Q1 2020 Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the enzyme group incorporated first quarter fiscal years plenty plenty earnings conference call.
This time, all participants I know listen only mode.
Then speaker presentation, there will be a question and answer session.
Good question. During this session you will need the press star one on your telephone.
Please be advised that todays conference is being recorded.
Quite any other systems, Please press star zero.
I would now like to hand, the confidence yes, we can today Mr. Keach. Please go ahead Sir.
Thank you operator, welcome everyone and thank you for joining us today as always before we begin I have just a few housekeeping matters, we filed our earnings press release and tend to yesterday. This announcement is available on the investors relations.
Section of our website at Www Dot enzyme group dot net.
A replay of this call will also be available on our website until five P.M. Pacific on Friday June 5th 2020.
We want to remind anyone that may be listening to a replay of this call that all the statements are made as of today may 12 2020.
And these statements have not been nor will be updated subsequent to todays call.
Also any forward looking statements made today are based on management's current expectations assumptions and beliefs about our business and the environment in which we operate.
These statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on todays call.
Listeners should not place undue reliance on forward looking statements and are encouraged to review our SEC filings for a more complete discussion of factors that could impact our results, except as required by federal securities laws enzyme and its affiliates do not undertake to publicly update or revise any forward looking statements where changes arise as a result.
A lot of new information future events, changing circumstances or for any other reason.
In addition, the enzyme group Inc. is a holding company with no direct operating assets employees or revenues.
Certain of our wholly owned independent subsidiaries collectively referred to as a service center provide accounting payroll human resources information technology legal risk management and other services to the other operating subsidiaries through contractual relationships with such subsidiaries.
In addition, our wholly owned captive insurance subsidiary, which we refer to as a captive provide certain claims made coverage to our operating subsidiaries for general and professional liability as well as for workers compensation insurance liabilities.
All of our operating subsidiaries, including the service center and the captive are operated by separate wholly owned independent companies that have their own management employees and assets.
References herein to enzyme or the consolidated company and its assets and activities as well as the use of terms we us our in similar terms used today are not meant to imply nor should it be construed as meaning that the enzyme group inc. has direct operating assets employees or revenue or that any of the subsidiaries are operated by the.
Yes, Andrew.
Also we supplement our GAAP reporting with non-GAAP metrics when viewed together with GAAP results. We believe that these measures can provide a more complete understanding of our business, but they should not be relied upon to the exclusion of GAAP reports a GAAP to non-GAAP reconciliation is available in yesterday's press release and as it is available in our 10-Q.
And with that ill turn the call over to very pork, our CEO Barry.
Good morning, everyone.
Before I outlined some of our operational metrics on behalf of all of our shareholders patients and their families.
I want to publicly thank our frontline teams for their heroism and dedication over the last several weeks.
As an organization the past two months have proven to be similar the most challenging times, we face both clinically and operationally.
During this unprecedented period, our ability to learn collaborate and adapt has been put to the test.
Each of our leaders have spent day and night doing all they can to protect treat and comfort their patients and employees.
We are in off as we've witnessed in doing extraordinary things to go beyond the call to do their duty in an incredibly compassionate and thoughtful way.
We live in a time, the 24 hour new cycles and social media.
And at times, it can be hard to understand why more praise an aberration isn't heat. Upon these leaders and caregivers that are on the front lines in post acute long term care.
Nevertheless, even though others might marginalize or even look past the contributions of post acute care all of them deserve our gratitude and recognition.
For showing up on the frontline everyday to give their very best of their patients. We love you enter honored to be associated with each of you.
Now we want to provide you some details on the first quarter performance before we provide an update on the impact of coven 19.
As we stated in our release yesterday, the tremendous operational momentum we generated in 2019 continued into the first quarter of 2020.
For the second quarter ROE, we achieved our highest earnings per share enter history of 77 cents, an increase of 92.5% over the prior year quarter, and an increase of 28.3% sequentially over a very strong fourth quarter.
Our results in the first quarter came from an impressive quarter over quarter improvement in occupancy and skilled mix days across the same store transitioning and newly acquired operations.
Prior to co bid, we continued to see strength in occupancy as the company hit its all time high in consolidated occupancy in February.
Starting in the last few weeks of March we began to see a decline in occupancy and an increasing costs caused by cobot 19, and the resulting slut.
Slowdown.
Normal patient traffic and the need for unprecedented use of personal protective equipment.
While these occupancy declines that increase expenses are included in our results, we still substantially exceeded our own expectations for the quarter.
We also want to make it clear that our results in the first quarter were not boosted by any stimulus funds or other positives on the reimbursement front.
I'm sure you all agree that our quarter quarterly results or something to celebrate.
Given these unique circumstances, our focus this quarter will be to provide an update on the impact of cobot 19.
We feel it's important to underline that this pandemic arrived at our doorsteps at a time when our organization has never been stronger clinically and financially as we told you last quarter. We saw significant bottom line improvement in all 21 of our markets at the end of the fourth quarter of last year, including some of our newer markets.
And yet we achieved 28.3% sequential improvement over that record breaking fourth quarter.
Let us reminds you that Insein was born intends much like these and our model is not only design to survive.
But to thrive and grow in the face of uncertainty our current health combined with our culture proven local leadership strategy healthy balance sheet and the enormous potential in our newly acquired transitioning and same store operations.
Gives us confidence that we are well positioned to manage through these unusual times.
And to rebound to our pre covered health.
Each of our local leaders.
Have been actively adapting to the rapidly evolving cobot 19 environment as they continue to provide the highest level of care to their patients as you might expect similar to what the whole country is experiencing the impact is varied by market and building by building.
Overall, our portfolio is not being overwhelmed by cobot 19.
As we mentioned in our release yesterday as of May eight 2020, the company's 225 affiliated operations across 13 States has 355 confirmed cobot 19 patients in house.
Also as of May eight seven operations had over 20, Covidien 18 positive cases, 25 operations had less than 20 cases, and 193 operations had no confirmed cases of cobot 19.
As testing continues to become more available we expect the number of known cases to continue to rise during the second quarter, but we believe we're prepared to operate in the cobot environment for the foreseeable future.
We started to see occupancy is decline in the latter half of March due to governmental stayed home orders a pause on vital procedures and overall lower hospital occupancy all of which directly impact patient referrals coming into the post acute setting.
More specifically between mid March in mid April combined same store and transitioning occupancy was down 5.2% and skilled mix was down by 11.8%.
Between mid April in early May combined same store in transitioning occupancy was down by an additional 1.7% and skilled mix actually improved by 13.6% respectively.
As these numbers demonstrate the rate of decline in occupancy slowed by approximately 40% over the last several weeks.
Also a recent boost in skilled mix was partially due to CMS is waiver of the three day qualifying stay and special arrangements with our managed care partners.
This recovery in skilled mix over the last few weeks together with the flattening of the occupancy declines demonstrates continued partnership with the healthcare community.
And as those that have been following us through our history know when we experienced an increase in skilled mix. It is invariably followed by an increase in overall occupancy.
The organization has taken numerous actions over the course of the past several weeks to provide the safest possible environment for its employees affiliated physicians and patients and a bit preparing for the potential and in a few cases and actual surge of cobot patients.
With the assistance to the service center, they've also been a successful in acquiring pp acquiring testing solutions and other supplies and equipment.
They have implemented staff retention initiatives tailored to the unique environment.
Of the various markets and the service center and field resources are providing training and helping to establish clinical protocols and safety measures in an ever changing regulatory environment.
To mitigate the impact of volume reductions in our operations. We've also taken steps to enhance our operational and financial flexibility and redirect resources to critical operations.
Simultaneously, we took actions to increase liquidity and deferred capital spend another cost to be delayed without impacting our delivery of care.
The organization has implemented certain cost reduction initiatives, which included the voluntary reduction and base salaries by the board of directors, the executive team and other key organizational leaders.
Companies response plan has multiple facets and continues to evolve as the pandemic unfolds.
As we said today, we've seen and expect to continue to see a significant impact from the pandemic on the second quarter and carrying into the third quarter, but we're seeing signs of stabilization and occupancy in many of our markets and we're optimistic that occupancy. So we'll continue to recover in the second half of the.
Year as hospitals reopened and vital elective procedures that have been delayed begin to take place.
We are maintaining our 2020 annual earnings guidance of $2 at 50 cents to $2 of 58 cents per diluted share an annual revenue guidance of $2.42 billion to $2.45 billion.
We are confident that we can provide this guidance for several reasons.
Including are better than expected results for the first quarter, which under normal circumstances would have led to an increase in guidance.
The implementation of certain cost reduction initiatives and the positive news on both reimbursement stimulus funding are also other factors.
While the pathway to achieving these results will differ significantly from what we originally planned and the quarterly cadence has changed we're confident that we are well positioned to regain much of our pre cobot momentum as the flow patients continues to normalize over time.
As the year progresses, we will continue to evaluate the impact of covert 19 across the portfolio and we will readjust as necessary.
And with that I'll ask Chad to give us an update on our recent investment activity chat.
Thank you Barry the company paid a quarterly cash dividend of five cents per share.
And common stock.
Due to our strong liquidity, we were pleased to continue our longstanding practice of paying a dividend to shareholders enzyme has been a dividend paying companies since 2002, and there are no current plans to suspend future dividends.
Also during the quarter, we announced for acquisitions, including one skilled nursing operation and one independent living operation that are part of a healthcare campus, both in San Antonio, Texas, and two skilled nursing operations in Colorado.
We were very pleased that we were able to add these four operations to book to the portfolio well in advance of the covered related acsix access restrictions.
Allowing us to successfully complete our multifaceted transitions.
We are happy to report that all four of these operations are doing well.
We have several deals in the pipeline that we halted temporarily has responded to the covert threat.
A few of these deals are slated to close sometime this summer while others will require a fresh look when the dust from a pandemic settles.
With these additions are growing portfolio is now comprised of 225 skilled nursing operations 23, which includes senior living operations and other ancillary businesses across 14 states.
An enzyme now owns 92 real estate assets 62 of which we operate.
This portfolio of owned assets took less than five years to build as compared to the 15 years. It took to acquire the 94 assets, we spun out that ctr, even when it was founded in 2014.
Through all the changes that are happening we continue to evaluate many opportunities. We anticipate that there will be a significant influx of older and newer deals that came come out of this pandemic as we slowly began to return to our pre covert plants.
While we are always very selective with each potential acquisition opportunity and pass on the majority of the opportunities that are presented to us.
We will be even more selective over the next few quarters.
And that is because not only as it extremely tricky to underwrite deals at this time, but we also believe that there'll be some very very attractive turnarounds on horizon, and we want to be sure. We're choosing the best available opportunities.
As an aside we want to remind you that our disciplined approach to acquisitions is not just focused on maximizing the return on our investments, but it's also an excellent buffer when there are pressures on occupancy.
Our approach to underwriting all of our opportunities is to pay fair and reasonable prices that are based on historical performance not on a pro forma or future future results that we will create through our performance.
And as you as most of you know the operations, we acquire tend to start out with lower occupancy and the price we pay reflects that lower occupancy.
So when occupancy go down like they did in March we have plenty of cushion built into our model. Similarly, our insistence on entering into leases with healthy coverage is hugely important as we're able to whether these storms without looming coverage problems that we expect many other operators are experiencing.
Lastly, we continue to methodically add value to our real estate portfolio.
Suzanne will give more details around our liquidity, but we currently own 72 real estate assets that are completely unlevered.
Many of these assets have been operated by an enzyme affiliate for long enough that they have built up significant equity value that we can unlock to fund the upcoming wave of very attractive acquisitions.
We're constantly evaluating our options, which includes taking a small handful of those properties to HUD for mortgage financing.
And with that I'll pass the call back over to Barry for some more detail around operations very.
Thanks, Chad.
We have learned a great deal through this process and our local leaders are now shifting their focus to a comprehensive recovery effort in each of their markets.
This includes proactively prick preparing for an executing on plans to provide care for all patient types, whether cobot positive negative or unknown.
These efforts very building to building and market to market and are being done in partnership with local and state public health officials to ensure compliance with infection control protocols and a comprehensive recommendations provided by the CDC and other public health authorities.
Some of these efforts have involved an entire building in other situations, it's a dedicated unit or floor that facility.
In one example city Creek post acute led by Executive Director Jarrett Mcdonald and director of Nursing Ana Mockingly entered into a unique agreement with the state of Utah.
At the urging of local hospitals that were were seeking to prepare for a wave of cobot patients. The state sought out our support in Salt Lake County to dedicate an operation to the care of cobot positive patients.
Jared and Anna along with market leadership and market resources began to build a clinical and operational plan that would allow city creek to become the solution for the surrounding hospitals.
As detailed plan required extensive preparation to ensure that there was adequate pp on hand from the staff a detailed staffing plan and proper infection control protocols, along with many other operational details through the entire process. The operation worked hand in hand, with local health officials and hospitals to ensure the proper transfer.
Current care and safety of both patients and employees.
The state entered into unique payment agreement with us, allowing city Creek to cover their expenses. During this temporary arrangement and function as a viable resource for the community.
To date. This operation is accepted dozens of patients and is already successfully transition many of them to home.
In another example, desert Blossom health and rehabilitation side initial wave of cobot positive cases in early April.
However, CEO, Scott Petty and director of nursing Andrea Francis were prepared.
After confirmation of these positive cases leadership quickly put admissions on hold to help ensure safety and allow for control of the spread of the infection.
The team also implemented communication plan for families. So they would have daily updates on the status of their family member they utilize technology to allow patients to connect virtually with level. Once the team executed a thoughtfully prepared plan to establish their dedicated koby unit that included physical barrier.
Yes staff inpatient separation units specific transmission based precautions enhanced clinical oversight and an effective disinfection protocols.
All the while working in lock step with their county Health Department to implement these procedures to actively manage the infection.
In their coated unit and the rest of their facility.
After the initial execution of their plan they were able to pivot and become an important resorts to the surrounding area partnering with their strategic managed care partners and hospital community to accept the recovering coated positive patients.
Even though the onset of the outbreak caused a sharp decline in occupancy because they were able to successfully carry out there comprehensive plan occupancy is quickly returned to pre coated levels and they were not only able to successfully treat covered positive patients in the recovery unit, but helped many of them to heal and many.
His return home.
And they continue to actively treat covet positive patients with great success.
Each of these examples the operations have reinforce their position in the market as an operation with the team of caregivers that are second to none.
The patients and families. They served our forever grateful for their willingness to take care of them at a time when it would have been easy to simply pass them along with someone else to handle.
These of course or just a few examples of the heroism that is occurring in our organization everyday and there are many more just like this our teams have shown tremendous flexibility and adapting to this new environment and continued to lead with solutions in each of their respective markets.
It really is in times like these that ensigns unique operating model really shines, our leadership and our operation model operational model or the reasons why we have adapted and we'll continue to adapt during this unprecedented time.
Rather than attempting to rollout a one size fits all approach across many markets with varying local restrictions.
Our CEO caliber leaders and their clinical partners with the support of a World Class Service Center are very carefully working with local governments hospitals and their managed care partners to be a solution to this pandemic.
As hospitals began to methodically resume vital procedures into reopened.
Our teams will be ready to admit the many many patients that have been waiting in the wings and are in need of post acute care all while working within the framework of Cobot 19 protocols now I'll pass the call over to Suzanne who can provide more details about the quarter and our guidance Suzanne. Thank you Barry and good morning, everyone.
Ryan detailed financials for the quarter Arkon plumbing, our 10-Q on press release Fag yesterday. Some additional highlights for the quarter included consolidated GAAP net income were 41, nine an increase of 90% of their prior year quarter. Adjusted net income with 43 million increase of 93% from the prior year core.
Okay.
GAAP revenues for 590 million, an increase of 25% over the prior year quarter.
Same store occupancy was 80.1% an increase of 28 basis points over the prior year and same store skilled managed care and Medicare revenue was up 11% and 13% respectively.
Transitioning occupancy was 82.7% an increase of 496 basis points over the prior year on transitioning skilled managed care and Medicare revenue was at 32 and 14% respectively.
Cash generated from operations with 27 million and free cash flow with 11 million. The company precluded the remained strong and as of May 1st we had cash cash equivalents at approximately 50 million and 235 million of available capacity on a revolving credit facility.
As Todd mentioned, we also have 72, Unlevered real estate assets and identified a handful of property for significant equity value that will allow us to add even more liquidity.
In March 2020, the federal government began to undertake numerous legislative and regulatory initiatives designed to provide ruby healthcare providers during the quarter content.
On creating waving the three day call. Thanks, Paul Carryback Special Ravi funding.
Now, let me give on Vance payment program for Medicare.
Through May 1st 2020. The company has received approximately 49 of Grand old under the Cures Act. In addition received around approximately 100 million from the Medicare accelerated payment program, which will have to be repaid in August of 2020.
In addition to carry back temporarily suspend the automatic 2% reduction of a Medicare claims reimbursement otherwise Daffy question for the period of May 1st 2020 through December 31st 2020.
This concludes the question how to positive impact on our revenue.
Magnitude as a positive impact will depend upon the continued impact our virus on our Medicare census through the remainder at the year before.
The federal government has also increased the federal Medicaid a fiscal performance none of US now I, 6.2%.
Net increase will terminate under require remarks on margins will start with lifted the temporary increase and after that we'll have a varied impact on our Medicaid.
Great. Thanks, Phil but for the state in which we operate have already approved increases are we expect several other studies there as well.
As Barry mentioned, we maintained our previously unmarked 2020 on your guidance at between $2 into defense and $2.58 per diluted share and revenue between 2.4, Q2, 0.45, Darren and independent of 2020 guidance represents an increase of 30.3% over 29.
Team spend adjustment river.
2020 guidance is based on diluted weighted average common shares outstanding approximately 57.6 million.
A tax rate of approximately 25%.
Inclusion of acquisition that stretches occurs in the first half of the year.
Exclusion of losses associated with startup costs and other operations that are not yet stabilized and the inclusion of anticipated Medicare and Medicaid reimbursement rates not a provider tax.
With the primary exclusion coming from stock based compensation. Additionally, other factors that could impact currently performing include variations and reimbursement system. The Raven changes in state budget seasonality occupancy and skilled mix.
Philanthropy generally conferences and stopping the start kind of impact of our acquisition activity Verizon insurance accruals, the resurgence of target candidate and other factors and with that I'd like to turn the call back over to Barry Barry.
Thanks Suzanne.
Before we move on to questions. We just want to remind you again that this isn't the first time, we faced adversity like we have in front of us.
Whether it was in the changes in the early days of our formation when some of the most experienced in respect to Dave's industry. We're filing for bankruptcy the aftermath of rugs four reimbursement reductions.
The increase costs and decrease in revenues, resulting from the two public company spinoff.
Let's see Terry or the devastation left in the wake of hurricanes floods or fires.
Our inside leaders have proven over and over again that our model uniquely positions us to take clear and Swift strategic action in each market they serve.
Our optimism expressed today is based entirely on our confidence in our local teams and our proven model.
Our success has and will always be due to their daily commitment and sacrifice and their ownership of our culture and organizational mission.
We are grateful to our shareholders and your confidence and support we can't adequate adequately express our appreciation to our colleagues in the field and the service center, especially our frontline staff.
Our nurses and Cnis in housekeepers, and all of those who.
Showing up everyday to do a remarkable were thank you for making us better we're grateful to each of you.
And with that we'll turn the call.
Turn over to the Q and a portion of our call Joelle can you. Please.
Correct the audience on acute eight procedure.
Thank you as a reminder to ask a question you will need to press star one on your telephone.
So with high question comes to pass on key please stand by where we compared to today roster.
Our first question comes from Morgan with RBC capital markets. Your line is now open.
Good afternoon, I guess, we'll start on the guidance.
Maybe any additional color around.
The cadence obviously, the second third quarter, probably a little choppy and I think you see it wouldn't be the normal pattern.
So Joe just any color. There does that include I think you said you had a couple of deals that might potentially close is that included in that guidance and I think you said that.
You would be recognizing that the $40 million just from mechanical or is that just a straight revenue flow through.
So, let's start there and I'm happy to.
Yes, Thanks, Frank I'll, let Suzanne comment on the cares funding as far as cadence goes.
Now you're asking a little bit in terms of kind of what we expect with census and recovery.
It's obviously a little difficult to predict look I can tell you that based on what we're seeing.
You know and.
We can we can speak more to kind of what we're seeing here in the second quarter, we had seen some pretty steady declines.
Even during kind of our weekly.
And I'm getting real micro here, but from from Monday to Friday, we were still seeing kind of daily declines.
Up until about three or four weeks ago.
We now are at a point, where census is remaining relatively flat through the weak and then we were seeing some declines on the weekends and even up until this.
Last week and that was true. This is the first weekend, where we remained flat.
From a from an occupancy standpoint.
Both through the weak and through the weekend now look and I'm talking very specifically about a very small kind of point in time here, but.
The pace of decline is that has has decreased substantially over the past several weeks and.
Even compared to some of our peers, we've been fortunate to see see that that pace. The decline in a in a pretty substantial way our skilled mix has gone up dramatically over that same period of time.
And part of that is due to the three days stay waiver with Medicare part of that's due to arrangements we have their managed care partners.
But part of that it's also due to some of the vital elective procedures that are beginning to happen.
You know a different different pockets of different markets.
And.
So it gives us some confidence that we will probably continue to see the even potentially some decline through the second quarter and that may even leak into third quarter.
We we don't know for sure, but even if it does.
We see.
A lot of pent up demand, especially for those that have been kind of waiting for those vital elective procedures that are kind of necessary there.
I think our normal slow down through the summer probably won't be.
Quite as Mark as it normally is but then again.
A lot of this so theres a lot of getting involved in some of this Frank.
But but I can just tell you what were what we feel like we're close to in terms of what we're seeing in feeling.
So even if the slowdown continues through the the beginning of the third quarter, we feel like the pent up demand will will will start to see things return to somewhat of a normal pace and I will also tell you 'cause it bears repeating that.
Our focus is on adjusting to the cobot environment, so even though there might be some substantial changes in how patients come from the acute setting to the post acute setting in terms of testing and how they are handled and how they are.
Potentially stage or or.
Placed an observation units within our facilities until there is the confirmation that theyre infection free.
The all of those adjustments are part of a comprehensive plan that our operators have been working on over the past many weeks and months to make sure that.
As nuances continue that we're we're prepared to adjust and adapt and be who we need to be to make sure that.
We do all we can to minimize the resurgence.
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You asked about deals and whether or not those are included in our guidance. There are no deals that.
That we have yet to close that are that would impact.
The guidance that we provided.
Thanks, Andy want to comment on the the cares that funding definitely so on that with regards to the care that funding ecolink will be an opt for now.
Either lost revenues or additional expenses. So the timing of Frank revenue recognition on that will just depend on the timing of those lost revenues and is expensive they really Mary the rapid them to the extent that we can't Pap lost revenues. Our expenses. Obviously, then we wouldn't have the funding into it can I just.
Offset each other and when you go through the analysis.
Okay, and but I guess, just conceptually on the the sequence here it sounds like it yes third quarter is epic third quarter historically, your lowest quarter of earnings it sounds like with what's going on in the second quarter, having the full quarter be impact.
That that you may see this this particular to year you may see second quarter. The Lois and then if if we're fortunate and efficacy the recovery continue a little bit better in the third and then better in the fourth is that a good way to think about it.
Yes, I think so Frank I think thats there that's how we're thinking about it.
Okay and in terms of the sequester I know you didn't give a specific number there, but a lot of people have kind of calculated at based off of historical levels.
The number you could share what what potential understanding that it could be different but just from a historical perspective, what what that would have represented on Medicare revenue how much benefit you would get from that.
Yes, obviously, Frank it depends on how many add Medicare patients we have in house, maybe between four and $5 million is what we're estimating.
Got you Indian.
On that cash benefits from.
The carriers Act you didn't mention the payroll tax deferral is that a big Adam I mean that when you get the payback over a longer period of time than that advanced payment. So is that is that another possibility of liquidity.
Definitely say under liquidity from the right. There are several items that Dan supplement that we've had mentioned which is approximately 200 million for us.
Hi, just to be repaid.
I guess on the deferral, we had two different deferrals right. We have the payroll tax deferral, which is about $40 million for us on that will get deferred on 50% for in December of 2021, and the remaining 50% through December of 2020 sale and then we also have that that federal.
Tax deferral, which is about another 25 million that gets deferred into July.
So several trials that $165 million control differ.
Got you and unit in the Ehealth map, hoping you do we're hopeful.
Hitting some rate increases pass through there.
Any particular states that you would call out in in how meaningful would that be army is is it in states that matter you have you got significant exposure and what kind of magnitude we talked in there.
Yes definitely right now obviously this is a process that will continue over time people are pretty early in the finalization of the ask Matt arm currently we have Arizona, Utah, Washington, and South Carolina here have their first cargo first round as what we think lumpy finals.
For us.
But this could continue to change that does at the four states, where we feel pretty confident about what we're going to be able to gap.
Okay, and my final and I'll hop back off.
You mentioned about the improvement in skilled mix with the return of elective I'm, just thinking I noticed Texas, obviously as new back there is there any other is that state have you seen more of a meaningful impact there or are there any other states or call out and I'll hop. Thank you.
Yes, no. Thanks, Frank good questions yes.
It's it's really sporadic Texas is certainly one of those where we're starting to see the elective started again.
But there are other states that have kind of informally loosened.
There the ability for folks to go in and do vital procedures.
Texas is probably the main one I think others will follow soon.
Okay. Thank you.
Thank you.
Our next question comes from Scott Fidel with Stephens. Your line is now open.
Hi, Thanks.
Good afternoon, everyone.
First question just wanted to attack on on the the cares and just interested if you're getting any additional visibility in terms of some of the additional grant funds that are still to be allotted it and then specifically just given your Medicaid exposure.
What you're hearing anything from CMS in terms of allocating funds more directly to Medicaid providers I know that CMS has been.
Surveying for Medicaid billings information et cetera, and provider so interested if you'd be getting the feedback there.
Yes, I mean, there's definitely a lot of additional detail that's going out there with regard to additional funding for the providers that need it as you mentioned on the Medicaid only accounting is they're giving some gathering data also with regards to im going to happen has significantly harder they're also looking at potentially giving a dish.
No funding there.
Numbers, the carriers round react which is.
Grant funding based after that we could be participating in there just seems to be some additional clarity that needs to be provided in or before we thought and complete those applications on round wanting to if they carry back but there is potential additional funding there as well as we mentioned at the states that we have for F map, we really only have.
Visibility to about four the states right now.
The other states are also still working on their plan under additional funding status plan.
Got it.
Obviously, I know, there's a lot of moving pieces to the second quarter and appreciate some of the visibility you gave us on.
Some of the census, and volume trends just interested if you can give us just any look into how we should think about some of the incremental costs that you're incurring whether it's from the or just off the departure calls have been put in place.
Our facilities.
Also I know that you incurred all of the cost directly into our reported results into your adjusted results in the first quarter. So also interested if if you did we're able to spike out an estimate of what type of incremental koby related cost you in your card in the first quarter as well.
Yes, definitely I think as ever, Illinois, I suspect that make us increasing cost for around wages and supplies.
With regard to supply typically they make up about one point and this is specifically nursing patient surprise that I'm talking about the make up about 1.3% of our revenue, but about one percentage increase of revenue if I connect spread that over the quarter I'm, so kind of increasing from 1.3 key 0.3 and on the wages.
We had an increase of about.
1.5% increasing revenue though.
About 2.5% of revenue increase and that's just going to vary up and down and based upon where every location is that on average definitely experience during.
Q1, and kind of and calibre.
Got it Thats helpful. Thanks, Susan and then just last question for you guys.
Just any thoughts on why the transitioning portfolio, but looking at a higher occupancy.
The normal in the first quarter and was even higher than the same store portfolio as well. So just any color on that and that's it for me.
Yes, Big Scott I can I can take that so.
As you know we refreshed those buckets every year.
And it really just speaks to the quality of the transitions that took place.
As we've talked about pretty openly.
The process of transitioning these operations as is.
Multifaceted is theres a lot to it.
And there were some some times maybe the last couple of years, where were we worked as efficient and effective and those transitions as as we would like to event.
I think through that process, we've actually.
Just gotten a lot better at doing those transitions.
And so I think thats, probably what you're seeing in that transitioning bucket is the effectiveness of both of sort of picking the right deals and and even some buildings that have higher occupancy isn't than maybe we normally acquire but but also just really performing well on on the transition.
And I think that speaks to as we talked in the script, all 21, who are markets being as strong as they've ever been I mean, the success of those transitions is directly correlated to that.
And it all comes down to those those local leaders.
Knowing.
Really all the buttons to push in the levers to pull that to make sure that you get the clinical.
Stuff fixed first and then and then.
Occupancy as follow so thats really what we're saying.
And that bucket.
Okay got it thanks.
Thank you.
Not showing any further questions at this time I would now like to turn the call back over to pay report for closing remarks.
Thanks, again, joelle and thanks, all of you who joined US in the call today, we're grateful for your your support and.
Have a have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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