Q1 2020 Earnings Call
After the speakers presentation, there will be a question and answer session. Slansky question. During this session you want me to press Star one on your telephone.
Please be advised that today's conference is being recorded.
You require any further assistance please press star zero.
I would now like they have the conference over to Chris Readying. Thank you. Please go ahead Sir.
Thank you good morning, everyone and welcome to U.S. physical therapy first quarter 2014 earnings call.
Currently no office with Larry Mcafee Executive Vice President CFO.
What's the Sonicone <unk> Gram recent Glenn Mcdowell or.
John basis here without suddenly office as well Johnson Vice President.
Good.
[laughter] javelin Oh.
Sorry, some background or Rex too far out.
Before we begin to cover results for this more complicated than first quarter Oh, that's still on the cover brief statement. Thanks. Chris. This presentation contains forward looking statements, which involve certain risks and uncertainties and these forward looking statements are based on the company's current views and assumptions and the company's actual results can be.
Very materially from those anticipated please see the company's filings with the Securities Exchange Commission for more information.
Thanks, John.
My comments this morning, I'm going to try to paint the picture of that early quarter three cobranded.
For the purposes. This discussion pre covert period, which would be the January and February.
Mark.
As opposed to covert period period of March.
Secondly, I'll discuss the steps we took quickly in advance to prepare us for the impact we began to feel acutely as communities began to ultimately adjust.
Early to mid March also discuss how this stuff something meaningfully and positively impacted the safety of our staff from patients service to our partners.
Aggregate financial performance, including ER visits.
Revenue, and especially importantly, our cash position and overall trajectory.
To be sure. This is Brian supremely challenging period, however, I'm, so very very proud on power teams have led throughout this.
Cool did 19 experience.
Our next January and February.
Volume started off strong against begin the year and in fact same store volumes picked up again for what was an excellent things three on 2019, we began the year in January and February with 5.9% same store visit growth.
This is per clinic per day, improving from 26.5 in 2019 27.7 in the first two two months of 2020.
Our revenues increase for this period approximately 8.3%.
After adjusting for the sale a single partnership that we are transacted on which sold last June and our overall volumes grew by 9.7%.
Despite the impact related to community closures and stay at home orders, which began to accelerate in mid March we grew revenues on an adjusted basis, 2% for the quarter. Overall. This was in spite of an estimated 8 million dollar revenue and contribution margin loss in the month of March secondary to the code.
At 19 pandemic.
In our industrial injury prevention business revenue was up for the quarter over 43% and the revenue impact in the quarter was much less than in our physical therapy business.
One exceedingly bright spot in the first quarter relates to several of our large periodic health clients signing expansions of their existing contracts, which we began to step up for us things begin to unravel in other parts of the economy.
Costco has been exceedingly helpful. Throughout this time discretion to expand that our surface location footprint with them in order to assist us in keeping our workers active resulting in significantly less for loans in this part of the business.
There's been a number of other bright spots as we have worked our way through the early stages of this trend dialing one of those has been our teams rapid deployment of parallel which has been widely adopted in utilized by our partners that was especially important during the height of the short term place orders were telling how quickly became a meaningful effect.
For those who were unable or unwilling to come to or clinics for therapy.
Special Thanks to been keeping one of a very important partners for his assistance with this program.
We expect to become part of the fabric.
Our alternative care delivery as we move forward.
Other bright spot was the across the board designation of physical therapy, as an essential health service, which allowed us with care with appropriate cautionary safety measures keep the overwhelming majority of our facilities open throughout this time.
We remain actively working through our APTP Alliance Center recent investment that will obvious within Q1 to keep the progress in ground. We have gained with telco and other positive adjustments as we work our way through to more normal post pandemic period at some point.
Part of the pandemic accelerating in the U.S., we went through preparatory drill of sorts to evaluate our readiness to function remotely should they come to that kind of course it did.
Which we've been doing now we've been functioning remotely from the majority of these past few months.
Early start we got enabled us to purchase needed equipment computers, which has allowed our team to make a rather seamless transition to remote work to ensure the safety of or Houston team, most accrue more than a large central office, where we provided the needed communication service and support to our partners. We're fighting the fight the frontline.
Yeah.
They came in and care for patients each and every day.
Today, I would say that we'll be back in the Houston office on a rotating shifts basis for the near term.
We better understand the signs.
Around the progression transmission diseases side, we begins to reopen.
To date or clinical services team has done a terrific job keeping us all the breadth.
Latest update some thinking around the science reentering, the kept our partners and staff and form so we've been able to remain operational very minimal amount of exposures and infections.
Because we're able to act quickly make adjustments the staffing through a variety of measure measures, including reductions to wages hours were furloughs and other means along with making sure some strategic decisions to close to go dark small percentage of our facilities as a rig.
All of our cash position has remained.
Strong and certainly stronger than we initially projected and along with the advance payments by Medicare of approximately 12.5 million Kazakh payments.
Approximately 5.7 million today.
Our cash position. This currently approximately 100 million.
Same time, we're seeing weekly improvements in new patient referrals that overall patient volume, we're now solidly above 60%.
Pre coke visit levels.
Trending forward.
This point in time, we're beginning to bring back select staff is volume warrants.
And we're doing that for most part PRN as volume dictates basis.
Additionally.
Additionally, brioche mix has continued to do well, while some of our client companies have been closer operating with restricted our support personnel that as curtailed our revenue somewhat for team has been able to offset some of those reductions with new or expanded business.
Currently we estimate that we are up.
In our graphics health business somewhere in the 10% to 15% range compared to our pre cope with levels, but that is an improvement over prior month.
Our partners and our Houston Phoenix have booked on well throughout these past difficult markets. We are ready to ramp backup safely. We look forward to what we hope is a gradual progression back towards both we'll see.
That concludes my prepared comments im going to turn things over to Larry to cover financials in more detail tight thanks, Chris.
Normally at this time I would go line item by line item quarter over quarter, but honestly that would be like comparing apples to oranges. So I'm just going to hit some highlights.
Included in the in the quarter were closure costs, So I believe 3.8 million.
And we talk about it in Theres, a bullet point honored on page three of them release.
Half of that wouldn't was noncash charges relating to write off of goodwill trade names et cetera.
Mind areas.
Equipment that we couldn't salvage severance and.
The remaining lease obligations are.
The the other thing I'll talk about as average net patient revenue in the first quarter was lower than a year ago.
There wasn't any one factor, we look investigated that lane and it wouldn't surprise me if the rates a little higher going forward, sometimes it just moves around quarter to quarter. One thing no that was probably the significant as the Medicare sequestration was in place in Q1 and that cost us over a one dollar visit that it's been lifted I think in may.
In may.
So I expect our net rate to be higher going forward.
[music].
Something else I talk about as cash as Chris mentioned, we have about 110 million in cash at present, we have our credit line fully drawn down 125 million. We just did that to be on the same side.
We were in compliance and are still in compliance with our covenants under our credit agreement.
Additionally, we see the Medicare advance payments, obviously, our billings and collections have gone all gone on on a top on a timely basis at much much better than I expected I thought, we'd see delays and payments, but that really hadn't happened.
I mentioned that credit agreement we.
As we run our forecasts, we might actually still be in compliance ended the second quarter is as bad as it's going to be.
But that said we've been in discussions with bank of America every week, they couldn't be more supportive and they offered to put in amendments in place that will keep us in compliance long term. So we'll do that.
Sometime in the next few weeks.
That's all I got Chris Okay, all right. Thanks, Larry and they have a lot of questions before we open for questions. We just want to talk about what we're comfortable discussing so we certainly want to discuss the quarter and where we are right now we want to try to avoid any future guesswork.
Around looking forward are estimating things.
Relative to its pandemic just because of the uncertainty. So appreciate your interest and understanding as we open the line. Thank you.
As a reminder to ask a question you would need to press star one on your telephone to withdraw your question press the pound.
Please standby will be good barbecue Monday roster.
Your first question you is from Larry Solow.
JMP Securities.
Formulary, Greg Greg Good morning, guys.
Good to hear you voices.
Sam was everybody going relatively okay.
So I guess couple of questions, obviously volumes down a lot.
Not really look you too much follower, but just sort of.
The trend down on the trend up is it.
You are seeing more improvement today are a little bit better patient volumes.
Some of these restrictions open up.
It might I guess my question is it more do restrictions or you're also seeing just patient spiky and whatnot and that's no different levels of.
Demand in terms of by has to get to the physical therapist or.
Sorting somewhat discretionary so I'm just trying to get.
And overall picture of how you mentioned different areas and obviously variants among volumes in regions is that based on.
In the northeast, it's probably a lot hit lot, Florida, there maybe some other parts of the company's maybe can you give more color on that yet so.
Just a little perspective, so our volumes bottoms, the northeast was hit harder ore volumes bottom there around.
April 12 or volumes bottomed in the western and central West and parts of the country. We prior to that since they bought him they're picking back up each week.
No I understand in in having the bulk of that period I have a lot of friends orthopedic surgeons they sat at home.
Offices were closed on what's your trauma on travel call.
Which is.
Clearly not an elective you weren't doing any elective surgery, so unless you're.
Doing cancer related to work or trauma.
We're sitting right at home with everybody else and so.
Things have begun slowly on elective surgery side.
Varies across the patchwork have begun to open back up and as they've opened back up I mean, anecdotally I get a note yesterday in San Antonio and we got literally dozens of referrals in the first couple of days of this week because.
The surgeons just started back in the surgery centers and so I don't think our volume where it is right now thats picked up each and every week referrals have each and every week.
I don't think is related to people being afraid I think it's been.
More related to the restrictions that are in place and the fact that while we were essential in remained open a lot of the rest of the healthcare environment was deemed non essential and has been closed so it's going to take some time.
Going to be community by community state by state, but so far were each week is better than the week before.
Overall, the bottom out at 45%, let's say in the press release are running at 60% as Chris mentioned it ticks up each week. Good news is that referrals are growing faster than visits so it should accelerate.
In the models, we did we didnt listen we'd be at 60% at this point. So we are ahead right and our financial models.
Yes.
On Monday volume and Monday is one of our busiest days, but every Monday night, our busiest days a week and that was closer to 70% both parts of the country. This week. So it wasn't quite there, but it was close so definitely picking off also I would especially investors that aren't as we got a lot of people on this call today too.
Yes, what we normally do I would urge you to look at our map on our website and see what states. We're in we're not in California, We're not in New York and we are in states like Pennsylvania.
Michigan in New Jersey that advance hit hard, but the fact that were in 40 plus dates in so many different communities.
Tightly has been very helpful. It's given us a portfolio effects that we didn't just get crane by being in one or two locations.
And you guys mentioned you close I think 35 clinics and maybe a couple of more.
Subsequent to quarter.
Or 35 will reopen I should say.
Your plan and most of these can you sort of characterize these clinics are they were they mostly modestly profitable.
Cannibalizing other clinics, what sort of though the longer term view to close so pretty expeditiously.
And can you also just touch on we've got some questions on the put option can you just refer review that again and if there's any risk to the company on terms determinate employees being able to.
Part of the company by the clinic.
Well.
Remember we.
Normally we closed permanently close 20 clinics that year.
And those right and for the most part the clinics, we closed this time or one offs somewhat more variable they either have.
Some losses or were modestly profitable and we when we ran the math if they come back and they're not running at what they were before obviously theyre going to lose even more money some of them had the leases up for renewal anyway.
Some of more already dark temporarily closed we didn't even have severance cost associated with it in aggregate they were unprofitable.
Okay.
Okay. So there is there are risks so we've gotten the question enough for many investors is just trying to clarify is there are the risk.
From a wrong from.
Maybe not so much close clinics, but for me I know you terminated a lot of employees have determined that it has there been any partners terminated or is there any risk partners require you to.
Buyback the clinic.
Yes so.
First of all three.
Other than other than maybe.
Our goal.
Site.
Partnership that was on profitable.
Time, we elected to close it.
We didnt have any partners that were terminated as a result of this none that I can think and so and.
Thank fully we haven't had a partners leave us in this period either.
Or partnerships and so we have a structured deal structure that after.
Predefined hold period, usually for five years of user after we do transactions a partner if that partner terminates his or her employment with us.
And can put their interest to us we have to repurchase.
And so.
We've been we've been fortunate I think that our partners.
Vast vast vast majority and I think you know.
I won't I won't say every single one because I don't know I don't talk to every single one every day, but.
They expect to be around for the longer term and they know that.
I believe as I believe that the business is ultimately going to come back and so is it sustainable that.
We have some of these I think.
Right now we're.
We're aware of worn repurchase that we can handle within our.
Within our current facility.
But other than that I mean, we're we're headed down you know working our way through this our partners are doing the same and.
It's it's working the way that it supposed store.
Great. Thanks, I appreciate the color guys.
Your next question in queue is from Brian Coyne 10 wells with Jefferies.
Hey, good morning, guys.
Hey, good morning, everyone is okay.
I guess I'll just follow person Larry's question on the closures.
So obviously like you said Larry.
So the ability to close anyway looking closely yes, 2025 locations here, but for modeling perspective.
Should we.
Assuming that the drop in revenue 2021 would be worse than your typical impact from the regular store closures that you do both years.
I guess, the my fault Larry would be just from the back office perspective is there a corresponding decline that we should model.
I'll be honest with you Brian I don't know how you would model 2021 at this point yes.
I.
I can I can say facilities that we have decided to close.
You know, we're certainly lose visits and revenue from those facilities, but we won't lose profitability in aggregate.
We're going to have the right.
We're going to have to rightsize, our corporate office Accordingly, and we have today, we'll have to keep it that way but.
I agree with Larry I don't I don't know, what Tony reform looks like.
Not as real help.
Totally understandable and then I guess your plate Larry earlier on looking at the map tenancy. Obviously is one of your biggest date.
The state has reopened I think we've been opened for two two and half weeks now you'll like walking us through the experience you've seen in terms of the re wrap in those operations and then how are you thinking about the referral they're coming in.
Above volume so how are you thinking about expanding capacity to take.
To take advantage on the increase in referral low.
Outpacing volume growth gas, so Brian I'll handle that so.
I couldn't be any prouder.
Some of our team in Tennessee, Our Star group those guys have done a remarkable job leaderships been incredible.
Responsiveness has been incredible.
How they adjusted.
Their staffing to their volume and how it was accepted and now we're now.
Ramping back up and in doing it the right way.
Dave.
As a partnership.
Found a way thus far to remain profitable.
Through all this even though their volume had been impacted.
Very significantly like everybody else's.
But they're ramping back up and.
I expect you know as we have the last.
Really since the April 12 week.
We've begun to pick back up when we talk about new patients being ahead of our currently our volume growth.
It's going to take a little time remember, we had such a low inflow of new patients during a substantial period.
We have some patients that we need to discharge too and so theres some balance between patients who've been hanging around for a while it's time for them to go.
In the new patient inflow, and that's going to for a little bit.
You on a one to one basis the growth of visits but it's it's picking up is picking up nicely through speaking of each week and I can't predict.
Even three weeks out at this point I don't know, but so far it's been steady for more.
Hi.
No.
Thats very helpful.
I guess, Larry just housekeeping I know you showed growth statistics, but we'd be able to share the same store numbers for the quarter.
Remodel.
Well, Chris gave that pre co that 5.7.
5.95, 0.9 pre Cove it.
No our overall volume for the quarter was 2%.
But thats not necessarily same store I mean honestly it would be.
Again, I would say, it's apples and oranges, how can you compare March of this year to March of last year.
Yes there.
Yes.
And your tangible and then I guess Chris.
Last question for you I think about.
The same store it keep track through writing if I look back to your business you definitely benefited from the strength of the employment picture.
And then as I look back to your own nine to 2012 timeframe volumes were challenged during that time, how are you thinking about.
Teradata recession heading into 2020 line.
How are you thinking about your volume outlook and then I guess the other thing I would ask is as I look back to the last recession.
Rate growth was positive and that offset the volume headwinds so.
Obviously in the last few years, we've seen rate growth flattened out.
So putting all those pieces together.
How are you thinking about.
The revenue outlook to the business.
Yes, Theres a lot packed in there so thats.
Thats, Okay, and it's all right. So I just trying to miss anything so.
Youre right were enough we're in a flatter rate environment.
Yeah.
I would say through from eight through 12.
While there was probably a year or two where same store was was flat or even maybe in the horse to those slightly negative we were able to to eke out some same store in the remainder of that period.
May not have it wasn't as high as it is or has been.
And our business lately.
Look we follow up some some strong.
Economic groups that are predicting a recession and Tony or maybe even still or maybe they are not right we'll see.
One of the things that we.
Weve learned here.
It's been interesting it's been tough as well, but we know who are a players are.
And we have tried our best.
Perfect by any stretch for we've tried our best to stay in touch with those people refer low to stay in touch with our doctors who were at home.
To do this the right way and no I have a lot of examples right now where we're getting calls from people who have.
And referral base followings, who have previously worked for somebody else, we're unceremoniously dismissed.
Nobody contacted them over a multi month period and they're now looking to join our team just because of.
They believe they will have a better long term opportunity and work with a group that.
That is able to going to be able to care about them in the business. It brings so.
In no way shape or form knowing what 20 ones are going to look like on the same store basis. What I will tell you is we're very very focused.
This has been a gritty time, but we've gotten you know we've gotten through the worst part of it I think and I hope.
We're going to grind it out and the other thing I'll say is.
Our competition, we think about it hospitals.
Who have had their hands incredibly full and who are really interested in getting their surgery, there imaging and those things back open again, maybe not as interested in PT, because that's a lot farther down the line. So we compete with them we compete for lot of small practices.
We've got more resources that are focused on this business than both of those groups. So we may have to move some market share. We're we're ready to do that we're going to work at that so we'll see what happens I.
I can't predict but we're focused on it and we're focused on overcoming at this point I would add I appreciate it lot Yep I got it.
I would add onto that that aided the 10 largest companies in the sector or private equity backed and our leverage.
Plus times to one versus our pre co that 0.6 to one.
So in terms of financial strength and flexibility. After this I think we're seeing a much better shakes and they will.
Larry you mentioned that I guess, sorry for my last question, you talked about the leverage and the credit facility and covenants.
I think you're showing in the pilings.
Flexibility to be about 2.5 times leverage and then 1.2 times on a fixed coverage can utilize walking you through how you're thinking about that and what the discussions are with the lenders in terms of your ability to adjust the covenants.
We have 110 million and.
Cash today 125 million in debt normally we would carry 30 million in cash.
So that remained mangy could reduce your borrowings by 80 may entity.
The amendments to the credit agreement, so I'd put us at 40 to 50 million in debt, maybe a little higher with operating losses. During this period.
I mean.
We lead the business is always thrown off good cash flow, we downsized, including corporate costs.
I think were solid for the foreseeable future.
And we expect them into this to be able to grow again, and then grow meetings organic openings and acquisitions and the other things that we've done them.
Many prior years before this happen so.
We expect to get back to that.
I appreciate that hi, guys. Thank you and good luck that fixed price.
Your next question is from Matt Larew with William Blair.
Hey, Matt.
Hey, good morning, how again guys.
So.
Great. Thanks, Laurie I wanted to ask a little bit about did that last comment and you've noted in a couple of decades expects to incur.
Losses during this time, but you also noted.
In the press release today that you've identified about 87 million annualized cost savings.
And I think you said at the 60% was well ahead of your plan in terms of volumes. So could you maybe give us a sense.
I'll bet East at Midland, what is sort of run rate savings on the back end to that this versus things that you've been able to reduce with the lower volumes.
So the 87 million as if everybody we furloughed.
Were terminated did not returned to work.
That's why it would be the rest of the right I don't know on an annualized base.
Annualized base here, so as we as business gets better we've started to bring back clinical staff I think we've added brought 30 people back from for low in the last couple of weeks and we'll continue to do that we've only brought back one person in corporate and were down 40% in corporate.
So again, we're going to size the business to what our run rate is if our run rate is 10% or 20% or whatever less than it was before then we'll have at least that much lower in staff, but I mean I can't tell you what things are going to look like in.
In June much less at the end of the here.
Sure, Okay, and then I wanted to actually spot Chris about Tele health.
You know just what is the experience been like are you getting paid for visits on tell how do you think.
Longer term this is a step change in the way that you're going to be delivering.
Services.
Yes, you could help us there.
Yes, I don't think it's a step change I think it's an added.
Uh-huh augmented service look there are times, we can all things back to what like it was like three months ago. We were all on planes trains in automobiles.
Around doing our thing.
Going to ball games, and doing all that sometimes the life happened to patients can't make it physically make it into the facility from those occasions, we a lot of those people might be able to do a telehealth visit.
Sometimes you just you wake up and you don't feel good or somebody who is little bit older. They worry that they might be getting the cold and so they're going to they're going to cancel we can do a telehealth visit in those cases, so I don't expect that we're going to convert existing patients and say why don't you do tell how.
Now that's not the case, but there are there going to be lots of times and circumstances. In this period has been one of those magnified where tele health is really nice adjunct to be able to get to somebody that you wouldn't be able to get to otherwise.
So the receptivity by the patients and our staff has been very very high.
We're going to continue with it we are getting paid by the vast majority of our payers.
Including Medicare for our.
Pete tipped facilities. We're we're in discussion about about 50 or 60% of our facilities are certified we have agencies Medicare isn't currently paying for tell health for those facilities, which I'll be honest mix literally an absolutely zero cents.
But.
There are a lot of lot of providers select medical many others or who are working those angles and fighting that.
For that to make sense.
But we just found out this week Blue Cross, Tennessee has decided to tell health is going to be a permanent offering for them.
So for some it's been indicated like Medicare the Tele health is going to be for physical therapy.
In other places that Didnt have it before during this pandemic period whatever that means.
Have a snowstorm.
To be.
And then we're working on.
On the beltway DC and with CMS for that ultimately to be permanent we think a lot of commercial carriers will allow it to be permanent but.
It's it's uncertain.
Complete basis as of yet.
And this is for you bring to become permit is this something that would it require some additional investment for you to scale up platform or or.
These have been relatively easy and plug and play free our clinicians right now we're completely plug and play in this been no honestly and the Cisco some crazy other than.
Yeah.
And I don't know that we did this at the clinic level you have to buy laptops, because we already have them but.
Today, we have had to make an investment at some point depending upon how this plays out and it won't be in in the immediate or even near future.
If we go to a different platform that would require some investment.
We would let you don't know what that looks like ahead of that but right now we're okay with where we are in the platform that we have.
Which is.
Just compliant with all the rules and regs and simple and easy to use and.
And we're going to be on that platform for the foreseeable future with out having to make an investment.
Alright, great does the final one here you mentioned the potential for M&A on the other at end of this as many of your smaller competitors maybe are under pressure.
Have you started to get additional calls already or has the Medicare advance payment and care is really funds help kind of stem the tide.
And then the second piece that maybe just speaking in terms of new referral sources a number of other.
Non hospital providers have indicated they've seen at increasing referral sources of smaller competitors have struggled.
Understand your referrals have been down have you started to see that might get three up.
Well if I understand the question referrals are picking up.
I don't have optically yet the ability to tell whether we're getting a lot of new referral sources.
Further we are those referrals are coming from that do expect one thing and I guess this is a prediction or maybe an expectation I think physicians, who own physical therapy business group had to go home and fit and furlough vis therapists and.
I think some of those are going to look at that business and say that really worth it because it's it's not their primary they don't do it as well as they run their their main business the primary thing.
And so I think some of those are going to go away or will go into management agreements or other areas. That's that's completely anecdotal.
You know that the rest of it I expect again expect referrals to continue to pick up from a variety of different sources one of the deals.
We have on the sidelines right now.
Focusing on hospital management of.
Physical therapy services Graham has a background in that area and so we're we're anxious to get to the point, where we can get that completed.
And focus a little bit more acutely on that and then in terms of the calls I have had some calls and in fact I've been on been asked to speak to.
National widely distributed.
Conferences zoom base kind of conferences.
And obviously part of that is what things look like post covidien, how that will affect them effect M&A and I've gotten calls from people that we've been in touch with over the period and they know we're not ready now but at some point, we are and we won't be and.
People I think are going to look at what they've been through and lot of them are going to want to be in a in a little bigger both in the one that they've been hand.
Storms, so we'll see that a couple of things one not hospital deal we're looking at as an outpatient.
Deal not a not an onsite hospital management contract.
And then I got to tax from one of our team members.
Sort of February have agencies or 40% of the business not 60 tips or 60, so 60% qualify for reimbursement from from Medicare now.
Okay. Thanks, Chris Thanks, Larry.
Thank you thanks.
Your next question is from Mike Krzyzewski with Barrington Research.
Hey, good morning, guys.
I was wondering just in terms of the I guess the patient experience in the PT experience in treating working with the patients whether it changes the physical building changes in the waiting room changes in terms of PC. He can speak to what what's different today versus two two and a half a month ago.
Okay.
It's a lot fit for.
You know some of its different so that is obviously, we're laying out our facilities that way too to continue to have distancing so thats.
Sure spread in terms of.
Shares in seating and plants in the gentleman that Jim area, and you know bikes, where we have multiple pieces of equipment in close proximity so with that.
It's scheduling and making sure that.
We we while particularly if needed and while we can we've got.
Hopefully people spread through the day in terms of pp. It's.
You know plenty of.
Sanitization you now.
Solutions and equipment to make sure. After every contact things are way down that we have plenty of hand sanitizer that we have masks that we were able through.
Through grams previous hospital connections and is that for we were able to when people were struggling come up with.
Meaningful quantities of Matt will do ups for.
The near term and May do us for the complete term of this we'll see how long.
The monitors and other things so yes, there are differences.
We continue to be able to be hands on locations.
Patients are wearing masks now.
And our facilities, our clinicians and our staff or Matt.
And then otherwise were.
We're going about our business and we're getting people better and we're able to do hands on work index based work and.
Re education and paying intervention techniques, just like we were before just a little bit more involved in you know.
Thoughtful preparation to pull it off the right way.
Gotcha and it gets Larry just to follow up on that.
The cost of any of that whether its.
Cleaning material PE that sort of thing I mean does that reach materiality in terms of sort of incremental spend there are not really.
Well I mean, obviously had some spend that.
I don't I mean, it depends on what you consider material I don't think we spend a million dollars on it.
I mean masks are ground water masks cost stuff.
Now 46 cents Chris.
So.
This is Mike there is some cost that's there.
Look we talk about materiality, there will be a point I think I hope we get through this that we don't have masks and I think at that point, we'll know water volumes are.
Right now we're in this volume adjusted period, where we have to do some other things and you know it's tough to predict exactly what that's going to look like over the next week or month or fume loans, but we're well positioned to get through it we just need to get through keep people protected and.
And we'll get out the other side.
Just real quick on are you guys, allowing multiple people to sort of be in the waiting room or are you having people didn't.
Cars as they wait to be call Dude.
Or is that sort of a clinic by clinic decision. It depends on the size of clinic, we've got some big clinics, we've got some smaller clinics.
Practically speaking, we're asking patients to come.
They can buy themselves not with any entourage, obviously right now most of our Clint most of our patients don't have to wait even on a normal basis in the waiting room adult normally said, sometimes the person that's in the waiting room is.
The driver or somebody else so they come right back.
Check and they go right back.
Or and we're able to do and take over the phone and things like that so there's not a big waiting room issue.
Some are larger than others, and if we needed to could accommodate.
People with adequate spread but most of the time or patient sort of a check in and come back and.
I am sure if there was or add there might be that.
A more dense arrangement, we would make an adjustment at that time and asked people to.
Wait for five or come back earlier or whatever keep some say.
Hey, or clinical team has done a really good job as looking out for.
Patients first and foremost and then each other and.
And so we've seen our exposures.
Go down.
Significantly we've seen our volume go up significantly and.
I think just as a week ago, we only have one person that was.
Working out.
Short term corn team and that was that was down from how much higher number the weeks before so we're definitely having the right direction doing the right thing we've had a lot fewer confirmed cases than I would have ever imagined.
Okay great.
A question just on on the Tele health.
Yes.
In terms of sort of the volumes in April and May I mean can you give any sense, even on a ballpark range of what percentage of the revenue in April and May was associated with telehealth.
Yes, I don't know that I can give you Mike a percentage of revenue Graham and be able to give us kind of you now.
Overview or snapshot on the visits and if we took a minute to do the math redo. After the call. We can probably figure out it's going to be a small percentage of revenue, but Graham what we were doing few thousand a week.
Yes, that's correct Chris.
So about 3000, a week I expect Mike that number actually to begin to go down a little bit.
As volume picks up in the facility in people and more readily able and capable.
Coming or feeling comfortable.
I expect that number to wane a little bit.
And again I don't have a good predictive ability to tell you awarded should look like.
On the peaks in the peak period, we're seeing about 3000 visits so we've got.
Okay, and payers were paying sort of the visit was 100 dollar visit payers were paying.
Centrally.
That with the rate.
I don't know with it it varied among payers there were some some unit exclusions for instance, obviously, there's some things you can't do on Tele health came to try and modeling you have to physically be there cant do manual therapy half the physically be there. So I wouldn't say that I would look.
The telehealth visit as being absolutely equivalent to an end clinic visit because there are few things that we do with our hand suggests that came through through the phone or the TV or the computer.
But generally speaking I think codes.
Probably some small exceptions codes were reimbursed at the same relative level same from Medicare.
But.
Not across the board not completely homogenous among or cross payers.
Okay, and then just last one and you may have you may have touched on this earlier I, possibly could have missed that but I just wanted to ask in terms of.
The industry and CMS and communications in terms of 21 pricing.
It has all that weighed on on that issue and.
Is there any incremental.
Okay.
Even anecdotal information you can share there. Thanks.
Yes, I know, there's the bill right now I talk with John do going from select medical they've done a great job our select has.
Yes.
Q why.
Alliance, a PPA American Hospital Association.
You know the long term care associations all have.
Rather.
Acutely banded together to press on CMS not turning back some of the reductions that were scheduled to.
Come into play in 2020, more we have bill right now we have we have a number of sponsors don't yet know.
Predict.
What happens with that.
But given the amount of.
Relief and assistance.
Given how important and healthcare system is and how important we are to the system and and the fact that we've been deemed.
Ahead of a lot of other types of of health care and Allied health professionals to be.
Absolutely necessary I think we have a shot but it's not done yet.
Thank you.
Hey, K going back to that Tele health volume question.
If if if it were to let's say, we run at 2500 week Forever, which.
As Chris said, I think a number those patients would come in and seen us so thats probably aggressive.
And we should have done at least 750000 visits in the quarter.
It would be like 3% Max 4% of your business. So it's not going to be at material percentage at your PTT as its the nice part is it should help to reduce or cancellation rate a little bit and we should lose less visit by having that flexibility.
Got it sounds good thanks, Thanks, Mike.
Your next question is from Kevin Gate, with D.A.H., Belo gain or investment.
Hi, good morning, everybody.
Really two days to.
The Swift action for management and really the deliberate delivery as information for the case it really appreciate it.
You cut off the comments about.
You being a stronger financially position player versus the other I'd like to open up the question maybe more on capital allocation, where you all stands in terms of your priority I know you mentioned pushing off.
M&A.
A little bit and.
You know and also saying that dividend maybe suspended for the upcoming quarter. If you can just expand on those two points.
You intend to.
Suspended the dividend if you intend to pay it and how long you.
Okay.
Thank you everyone.
So we've always said this very consistent our if you look at rates of return.
Highest return is on a de Novo clinic, one we've opened ourself second would be on acquired clinics, which in turn spin off to Novartis and then thirdly said we were.
It's hard to judge whether it was better new share buybacks or pay dividends, we initiated the dividend in several years ago. We've increased it every year sense in this situation, where theres. So much uncertainty, we like hundreds and hundreds of other companies have suspended the dividend will resume and at some point I would expect so what we pay one this year we've already stay.
Did that we doubt that we would pay any dividends this year.
Any room, we paid our first quarter data, we got will pay any subsequent dividends this year.
But I think there is a good appetite by the board and certainly the management team.
To to get us in a position, where we can reinstitute that at a point, where we feel comfortable that.
Our capital structure is.
Good and stable and we can do everything we need to do.
Great. Thank you.
Thank you.
And there are no further questions in queue at this time.
Alright listen thank you everybody. A note was alone call I know you had a lot of questions. So.
And I are around if you want to have some.
Follow up were available we thank you for your time and your interest and your support take care of a great day Bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[music].