Q1 2020 Earnings Call
Coupled with the increase in surgical specialists choosing to bring their cases to our hospitals that was delivering ahead of expectations. It was also clear we were beginning to realize value from the capital investments made in the second half of 2019.
USPI segment was ahead of budget due to similar service line expansions at the end of last year higher acuity procedures and the effective ramp up of acquired in de Novo centers from 2019.
Our conifer business continued with strong client revenue growth performance translating to stronger fees and ongoing efficiency initiatives.
The focus on detail is having an immediate impact and we're quite pleased with the early signs of continued improvement.
This level of performance coupled with the continued expense management and operational improvements resulted in a strong company wide results through February ahead of our expectations.
These were great results by any measures and indicative of the strides we had made as an organization during the last year tore the basis of sustainable forward performance.
All right for as we entered late February the pandemic was beginning to take shape as a potentially serious situation.
Supply chain leadership integrating a key functional area as a quick response team.
We established when a few short days tracking and monitoring of these important items, including the actual by hospital or positive or negative cases persons under investigation Covance discharges and deaths coupled with a close communication process. So every engaged hospital in group across the entire.
Enterprise, we're using the same source of information and receiving the same precise recommended actions.
There's also allowed an open an immediate sharing of learnings best practices and fundamentals appear support across the entire network.
Additionally, as new CDC state local and other agency rules procedures and information, we're being issued which was quite frequently the command center ensured we remain in a constant and aligned execution across our network.
As we began to see these cases reason hospitals, we immediately acted to ensure patients staffing safety was addressed across their relocation focused on isolating cobot 19 cases.
We were keenly aware that the protection of our staff and facilities were critical for our system to remain response.
And were able to accomplish this throughout our entire system remaining on the front line and responses to the communities.
At the same time across the country the shelter in place and suspension of all elective surgeries began the quickly rollout.
Much of these actions took place between March 15th and 22nd followed by the U.S Surgeon General Street on March 14th the basically hold all elective surgeries.
On some governors may not have officially suspended elective care shelter in place orders across the country achieved the same effect.
During the same period of approximately March 15th to March 26, we saw the number of POI cases jump from less than 400 to over 1000.
And a strong increasing confirmed covered 19 cases, while the number of penalize continued to increase daily.
Our preplanning was instrumental in ensuring we are defined had a defined set of plans and were able to maintain although with some difficulty the initial surge across the system.
We had significant increases in Detroit, Massachusetts, Florida in Southern California, with each system responding aggressively and doing an incredible job. Other markets also felt the initial strains in these early weeks dealing with numerous cases in the unknown preparation for what we were told would be a new surge in many locations Fortunately.
We maintain coverage in response and were able to handle the spikes in issues that presented across the system.
Slide five all these series critical issues were engaging our frontline support functions, we quickly realized that the significant drop in volumes is going to have an immediate series effect on our business. We determined we needed a new staffing strategy for our headquarters in Nonclinical operations, which led us to taking actions or series of weeks.
Deferral, our approximately 10% of the workforce, which included 3% of hospital field operations, ensuring however, we maintain stabbing coverage to handle the actual and potential demand to covert 19 patients as well as the necessary staffing to respond to emergencies that might have presented.
And the hospitals, we took action the flow and flex down teams and USPI closing over 100 facilities and reducing the hours in days in the balance of the facilities. We maintained a minimal staff as recommended by CMS and some USPI locations compared to handle any overflow from hospitals driven by then.
To serve emergencies, which fortunately did not occur.
Given the reductions were in the hospital units not directly is addressing cover 19 patients, we redeployed personnel impossible and shutdown certain service lines to ensure we maintain adequate ERP and space available for the potential surge of patients.
By the end of March you are traveling in admissions decreased by 35%.
Capital surgeries by 50% and USPI surgical volumes by 75% driven by the shelter in place orders and the potential patients apprehension and contract in the buyers in medical facilities.
Increasing coli cases in areas like Detroit, Florida, and Massachusetts required the use of premium time, and we also had USPI hospital nurse volunteers, who were not needed at their locations due to the shutdown volunteer to travel to our Detroit, Arizona hospitals as well as some that volunteered to go to New York City.
To support hospitals, and the hardest hit areas of the country.
We added temporary staffing where possible and available to ensure we are the needed coverage as cases increased in those markets.
These were actions taken immediately improved effective in supporting specific locations. Additionally, we continue to acquire needed PV, regardless of pricing, which in many cases was five to seven times higher than our normal contracted price.
We use CDC.
State and local guidelines on PBS PB usage and were persistent on a constantly supply and balancing as we engaged every available source and chase down many that proved to be falls to acquire additional PB, while the situation was chaotic our frontline personnel were rolling.
Our teams behind the scenes work endlessly to support every location and delivering this mission of care.
I'd like segment also to comment on our global business Center in Manila.
In Manila Lockdown occurred on March 15th.
Forcing our 900 associates to work from home.
As part of the creation of this organization, our business continuity planning, which truly put to the test.
Within a short period of time on Manolo operation was functional and performing at about 90% of the pre lockdown levels from home. We continue to see excellent performance from the global business Center and we continue to increase the leverage of this highly effective in skilled team.
Moving to slide six is now brings us to today.
We are carefully coordinating a comprehensive recovery effort across different geographies incompliance with state and local orders, while we are continuing to treat covered patients.
During the past weeks, we have engaged in the planning and detailed steps to reopen elective surgeries and to over our hospitals to our patients in our communities.
These plants focus on every physician and how they will re engage in their respective practice, including how they plan to priorities.
Prioritize cases, how this fits into a methodical ramp in all our schedules.
Procedure in diagnostic screening.
All while balancing staffing and support units to effectively have a labor plan that mirrors the demand curve.
Our labor plan that engages with our physicians to ensure their needs are met and balance well with the needs of the patient and the facility.
We have begun to resume elective procedures consistent with area regulations and in close consultation with our physician.
Our early reads are promising and we expect to may take a several months to bring up our USPI locations to pre covance volumes and hospitals. It will be a balance of how quickly Colby cases fall how effectively we can rebalanced the surgical volume and how well we can reach into the communities and reassure the patients and the overall.
Community with the hospital is open and safe.
IAR volumes will need additional focus and we've initiated a detailed marketing campaign to reinforce what our cards do and can do indu as appropriate highlighting our trauma levels and skills and that they are safe and open for business. These campaigns, we tailor to Reengage our community along the way.
Concepts of our community built on care that has been so successful in the past.
It is early for us to make predictions on speed and curve the restart, but we're engaging at every level to bring our services back to pre told it positions. We also have taken steps to ensure adequate debt capacity a case of a surge in covert cases and have access to inhouse colder testing in all markets.
Yeah.
Moving to slide seven let me address the lingering question about what we believe will happen at the pandemic surges in the fall or winner.
As with everyone else, we have no idea that will happen, but importantly, we do have a plan, which should assist us in responding more safely and effectively in every market.
Our view is this plan is tailored to the market the demographics and the learnings we've had from this current situation on deployment of people supplies and support as a framework, we will isolate covered patients in markets, where we have multiple facilities utilizing a designated covered facility to receive patients we will ensure everywhere.
Patient as limited access and Darex cobot related cases to specific place, where we can determine at that individual needs to be transported organ self direct to the centralized location testing treatment as appropriate admissions or sent home orders to self isolate will be coordinated from that primary location.
These functions as a designated facility will provide updates and reporting and provide appropriate follow up with patients in loans.
Where we have fewer locations will designate a specific winger floor that can quickly be adapted to the coldest patient loan and providers care isolated from the balance of the facility. Our belief is we can maintain safe clean facilities that do not recovered cases or they do will allow them to isolate patients.
Allowing us to provide the ongoing and reliable care our communities expect while ensuring our response to cover cases is direct and effective in every community.
This also ensures our USPI surgical centers will remain open in functioning, allowing normal flow patients to continue to receive the needed medical care and life saving actions we provide.
To accomplish this we need to be transparent that community of our actions communicate and advertising approach rebuilding the confidence in the safety of locations. We retained prepared to move people and take the actions this dictates without delay.
These plans are now being finalized across our system and we believe will be extremely helpful providers reappears for headquarters in office locations. We have a strict zero tolerance set of procedures and forced daily for every employee to protect them and the others. They work with.
Slide eight from a financial perspective, Weve address specific actions to prove our cash position, which Dan is going to detailed deeper during his review. Additionally, while the strength of January to mid March help cover Q1 April was a tough month as we realize significant volume reductions across hospitals and USPI segments.
Driven by the shutdown orders.
We closely managed our gross cost profile by taking responsible and rapid actions utilizing a list of things designed to ensure operation areas remained effective recognize the reduction in sport and areas that were closed by the orders on shelter in place and elimination of elective surgeries as I stated earlier overseas.
As a weeks we flow furloughed, approximately 10% of the workforce, which included 3% of hospital field operations, maintaining our operational effectiveness, we have reduced our annual capex by 300 million or about 40% deferring and eliminating projects unless they are life threatening are critical to sustaining core operations.
Yes.
We've also successfully issued 700 million of additional secured bonds and have increased our revolver by 400 million to $1.9 billion.
We received approximately 345 million in grants to date or approximately <unk>, 0.2% of 175 billion authorized by Congress for grants under the cares acts and other stimulus legislation.
CMS is advance us approximately one front point $5 billion under their advanced payment authorization, which will have to pay back starting in August and completing by March 2021, and less cars and Congress acts to extend the repayment schedule, which would be extremely helpful.
We also expect to differ in 2020 based on the cares at approximately $250 million payroll taxes, which we will have to repay 50% December 2021, 50% in December 2022.
Early in the pandemic prices, we have also delayed the funding of our 2019 for one k. match that we typically funded in March each year.
We did release and for our eligible furloughed employees. So they could avail themselves of this resource and at this point, we're going to be shortly funding the balance of all eligible employees.
That leads to the question of guidance and guidance is important and we as much as everyone else in this call we'd like to firm up expectations for the second quarter in the full year frankly, we pulled our guidance on April 2nd because it was clear depend where it was clear the pandemic as a developer simply impossible to put any reason.
And we'll framework together.
We realize April via very weak month, given the shutdown in the lack of elective surgeries, we view mayors to begin in the recovery and are pleased with many facilities opening at 50% of pre cobot surgeries last week and a more promising scheduled. This week. We're also aware that in some markets such as Detroit.
This restart maybe slower as cobot cases are ultimately closed out over the next several weeks.
And we will have to determine the flow of new and remaining cases by market to get a realistic cadence before we can draw reasonable conclusions.
USPI seeing approximately 40% of its pre cobot cases, as they start to reopen across the country again as with the hospitals much will depend on market partners and state and local approach to opening economy.
However, we'll continue to perform perform as they have throughout the crisis and we'll have to deal with decreasing billings, resulting from the pandemic.
Their focus remains on current and past due collections for all clients as well as patient intake functions and tenant, which we believe will begin to ramp up our objective is to return quickly but to do so safely and with a keen awareness of the market level conditions, which will dictate our level of engagement will manage the cost profile.
Tightly with attention to adding back services and staff based on demand and you and ensuring we do not get ahead of ourselves in this process.
Since we're not prepared to answer needs. The guidance questions. We are planning to hold a briefing in June to discuss the business and our viewing the restart across all of our areas since as I said earlier today, we can't predict the speed of the recovery.
We will approach this as an open hall similar to the various financial conferences, we attend each year, we will provide an overview on an update but will not discuss specific numbers other than to put them in context of what we see occurring realize we can discuss trends and observations, but the specificity specificity we do.
Calls like this normal earnings calls is not realistic to expect in this update since our financial books will not be closed or audited. So we want to set a clear expectation now we will provide a question and answer session as well as to ensure we can provide as much transparency as possible. Since we know how important is next few months will be dealing.
With this are known situation.
We will still hold our scheduled earning calls to provide the quarterly analysis and in depth discussion you expect.
Regarding the spin economy.
We are honest we were on schedule at the end of February as you would expect for the last eight weeks, we have been 100% engaged on the pandemic and are now equally engaged in recovery.
This is no signal in the statement. So please do not speculate as we will continue the actions to prepare to spin on schedule fully aware there may be new bumps in the road we have to address.
As with guidance will continue insurer with transparent on the timing and spend advising any changes if necessary.
As I noted to be recall, we've had a tremendous momentum based on a solid foundation. The teams have laid over the last few years.
Foundation built by the successful turnaround led by this team has served us well and executing leading to the pandemic.
Our continued focus on portfolio optimization use a detailed analytics fueled by real time data improve patient physician experience strong and reliable globalized operating model and solid underlying free cash flow focus will continue to position us for strong return to go.
Growth once we begin to reopen in operating.
This team is energized focused accountable and most of all operates with clarity as a team.
We've been through some difficult transitions during the last few years as we restructured the company.
The colder Nike crisis created a new high bar and testing the ability to develop execute lead the organization through these incredible situations are hospital teams were incredible as where our USPI colleagues.
And our support teams across the organization, including conifer.
Throughout all of this their response with selfless in all aspects immensely proud to have stood shoulder to shoulder with them in this crisis and no. They are here together to deliver the next phase so with that I'm going to turn it over to Dan and I'll finish them with few closing comments Dan. Thanks running are good.
Morning, everyone I will start off by thanking all of our caregivers and employees who have been working tirelessly throughout this crisis to ensure we are able to provide quality care for our patients. During these trying times.
Our true heroes, and we express our deepest thanks to them.
Let me begin Myra remarks on the quarter with slide nine.
As we previewed with you on April 2nd and ends Ron noted in his comments a moment ago. The impact from cover 19 in the back half of March with significant on our results for the quarter.
Up until March we are on pace for a very strong quarter.
Through February our adjusted EBITDA was 40 million better than budget.
With all three of our business units ahead of plan.
The performance improvement we produced over the past several years was continuing with solid volume and pricing growth.
Higher acuity and tight cost management.
However, due to the effects of the pandemic, we estimate that our adjusted EBITDA in the quarter was negatively impacted by approximately 125 million.
Due to patient volumes declining significantly and quickly and our facilities.
With the most pronounced impact on our USPI ambulatory volumes.
And the additional costs, we incurred acquiring additional PB.
Overtime and related staffing to effectively respond as well as the cost to maintain all facilities at a high level of readiness.
Fortunately due to our strong performance through March.
And the quick actions, we took to reduce our costs in the back half a month, our adjusted EBITDA was only down 6% compared to last year.
Let's now turn to slide 10.
I'm, an EPS perspective, our earnings per share in the quarter were strong at 89 cents per share compared to a loss of 19 cents per share and last year's first quarter.
A large portion of this EPS growth related to an income tax benefit of 86 cents per share. We recognized in March this year associated with the easing of the interest expense deduction limits.
By the cares Act, which we appreciate.
Turning back to EBITDA per minute, you'll see on slide 10, our EBITDA results in the quarter for our three business units.
Our hospital segment results were relatively flat versus the prior year down approximately 1% as growth earlier in the quarter was offset by the impact that pandemic in the back half on March.
As I mentioned earlier USPI was also ahead of our plan until the impact of covered 19 took effect, which resulted in EBITDA being 21 million lower than last year.
Conifer was also performing well pre covered 19 and was still able to achieve its EBITDA expectations for the quarter. Despite the headwinds in the latter half of March.
Let's now turn to slide 11, which outlines of the severity of the volume declines in the back half of March due to cover 19.
Not surprisingly these volume trends worsened in April as governmental shelter in place orders.
And guidance to restrict elective procedures took further hold.
As well as a growing reticence on patients to seek care because of the pandemic.
Here are few statistics.
Hospital admissions were down 25% in the back half of March.
And about 33% lower in April.
Hospital outpatient visits dropped 35% in the back half of March and were down about 60% in April.
Hospital Emergency Department visits declined by 25% in the latter part of March and approximately 50% in April.
Hospital surgeries were off close to 40% in the last few weeks in March and roughly 55% in April.
And yes, the eyes systemwide surgical cases fall over 50% in the back half of March.
And we're down about 80% in April as we closed or scaled back capacity in all facilities.
While the volume declines demonstrate the profound challenges we have been facing we have been extensively planning for how we will ramp backup our operations in a very safe frightful and data driven manner as restrictions are lifted or eased.
Looking briefly at cash flow in the quarter cash flows improved despite the covered 19 headwinds due in part as deferring about $75 million for one k. matching contributions at the end of March as we wanted to preserve liquidity at that point.
Since we have been able to enhance our liquidity recently by increasing the borrowing capacity of our line of credit facility from 1.5 billion to 1.9 billion.
And accessing the debt capital markets in April and by issuing 700 million of secured notes, we intend to fund the four one k. match to our employees in the second quarter.
Let's now turn to slide 12.
As you can save the first quarter results for each of our business segments broken down between the first two months of the quarter and demand for March.
It is readily apparent that the growth momentum we've been executing on over the past few years was continuing until the pandemic took hold.
When you add up the numbers through February you'll see we produced 451 million of EBIT at that point, and we're well on our way to a very strong quarter.
As we outlined in our press release, our hospitals were delivered and delivering solid volume growth through February has adjusted admissions were up 1.7% and emergency room visits were 6% higher than last year.
Also we are continuing our strong cost control and pricing growth with solid.
It was a similar story with our highest value ambulatory business from February.
EBITDA was ahead of plan surgical case volume was up 2% and net revenue per case growth was very strong up about 7%.
When you add in year, CIO imaging and urgent care volumes through February.
USPI total case growth was 5.7% at that point.
Also through February USPI, EBITDA minus NCR growth year over year was about 17%.
Which is another data point reinforcing the fact, the USPI was carrying solid momentum through February after strong performance in 2019.
Not to keep repeating myself, but it was also a similar story with conifer through February.
Conifer was ahead of plan driven primarily by continuing cost efficiency actions.
Until its revenues were impacted by declining clients hospital revenues due to cover 19.
Although our business were materially impacted by the pandemic in the back half of March.
Our strong performance across the organization up until that point enabled us to confront the cover 19 challenges from a much stronger position.
Before I turn to liquidity I do want to mention that we are no longer discounting, our malpractice and workers compensation actuarial liabilities.
Previously we reported these liabilities on a discounted basis using the seven year treasury rate with changes in the rate increasing or decreasing expense in EBITDA.
We concluded that changing to the Undiscounted presentation is peripheral because a discount rate adjustment was not an indicator of our operating performance.
And was a noncash item and changing to the Undiscounted presentation increases the transparency of our financial statements and operating results.
Yes, the on discounting accounting approach is also consistent with how many other companies report disease type of liabilities.
Our auditors have reviewed our new accounting treatment and concluded it is preferable.
Let's now turn to slide 13 to discuss our liquidity.
As of last Friday May Onest, we had approximately 2.2 billion of excess cash.
As well as 1.9 billion and available capacity.
On our line of credit facility as we do not have any borrowings outstanding on our revolver.
We believe we currently have sufficient liquidity.
As we model various scenarios over the next year.
We executed on two important actions in April to enhance our liquidity first we issued 700 million unsecured notes in April and used a portion of the proceeds to repay all outstanding borrowings on our line of credit.
Second we worked with our bank group and amended our revolver in April to increase our borrowing capacity from 1.5 billion.
The 1.9 billion.
We appreciate the support of all of our debt and equity investors.
And our banks as we manage through these difficult times.
As you can see on the slide we also highlight certain of our larger cash receipts or disbursements in April.
We received about 1.5 billion of Medicare advances during the month.
This was significant regulatory relief that strengthened our near term liquidity.
It is important to note that we are mindful of our obligation to repay these advances.
After four months Grace period, we will begin repaying these advances in August.
Our hospitals, including surgical hospitals will have up to one year in other words until next March to repay the advances on an interest free basis, and our surgery centers and physician practices will have up through this november to repay them.
We are taking this into full consideration as we evaluate our liquidity over the coming quarters.
We also received approximately 345 million of granted from recent stimulus legislation.
Including the cares Act.
These grant funds are to reimburse providers for incremental costs incurred.
And loss revenues due to the covered 19 pandemic.
This funding relates to the initial 50 billion distribution from 175 billion of Grand aid earmarked for health care providers.
These funds will not have to be repaid as long as we satisfied the terms and conditions of the grants.
There may be a few minor amounts that have to be repaid by few of our facilities, but it will be insignificant.
Next let's turn to slide 14, where we've summarized significant opportunities.
For additional liquidity in the near future.
I won't go through each of these in great detail since we previewed most of these on our April 2nd call.
I will point out that we continue to expect that we'll be able to complete the sale of our mentors hospitals and 2020 for about 350 million of proceeds as that process is still on track.
Also there is still 125 billion of grants made under the recent stimulus legislation that is not yet then distributed to providers.
We anticipate will be eligible for some portion of these funds.
However that is contingent on how the funds are ultimately determined to be allocated.
We've also taken other actions to enhance and preserve liquidity as we manage through these incredibly difficult times, including dialing back our anticipated capital expenditures this year by 300 million or about 40%.
Significantly scaling back discretionary spend.
Negotiating with various vendors to extend our payment terms.
And reducing contractual obligations.
Due to extreme volume declines in our facilities as a result, a pandemic.
We had to furlough certain corporate and administrative overhead personnel across the company.
And for Carlyle in flex down staff and our facilities only if they were not needed for patient care needs and other areas of the facilities.
While we did maintain the health benefits coverage for our furloughed employees.
We understand the hardship these actions created.
And we're very thoughtful before we decided to take now.
Unfortunately, because of this pandemic these actions were necessary.
Due to the actions we have taken in response to the pandemic to reduce our spend and the fact that we will be collecting cash on accounts receivable generated from higher revenue levels before kind of a 19 took hold.
We do not anticipate a material cash burn in the second quarter.
Even if we exclude the Medicare advances and stimulus grants received in April.
Of course this is dependent on how the pan the impact from the pandemic unfolds over the next few months.
These are extremely challenging times for our patients the communities, we serve our caregivers and all of our employees the company.
The healthcare industry as a whole as well as the entire nation. We will continue to try to do our level best to ensure we appropriately addressed the difficult challenges in the days and weeks ahead.
Ill now turn the call back over to Ron Thanks, Dan.
Few closing comments refer to slide 15, I just want to summarize pre covert 19 performance continued the strong operating momentum from 2019.
As with others, obviously, we've had a very significant drop in volume across the hospitals and USPI driven by the stay at home orders in.
Decline in of elective surgeries due to the stopping of that I think we acted very swiftly to protect our employees in patients, we bolstered our balance sheet and liquidity with some support from the Cures Act.
But not sufficient.
We focused on cash by reducing Capex vendor spend we eliminated all discretionary items furloughing influx in schedules to match demand.
We are planning for an effective and safe restart with very detailed planning and the operational turnaround and disciplined of the past two years. We believe was instrumental in making our response effective and our recovery led by the same team will address it in the same manner.
I also want to comment briefly on the tenant careful and weve redesigned our tenant care funds to be a source of eight to our employees, who have suffered a financial hardship related to covert 19, the outpouring of support across our system from employees vendors and others has truly been significant.
And we're incredibly grateful and thankful.
Our leadership team donated 20% of their salaries and numerous leaders across each area of our business donated 10% of their salaries.
For the months of April May and June to this fund.
Our board of directors has donated 50% of the cash fees for the second quarter and I have donated 50% of my salary for six months from May through October to the fund.
This fund serves many and as a valuable useful tool for our people and we're thankful for all the sport and proud to joining and providing funding this important resource.
Finally, I want to extend my personal thanks on behalf of our board and our executive leadership to our brave teams in all healthcare providers around the country healthcare is a field in individuals join as a cone and as part of this pandemic. It is with our deepest sorrow to acknowledge that some of our caregivers of lost their lives serving others in.
Need during this pandemic.
Our hearts go out to their families and co workers as we share the impact of their loss.
We honor them as heroes, along with so many others on the front line those were flying across the country to fill in need and one of our markets or another area like New York.
Foreign changing from their families, while protecting and providing compassionate care and these challenging moments in saving lives.
And there's also heros you may never see working behind the scenes, including the men and women preparing meals. Our hospitals during care has delivered in a clean and safe environment fielding and distributing numerous donations delivering supplies and so many other things in our communities. We have said many times since mid March that we've all operated on a week to consists of yes.
Today today and tomorrow since there have been note there's been no downtime or breaks from the pandemic. We hope you join us in honoree and thanking the men and women who have responded across the country and without whom we've not achieved results of where we are today. So with that operator wed believe we're ready for questions.
Certainly would obviously ducking your question answer session. If you like placing the question can you. Please press star one under telephone keypad, a confirmation told will indicate your wireless in the question Q you May press star to if you'd like to movie question Curlicue for participants using speaker equipment and may be necessary to pick up for handset before.
Our pressing star one one moment, please fully poll for questions.
First question space coming from Josh Raskin from there for research your line is allies.
Thanks, and good morning, and appreciate all the extra comments this morning.
Wanted to circle back on the capacity conversation that you had and what is capacity look like when it comes back.
In line you know if you were doing X number of procedures and normal conditions, how many can be done now and sort of thinking both the hospitals in the assay than what it that ramp look like.
Well ill, let us on talk about there, but I would just briefly say as I said the ramp will be a function of.
The ability to.
Hospitals at least to consider where we are with the Cobra cases closing down and we're starting to ramp up so the ramp.
There's no reason to think we have capacity from as much as it is that will bring back staffing as the cat capacity presents itself or the demand presents itself sound you want to.
Some color on it for them, yes, sure I mean, Josh.
Yes, a few things first of all.
The capacity is available really the ramp up depends on first and foremost.
Compliance with the state executive orders and and.
In our case 18 of our 20.
Capital markets and.
The great majority of our ambulatory markets.
The moratorium on elective surgeries has been lifted we have a few places Michigan, Massachusetts.
Few other states that are really hot where we have some USPI assets, Pennsylvania, New Jersey for example.
Where are those moratorium still exists so.
Thats first second of all we have adequate capacity infrastructure ready for surge pp capacity and also there is no shortage of.
Ventilators and other infection control process equipment that we need including surgical equipment by the way there have been shortages in the supply chain for basic surgical instruments and other equipment. We don't we don't have that problem. So thats not not an issue and look the last thing is simply getting.
Patients and physicians comfortable with the environment, we've put a lot of effort into infection control processes, but also really communicating the culture of safety that that tenant has in its operations and USPI has in its operations over the last six weeks, we've performed tens of thousands of medically necessary energen surgeries in the USPI.
Environment without a single known Covance exposure as a result of surgery that that makes people very comfortable to hear that in the hospital setting. We've just created separate tracks and and very careful processes, including adequate testing capacity.
In order to ensure that people are comfortable coming back for procedures or other related items final point I'll make is the emergency Department is also critical channel.
In the hospital and I'd reiterate runs point that we have begun the campaign to communicate the safety of our yours to all the constituents in our communities because obviously, that's a that's space, where we don't want medically necessary cared deferred.
That's helpful lighting I was actually looking more at 100 assay is were closed down by a large majority of those are open and then I was curious more around protocol changes in our time to turn around Graham.
Ability that dadeland waiting rooms, but now that you feel like we have the capacity to do exactly what we were doing February and before.
That's correct I mean, there there are two aspects to this first of all.
You're right. The vast majority of centers are open they may not be open full time on the USPI side, but we're opening them up methodically day by day or bio or as the appropriate demand presents itself from patients and physicians will do that largely so that we don't end up.
Running ahead on costs relative to.
The demand side revenue that will be generated so that we're responsible about that same thing in the hospitals I mean the hospitals.
Have remained open in fully functional but even in some of the procedure related areas, where we flex down will begin to flex in the other direction as the demand.
Presents itself look in terms of turnaround times and other things like that.
We don't we don't foresee any problems related to delays and other things that I would tell you that.
Again, the biggest source of delay.
People are worried about I think is the testing capacity and we have in house testing capacity and all of our markets and also arrangements with the large lab companies for for testing on an ambulatory basis, if we needed. So we're prepared to provide that.
In all of our settings.
Thank you.
Thank you.
Thank you next question today is coming from Justin Lake from Wolfe Research Your line is allies.
Thanks, Good morning.
Couple of questions. Your partners did you mention the law of $125 million negative impact open in the second level margin really helpful. Detail. Just curious I know you started making adjustments on the caused by late in the model into April was hoping you could size those cost takeouts means to help us.
Well the overall impact versus let's just say of $250 million monthly kind of one rate X, what you're seeing with the big impact on calls.
Justin It's Dan good morning.
Let me I'll start off on their own runners Duncan.
Good.
I would tell you is we've obviously taken.
Significant amount of cost actions.
Not only in latter part or March bid further actions throughout April.
To mitigate the impact of this unfortunate situation on the company.
In terms of.
Specifically mention something in my remarks about when we.
Think about the second quarter, you know, it's obviously difficult times volumes are down dramatically.
But when we think about.
Cash flows in the cash burn as I say.
We don't think it's material at this point, obviously depends on the rest of the quarter unfolds, but we're doing everything to.
Reduce our spend whether its discretionary costs or capital expenditures.
As we also mentioned we had to take the unfortunate actions of Furloughing employees, but.
Those actions were necessary.
For the company to continue to move forward.
Yes, just building on that briefly.
Look I do think the results for the first quarter and especially the last two weeks in March were impacted.
By our operating teams that on the hospitals and USPI side and the physician business reacting very quickly.
Everybody was focused in those last two weeks on really understanding what was kind of it and how are we going to manage it but the operating teams moved quickly to begin flexing, you'll see more of the impact of that in April.
Of course, especially as the furlough.
And really the USPI ramp down was primarily in April.
Certainly our ability to flex fully on the hospital side extended from the last two weeks in March.
Much stronger.
Also in April I'd also point out that the trend the volume trend line in the last two weeks in March also worsened in April as the.
Points that Dan Enron.
We've made our true.
From from that standpoint, so surgeries admissions emergency department visits et cetera, as you can see in the presentation worsened in April necessitating.
Further further management of our our costs, we didnt, we didnt really impact staff at all on the hospital side that we're required for coated care or.
Potentially surgeon cobot care in various markets and I think ultimately, especially in places like Detroit in Massachusetts in South, Florida, where there was a surge.
Maintaining that staff and capacity served us well, because we really did not have.
Ultimately any problems with shortages and infrastructure people or or pp.
Right and then there's just a quick follow up.
Question on surgery centers, they start to open I think you told us that the.
You see the big volumes, improving say that theyre down only about 40%.
They start to open up is that just a function of getting the schedule back up or are you hearing back investigation that.
Bigger ready came on the R&D.
On the patient side to reschedule.
Yeah, Let me clarify the numbers first and then I'll pass it to Brett.
When we.
Had some conversations in the middle towards the middle to the end of March we were seeing about a 60% decline.
In surgical volumes in the is sees as I pointed out as we got in April those numbers.
Increased into.
The 80%.
Ranged from a decline standpoint, so what we're well past the Nader, especially as states have opened up and and our back again.
Actively booking cases, and add ons and other things as is appropriate in each state with the orders, but im not sure that were quite yet back.
50% of normal Brett I don't know if you want to add comments there.
Yeah, Hi, Justin It's Brad, Yes, I would say just make up labs observation first.
We are starting to see the demand improve significantly distinctly esensor that from last week, we actually perform 50% more cases, and we had scheduled the Friday before.
And also last week, we had planned to have 88 facilities closed.
This week, we have 32 facilities plan to be close, but it will likely be much much less than that so.
It just gives you a sense of how we're beginning to ramp up the operations as it relates to our medical staff I would say that generally speaking there very much ready to get back to work and take care of their patients that have delayed medical care. There's certainly a significant amount of pent up demand for elective surgery how quickly it.
Back to Tom's point is is a function of a number of different variables when the patient feel safe Haven the procedure.
Get an appropriate medical clearances, when they're PCP offices opened whether or not insurance benefits are in jeopardy. I'd, just say, we're ready to manage the increased demand by ensuring that we have the appropriate.
These securities testing protocols in place so that our staff physician and their patients really have confidence. They can work can be treated in our facilities safely.
Yes.
Thanks Go next question is coming from Frank Morgan from RBC capital markets. Your line is allies.
Good morning, I, just wanted to confirm that number one more time you said if you were at 40, the U.S.P. hours at.
Operating at a 40% reduction so you're LOE was minus 80 in your now at minus 40.
No that's not correct. So one more time.
We talked in March about being down I'm going to just use it as how much were down down about 60%.
At that period of time that worsen to being down about 80%. So again, 20% of normal and in the last 10 days.
As Bret points out the demand both for backlog cases.
And other care given again, how I described the USPI environment is viewed as very safe.
Has increased rapidly and we're trending if you look on a forward going basis, probably somewhere between 40 and 50% of normal so down roughly 50% to 60%, but with active week over week increases that are that are substantial now when that gets back to 90% I don't.
100% or 105% I don't have a way of predicting right now, but what we're focused on more than anything it's just ensuring that we're ready to serve that demand that doesn't seem to have any limits right now at the range. We are on the growth that will see week over week over week as the physicians get their practices up and running.
So I think thanks for the end of May will have.
Significantly more information about that.
Okay. Thanks for the clarification. My question is what are the types of procedures that are actually coming back version the assay setting and with regard to doctors being comfortable do you think it's enough.
That if they are comfortable that the patients will follow follow along with with their thoughts on safety. Thank you. Thanks.
Yeah, Brett do you want to take that.
Yes, I'll only thing I would anticipate again, a couple observation to I would say were thoughtfully and take safely ramping backup volume across portfolio.
And we'll ensure that capacity is there to meet the needs of our medical staff, but they're the ones who are prioritizing, making the clinical decisions in terms of two to care for first if you look at what which procedures are actually coming back more quickly.
Actually probably than the higher complexity cases in the area of spine total joints.
General surgery, some of those things that have been delayed.
But are certainly necessary to get done as soon as possible in order to avoid more complication.
Later.
The types of procedures that are coming back a little bit more slowly.
Are you now in the areas of JPY and pain.
20.
Net debt, that's really how I would.
Differentiate between especially is coming back quicker more quickly than the ones that are a little bit slower to come back, but generally speaking as I alluded to earlier.
We are seeing that demand kind of began to improve significantly across all specialty but of course, some are coming back a little faster than others.
Let me answer your question.
That's got it and they do a cost question do you feel like that that April was sort of the maximum level of cost cuts that you can make some lumpy.
Operating perspective, and a level. Thanks.
No. This is Dan.
Now across some of that and we will react appropriately to the situation as we encounter them. We obviously are optimistic that.
The operations are going to recover.
And start ramping up as we've been talking about but we will make the appropriate.
Adjustments if if otherwise.
Thank you.
Thank you next question today is coming from A. J Rice from credit Suisse realized allies.
Hi, everybody and thanks for all your collisions are doing.
Maybe we talk a lot about the federal response to a so what's been happening from a payer standpoint, maybe just to have you comment theres been a lot of pronouncements from managed care companies about what they're doing as that in any way benefited you are impacted how this situation has unfolded.
No there was that App map.
Enhancement on Medicaid is that it had any impact from your perspective, and I guess the discussions about rates for next year would be a part of that as well maybe affinia that's ongoing.
Hey, guys Dan.
In terms of the become as things he mentioned so as far as the F. map.
Yeah. We obviously are we appreciate that we think it's important will certainly help to some degree I would say at this point it's nothing.
Of significance.
In terms of $14 perspective, but.
It will obviously help as the additional funding and is allocated to providers based on the care.
In terms of from a pricing perspective.
We've talked about in the past.
Our commercial book of business.
Essentially we're over 90% contracted this year and you know three quarters or 75% roughly for next year. So we have very good visibility into our our pricing as we look at the next.
A year and a half or so so.
The the rates that we have been able to negotiate and contractual terms.
It's been helpful in driving our pricing yield.
Over the past several years and wood has continued so far this year and we expect fully to continue for the remainder of this year.
Okay, maybe the follow up.
I would be obviously, you're focused on just getting through the current.
Good month, or two and getting back just semi normal but I wondered.
Clearly, we're being asked by investors to think about what is a recessionary impact on that business. Obviously, we're in a post days CA world. The let them. We're in a downturn, we didnt have bigger things like exchanges or had asked Medicaid I guess, we're into perspective or thinking about that payer mix dynamics and economic downturn the volume the costs.
Side, particularly labor you guys have any early thoughts there would be helpful and thinking through the implications of that given what we're seeing out there economically.
Hi, this Ron.
We are talking about that I don't know for prepared to give you kind of agreed insight, but some of this will I think is people.
The problem is the unemployment figures are probably somewhat inflated as companies start to come back.
So we're not assuming that immediately I mean, there's lot of companies are doing what we did we on when we furthered our employees their healthcare stayed intact.
And we're paying those costs. If you follow the trends you see there is a lot of that going on.
Then as Cobrand some other things that as people reviews. So I think we'll have to wait and see what the real mixes in terms of people going back to work how that that will flow relatives to insurance coverage and then there's obviously a tail on that so.
There is is requirements for Cobra to exist currently.
At least 18 months from a legal standpoint, so I don't think we'll see an immediate impact of that obviously, we have some concerns on deductibility, but lot of that has been laid by a lot of the insurance company. So again I think we have to sort through that as we see the startup come.
But.
From a recessionary standpoint, I'm not at this stage I'm not overly worried about it but it's something that we're concerned about and we'll watch and monitor accordingly, So Dan do you have any of the thoughts on that and in terms of you know well obviously.
Reevaluate our as some cost structure if things go along.
We there's still more opportunities as we talked about on February call.
We have 150 million of incremental.
Cost efficiencies that we are working on executing on this year and we'll continue to do those type of things too.
Yes.
The portfolio appropriately based on the economic conditions and we're facing.
Alright, Thanks, a lot.
Thank you. Our next question today is coming from Kevin Fischbeck from Bank of America Merrill Lynch. Your line is now live.
Great. Thanks, I'm wondering if you get hair cutting capex by 40%. This year there how do you think that might influence or impact your your growth going forward.
Hi, Kevin It's Dan.
Now we actually when we will lead went through literally project by project.
We had.
Plan to fund this year and you know the be obvious capital spend that we continue to believe is absolutely necessary.
Relates to.
Appropriate patient care.
Like safety.
Investments as well as.
Investments that we believe are important to drive growth in the future.
As we get through this.
We have reduced as we talked about we have reduced our capital spend by roughly 40% this year.
But I would tell you that we believe that once we get through this that the and will continue.
And get back to our growth trajectory and.
We don't believe laws as the spend that we have reduced that.
If the right opportunities are there we will make the investments as we don't think it more materially impact our long term growth prospects. The actions were taken right now it's absolutely important we need to do this now.
In June.
German enhance liquidity.
You get to the right time will make the necessary investments.
And I guess that maybe along that same vein I guess, the company's consistently gone out but surgery center to every year.
To help supplement USPI has growth and a half how are you thinking about that pipeline and your ability and willingness to do.
Do deals and.
Maybe what that pipeline or you think that will be better pipeline of xtwelve mindset that disruption that how many smaller players are saying.
Yes. This is Tom and I will tell us breadth to comment as well just a couple of thoughts there first of all in the first quarter.
We did close on a number of transactions.
We're working on through 2019.
So thats one the second thing is I think it remains to be seen how the centers ramp up in the sentiment of.
Physicians and health system partners that we have in existing markets.
With respect to their plans from an expansion standpoint, but but the market. So we'll see how that goes but but from the standpoint or the market that exists of independent surgery centers stand alone.
To your single specialty we certainly anticipate that.
Over time, and it's too early overtime, we will probably see more opportunities from those who are looking for.
More stable ownership structure that can help them grow and thrive into the future.
And I will be prepared as Dan said to take advantage of those when there are good opportunities Brett.
Yes, it sound like you covered most of the only pillar I would add it obviously the M&A landscape as we said before pre co bid was very favorable.
But obviously, we put most of the M&A activity on hold until we get to a point, where we can ramp backup or existing operations.
Into sounds point in Q1, and as expected we had we added productive quarter we added.
Or acquired six surgical facilities, we opened two de Novos and invested over $50 million force that was prior to the koby crisis.
In addition, we continue had a strong pipelines of course, you know our primary focus is going to be ramping backup or existing operations.
Net includes.
A number of you know de novo's that we're under construction.
When the crisis hit obviously those are pretty far along so.
We'll continue to develop those open those which will likely come at a later part of this year and early next year. In addition that we have four other de Novos.
That are.
Moving moving along quickly and then five additional didnt have those that are ready to be syndicated when when things.
Get back to some some level of normalcy, so all the say.
We believe that.
Once we get back to.
We'll see I was alluding to I think we'll be in a pretty good position to refocus on the M&A activity that we stopped.
And bill in the Middle of March.
Okay. Thanks.
Thank you next question today is coming from Ralph Giacobbe from Citi. Your line is ally.
Thanks. Good morning, I was hoping you can give us a sense or an idea of how.
Change rates compare to commercial rates in new markets.
Hey, Robert Stan Good morning.
Now that the exchange rates generally speaking our.
Relatively consistent with commercial terms and conditions and pricing yeah, there and did it depends literally by market of course.
But it's not unusual for there to be.
Hey, some discount from compared to normal commercial plan.
Obviously, we we work with.
All the plans.
Jay contracts on a national basis, with national payers and on a statewide basis.
With regional or statewide plans like the blues.
So you know it we look at each each market each exchange opportunity the pricing.
In terms of of the affordability to consumers and make a decision.
Other you know, it's makes sense to have aluminum delta between.
Traditional commercial rate in an exchange rate.
Okay, Alright fair out and then just on wealth wanted to ask that you should keep in mind is that the company long ago put in place abroad in network strategy with respect to the exchange plans.
Which obviously served the company well through the post HCM period and that strategy still remains in place in terms of being inclusive we expect that to serve as well going forward here to the point about exchange capacity potentially increasing.
Okay, all right. That's that's helpful.
Then just on the follow up I know you talked about M&A on sort of yesterday I was hoping you could talk a little or that the JV pipeline.
In terms of health systems.
The current backdrop, you think accelerates those conversations that sort of opportunities there and then on the hospital side I know, it's really early but any perspective on competitors in your market and you know maybe either their financial position or long longer term consequences of coverage that we now have a market share or even potential sort of M&A within your luggage.
Thanks.
Yeah.
So our Brett you want to deal with the USPI Pegler, yes on the on the JV side.
Our pipeline.
It continues to be very strong related to from an health system partners that are looking to partner with us and vice versa.
If you recall last year, we added seven you probably health system partners.
First quarter, we added another one and if you look at our pipeline.
Potential new partners.
It's very robust obviously the last.
In the last couple of months.
As as.
As for those conversations down but.
But based on.
Very recent conversations.
Health system partners are ready to ramp back up those conversations so we anticipate actually probably exceeding at least meeting or exceeding the number of new health system partners.
That we added portfolio. This year as we had last year so continues to be.
Very active part of our development activity, obviously, most health systems around the country are still trying to accelerate their inlet Troy growth and we're still.
I wanted to go to organizations in the country for those health systems that are looking for partner to help them.
Welcome to accelerate that growth.
And to your second question about market share in competitors I don't think we want to go down that path today, we really haven't been focused on that and we really just been focused on recovery in our own markets and what we're doing so.
No its table that maybe a conversation at another time so.
Okay fair enough. Thanks.
Thank you next question today is coming from Whit Mayo from maybe ask your line is that life.
Hey, Thanks, I appreciate you guys extending the call 'em today, maybe just from threats since I've got you on the line than you've been with USPI for some time through various cycles and Medicaid is such a small piece of your business and I presume.
Most of that is probably tied to your surgical hospitals, maybe I'm wrong, but I'm just I guess my question is how do you think this changes going forward do you think Medicaid grows in terms of the realities of the economy to you you emphasize the Medicaid as they pay or more im just maybe a little bit more worried about mix that I have heard you guys describe.
This earlier, so any any context would be helpful.
Yes, yes wed to your point Medicaid is very small amount of our.
Current mix.
Both in the surgical hospitals as well as assay.
Like I guess I can foresee.
That mix shift a little bit towards Medicaid just because of.
Because of what's happening in the environment related to unemployment that I don't I don't see a significant shift from a payer perspective in that regard.
Okay. No. That's that's helpful. In second question just for for Dan.
On the malpractice change if you run that the Undiscounted math back a year or what's the difference I mean I I appreciate the change than ever really understood why you discounted it to begin with but anyway to frame up if we did it this way our 2019 expense would be X versus Y just any impact on the quarter would be helpful.
Hey, where and what we did we did go back and recast the the prior year numbers.
To remove the the adjustment that you may remember last year.
There was about for the entire year, there was additional expense of about $23 million and because of the change in the discount rate.
But in 2018 in 2017, there was earnings.
There was 12 million of earnings from it in 18 and about 5 million in 17. So how this rule change where do you just go back to the United beginning period and you just all the period. So all the numbers that you see comparing this year versus 2019, they've been a job they've been recast for the change.
Okay. So we just take whatever you said that the 23 million or something from last year and just.
Yeah Cross that out and that's the that's the impact.
Well now these numbers we presented went in the the documents have already been adjusted to remove the 23 million amazement adjustment in order to do this so yeah, okay. Okay I got it thanks.
Its normalized it's all normalized.
I will make you had about another five minutes right okay.
Thank you our next Clarient face. Our next question is coming from Peto Chickering from Deutsche Bank. Your line is now live.
Good morning, guys. Thanks for taking my questions to ask Justin's question, a little different way there are lot of moving parts and the pinedale due to its huge movements within emissions cost reductions in furloughs.
Looking at two key you can you walk us through the variable versus fixed components for salaries and benefits supplies and other opex.
Okay.
Hey, Peter Dan do you want to Sir yes, yes or.
You know obviously as volumes move.
Or down.
We always look at you know our cost structure and adjust appropriately.
In terms of specifically your question into the mix on variable.
Versus fixed you know.
We all knew he like to approach. It every every single dollar, whereas the cost is variable right now. Some obviously some is some costs are obviously more difficult to the flex down such as rent expense, but you know when you go through the can the areas of the PNM in terms of labor how much is fixed versus.
Variable.
Yeah, maybe 40% or so for for labor I agree it really depends on the environment situation.
If it's an extreme situation like we've been dealing with them.
You have to adjust accordingly to be more aggressive to.
Supplies, you know a large very large portion of the supply costs or our variable, obviously, not 100% out because you always need to maintain a certain level.
Specifically for you know for needs. They use you know there's going to be.
Some point, whether it's the next day or a week or month ahead.
The other operating expense category is the area that probably from a percentage standpoint has the least amount of initial flexibility in terms of variability to flex down because thats, where you have rent expense in there and oftentimes it takes a little longer to get it that.
But yeah listen I think we've demonstrated we do a really good job managing the cost structure as not only when the business.
Flexes down but also as it is if it.
Grows and which we had and obviously during the past couple of I just want to say, though that we'd be have really trying to take a much more aggressive attitude that all expenses are variable and you have to really approach. It would that kind of a mindset you may run into the wall, but that doesn't mean, you can't renegotiate relook.
Reallocate rethink about.
Closing out areas are subleasing I mean, there's things you can do to deal with some of these things and we just.
We tried to be very aggressive about that so.
Great.
Let me know some might have had a comments there.
The only thing I would add to that is that.
Remember I think the broad commentary, we just made really applies in the range as Dan gave to the hospital business the.
The direct variability, even before renegotiating contracts and other things on the on the ambulatory side or the U.S.P.I. side is greater and.
It's important to note that as we ramp down facilities, whether they were shut down or ramp down quite significantly.
We will demonstrated the ability to variabilize more cost in that environment.
And then the hospital environment.
Operator, we'll take one more question.
Certainly our final question today is coming from Andrew Mark from Barclays. Your line is ally.
Hi, Good morning, Thanks for squeezing me and you got done they're confident around the liquidity and cash profile of the business in your prepared remarks, I was hoping you could expand on that and speak to your plans to manage their cash in working capital needs in the back half of the year, especially as you start to repay the $1.5 billion, an accelerated Medicare payments in August thanks.
Yeah.
So in terms of you know as we.
Moved through the year, we do have to start repaying the other 1.5 billion of advances.
But keep in mind, you know that will start in August and it it will be repaid gradually based on.
Claim payments that otherwise would be processed by Medicare and paid so for example, say on like a number of say you're getting.
Paid for $25 million on Medicare.
Fee for service claims and I'd be given day or weak.
And once we get to August will take advantage of the repayment terms under the advanced program and for that $25 million of claims and normally they would send you cash associated with that that 25 million then would be applied against the advances so it will be paid off.
Gradually as we move through.
The back half of the year and into.
Into 2021 as well so we obviously you know we're running numerous.
Cash flow models.
Depending on various scenarios and based on the sources of liquidity that we currently have.
Whether it's the existing cash on hand of 2.2 billion or our revolver capacity of 1.9 billion.
You know that's why I mentioned that we believe we have sufficient liquidity.
As we think about the next year I. It certainly we pointed out a lot of information in the slides as two other and liquidity enhancements as we move through this year.
We believe we're going to be able to complete the sale of our Memphis hospitals that would be roughly 350 million of proceeds and the various.
Provisions of the stimulus legislation also provides.
Some additional liquidity such as the deferral of the on the company payroll tax match.
Which is roughly $250 million and that doesn't half of it doesn't have to be paid back until December of next year and the other half December 22, So that provides us a window there and we're getting relief on the on Medicare, 2% sequestration adjustment.
So you know between all those components as well is Howard, we're reducing discretionary spend and reducing capital expenditures.
That's how we're going to manage through this and obviously.
Watch in every single dollar and all that comes in and every dollar has gone out.
Okay, great. Thanks.
Thank you we reach of our question answer session ought to turn the floor back over to management for any further closing comments.
Thank you every month and thank everyone. We really appreciate your time I know our prepared remarks were a little bit longer than usual, we thought it was important to get on the information across and I. Appreciate you. This stena staying on longer than normal onto the asking some questions. So have a good have a great that yep. Thank you.
Thank you that does conclude today's teleconference. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.
Okay.