Regards I am far proposal you know even in the proposal dead potential.
<unk>, there's a couple of years out and I think that that like.
You've seen I stayed there for you know when a new regulation times, we did you prepare and sadly adjust and make sure that we know what whatever the regulation may be we have a plan in place that we can execute on when you things come out.
Okay. Thank you.
Thanks for it.
Thank you at this time I like to turn the call back over to see Oh, very port for closing remarks, Sir.
We'd like to think of room for joining us and we'll go ahead and a wrap up the call. Thank you.
Ladies Jasmine is concludes today's conference call. Thank you for participating.
Disconnect.
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