Q1 2020 Earnings Call
Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time. Your line is what it can be placed on hold thank you for your patience.
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Ladies and gentlemen, just to call operator, today's conference is scheduled to begin momentarily until that time. Your line fill that can be placed on hold thank you for your patience.
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Gentlemen, thank you for standing by and welcome to the H.C.S.G. Q1 earnings call.
The matters discussed on today's conference call include forward looking statements about the business prospects of health care services group Inc. within the meaning of the private Securities Litigation Reform Act of 1995.
Forward looking statements are often preceded by the words such as believes expects anticipates plans will go may intends assumes or other similar.
Expressions forward looking statements reflects management's current expectations at the date, if this conference call.
And involve certain risks and uncertainties. The forward looking statements are based on assumptions that we have made in light of very industry experience and our perceptions of historical trends current conditions.
And expect to future developments and other factors that we believe are appropriate under the circumstances.
As with any projection or forecast they are inherently a susceptible to inherent uncertainty.
And changes in circumstance Sanchez.
Health care service.
Services groups, Inc.
Actual results could differ materially from those into anticipated in the forward looking statements as a result of various factors and the forward looking statements are not guarantees of performance.
Some other factors that could cause future results to materially differ from <unk> recent results.
Or those projected in forward looking statements are included in our earnings press release issued prior to this call and in our filings with the security in Exchange Commission, including the Fccs ongoing investigation.
There can be no assurance that the FCC or another regulatory body.
I'm not make any further regulatory inquiries or pursue further action that could result in significant cost and expenses, including potential sanctions or penalties as well is.
Distraction to a management the ongoing FCC investigation, and or any related litigation could adversely affect the or cause variability in our financial results. We're under no obligation and expressly disclaims any obligation to update or alter the forward looking statements, whereas as a result of subjects changes.
Information subsequent events or otherwise.
At this time, all participants are in listen only mode.
After the speakers presentation, there will be a question answer and an answer session to ask a question. During this session you will need to press star one on your telephone keypad. If you require any further assistance. Please press star zero. Thank you I would now like to hand, the conference over to your speaker today, Ted Wahl President and CEO. Please go ahead Sir.
Okay. Thank you Jack land and good morning, everyone, Matt Mckee and I appreciate all of you joining us for today's conference call.
Yesterday, we released our first quarter results in Plano filing our 10-Q by the end of the week.
Cobot night team quickly became the dominant theme during the quarter.
The pace at which the virus presented and altered operational protocol for our customers was unlike anything we've experienced.
The industry responded with innovation and resolve even if predictably the worst outcomes are scenarios made the headlines and there certainly have been some heart wrenching stories overall, we've been extremely impressed and proud at the level planning preparation in execution that we've seen and been.
Part of sector wide.
The countless behind the scenes examples of customers and their employees going above and beyond during these times, it's certainly for underreported, if not under appreciated altogether.
The vast majority of long term and post acute care operators are providing exceptional care.
And we've been right there with them at our absolute best delivering in the most extraordinary way.
Our subject matter expertise in infection control and supply chain management has been rivaled only by the incredible dedication and commitment of our employees at every level, but especially our heroes working in the facilities.
Their passion perseverance encourage in the face of great adversity is nothing short of inspirational.
And although it doesn't come close to approaching the level gratitude, that's appropriate I once again like to thank our dedicated field based employees for all of that they're doing entire asleep supporting our customers and most importantly, helping to preserve the wellbeing of America's most vulnerable.
Our highest priority remains ensuring the health and overall well being of those employees.
To that to that end since the outset of the virus, we implemented enhanced compliance protocols for P. P E training programs and services.
And operational policy in procedure.
Additionally, many of our customers have instituted wage premiums and attendance bonuses for facility staff, which we strongly encouraged and endorsed nearly all of our customers have included our employees in these programs as they are every bit as much on the front line, that's the direct patient care staff.
I'd also like to acknowledge the team here at our home office, who seamlessly transitioned to a remote work environment.
Our I T team did yeoman's work and getting every employee set up with hardware software and ongoing technical support.
We're not a company that has historically had any of our home office departments working remotely much less all of them.
These employees continued to deliver best in class support and service to our customers and field based operators and for that we are grateful.
Looking ahead, we'll continue to closely monitor the impact of Cobot 19 on the industry as we work with our customers and managing this unique challenge.
It's important to recall that prior to this crisis industry fundamentals were showing signs of improvement from the positive tailwind of favorable occupancy trends, the patient driven payment model and 2.4% Medicare increase.
And well quite a bit of uncertainty remains as to the impact of this virus on the industry. We've been encouraged by both the pace and significance of the enacted and proposed federal and state relief measures, which are providing meaningful financial support to an industry committed to combating this crisis.
And although more needs to be done and we remain cautiously optimistic that more will get done.
Longer term this crisis, certainly shines a light on just how crucial long term care post acute post acute care is to the health care continue on and how important adequate funding and responsible reimbursement programs are to the financial health of the industry.
In the coming months, we will continue our intensive operational focus on mitigating the effects of cobot 19, and remain proactive in delivering the best possible outcomes on all fronts above all we are deeply committed to supporting our customers in the care of their patients and residents while simultaneously continuing.
To protect the company resources, including our most valued resource our employees.
So with those introductory comments I'll turn the call over to Matt for a more detailed discussion on the quarter.
Thanks, Ted and good morning, everyone before I review the first quarter results I wanted to emphasize that in addition to our intensive operational focus on cobot 19 that had spoke about we have and will continue to prioritize our strike their strategic priorities to that end, we will remain vigilant in ensuring contract integrity between us.
And our customers whether it relates to increased labor and supply cost for spending that falls outside typical scope of services were timely payments for services rendered our customers commitment to both the operational and financial aspects of the partnership is necessary for the sustainably sustainability of our business relationships further will come.
Can you to prudently manage a strong balance sheet with no near term maturities that appropriately complements our cash position. We believe these priorities not only best positioned the company for long term growth, but are more relevant than ever and cobot 19 environment.
As far as the first quarter results revenue for the quarter was $449.2 million with dining and nutrition and housekeeping and laundry segment revenues of 224.9 million 224.3 million respectively.
Net income for the quarter came in at $20.2 million and earnings per share was 27 cents per share.
Direct cost of services was reported at $387.2 million or 86.2%.
Temporary cost increased primarily relates to approximately $2 million of payroll for account managers. This transition out of a facility that we are no longer servicing as well as cost related to starting up new business during the quarter.
We expect this cost impacted decrease as account managers continue to be assigned to new facilities at which they are budgeted and the new business additions operate on budget overall, our goal remains to manage direct costs at 86% by the end of the year, excluding any cobot 19 related costs temporary investment in management capacity or any new business.
New business startup inefficiencies that may occur.
Dining and nutrition, and housekeeping and laundry segment margins were 6.4% and 10.7% respectively.
That's gionee was reported at $30 million or 6.7%, but after adjusting for the $5.7 million decrease the current deferred compensation actual aes gener was 35.7 million or 8.8% and we expect that you need to remain at that level in the near term as those costs are largely fixed but continue to target.
Question I have 7.5%, excluding any cobot 19, or FCC related costs with the primary pathway to leverage that existing in the topline growth.
Investment and other income for the quarter was reported as a 5.2 million dollar expense again after adjusting for the 5.7 million dollar change in deferred compensation actual investment income was around 500000.
We reported an effective tax rate of 24.6% for the quarter and expect our tax rate for 2020 to be into 24, 26% range, including Watsi.
To the balance sheet at the ended the first quarter, we had net cash of approximately 105 million and a current ratio of nearly three to one cash flow from operations for the quarter was $12.7 million inclusive of the $4.6 million decrease in accrued payroll and because we previously had called out that the quarter to core.
The impact of the 2020 payroll accruals, we wanted to confirm that the actual Q1 payroll accrual was eight days not to 17 days that we previously anticipated. The reason for that was that due to some of the cobot 19 related uncertainty regarding potential delays in direct deposit processing and Fedex delivery times, we decide.
Added to Prefund the payroll at the end of the quarter to mitigate any risk of paycheck disruption for our employees. So, whereas we would have typically funded payroll on the Wednesday in the last pay period of March we funded on that Tuesday.
For the rest of year, we're expecting payroll accruals of 10 days in Q2 four days in Q3, and 12 days in Q4, but of course, the payroll accrual only relates to timing and the impact ultimately washes out through the full year.
Yes, so for the quarter was reported at 61 days consistent with the previous quarter. After adjusting for the implementation of the current expected credit loss Cecil as required by the financial accounting standards Board effective January one of 2020, the new accounting standard required a transition from an incurred loss methodology to an expected loss methodology.
And when evaluating potential credit loss, primarily relating to the company's accounts and notes receivable the implementation of Cecil resulted in it in an initial onetime increase of $42.2 million to the company's allowance for doubtful accounts through a reduction of stockholders' equity.
As announced yesterday the board of directors approved an increase in the dividend to 20.25 cents per share payable on June.
June 26 2020.
Cash flows and cash balances supported it and with the dividend tax rate in place for the foreseeable future. The cash dividend program continues to be the most tax efficient way to get free cash flow and ultimately maximize return to the shareholders.
This will mark the 68 consecutive cash dividend payments since the program was.
In 2003, we're proud that it's now they're 67th consecutive quarter, we've increased the dividend payment over the previous quarter. That's not a 17 year period. That's included for three for two stock splits we recognize the dividend is important to our shareholders and we've increased in in line with our long track record.
And with those opening remarks, we'd like to now opened the call it for questions.
At this time as a reminder to ask a question. Please press star one on your telephone keypad.
Again that is star one on your telephone keypad to withdraw your question press the pound or hash key. Your first question comes from Andrew Whitman from Baird. Your line is open.
Great.
What question.
Just a personal balance sheet, it looks or something or the liability side did you guys.
Wrong, you're revolver in the quarter.
A lot of companies that can use new talk.
And she.
Yeah, we didn't specifically drawl at quarter and per Se, but you know during any quarter, Andy we're carrying some level of debt just a short.
Cover short term working capital needs.
Right of the timing of what is our largest.
Outflow payroll and the timing of cash collections from our customers at any point in time this quarter.
We ended with 50 million, whereas you know the most recent quarter. We ended with 10 million. So we did for two reasons. One as you suggested to has some additional liquidity in light of Cove. It 19, and some of the uncertainty around financial institutions, and how would impact the banking system at least in the short term.
Also what Matt alluded to in his opening comments.
As a as an additional as they have some additional liquidity on hand to pre fun payroll for the employees.
But that's helpful. And then they just wanted to talk a little bit more about the the numerous kind of funding provisions that have been put in for the benefit of your customer even some <unk>.
<unk> holidays.
Q.
But could you just talk a little about a little bit about some of the things that maybe talked about.
How are your customers are are being compensated Judas challenging time for them to cheat liquidity in place so that they can get payments are.
You to do your services.
I think just understanding the myriad of things going on right now it'd be really here.
Yeah.
It's there's certainly a lot of moving parts here I think it's worth noting.
Tried to cover some of this at a high level in my opening remarks that since the beginning I think the administration.
Certainly asked operators to continue to prioritize providing care to the residents and.
Every understanding we have is that the intention of both the federal and state government is that operators will be kept hall, if they're not hole in real time.
Tension should be and we'll be as we understand that they'll be made whole relative to any lost revenues are spend that they may incur as a result of Kobe. So obviously ordinary reimbursement and funding sources remain in place, but certainly to deal with Kobe 19 related costs, there's been a number of programs.
As you suggested to mitigate the financial impact I think you know from a short term cash flow perspective, certainly the $30 billion and grants that was part of that cares Act, which was the 6.2%.
Prior year Medicare's fee for service spellings.
Had a beneficial impact.
Immediate impact of the industry and was tilted towards the heavier Medicare providers, along with you know the accelerate payment program and the ability to withhold payroll payroll taxes, both of them are loans not grants, but again, what the industry need is more grants and less.
Loans.
<unk> for the remainder of 20, <unk> 20, 2020 and into 2021.
You know grants like the two per cent Sequestrations holiday, which begins in may through the end of the year.
Is going to be impactful the 6.2% increase in the federal medic medical assistance percentage match now that still 50, 50 in terms of which stage or or not participating but that could change you know at any given moment and then I think the under reported benefit for the industry is.
The new payment rule, which proposes a 2.3% increase and leaves P.D.P.M. in place, which I think has been you know a solid reimbursement of responsible reimbursement design for the industry. All of those are have been and are positive immediate steps, we're certainly needs to be done I think that.
The one that we're we're most interested in and anxiously waiting is on the Medicaid side and that as far as we can understand is going to be more in the second traunch of funding that's going to come out and that'll leave <unk> that'll that'll further four to five some of the providers that were maybe left out some of them were Medicaid centric provider.
That were left out of the first 6.2% Medicare C.M.S.
<unk>.
And then anti just to the what the final component of your question related to health care services group in our ability to defer payroll taxes, we do have that opportunity and we will be taking advantage of that to that of result in the deferral approximately $40 million and payroll taxes. So half of that would be repaid by the end of 2021 and the other.
<unk> at the end up to 2022, so that I have a positive cash low impact this year with the offsets in 21 22, and as we sit near there no. Other government programs that we anticipate participating in or or benefiting from directly most relevant for us as Ted said will be the programs grants and opportunities that are made available to our clients.
Super who had just one last question that I wanted to ask has to do with that.
Usually your businesses <unk> predictable your contract you know when you do but certainly with operations being affected. So many ways is probably times, where your customers are going to ask you to go outside of the contract.
<unk>.
And you're just talking about the processes.
Place in the relationship how it works with your customers. When you have to go outside the written contracting how you get compensated and if you get compensated for those things.
Yeah.
Overall, I I guess I guess in this environment early in any environment overall, our expectation is that for any additional spending related to staffing wages supplies that falls out the typical scope of services and again in this environment Coby coby at 19 related or otherwise is tracked and communicated to the customers.
As part of our standard supplemental building process. The internal acronym for that is our Bcr, which is outlined in all of our service agreements and very familiar to our customers. So we would expect you know inside or outside the Cove at 19 environment that process to be followed.
Yeah.
Your next question comes from.
Your next question comes from <unk> from our B.C. capital markets. Your line is open.
Your morning. Thanks.
Can you many give us a little bit more color on what is happening at the facility level, Ted <unk> alluded to hear prepared remarks. It sounds like workers are still showing up and doing their jobs for the most part of you if you've seen any pick up and turnover in those positions Ah argh job applications trendy not given the higher unemployment or people maybe.
A waiting to this because of the risk.
Are you seeing things like art and managers negative pitching more to help out with anything kind of how how things are functioning at the facility level.
Yeah, It's a great question, Sean It obviously, you specifically related to you know our ability to fully staffed facilities that was something that we were exceptionally mindful of and I've been monitoring very closely to date staffing thankfully has not been an issue I think there's really a few reasons for that first off our people deal with.
Communicable illnesses all the time, it's just a part of the job, whether it's Murcia C. diff influenza scabies.
Not to minimize the impact of current a virus, but there's confidence among our employees in our training and how well prepared and protected they are so that's definitely been a significant component in in the education in the confidence that they bring to work each and every day. The reality is that there's likely a part of them that sees the unemployment data and a lot of people out.
Work and appreciate the reality of the current labor market and environment and and this you know a cynic may question. The validity of this but you know among many of our employees. There is a significant emotional commitment to the patients in the red residents that they see on a daily basis and yeah. They want to be there to provide karen to help in any way so.
Thankfully staffing has not been an issue and I guess more specifically Shaun has kind of two hour operational protocol. The fortunate apart from where we said is that all of the recommendations whether from C.D.C. or C.M.S., two preventing and containing the spread of of Corona virus fall within the guy.
Lines related to influenza so from a true operational perspective.
Very well equipped the only real additional requirement would be additional personal protective equipment requirements, which in coordination with our clients were obviously, providing to our employees to make sure that they're fully not only educated protected as well.
<unk>, that's that's great and then maybe a little more directly on on how old. The industry relief is is flowing through to you can you talk a little more about it from a cash collection standpoint, you've had a a few weeks impact in March from this I guess.
Movie most everyone to a weekly payment basis, the timing on that.
Oh, please working out really well you've had several looks now on how catch collection aim at the trend it for at least 60% of your Bayes, thus far in April.
<unk> has there been any any meaningful or noticeable change and so far in in April.
No and and and that that would be our expectation Sean were look we're working proactively with our customers to understand exactly where they're at financially.
But our customers very much depend on the services, we provide and you know our expectation is at fault payments will continue to flow to A.T.S.G., especially in light of the fact that you know the vast majority of our costs at where impairing payroll and payroll related critical to the care and content.
<unk> of the facility operation So just like the the the the the the final the final aspect of a business any given business or in this case provider would would not find would be their payroll and we have the same expectation as it relates to us. That's further aided by the fact that we have over.
60% of our customers paying US you know on a weekly basis, where it at a frequency greater than monthly. So again plenty of conversations ongoing related to payment terms by our expectation is that we're going to continue to be paid for services.
Normal course of business type way.
Great. Thank you very much.
<unk>.
Your next question comes from Ryan Daniels from William Blair. Your line is open.
Hey, guys.
<unk> I guess it started off you can provide a little color on the sales outlook burned now what's the earth.
Management on one hand, it's a little bit cold given the less travel and you know sniffs kinda preoccupy, but on the other.
Like the need for your expertise is is up a little bit.
<unk>, you're exactly right neck that you know.
Without a doubt and and we certainly.
Never wish for circumstances like this and want to be a hyper sensitive and how we you know sort of phrase things, but as it relates to the services that we provide as Ted just alluded to you know in the nursing home environment you'd be hard pressed to find departments that are you know less directly.
Affiliated with infection control you know when you think about housekeeping and laundry departments and certainly you know dining services are always paramount within that environment. So very important service and it gives us an opportunity to distinguish ourselves relative to would be competition or the in house managed model. So you know this does without.
Opportunistic certainly offer us an opportunity to bolster our reputation now having said that we are clearly not focused on selling the business or in an onboarding new business right. Now, we certainly don't want to lead with our Chen and overextended ourselves operationally, but there are conversations that are happening our sales folks are primarily.
Supporting our existing customers right now in supplementing our operations team, but there are engaging in dialogue with prospective customers as well and you know if anything this offers us an opportunity to sort of further add two and refine our pipeline of new business opportunities for when we do reached that point at which it makes sense.
Just every accelerate into growth mode. Yeah, we had talked previously about the expectation for really growth to kind of resume in the back half of the year I think I think that I think that timeframe still makes sense highly unlikely that will be prioritizing any new business additions here in the second quarter more likely they will be.
Pushed out the back half of the year, but the hope is that at least by <unk> by mid year, we'll have additional clarity as to the dust having settled from the transition to P.D.P.M. and obviously much more of a priority corona virus not that the virus or the treatment of covert 19 will be in the rear view, but at least a habit.
Her sense for the industry landscape and what the go forward proposition really looks like as it relates to grow.
Great thing peculiar helpful. And then I guess turn into margins they looked pretty close kind of where you guys have been targeting I was just wondering it you know the man who had been deployed actively this quarter and kind of you know what's that going forward.
Well, we I I know, Matt spoke to some of the margin profiles and his opening remarks by you know from from a a direct costs of services perspective.
Continue to carry some of the access management capacity that we had coming into the year. Currently we did make progress in in assigning some of the managers that we were carrying into facilities, where they're specifically budget at at and obviously Cove at 19 created an opera opportunity to you know further.
And more specifically deploy still other with a manager. So we're still we still have about $2 million of management cost that we're carrying and we're deeply committed to continuing to invest in those managers that is our most you know that is that is truly the most difficult part of our businesses the hiring and developing managed.
People and.
Often negating factor are primarily the gaining factor on our growth, especially in light at the demand for the services.
And in this environment that demands on even further heightened so we're going to continue to invest there and.
<unk> would expect direct costs to be you know our target 86%.
You know, we're going to continue to we're going to continue to try to our best to management in and around that range in light of Cove at 19, especially when you consider S.G.N.A.
You know the Mat mentioned in his opening remarks that in the current state, we're going to be in and around 8% or at least at the current levels. You know once we start to wrap up the top line, that's when you'll really see that leverage in S.G.N.A. because again the majority of those costs are fixed.
Thanksgiving.
Take care.
So you're next question comes from A.J. Rice from credit Suisse, you're <unk>.
Hi, everybody. Thanks, maybe just well that margin question it a little bit more specifically I made your dining margin just 6.4% were up 230 basis points sequentially and your housekeeping at 10.7 was up 120 basis points sequentially. So a decent.
Big improvements actually I know it bounces around a little bit from quarter to quarter of what was there anything.
Usual are there I don't remember seasonality goes there seasonality in there or anything that is particularly helping.
You know as I just building off of the last the last answer to the the question and we did have some successes past quarter and assignment signing some of that access management capacity. It was about a million dollars of management that was is now assigned you know within a budget at any given facility and a significant portion of.
Directly benefited dining margin. So that was certainly part of it even coming into the your A.J. you know one of our strategic priorities simply said was managing the base business, but that for US means a relentless focus on systems implementation at adherence customer satisfaction compliance and budget.
The actual really taken care of the customer you know and the operations within the existing customer base. So I think that focus certainly pay it off in some improved underlying performance and you mentioned seasonality you know, we we generally don't call that out because there are some of course, there's some puts and takes every quarter that.
Generally washes in any given quarter buy into for you do have some higher food related costs, specifically for Thanksgiving and Christmas celebrations, and the timing of those supplemental buildings or V.C.R.'s you know at least a portion of the may fall into the subsequent Porter.
Now that that's that's hundreds of thousands of dollars that's not millions, but I think it to the collective of those three things that that helped improve the dining margins.
Specifically.
Yeah.
Thinking about the nursing home customer base I do my understanding is there is pressure on the occupancy side of that because of a some holds in some facilities be.
<unk> the throughput from the hospitals, you know downstream from <unk> <unk> surgeries and other things like that.
So I guess there is some level of pressure on on your.
Message that you're coming is that the government.
Funding has been sufficient to offset that there for your see the customer base the sort of even keel at this point in terms of credit quality and all is that the way to think about it or I mean, you know I've seen various.
<unk> six percentage point pressure on occupancy rates in a nursing homes are you seeing something like that it is I.
I mean after the government funding I'm, assuming that you might be a little more concerned about that is that right.
Right and I would never use the word sufficient to describe were adequate to describe the government funding. That's occurred what I will say is that it. It did plugging short term liquidity hall for the vast majority of providers, although more still needs to be done because to your point A.J. you know the and worse.
The same type of data that three three to six per cent impact on senses today really less pronounced among the the true long term care.
Resident population and felt more in the post acute segment as you suggested hospital elective procedures are down the corresponding discharges have decreased.
Most of our customers have a mix of both longtime residents as well as short short term, we're short stay rehab patients.
Depending on the facility, it's weighed more heavily in one direction or the other so we're likely going to see additional near term occupancy pressure as procedures remain as hospital procedures remain had to reduce level and facilities with confirm covert cases or even temporary close to a new admissions so continues to be uncertainty.
I I, we we we strongly believe more is going to need to be done, especially you know as the impact of occupancy pressure is felt as well as Kobe ongoing covert 19 pressures on the cost side because this the reality is this this virus, especially in long term.
Posted you care is likely to be a major issue for the industry unless or until there's a vaccine you think about the perfect storm.
For that type of the type of environment is highly contagious and it poses the greatest threat to those with underlined conditions, which oh by the way is nearly the entire resident and patient population in the long term of post acute care settings. So I I, we do believe that at least 10 days the government.
<unk> has certainly stepped up although much more needs to be done over the <unk> in the coming months from our perspective.
Okay, because the last question.
Understand about who's extra demand for additional cleanings or whatever that that is going to get pass through to the underlying customer.
What happens if your <unk> your hourly employee based either gets coven. It has to be set is at home for 40 days or I don't know, whether you're seeing and I know some or see this issue of workers not wanting to go in because of they're just afraid there.
To get the virus are you experiencing anything on either of those fronts and the is the is the underlying quiet responsible picking up the extra labor costs associated with having someone stay at home quarantine and having to replace them with someone else.
So your question A.J. you know, there's there's a couple of things that I mentioned in previous comments that apply you know thankfully we've to date not had trouble staffing. The facilities. You know that's obviously always <unk> primary area of focus for us and especially during this environment and times, but we had fortunately been able to <unk>.
She knew staffing the facilities reality is that that there has not been much of a need for additional staffing beyond what's typically required you know as I mentioned earlier really from October through April each and every year. It's influenza season, and you know while that may not resonate as much in the general U.S. population it certainly very impactful within.
The skilled nursing environment. So you know all over the C.M.S.N.C.D.C. recommendations for containing and controlling the spread of current a virus fall within what's currently recommended for influenza. So unfortunately from an operational and a staffing perspective as I say nearly all of what's required from current.
<unk> containment perspective is already in place each and every year as it relates to containing influenza and the other component is that it runs a bit counter intuitive on on the surface, but we've actually seen record numbers of applicants fully recognized that that's largely to do with view overall labor environment and unemployment since.
Trio for the U.S. population, but that's further enabled us to keep the facilities fully staffed that's imperative. So you know whether it's dealing with employees, who are afraid to come to work or whether they or someone in their household ultimately becomes infected or if somebody needs to be home with children because of schools being closed.
We are required to staff the facilities. Unfortunately, thus far we've been able to manage that with the existing employee population and as I said record numbers of applicants at both the lines that levels and also into the management training program.
Okay. Thanks on.
Your next question comes from Mitre Ram Gopal from sit Dokey. Your line is open.
Yes, how yeah. Good morning pretty much my question is a bit answer I just wanted to follow up again in terms of some longer term business opportunities as a result of the pandemic I know, it's focus being out in nursing homes and I'm just wondering some out of areas like assisted living et cetera. If you were also seeing some heightened interest in terms of.
<unk> potential customers looking for you to maybe help them on that.
You know that's that's not as you call out mature been a primary area of focus for us, but you know this is a a pandemic that is certainly influencing all components of the healthcare continuum and certainly a senior living falls within that as well. So you know it in certain markets we've had more.
Conversation with prospective clients in senior living but that really as you would recall only relates to the dining opportunity for us So where there's cross ownership you know we may lend additional temporary operational hand from a disinfection perspective or to educate the employees in in a senior living facility. So.
You know our long term view as it relates to that opportunity remains unchanged very appealing dining opportunity, but really from a housekeeping and laundry perspective, which would be more relevant as far as covert containment not exactly applicable.
Okay, I know that's great and.
Back again, obviously, you you've pointed out in terms of the elevated pair will cost and you certainly have a number of manages you can deploy <unk> facilities et cetera, I assume the game plan is obviously no. One knows went how this all plays out at a time make but at least a plan right. Now is to continue to carry every one is that fair.
Yes.
Okay. Thanks, again, if they could <unk>.
Your next question comes from Jason Plagman from Jeffrey's. Your line is open.
Good morning, just wondered if you could expand a little bit on your your outlook for 'em sequential revenue growth for that for the next few course, yeah. It sounded like you're thinking revenue is close to flat sequentially. You know maybe for the next quarter or two and then you might be more comfortable taking on new business.
The end of the year are into 2021 is is that a fair characterization or you know just how are you thinking about kind of the trajectory for for the next two to four orders.
Yeah, I I would not characterize it that way I would characterize it as we are you know highly focused on mitigating the effects of covert 19, Oh and will continue to be through the quarter awhile also focusing on or other.
You know strategic priorities that we call it out at the beginning of the year round managing the base business assigning our managers to new opportunities and maintaining a disciplined view on growth in credit decisions I think what Matt tried to add some color too and I'll I'll just reiterate that is that we would expect by the end of the second quarter certainly not.
Covert 19 to be in the rear view mirror, but expect to have some further visibility on our level of comfort or discomfort and ramping up to ramping up growth or you know in a it being more selective with certain opportunities that are out there. So.
Short short answer would be we'll have more visibility. We believe you know in the coming in the coming couple of months than we do today because again the the path of covert 19.
Nationally worldwide, but certainly within the industry is still littered with uncertainties.
Okay that makes sense and then as as far as just the you know <unk> of your potential new clients you know how any changes in how you go about that or you know how any <unk>, how how that complicated by you know just the disruption are related to co Ed with you know short term.
Potential disruption in in occupancy r. or or in expenses fair fair clients and it just to impact and their financial health.
It will continue to be a holistic evaluation of all the criteria you mentioned and obviously qualitatively we would consider both.
Quantitatively, we would consider the impact of covert 19, and then qualitatively and we would impact the potential uncertainty in any given opportunity.
Okay. Thanks for the questions.
Thanks, Jason.
There are no further questions at this time I will now turned to call back over to Tedwalk presidency, Yeah.
Terrific. Thank you Jacqueline in the coming months, we will continue our efforts to mitigate the effects of Kobe 19, while delivering the best possible outcomes for all of our stakeholders. We will continue to prioritize managing the base business, ensuring that our managers are assigned to exciting new opportunity.
Cities and maintaining a discipline view on growth and credit related decisions.
Above all we are deeply committed to supporting our customers into care of their patient and residents while simultaneously prioritizing the health and safety of our employees and protecting company resources. So on behalf of all of us at H.T.M.S.G., Matt and I would like to thank Jacqueline for hosting the call today.
Thank you again, everyone for participating.
Ladies and gentlemen, there's concludes today's conference call. Thank you for your participation you may now disconnects.
Yeah.
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