Q2 2020 LHC Group Inc Earnings Call

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Good day, ladies and gentlemen, thank you for standing by welcome to the L.H.C. Group second quarter 2020 earnings Conference call. At this time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During the session you need to press Star then one on your telephone keypad.

As a reminder, this conference call is being recorded if you require any further assistance. Please press Star then zero at this time I would like to turn the conference over to your host for today's meeting Mr., Eric Elliott. Thank you Sir please begin.

Thank you Howard and good morning, everyone I'd like to welcome you to LHC Group's earnings conference call for the second quarter ended June 30, 2020, hopefully everyone received a copy of our earnings release last night I would also like to highlight that we have posted some supplemental information on the quarter and the impact of covert 19 on a quarterly results section of our investor.

<unk> relations page the supplemental deck as well as a copy of the earnings release, the 10-Q and ultimately a transcript of this call when available can be bound on this page our supplemental deck includes all of our reconciliations and breakdown of adjustments we will refer to these non-GAAP measures during our call today in a moment, we'll have some prepared comments from Keith Myers Jerry.

Imminent, Chief Executive Officer, Josh and Josh profit, President and Chief Financial Officer. We're also joined by Dr. been Doe Gay, our Chief Medical Officer, and Bruce Greenstein, Our Chief strategy and innovation Officer, who will both be available along with Keith and Josh during Q in a before we start I'd like to recommend remind everyone that statements included in this GAAP.

Ensco in our press release and in our supplemental financial information May constitute forward looking statements within the meeting of the private Securities Litigation Reform Act. These statements include but are not limited to comments regarding our financial results for 2020 and beyond.

Actual results could differ materially from those projected and forward looking statements because of a number of risk factors and uncertainties certain risks and uncertainties such as the magnitude of the impact of the coven 19 pandemic that could cause our actual results to differ materially from our projections estimates or more fully set forth in describing our annual and quarterly SEC filings include.

During our earnings release and related form 8-K, our form 10-K, and our form 10-Q, one file.

I see groups will have no obligation to update information provided on this call to reflect subsequent events I'm pleased to introduce the chairman and CEO of LHC Group Keith Myers.

Thank you Eric and thank you everyone for dialing in and participating in this morning's call.

Before we began I want to recognize all of our LHC group family members at every level our organization for the courageous work you're doing.

Thank you all for your parts of era dedication and extraordinary efforts during the year unprecedented time.

You are simply amazing and it's an honor and privilege for me to work with all of you. Thank you so much.

I'll start with a few observations about the past several months, what we learn how we've evolved and what is driving our increased confidence as we look ahead for 2021 and beyond.

Now I want to focus on investments, we're making in sharing our greatest asset are employing.

Our protected and have all the resources and support necessary on the front line and throughout our organization.

I will also cuts on M&A and then finally I'll wrap up my comments with a brief discussion on the regulatory outlook.

That has become considerately, even more favorable for the home health industry.

We've learned a lot about the resiliency of our organization through this public health emergency and have incorporated best practices are adopting during this period into our care model and operating strategy.

Similar to the experience with our intense preparations prior to the integration of almost family and the implementation of PDGF.

These challenges have strengthened and improved at every level of organization.

Since our first coded admission on March 13, we have committed and care for more than 4700 coated confirm patients.

And currently have on census, and an additional 882 Colby suspected patients.

Our rigorous clinical protocols and extensive experience with infectious disease pace.

Along with the significant investments, we've made and PPG early on.

Gave our clinician resources and confidence can be on that front lines caring for patients early on and provide a patients and families peace of mind.

As a result, we saw weekly cobot related business.

Mis business decreased from the height of roughly 8600 to less than 300 by the end of June.

The momentum we established with mused physician referral sources from January and February accelerated in April and hit double digit growth in both May and June resulting in nearly 4000, new referral sources in the second quarter.

Year to date, we've seen a 9.3% increase in new apparel horses as compared to the same period in 2019.

Our proven longstanding strategy of partnering with hospital and health systems to be that trust. This dilution for in home health care and hospice services positioned us well to play a meaningful role in our nation's response for the cobot pandemic.

Our growth from this strategy over the past 20 year speaks for itself as the number of new opportunities in our M&A pipeline.

Such as the joint venture, we finalized with Orlando help on August Onest.

While challenging and cobot pandemic has provided a unique opportunity to highlight our clinical capability.

How tightly integrated we are without partner how seamlessly we collaborate.

And the extent to which they are leveraging our unique experience and capabilities to improve health outcomes efficiency and patient satisfaction.

EBITDA than the value, we have been demonstrating to all stakeholders in communities. We serve throughout our country can be seen in the reacceleration of admission and organic growth since our mid April low point.

Through mid March we were experiencing double digit organic growth in home health admissions.

We were able to get back to pre cold and level by the end of may and exceeded pretty cold weather and year over year levels throughout July.

As strong as the home health care industry trends were early in the year.

Prior to the public health emergency.

We really we believe we could be in the early stages of a new norm, where patients family physician discharge planners and other referral sources are increasingly choosing the safety privacy comfort and efficiency of in home health care services.

Over more costly and potentially higher risk.

Good inpatient post acute care setting.

We believe that the recent experiences of co infections in nursing homes.

We will be a hurdle to fully reverting to past practices in post acute care, which could have a profound positive implications for the home health care industry and for LHC group in particular.

We believe this new normal also extends to greater awareness and acknowledgement of the benefits of in home health care and direct support.

The policy level as evidenced by policies have been put in place to allow nurse practitioners mph, the order and follow home health plans of care and conduct face to face vivid.

The new normal we are seeing extends to our growth opportunities as well.

In addition to the organic growth from our continued industry, leading quality and patient satisfaction scores successful pdgm implementation and market share gains from new referral sources and sniff diversion.

Affect an acceleration in M&A activity in New hospital joint venture Hospice acquisition, and a seller accelerated consolidation in the home health industry due to Pdgm and wrap eliminations.

Now I want to turn to our greatest asset are more than 32000 LHC group employees.

As we noted early on in this public health emergency.

Ensuring an adequate and reliable supplier quality PV to protect our clinicians and patients we serve throughout the country was our top priority.

But due to dedicated PB works prudent screen, we put in place and Mark we maintain adequate inventory levels to provide full pp kits for every in person patient encounters by clinician caring for our cold in 19 positive our suspected patients.

These pbteen kits include among other items and in 95 masks isolation down Dashiell glove and head covering and should cover.

In addition, we provide appropriate mask and gloves to all direct care providers for every in person patient encounters throughout our organization.

We have also developed and implemented a more efficient warehousing system and proved our shipping process with more strategic store location to ensure a timely distribution and receipt of PV and all locations throughout the country.

As a result, we continue to achieve our goal of accepting and treating cobot 19 patients at all location and continue or our universal math go modestly all patient encounters throughout the organization.

Specific to the safety and well being of our employees, we can dub daily online screening of everything.

Warm temperature checks on employees entering any office and agency location.

Back to social distancing and where masking all common area.

And at contact tracing when instances of such suspecting exposure occur.

Maintain in office staffing between 25, and 50% occupancy dependent on specific state mandates and have sustained thorough cleaning and disinfecting protocol and all off.

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In addition to ensuring the safety of our employees through our infection control and PB initiatives. We have added two and replace several initiatives to help relieve the financial burden some of our employees may be experiencing due to the cold igniting pandemic.

And Mark we began introducing problems that include.

The addition of a cobot 19 related criteria. The LHC group purpose fun to help LHC group employees receive support when they experienced financial and other hardship in their lives.

Especial peto cash in for 100% of a certain amount of an employee's p. deal value.

Enhancements and modifications to the loan and disbursement parameters affording time employees on our full NK program.

And expanded offering of benefits provided by our employee assistance program.

A make whole wage and Jeff Wade supplement for frontline direct caregiving employees designed to protect and restore growth wages for employees, we experienced lower gross wages due to temporary effects of coated 19 on patient volumes.

Resources for all employees to be better prepared and informed to daily communication updates on directive policy and procedural changes related to coal that 19.

And a special 24, seven coven 19 email inbox to answer questions that arising mindfully.

In June we introduced a onetime peto replenishment to frontline direct caregiving employees.

And for any employees, who previously donated their PCB oh hours to these frontline caregivers.

Earlier this week, we announced our employees that we are holding the line on health care benefits planned for our 2000 22021 open enrollment plan by absorbing the majority of the premium increases, resulting in three of our for health plan option, having no premium increase.

Employee.

With regard to M&A as I mentioned earlier, our joint venture with Orlando Health went into effect on August Onest.

They're Orlando Health system spans nine, Florida County, and includes 13 wholly own hospitals and emergency Department Rehabilitation services Cancer Center part Institute.

Imaging and laboratory services wound care centers and more than 300 physician offices and 11 urgent care centers.

This most recent partnership is yet. Another example of how we collaborate with hospitals and health systems to more fully leverage our home health capabilities and expertise to growth area in home services offering and become a more integrated component of their overall continuum of care.

During covert 19, our existing joint venture partners more fully leveraged our capabilities as an integral part of their healthcare to deliver team than ever before.

As a result, we fully expect even greater joint venture interest from hospitals and health systems in the future.

That said.

Our pipeline of potential M&A growth opportunities is well balanced between home health and hoppers.

Our M&A pipeline combined with the historic organic growth opportunity, we see ahead from home health market absorption.

Has us optimistic and bullish on both organic and M&A growth opportunities for the remainder of 2000 22021 and beyond.

Lastly, I would like to touch on some of the recent regulatory announcements.

In late June CMS proposed its home health payment room for fiscal 2021.

The proposed rule calls for a 2.6 rate increase.

And last week CMS released its final rules for fiscal 2021.

As it relates to the hospice.

2.4% market basket increase was slightly below the 2.6, when the proposed rule, but given the 60 basis point cut a year ago. Overall, we consider this a win for the industry.

And now here's Josh to provide some additional color on our financial results operational results and outlook Josh.

Thank you Keith and good morning, everyone. Thank you all for joining our call I'll begin my prepared remarks by saying how much I appreciate all of our clinical professionals and support personnel across the country and what they do each and every day.

It is truly gone above and beyond during these historic Thompson, our country to put others above self and to be an integral part of the solution for our country. During this pandemic.

It is a true privileged to serve you as you give so much of your self serving others.

Again, we are humbled and honored to be a part of your team.

Similar to last quarter. This was not a normal reporting period by any means.

My Tom This morning, we'll be focused on the accelerated recovery of our business from the covert induced low point in mid April.

Provide some context and granularity behind the drivers of this improvement.

Expand on keys comments around what it needs to thrive in this new normal with PDG and covert 19.

And close with some color on a reinstated guidance outlook for the year.

Our supplemental financial information is posted on our website with detail on the breakdown among sector performance as well as a lot more detail on the weekly and monthly trend through the end of July.

I encourage you all to review the supplemental financial deck as it provides additional details to my comments this morning.

The second quarter as noted in our earnings release was impacted by expenses associated with covert 19 for purchases of pp additional supplies and employee related cost and expenses, including employee bonuses increased wages.

Wage supplements and patio replenishment for frontline caregivers.

And other categories of costs and expenses incurred in response to the pandemic of approximately $27.3 million or 64 cents per diluted share.

I would also like to note that of the 88.7 million Enpro moderately funds. We received an April under the care, Zack 44.4 million or 27.2 million net of non controlling interest and tax was recognized in our PNM filed with the balance carried on our balance.

She has a deferred liability.

We also received $310.7 million and accelerated Medicare payments in April and CMS will begin recouping. These funds later this month and over the following 180 day period.

While our full quarter as revenues adjusted EPS and adjusted EBITDA reflected the lower census, and admissions.

Now returned to pre cobot levels in home health until early May.

That is only part of the picture.

The real story within the quarter was the weekly improvement through May and June that exceeded our prior year performance throughout the month of June and got US back if not slightly ahead of where we wanted to be with our pdgm care model and our operational strategies.

The pace of the improvement has given us even more confident than we had before that we will have the right exit velocity coming out of the fourth quarter and entering 2021.

Let's break down this pace of recovery, a little bit more with some details.

Home health admissions hit a weekly low point of 6169 during the week ending April 18th.

Our supplemental information shows the progression of admissions from their through June 30, and then again through the week ending August 1st we saw us have 8012 admissions that week.

For the end of June for the week ending June 6th through last week, we have been on an 8000 plus home health admission pace each week, except for the July 4th week.

We've also been closely tracking on missed visits due to covert 19.

Our highest point was the week ending March 20, Eightth, which resulted in 8585 missed visits.

Since then we have cut that number down to less than 200 covert 19 related miss visits per week by quarter end.

We have seen that number increased slightly over the last few weeks and we're at 245 through the week ending August 1st.

Our expected LIBOR rate is between eight and 9% of total home health episodes.

We saw this numbers by 12.5% during the week ending April horse, but it is now training at the pre cobot 19 level of around 8.25% last week.

Since the week ending may 16th we have been within our expected luper rate range staying between eight and 9% each week.

We're also tracking the number of patients that declined admission due to covert 19.

We hit a high of 336 patient refusals the week ending March 21st, but the number of patient refusals due to cover 19 had improved to only 18 last week.

Home Health average daily census went from the low point of 74936, the week ending April 18th to approximately 82000 for the week ending June 27, and was up to 83061 last week.

This improvement has come despite some of our state slow to fully lifted the ban on elective procedures.

Our elteks continued to be a strong performer in the quarter climbing from an average daily census of 222 in the first quarter to 257 in the second quarter.

Today the census in our Eltek is 262 as of this morning.

We received full eltek reimbursement for every patient admissions for the entire second quarter, which brought our revenue per patient day to 1385 as compared to 1270 last year.

The public health emergency related relief, which was set to expire on July 20 fit for the Elteks was officially extended for an additional 90 days through October 23rd 2020.

Another area, where we have seen both substantial momentum and validation of a key differentiator of our organic growth isn't the number of new referral sources.

Keith mentioned this earlier and we broke it down by month on our last call.

For the first quarter, we had 3915, new sources for home health referrals with the strongest year over year pace, obviously in January and February.

That was driving our 12% organic growth for home health admissions pretty code.

March declined year over year, as we might expect at the onset of the pandemic.

However, if we look at the progression. Since then the trend is more telling and explains why we are so confident on the organic growth pace and exit velocity as we enter 2021.

In the second quarter, we had 1205, new referral sources in April 1294 in May and another 1497 in the month of June.

The month of May and June where year over year increases of 10.7 and 37.2% respectively.

This brought us up almost 4000, new home health referral sources for the second quarter, which is an increase of 16% over the second quarter last year, and we are up 9.3% for the first half of the year.

As I noted before this trend as an early indicator of market share gain potential, particularly wink when combined with our industry, leading quality scores and our efforts to continue earning the confidence and trust from these new referring physicians.

Another contributor to our momentum and new referral sources and admissions has proven to be our partnering with physicians hospitals and other healthcare providers and caring for cobot 19 suspected and confirm patients.

As Keith mentioned earlier, we have provided care for 4700 confirmed covert 19 patients and have an additional 882 coven 19 suspected patients currently on service.

Of the 4700 Kelvin 19 confirmed patients 4451 have received care from one of our home health agencies with the remaining 249 patients on hospice care.

Well the 882 Coven 19 suspected patients 820 are currently on home Health service and 62 on hospice.

Our industry, leading quality and patient satisfaction ratings, along with our best in class infection control procedures makes us the partner of choice for referral sources, who desire for their coven 19 patients to be cared for in the safety and comfort of their home.

Before I turn to segment performance I would remind you that among his many provisions that healthy industry. The cares act temporarily suspended Medicare sequestration for the period of May 1st through December 30, Onest 2020.

As a result healthcare providers received an increase in fee for service Medicare payments by approximately 2%.

For LHC group, we recognized $5 million and additional revenue in the second quarter due to the submit the suspension of sequestration.

We estimate this to be in approximately $15 million to $20 million positive impacts revenue for us during 2020.

Within home Health I believe is instructive to break down our revenue per episode and speak to all the factors that influence within the quarter, particularly as it relates the PDGF and this sequestration effect.

Our revenue per episode was down approximately 2.5% and the second quarter compared to prior year was reflects both the impact of Pdgm anecdotally 19, offset by the suspension of sequestration effective may onest.

Coven 19 call as increases in lupus and increased our community admissions as a percentage of overall admissions.

We also experienced a shift of our patient mix from early payment periods or as we call them p. ones to late payment periods or P. twos as we continue to care for vulnerable patients to ensure they continue to receive the care they need while on the safety of their home.

All of these factors negatively impacted revenue per episode by approximately 3%.

Pdgm had an approximate negative impact of 1% in the second quarter, which was an improvement from the 3% negative revenue headwind, we experienced from Pdgm in the first quarter.

These were offset by an approximate 1.5% increase from sequestration or $3.9 million of additional revenue in the second quarter for home health.

As a result of our focus on Operationalizing Pdgm, we continue to see rate improvements on episodes and progress, which gives us confidence in our ability to mitigate the remaining portion of the impact of Pdgm as previously planned once the impact from Cobot 19 stabilizes.

The lower revenue per episode was offset by cost savings associated with greater efficiencies driven by our Pdgm care model.

As we exited Q2, we are ahead of our original expectation on revenue per episode as well as our cost initiatives associated with Pdgm.

On hospice and Eltek segment.

Each continue to perform well with volumes improving year over year end sequentially.

The revenue impact from sequestration in these segments were 769000 and $339000 respectively.

Deltax also received an additional $2.9 million in revenue from the change to full eltek payments on site neutral patients as required by the cares Act during the PHG.

Our home and community based services segment reported a 260 basis point decline in EBITDA for the second quarter 2020, as compared to the second quarter of 2019.

However, there was a sequential improvement of 390 basis points over the first quarter of this year.

During the second quarter, we experienced an impact related to coven 19, with billable hours and CBS declining 15%.

In the second quarter of 2020 as compared to the same period last year.

We continue to see this number improve and are currently pacing back over 170000 billable hours. This week.

With our recent EMR system conversion and the related headwinds now behind us and barring no unforeseen digression in this service line from Cowen 19, we should see the CBS service line began to gain momentum throughout the year and enter 2021, the strongest we have ever seen in this segment.

Now that we are back on or at least close to the pace. We were setting pre coven and we believe we're prepared to operate under the new realities of Coven 19, with our Pdgm care model, we have elected to reinstate 2020 revenue adjusted EPS and adjusted EBITDA.

Items.

We're now expecting net service revenue to be in the range of $2 billion to $2.05 billion.

Adjusted EPS to be in the range of $4.60 to $4, an 80 cents and adjusted EBITDA less MCR to be in the range of $220 million to $230 million.

As we discussed when we originally gave our initial outlook for this year, we were expecting our performance to be heavily weighted in the second half of the year as we position the company with our new Pdgm care model and operational strategies.

The main goal was to be positioned with maximum exit velocity in the fourth quarter. This year to fully benefit in 2021 and beyond and we're still on pace for entering 2021 as planned.

Let me provide an example of what I mean.

There are a number of best practices, we have incorporated from lessons learned during our response to the ccrone of hours pandemic.

We have taken advantage of technology and remote learning platforms for new hire account executive sales training.

New remote leadership development training through a third party partner and new remote format. It leader training for excellence by design program.

These and other lesson started off as necessities, but have become an ingrained motive operations, enabling us to drive further efficiencies and maintain our momentum.

Turning to page 27 of the supplemental deck, we have updated all of our debt and liquidity metrics for the quarter end.

We have over $507 million of liquidity with cash availability on our credit facility and an accordion feature for up to 200 million of additional capacity net of the Medicare advanced accelerated payment funds.

I'm very pleased with our adjusted free cash flow that was at $58.7 million for the three months ended June 32020.

Additionally from a cash perspective as I mentioned on our last call. The cares act permits employers to defer the deposit and payment of the employers portion of social security taxes that otherwise would be do between March 27, and December 30, Onest this year with half deposited by the end.

The 2021 and the other half by the end of 2022.

In the second quarter, we deferred 17.8 million.

And we still expect the cash benefit to us to be approximately $50 million and 2020.

As expected Dsos improved to 61 days in the second quarter compared to 62 days in the first quarter.

We continue to expect us to settle into a new normal rate of 55 to 60 days in the remainder of 2020 and as a really good momentum of cash collections as we exit Q2.

Moving now to our joint ventures, Keith discuss how closely we have been integrated with our joint venture partners throughout the pandemic.

We have been able to provide prove time and again, how essential we are to them and delivering the highest level of quality in the most cost effective setting.

A few examples of might help drive this point home.

One we have continued communication regarding capacity planning.

He availability CMS waiver updates and among other topics as it relates to our hospitals current challenges.

Two we are constantly collaborating with and sharing development and execution of cobot 19 protocols with our partners.

Three we have worked closely with some of our partners on a skilled placement program.

With the challenges skilled facilities are facing we are working with hospital partner case managers and physicians and focusing on accepting patients at the top of the home health acuity capability that historically were discharge the skilled facilities.

And for we're having continued calls with partners to determine real time needs and determine Wade our home health hospice for H. CBS agency could better facilitate care and eliminate patient and family concerns of exposure to the crown of ours.

With regard to our differentiated joint venture strategy. We noted last quarter that we would most likely experienced some delays in finalizing new joint ventures during the pandemic and that will certainly the case.

However, it did not take long for us to get back on track with the announcement in late June and subsequent Finalization on August Onest of a new joint venture with Orlando Health.

We were able to combine three of Orlando held home health and eight CBS service locations with three of our own.

Our latest partner is one of Florida is largest not for profit healthcare networks with nearly 450 locations spanning across and across nine counties.

We believe that we have just scratched the surface with these first few locations and this new partnerships should provide a strong growth opportunity for us for years to come.

I would also echo what Keith mentioned earlier about how the success, we have had improving our value proposition. During the pandemic has had a positive impact on our M&A pipeline for future joint ventures.

The pipeline remains robust with our in house corporate development team remaining laser focused on acquisition and JV opportunities across each of home health and our hospice segment.

And to the extent that our potential partners are able to focus on this aspect of their business. Our pace is expected to pick back up through the back half of this year and internet.

While it has not been on the front page of all the challenges and priorities we have needed.

To focus on throughout the pandemic.

Historic consolidation opportunity within the highly fragmented home health industry is still there and as compelling as ever.

Our increase in the number of new physician referral sources show that we are already capturing some of this opportunity through organic growth and market share gains.

Our Pdgm care model is in place supplemented with improvements we have added from lessons learned during the coven 19, pandemic as well as industry, leading quality and patient satisfaction scores.

We expect those organic gains will continue and we believe we are a natural fit for any independent home health hospice provider and that should further compel our inorganic growth for M&A activity later, this year and in 2021 and beyond.

To sit here today with a much better outlook than we did three months ago is a true testament to the commitment and dedication of our employees as well as the culture that exists within LHC group to consistently adapt and grow with new challenges and turn them into opportunities to provide the highest quality of care and compassion.

For more patients and partner with more referral sources.

As a result, our mission is as volatile as ever and our value proposition even more compelling.

That concludes my prepared remarks, operator, we're ready to open the floor for questions. Thank you.

Ladies and gentlemen, if you have a question or comment at this time. Please press Star then one like your telephone keypad.

Your question has been answered or you wish to remove yourself for the Q simply press the pound cake.

Again, if you have a question or comment at this time. Please press Star then one on your telephone keypad.

Our first question or comment comes from the line of Kevin Fischbeck from Bank of America. Your line is open.

Hi, great. Thank you.

To give little more color about the referral sources that you're getting I don't know is there any way for you dependent size.

The opportunity is still left in your markets as far as the where the referral sources already getting 50%, 70% 30% of the available.

Rules versus today.

I'll take that Kevin.

Keith at the good question.

So we don't have that right now, but it's something that we're looking at each other we could easily run market by market and we love beta so thats a less than I think we could start tracking.

Okay.

And then I guess.

Wanted to understand your commentary a little bit about how you. Initially you 2020, and how you're currently doing 2020 as far as that kind of ramp up.

Point, when we think about 2021 are you, saying that more or less.

The path that you expect to beyond based upon this new guidance as far as ending this year and therefore entering next year is pretty much.

Where you thought you would be back in in January and therefore, the view on 2021 should be pretty much the same as as it would've been back in January that might.

Stepping up correctly.

Yes, Kevin. This is Josh you are thinking about that correctly I may put a little fine point on it. So as you recall in our original guidance, we had a little bit of a back end weighted.

Progression to our year end 2020.

That started to ramp a little bit in Q2, and then really accelerate in Q3 and four.

As evidenced by our results in the second quarter and some of the Franco said during prepared remarks.

I couldn't be more pleased with how the really our operators throughout the country have.

You know that operationalized and handled not only the pandemic, but have really.

Incorporated our key care pathway strategies under Pdgm, even at a earlier clip than we expected. So we are you know we've executed on some of the cost strategies that we had coming into the year that we saw would happen more kind of in the third quarter heading into Q4 already so that gives us a lot.

While the confidence in the trajectory of got for Q3, and four which led to us feeling confident to reinstate guide, but as I look at it and map it out Q3 and four will be.

Similar to each other than we had originally thought but Q4 to your point will still be and not a little bit of ahead of pace for entering 2021 from where we thought entering the year.

Okay. That's it could be my last question, which was just kind of implied guidance. It did kind of seem like there wasn't a lot of.

It's a fair the improvement in volumes from Q3 to Q4 is the reason for or what.

Either case.

Yeah, Kevin I would say you know as it relates to volumes.

In our implied guidance.

From a revenue and the volume perspective, we're still quite frankly being a little bit conservative.

Due to the uncertainties around the pandemic feel extremely confident from a EBITDA margin perspective, and even perspective as those sorts of things, though but we wanted to you know take into consideration on the topline side you know the unknowns around you know potential disruptions.

From future spikes and and that sort of thing as it relates to the pandemic. So I would tell you we've got a pretty conservative spread of the revenue. If you look just at the midpoint of the guidance range that would put you at somewhere between 500 and tend to 515 million of revenue each quarter.

I would expect that Q4 would be a little bit better and you will continue to have that ramp of growth, but again damping that down a little bit for the unknowns of the pandemic, but Kevin I'd want to say one thing a round that as it relates to growth and the momentum because you can tell were variable.

Bullish on the kind of market absorption and market share gains that we have been experiencing throughout the year and we think thats due in part to a lot of factors, whether its pdgm disruption whether it coated related.

You know our sales team members I just want to tip my cap to them here publicly they have really gone above and beyond and found new ways to still interact with referral sources and create new relationships.

In the face of some new social distancing protocols and alike.

One thing that we spend a lot of time last week in our EMEA Wars as you know we have monthly operations reviews here at LHC Group every month and last week was that session for US here and one thing you know I've spent a lot of Tom talking with our division presidents of operations and sales on was the growth potential in the back.

Half of the year and really the only item that could potentially you know be disruptive to that based on where we sit today would be if you had an uptick or an exacerbation in the volume of your visiting clinicians that are in quarantine for any reason.

Due to exposure or potential exposure to the Corona virus. So that really spark me as you know we're very much data driven around here. We track that every week, we have a tracking mechanism that doctored, okay, who I'll.

Tag in here and just a minute has been leading for us since the pandemic began to really watch and monitor our employees.

Across the entire country and I'm real pleased with even as the number of positive cases throughout the country has continued to grow just to put into perspective for you. Kevin we have just over 10500.

Field clinicians field visiting staff and home health.

And throughout the entirety of the pandemic, we have been anywhere between 100 to just under 200 of those clinicians on quarantine at any point in time.

So to put that into percentage your anywhere from 0.9% to 1.9% of your field clinicians in home health that might be on corn team for a few days pending a test or upwards of 10 to 14 days, depending on the situation, but what I'm. The most encouraged with his since the latest spikes in coal.

That is started happening throughout the country.

And drive July we're only having somewhere between 30 to 40, new employees per week that are having to go on corn team, which is less than half a percent. So if you've managed year infection control protocols to a point that you can keep that low of a number having to be corn.

Teen on a weekly basis than the ones that had previously been on quarantine are starting to roll off and go back into.

Kind of active duty and able to see patients that gives me confidence in our systems and in the way we've been taking care of our employees and on the hospice front. We've got about 1600, two field employees that C patients and only about 20 to 30 or so at any point in time have been on quarantine. So about one one and a half per se.

Sent by Dr., Dan you want to maybe provide some color on that topic certainly thank you Josh.

We began a very strict infection control program. The first week in March before you, except that our first patients and we have refine that and kept abreast of all changes from CDC guidelines World Health organization and other health systems, which begins first thing every morning about an hour to two hours prior to entering work for all 30.

2000, plus employees undergoing a in electronic questionnaire that everyone in this room as well as all of our staff most to answer before attending work.

Any questions that are answered any possible exposure immediately goes into an algorithm for our contact tracing team.

That follows up on every single one of those to guide them and give them advice on a low medium or high risk exposure, which may result in a stay at home full quarantine or seek testing our physician visits.

That continues as they arrive to work mandatory wearing masks and temperature checks and.

Person checking temperatures.

Asking them about their questionnaire to ensure again that that has been completed in the right people who have been notified.

As that progresses.

Oh office staff, most maintained six feet a distance grow their workstations, most of which greater than six feet along with plexiglass dividers in many cases as well as any mobility in our agencies are home offices must be done while wearing a mask and anytime you are great you are less than six feet. Apart. This continues on with our.

Clinical staff.

As they both limit their interaction with our support staff.

When they come to pickup equipment is force for PD.

Questionnaire doesn't only extend to our employees, but also our patients before every visit in the home questionnaires asked of our patients also their caregivers and family members that may have been present from the last time, we have seen them.

And upon arrival that is repeated from a distance in a full pp depending on the patients a situation as.

Keith mentioned all visits are done with.

Medical mask and gloves and whole suspected Tobin 19 positive patients require for BP for all of our clinicians and then of course any confirm positive also has full pp.

From a PD standpoint, I think it was mentioned that we have we're very proud of the process that we've put in place.

That appointed admission of any patient we assess the entire episode and how many visits may be made and we have immediately distribution. We distribute immediately the total amount of pp that our clinicians may require for that patient state not on a daily or weekly basis, but for an entire episode that is done automatically an updated and with check.

And balances throughout the day and as mentioned before our equipment can be shipped for more than one location to shoot to ensure any stoppage of work due to those individuals getting govi 19, or any other natural disaster that we can continue to provide that to all of our clinicians, which improves the health and safety of not only them, but all of our employees as well as.

Our family members, but probably the two key points that I think book, Josh and Keith mentioned was that one our contact tracing efforts that are ongoing and began at the time of questionnaire before worth our time of temperature check or at time of any notification throughout the workday, we have immediate group on standby that can stay.

Breaking down and questioning and starting to assess the situation.

Our goal is to do it in 10 minutes or less which we have been very able to do especially during working hours.

We also have in addition to do that the Covidien box that is manned everyday seven days a week fund by our most senior nursing staff very select group of overseen by myself, who is a brand practicing primary care physician. Following each of these instances. So that we can give accurate up to date, but more importantly, very can.

Insistent information.

Again that occurs with less than an hour and business hours and at the beginning in end of each day, along with ending each day with an all employee email, giving them any updates or any changes from CDC guidelines or from our from our own state restrictive guidelines throughout our service areas. We always used the most restrictive power.

Procedures in place for our company so as a whole I see this has reduced as a key to both the communication and the assessment of each possible incident that has led us to as Josh mentioned less than 2% of our clinicians requiring quarantine in any one given time and this is what allows us to continue to care for our over 100000.

Patients on service as well as be available for new AD mids, each and every day for both count for both Cobot 19, and Noncovered 19 patients to decompress hospitals.

And in many cases, although we are now admitting higher acuity with more to say disability patients.

To avoid congress living facilities with snip diversion and high acuity high skilled.

Process and protocols in place.

Great. Thanks stock, Ben and Kevin I know that was a lot of an answer but really wanted to give them. Some color to everything we're doing to maintain our growth momentum and ensure that that doesn't get in the way in the back half a year.

That's that's actually really helpful. It pretty impressive.

That's it for me thanks.

Great. Thanks.

Thank you. Our next quick question or comment comes from the line of Brian Tanquilut from Jefferies. Your line is open.

Hey, good morning, guys and thanks for all the colors. So.

Thank you quick answer short answer your question.

Josh if I think of the guidance, you're giving for the year, what's embedded in demonstrate the cares money organic growth assumption and then again I know H.

You recognized.

No benefit or gains here in Q3, obviously, all the insurance companies at fairly low ml ours. So how are you thinking about the.

Uplift from that as we think about the guidance, but I guess.

Related to that if I look at your visit per episode down almost five year over year like how sustainable is that or how much. You know are you thinking that can move from that 32.4 level.

Sure sure and thanks, Brian.

So I'll try hit everything you just mentioned on so for the back half of the year I would say a few things to be cognizant of and I will touch on the last when you just mentioned first so of our in person VP add kind of run rate right now 13, and a half or so in person.

Thats per episode, we have factored in a progressive kind of uptick throughout the last six months of the year in that have anywhere from you know a half to another one one and a half visits so you could put anywhere from $10 million $10 million to $15 million of incremental.

Direct visit costs from a home health perspective into that model that and you kind of lends itself to our our guide midpoint. If you will on the on the cares Act we have nothing in our guide for the rest of the year that contemplates new cares.

Money or expenses, we will continue throughout the year to be monitoring that and as we did in Q2, we will adjust those results out we'll adjust out any you know co vid related increase in expenses as well as any cares AG provider lead fund offsets we'll adjust.

Both numbers out for the remainder of this year. So our guide does not contemplate any of that and then as it relates to HC I mean as you noted a we traditionally receive the Medicare shared savings payments in Q3, and we've got that factored into our guide and I would say you know.

The past few years, it's been around the 3 million dollar.

Level so.

Somewhere between three and 5 million is what our team is you know optimistically projecting but as you know those calculations, it's kind of come in at the very end. So we've got some of that baked in as well.

I appreciate it and then I guess just as they think about organic growth heading into next year, you talked about how Q3 Q4 kind of flattish stared right, but if I'm looking at your weekly admissions on page 10, it's been flat the beginning of June hovering around 8000 admissions per week, Mark. So are you second.

Yes sellers to get to that.

That run rate that you were talking about that you need yet that 2021 kind of goal starting the year.

Yeah, and I would say, one Brian and as I mentioned, when I answered Kevin's question there.

They are some unknowns and some conservatism and our revenue and topline guide, but if you ask me you know do I expect to have positive organic growth in Q3 and four the answer would be yes based on where we're sitting here right. Now if you just look at June and July and the most recent months even.

With the spikes in Corona virus throughout the country, you know when home health, we've had anywhere from seven 8.5% organic growth month over month and hospice is running between you know 10, 10, 10, and a half so I do expect some growth in the back half of the year.

And in our model we've got.

Pretty flattish conservative 510 by 15 million per quarter, but I think you know if we continue on this growth momentum and you know that 8000 per week continues to not only stay firm, but if it gets up to 8500, even 80 509000.

Which is where we were ads in January February than you would see even more momentum as we exit Q4.

Got it and then I guess my last question for Keith.

You'd be proposed rule has come out.

There's a little bit of the headwind there are the rural add on how are you thinking about that and maybe you guys did share.

What percentage of your business now as we were lighter than buy down quite a bit over the years.

Yes, I'll, let Josh and take the second part of that I feel I feel really good about the.

From a policy perspective, the support for our rural reimbursement, whether it's the rural.

Add on our.

Our something more permanent.

That's been one of the very consistent.

Policy perspective that the or policy initiatives that we have support on both sides and I'll form.

It's kind of a constant it's a constant pipeline that even in the partnership we have a.

Whatever our when our agenda items move around.

There's a.

Especial initiative.

Some assets that are focused just on the rural lateral.

In certain key champions on the hill from rural areas that support that.

It's just.

It's something that you have to pay a lot of attention too because it.

It's not.

It's an easy place to cut.

Yeah, and Brian on the kind of relative proportion of our episodes were now pretty consistently around 30% of our patients.

Our patient episodes are in rural and assays, which you know if you go back even free the acquisition of almost family that number would have been a lot higher for LHC. So we have diversified our and as they reach as we've grown the company. So it's a lot less material than it once was let me let me say one other things.

While we own this month, we don't I really appreciate the question and we don't call by very often sort of benefit of everyone.

Just want to remind everyone of the issue is that the home health rate of based off of the hospital wage index.

And then in rural areas.

That is an appropriate because.

They are wages are lower in rural areas of course, but in rural home health patients have to drive many miles between patient homes. So the number of visits you can make per day as a clinician.

Much lower than they are in more populated urban area. So the from the outset of PPS the home health.

<unk> rates have been set on the hospital wage index and that's why we always have the need for something.

For lack of a better term to patch or make up for this that inadequacy in reimbursement for rural now.

I appreciate that thank you.

Thanks, Rob.

Thank you. Our next question or comment comes from the line of Whit Mayo from you. Yes. Your line is open.

Hey, Thanks, So I'll keep it at one question since we're already at the top of the our the Florida numbers that you guys disclosed or are pretty crazy and in June and July.

Might've been a typo at first but can you maybe spend a minute just decomposing that 18, 19% growth I think the comparisons are a little distorted given some of the disruption, but how much of this is market share gains does this diversion new referrals, maybe any help.

Framing.

How to put that 18, 19% perspective, thanks sure. Thanks, Whit and I assure you it's not a typo as you all know we've been laser focused on the growth strategy and Florida since prior to the transaction with almost family and we have been talking about it.

Ever since we closed the transaction and really spoke coming out of last year. As this year 2020 was going to be a really strong growth year for us there.

And it goes back to a lot of the strategies, we implemented toward the end of last year. Yeah. We added more a ease more sales team members, we really increased our relationships with a lot of the hospitals throughout the Florida market. Obviously, we just announced Orlando helped joint venture, but even throughout hospitals.

That were not joint venture partnered with we have strengthened and the reputation of LHC group working with hospitals now that we go wall to wall carpet in Florida with home health providers or we have really gotten in which case management and the C suite of a lot of big hospitals down there and have untapped new referral sources.

From that kind of referral flow. We've also really had a nice increase in physician new physician referrals and the state of Florida. So I I mean, what we continue with 18% organic growth in the state of Florida Forever, Obviously, no, but I will remind you add.

In Q1 prior to the onset of the pandemic in the Middle of March we were pacing at around 15% in the state of Florida in the first quarter. Then you know Kobin hit it started going down but you see the recovery in Florida, We were back positive BOMAY and then as you referenced you know such strong numbers.

In June and July so I've got a real high degree of confidence.

For not only the back half of this year, but going forward with our growth momentum in Florida.

Super helpful. Thanks.

Thank you. Our next question or comment comes from our line of Justin Bowers from Deutsche Bank. Your line is open.

Hey, good morning, everyone and really really appreciate all the.

This quarter as you guys I didn't top notch, so I'm just going to piggyback on whats question and you guys are also putting up some impressive numbers in Texas to like up 22% and.

And you know, Louisiana, 26% and was just trying to get a better sense. So when you talk about the increase the full relationships to our they are they tie like are they.

Disproportionately more weighted to where you're saying some of this increased activity or is there something else going on and then I have a quick follow up.

Sure.

So just I guess I would probably have to go slice the data a little bit more finely to be able to directly answer your question as it relates to the specific markets.

No because I remember looking at last week during in the large that the new referral sources are definitely up.

In Texas, and Florida for sure. So that is a contributor to this.

But but I'd also say you know in some of those those two states alone right. There have been where there has been some recent surges and ccrone of hours pandemic and I do believe that.

While new cases of the pandemic rise in certain markets. The healthcare kind of infrastructure is a lot more comfortable now with taking care patients in the home. So we are prepared we've got all the pp. We've got all the infection control protocols in place. So I think in states, where you're so.

Saying more surges, we're actually starting to gain more market share and not one to one for cobot patients, but you build those relationships with the referral source, when you're willing and able to partner with them for those patients and then you get more following that so I think you're seeing some of that too.

Yeah. Thanks, Josh that's kind of where I was going to it was it was more the next was going to be like is it are we seeing increases from your existing JV partners in those markets too or is it like is there are just water.

Capture going on and it sounds like the ladder and then just a quick follow up on Pdgm on pretty positive commentary there and is it is it do you guys feel like you're in in.

A good place now with respect to revenue side in the care plan or is there some more wood to chop in that.

And is there still some room on the table on the rate or is like the down 1%, where you guys wanted to be by year end and then I'll I'll stop there.

No. Thanks, Justin I'll I'll start and then I'll.

Kick over to Dr. been again on the Pdgm rate headwind side, you know, 3% headwind Q1, 1% headwind Q2 feel really good about being at the only negative 1% for Q2 is there more wood to chop I would say that you know we said all along that.

As we exit 2020 going into next year, we believe that you know we had a real good opportunity.

Two.

Implement our care pathways in a way to mitigate the reimbursement headwind from that so that extra 1%. You know we would expect that to to be mitigated throughout the back half of this year, but you know whether it settles in at a half a percent or you know somewhere and where we're at right now.

We feel really good about it on your first question. Let me just say generally yes, we are receiving an increased referral flow from our hospital partners and those key states you mentioned.

In Texas, You've got Texas Health resources method is.

A lot of our Christmas footprint as.

As well and then in Florida.

Obviously, we've got Baptist in the Panhandle, and some hospital partners in that state. The Doctor been why don't you talk a little bit about what we're doing with some of those partners in those states, that's leading to some of that referral flow.

Absolutely. Thank you Josh as mentioned before a much of the.

Well that numbers have given us an opportunity to increase our conversation with our partners and other hospitals that are in our geographical areas.

This conversation.

As Josh mentioned that extends beyond coven 19 patients and it gives us the opportunity to shorten the length of stays and give the availability for patients to move from inpatient into the home and at that time. Our goal is to create a seamless transition where we are a true partner that is able to continue the care that began in the hospital.

In the home. This is something at any time of transition Theres always a point at which there's some difficulty continuing forward and having a true partner and having that conversation goes a long way and providing that care seamlessly along with that we've been able to brainstorm together at coming up with solutions for some of the higher acuity patients that may have gone to account.

Good living facility are skilled nursing facility to let them know what our capacity is to care for those patients and often extend not only our own protocol that we have worked quite a bit on but also utilizing the cardiology pulmonology protocols used in the hospital during our own service line once they returned home.

This is green created to the point, where as an example, we have a leader in Florida, who actually contacts our joint venture hospital on a daily basis, almost as part of the bed delivery service line and saying how many patients they were available to take that day based on based on staffing as well as capacity that we have on our end so that create.

So that transition period or that option to transition those patients the hospital to home in a more seamless pattern.

Alright. Thanks, so much appreciate all the detail.

Thank you. Our next question or comment comes from the line of Frank Morgan from RBC Capital. Your line is open.

Good morning.

You talked about some of your opinion ugly cost reduction efforts, yeah, I'm just curious.

How much of those do you think are really permanent so that is this volume recovery continues you really see some nice margin leverage from that and.

I was looking at your segment margins they already fairly impressive with home health care back up over 13% in hospice almost 16 so.

How much I know you did mention when all said about the potential for increasing visits per episode, but how do you think about that the opportunity you see margin leverage is is this volume recovery continues thanks.

Yeah. Thanks, Frank this Josh I'll.

Well say there is as with any.

You know trying situation.

It really forces.

Hi, outperforming themes to get around the conference table and spend a lot of time doing post mortem or lessons learned and I've got to tell you. We have spent in ordinate amount of time doing that throughout the pandemic.

And we're not done learning yet there there's a lot more than I think we will we will learn from this experience.

Not just from an infection control and protocol standpoint.

To be ready and nimble whenever you know future spikes or you know.

Probably not but any other.

Infection control pandemics might ever occur.

But but it goes beyond that and things like the way, we are incorporating more technology and remote learning remote team interactions.

On the things we're doing to continue to onboard new sales team members as we continue to have opportunities to grow we used to bring them all into lap yet and have you know a week of quote downtime. While they are training. We've now incorporated a virtual element to how we are getting them trained along with some other in person ride alongs to get them.

Actually out on the street sooner so.

So there's there's a lot of those types of things that you know when you think about travel you think about airfare hotel rooms, I think that will help our gionee and our margins.

We continue to look good going forward.

But I want to reiterate Frank you know those the lessons that we have and will continue to learn from this a you know as well.

We almost every week with lessons learned and what can we do to hardwire those into.

Our operations so.

To the margins feel really good about home health hospice with the the caveat that you already alluded to a with a slight uptick in visits per episode on the home health side and I wouldn't be surprised if the hospice margin came down just a little bit in the back half of the year, where possibly a little bit uptick in.

In person visits could occur there as well.

Maybe one quick follow up as I look at your revenue factors you described in home health care alerts on slide 20, when you're looking at.

Percentage of Ptcs institutionally, I've missed lupus and case by case mix rates.

Which of those I mean, it looks like.

Think about which of those are essentially back to normal should we see more movement in the percentage of.

The two days going down and Pete Wentz coming back up it looks like the institutional Ed mentioned with the one area that you still see some reversion back to normal so any commentary about any of those four factors and which ones would drive rate change the most thanks.

Yes, Frank so.

You can see and I mentioned my prepared remarks that we feel you know we're kind of in a expected normal range on the loop. Aside the case mix is you know showing a good trajectory there month over month backup over one in the month of July So that's very positive, but you hit the to the two that really will help.

Overcome the the rate pressure, we're feeling right now that negative 2.5% on the revenue per episode that I described are really in the institutional and mid percentage and then the percentage of I would say the betterment of the rate comes from the percentage of PD ones on more you know front end admissions.

So on the institutional we've really kind of dip down into that 50 758 range. We're pleased that we're back up over 60, but you've got four or 500 basis points at least have continued improvement there.

As more elective procedures occur and things of that nature, and then on the percentage of P. twos as we know now that we've got that 8000, plus new patient ADMET run rate going we're seeing the percentage of PD, one slowly improve but once we get back up to the 8500 and above that I described earlier.

Going to see that kind of move back.

Better as well.

Thank you.

Thank you.

Next question or comment comes for long enough.

Okay.

Mr. Matthew Leroux from William Blair. Your line is open.

Okay. Thanks.

Thanks for all the detail on some of what do you do what you TV Parker's wanted to ask about.

What do you other constituents, which is on the payer side because it doesn't look like the any business was very strong in the quarter and no. There's lot of site of care redirection efforts going on there. So just curious what the conversation you you've had intra quarter with payers not only about again Medicare direction near term, but perhaps not as you know my catalyze more Smith at home.

Our other.

More based relationships move forward.

A great Matt So I'll I'll.

Say, a few things now I'll kick it over to Bruce.

Very pleased with as Weve talk you know year over year things like for the past few years with our continued ges.

Fundamental rate per visit improvements that we're seeing on our entire managed care book of business.

And I want to acknowledge and said my cat to our leaders that are really driving that effort and we.

We've got just such a a top notch team that is you know day to day in the trenches of you know entering into new contracts negotiating improvements in rates and that sort of thing. So you know we've seen continued rate improvement year over year, just in the underlying a mix of our business that we have.

Now as it relates to value based arrangements, we have seen an uptick in those and our you know it's still not a material portion of our revenue, but I'm Super excited we have a biweekly me a meeting every two weeks that briefly but its you know Bruce and our team that drives that effort with myself and some of our operators.

And he comes in and just you know so excited and get the rest of US excited about where where that's headed so response you give an update on worry on value based.

Yes, so value based continues to make up.

Sort of a larger portion of our activity and as Josh said it may not be material in terms of the percentage of our overall activity it becomes more and more influential because it's got a larger portion of each of the arrangements that we have when we extended out from the beginning and we like the way that payers.

And the health systems that are under full cap arrangements from payers are starting to think about it and maybe you just considering the first wave it was more process oriented or more measurement oriented around starz timely initiation of care, but now we're seeing a second wave, which I think.

It gets even more.

More important fair the U.S. health care system and better for us because we're able to address it and that is in managing total cost of care today were around the measurements associated with reducing unnecessary emergency department visits in hospital Rehospitalizations, but now we're in discussions on managing total costs.

Cost of care for a period of time.

I think we'll be that the next phase the third stays at value based relationships. We already are so data oriented that we're measuring the total cost of care. During the time that we are working with the patient in or episodes. We are already managed or we're already measuring the cost going out to 180 days from the time to that.

Sure so whether it's the largest payers in the country that we're working with today, we're paying attention to that and we're in relationships, where we're starting to get.

We're starting to get our bonus checks from.

He then no obvious markets like Medicaid, where we've had a lot of success.

But we're already looking at BPCI bundled payments were working with our our hospital JV partners that are render a full cap rates you mentioned, we're starting to harvest does bonuses right now and that's just leading to more sophisticated discussions about taking over a larger say.

Share the management of those patients going forward.

Matt I also want to touch on you mentioned snip diversion and got Snippy version has become an exceedingly hot topic since close it started and it's something that we've been talking about for at least the last two years that LHC.

And despite how enthusiastic I am about being able to work with our hospital partners today and jump in to take patients to the safer place in a place that they want to be where we can take care than clinically appropriate Lee.

This is something that I think is sort of a half generational change as we've gotten deeper and deeper with our health systems on sniff diversion were unlocking relationships that have been beyond arm's reach for US there about working with discharge planners in case management teams in corporate office since all the way down too.

The hospitals, where maybe we haven't had the same kind of reached that we want you. We haven't had the ability to bring home more clinically complex patients that we want to so when we measure the number as sniff diversion patients that were taken its not a in the thousands but what's happening is as we take in dozens and dozens we're.

Also bringing in new patients that would not have come to us otherwise and I think even when togut is over soon I hope that it could go on for a year longer.

Those relationships will continue to spin off I'd not just the sniffed diversion patients, but also our middle 50% outpatient, but also a lot more a in the upper 10% patient and were convincing clinicians throughout the healthcare system that home is not just where patients one.

To go home is not just the safer place to go but it's also the clinically appropriate place to go and that's we couldn't be happier about that transition as well.

Great. Thanks Bruce.

Thank you My next question or comment comes from the line of Matthew Gilmore from Baird. Your line is open.

Hey, Thanks, I just had one last one for either Keith has asked but could you just sort of update us on where you are with the CFO search may add up a little bit of the false start, but just kind of get a sense, where you are on that process.

So I guess just keep I'll go first.

As you know I think we have Russell Reynolds engaged we've worked with Russell Reynolds for a long time, Sarah even in particular does most of worked for us.

So it was our.

It was really quite disappointed that Robert did or didn't work out for personal reasons and in the end. He was he was a great fit we thought.

But Russell Reynolds was already engaged and they just continued engagement.

And so.

I would say you know often we signed as a silver lining on a lot of things that don't have greater.

Upfront the the cast of a candidate now that we're looking at is.

Much is much more impressive I would say not take anything away from Robert but the search as more public and I think I think thats what.

Given Russell Reynolds more success, so happy with the process and.

We have the we have the benefit the blessing of being able to take our time to make the right decision.

You know its unique with to have Josh and as this has been here this long and.

Then headed up a number of important departments isn't an attorney Adam Accountants.

And we have.

Very experienced.

Staff that all around him. So so that we don't need to make a lead drug decision, but I. Appreciate the question Josh you want to add I think that yeah, no I mean that maybe the only thing I would add talk he just said is how excited we are about the the candidates that are inbounding with interest.

You know when we are first doing research obviously it wasn't public at that point.

So you know that Theres, one way to search and that arena, but once once it became public Russell rental was actually receiving inbound inquiries now that LHC group CFO position is available and being marketed so we have a weekly you know call with Ross rentals, where they're giving us.

Feedback of the candidate pool and not only do we have strong candidates, we have a broader number of candidates than we had the first go around as well so I agree with Keefe no huge rush, because we're going to get the right person to complement the thing.

Great. Thanks, a lot.

Thank you I'm showing no additional questions in the queue at this time I'd like to turn the conference over back to Mr., Keith Myers for any closing comments.

Okay. Thanks, Thanks, operator, thanks, everyone for dialing into the recalled and thanks for your support and confidence and LHC group as always we want to be available available to you at anytime you have questions. Please contact Eric Elliott and Eric will make other members of the management team available to you as needed. So thanks.

So again and look forward to talk next quarter.

Ladies and gentlemen, thank you for participating in todays conference.

You may now disconnect everyone have a wonderful day.

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Good day, ladies and gentlemen, thank you for spending.

Oh H.C. group second quarter 2020 earnings conference call.

At this time all participants only.

The speakers presentation, there will be a question answer session.

Good question during the session you wanting to press Star then one.

Okay.

As a reminder, this conference call is being recorded if you're acquiring any further assistance. Please press star then sure.

At this time I like to turn the conference which are your host for today's meeting Mr., Eric Elliott. Thank you Sir please begin.

Thank you Howard and good morning, everyone I like to welcome you to LHC Group's earnings conference call for the second quarter ended June 30, 22 warning hopefully everyone received a copy of our earnings release last night I would also like to highlight that we have posted some supplemental information on the quarter and the impact of Cobot 19 on a quarterly result section of our investor.

Relations page the supplemental deck as well that's a copy of the earnings release, the 10-Q and ultimately a transcript of this call when available can be found on this page or supplemental deck. It was Oliver reconciliations and breakdown of adjustments will revert to these non-GAAP measures during our call today in a moment, we'll have some prepared comments from Keith Myers German.

<unk>, Chief Executive Officer, Josh and Josh <unk>, President and Chief Financial Officer. We're also drawn by Dr. Bendel gay, our Chief Medical Officer, and Bruce Greenstein, Our Chief strategy, and innovation Officer, who will both be available along with Keith and Josh Derek Una before we start I'd like to recommend remind everyone that statements included in this conference.

So in our press release and in our supplemental financial information May constitute forward looking statements within the meaning of the private Securities Litigation Reform Act. These statements include but are not limited to comments regarding our financial results for 20 and beyond.

Actual results could differ materially from those projected and forward looking statements because of a number of risk factors and uncertainties certain risks and uncertainties such as the magnitude of the impact of the cobot Nike abandoning that could cause our actual results to differ materially from our projections estimates or more fully support than described in our annual and quarterly FCC filings, including.

Our earnings release and related form 8-K, our form 10-K, and our form 10-Q, one file LHC group will have no obligation to update information provided on this call to reflect subsequent events I'm pleased to introduce the chairman and CEO of LHC Group Keith Myers.

Thank you Eric and thank you everyone for dialing in participating in this morning's call.

Before we begin I want to recognize all of our LHC group family members at every level our organization for the courageous work you're doing.

Thank you all for your parts of era dedication and extraordinary efforts during the year unprecedented times.

You are simply amazing and it's an honor and privilege for me to work with all of you. Thanks, so much.

I'll start with a few observations about the past several months, what we've learned how we revolve in what is driving our increased confidence as we look ahead 2021 and beyond.

Now on a focus on investment rulemaking, and ensuring our greatest asset our employee.

Our protected and have all the resources and support necessary on the front line and throughout our organization.

I'll focus on M&A and then finally I'll wrap up my comments with a brief discussion on the regulatory outlook.

That has become consider really even more favorable for the home health industry.

We've learned a lot about the resiliency of our organization through this probably help emergency and have incorporated best practices are adopting during this period and care model in operating strategy.

Similar to the experience with our intense preparations prior to the integration of almost family and the implementation or PDGF.

These challenges have scrap and improved our at every level of organization.

That's our first colada admission on March 13, we have limited and cared for more than 4700 kogan from patients.

And currently have on staff, that's an additional 882 cough cold introspective pace.

Our rare clinical protocols and extensive experience with infectious disease patients.

Along with the significant investment.

We've made and PPG early on.

Gave our commission the resources and confidence can be on the frontline caring for patients early on and provide a patients and families peace of mind.

As a result, we saw recently probing related Air group.

Mr visits decreased from a high of roughly 8600 to less than 300 by the end of June.

The momentum we established with new physician referral sources from January February accelerated in April and hit double digit growth in both in May and June resulting in nearly 4000, new referral sources and the second floor.

Year to date, we've seen a 9.3% increase in new referral sources as compared to the same period in 2019.

Our program long standing strategy of partnering with hospital and health systems to be that trust. This solution for in home health care and hospice services.

Question, or well, probably a meaningful role in our nation's response to the covert pandemic.

Our growth from this strategy over the past 20 year speaks for itself.

As of the number of new opportunity than our M&A pipeline.

Such as the joint venture, we finalized with Orlando help on August 1st.

While challenging the covert pandemic have provided are unique opportunity to highlight our clinical capability.

How tightly integrated we are with our partner.

Seamlessly we collaborate.

And the extent to which they are leveraging our unique experience and capabilities to improve health outcomes efficiency and patient satisfaction.

Yeah, we're up in the value we have been demonstrating to all stakeholders in communities. We serve throughout our country can be seen in the reacceleration of admission and organic growth. That's our mid April low point.

Through mid March we were experiencing double digit organic growth in home health admissions.

We were able to get back to break all that level by the end of may and exceeding pretty courseware and year over year levels throughout July.

As strong as the home health care industry trends were early in the year.

Prior to the public health emergency.

We believe we could be in the early stages of a new norm, where patients families physician discharge planners and other referral sources are increasingly choosing the safety privacy comfort and efficiently of in home health care services.

Over more costly and potentially higher risk.

We've got inpatient post acute care setting.

We believe that the recent experience to the co infections in nursing homes.

We'll be a hurdle to fully reverting to past practices in post acute care, which could have a profound positive implications for the home health care industry and for LHC group in particular.

We believe this new normal also extend for greater awareness and acknowledgement of the benefit of in home health care and direct support.

At the policy level as evidenced by policies and then put in place to allow nurse practitioner than ph, the or fall home health plan repair and conduct face to face there.

The new normal we are seeing extends to our growth opportunities as well.

In addition to the organic growth from our continued industry, leading quality on patient satisfaction score.

Assessable, Pdgm implementation and market share gains from new referral sources and Smith of art.

We expect an acceleration in M&A activity and new hospital joint venture hospice acquisition, and accelerate or decelerate, a consolidation into home health industry due to pdgm and wrap elimination.

Now I want to turn to our greatest asset are more than 32000 LHC group employee.

As we noted early on in the public health emergency.

Ensuring adequate and reliable supplier quality PV and protect our clinicians and patients we serve throughout the country was our top priority.

I don't have dedicated PB works through the screen, we put in place in March we maintain adequate inventory levels to provide full pp kits for every in person patient in power by clinician caring for our Coleman 19 positive our suspected patients.

These pbteen kits include among other items, and then 95 math isolation gown Dashiell glove and had covering then shoe covering.

In addition, we provide appropriate mask and glass to all direct care provider for everyone arson patient encounters throughout our organization.

We have also developed and implemented a more efficient warehousing system and improved our shipping process with more strategic store location to ensure a timely distribution and receipt of PV at all locations throughout the country.

As a result, we continue to achieve our goal of accepting and treating coded 19 patients at all location and tenure, our universal math from Gov offerings, all patients in town throughout the organization.

Specific to the safety and well being of our employees, we conduct daily online screening of every day.

Warm temperature checks on employee entering any office and agency location.

Back to social destined thing and were masked in all common area.

And that contact tracing when answer physicists suspecting exposure occur.

Have maintained in office staffing between 25 and.

Occupancy dependent on specific state mandate and have sustained thorough cleaning and disinfecting protocol and all off.

In addition to ensuring the safety of our employees through our infection control NPV initiative, we have added two and replenish several initiatives to help relieve the financial burn some of our employees may be experiencing you can have covered 19 pandemic.

And Mark we've began introducing programs that include.

The addition of a covert 19 related criteria for LHC group purpose funds to help LHC group employees receive support when they experienced financial and other hardship and airline.

Especial peto cash in a 100% over a certain amount of an employee's PDL value.

Enhancements and modifications to the loan and disbursement parameter afforded to our employees on our four one K. program.

And expanded offering of benefits provided by our employee assistance program.

A make whole wage and Jeff Wade supplement for frontline direct caregiving employees designed to protect and restore growth wages for employees, who experienced lower growth wages due to temporary effects of coal that 19 on patient volume.

Resources for all employees to be better prepared and inform through daily communication update on directive.

Policy and procedural changes related to call the 19.

And a special 24, seven Provant 19 email inbox the answer questions that arise from my employees.

In June we introduced a onetime PCL replenishment to frontline direct care gathering employees.

And for any employees, who previously donated their PCB Oh hours to these product line caregivers.

Earlier this week, we announced our employees that we are holding the line on healthcare benefit plan for our 2000 22021 open enrollment plan by absorbing the majority of the premium increases resulting in three of our for health plan on having no premium increase.

And employee.

With regard to M&A as I mentioned earlier, our joint venture with Orlando Health went into effect on August one.

There are Orlando health system span nine Florida counties and includes 13 wholly owned hospital and Emergency Department Rehabilitation Services Cancer Center Heart Institute.

Imaging and laboratory services wound care center, and more than 300 physician offices and 11 urgent care centers.

This most recent partnership is yet. Another example of how we collaborate with hospitals and health systems to more fully leverage our home health capabilities and expertise to growth area in home services offering and become a more integrated component of their overall continuum of care.

During the call that 19, our existing joint venture partners more fully leveraged our capabilities as an integral part of their healthcare delivery team than ever before.

As a result, we fully expect even greater joint venture interest from hospitals and health systems in the future.

That said.

Our pipeline of potential M&A growth opportunities as well balanced between home health and hoppers.

Our M&A pipeline combined with the historic organic growth opportunity, we see ahead from home health market absorption.

As our optimistic and bullish on both organic and M&A growth opportunities for the remainder of 2000 22021 and beyond.

Lastly, I would like to touch on some of the recent regulatory announcements.

In late June CMS proposes home health payment room for fiscal 2021.

The proposed rule costs for our 2.6 rate increase.

And last week CMS released its final rule for fiscal 2021.

As it relates to hospice, the 2.4% market basket increase was slightly below the 2.6, when the proposed rule, but given the 60 basis point cut a year ago. Overall, we consider this a win for the industry.

And now here's Josh to provide some additional travel on our financial results operational results and outlook Josh.

Thank you Keith and good morning, everyone. Thank you all for joining our call.

I'll begin my prepared remarks by saying how much I appreciate all of our clinical professionals and support personnel across the country and what they do each and every day.

Truly gone above and beyond during these historic Thompson, our country to put others above sell and to be an integral part of the solution for our country. During this pandemic.

It is a true privileged to serve you as you give so most of your self serving others.

Again, we are humbled and honored to be a part of your team.

Similar to last quarter. This was not a normal reporting period by any means.

My Tom This morning, we'll be focused on the accelerated recovery of our business from the covert induced low point in mid April.

Provide some context and granularity behind the drivers of this improvement.

Expand on keys comments around what it needs to thrive in this new normal with Pdgm anchovies 19.

And close with some color on our reinstated guidance outlook for the year.

Our supplemental financial information is posted on our website with detail on the breakdown among sector performance as well as a lot more detail on the weekly and monthly trends through the end of July.

I encourage you all to review the supplemental financial back as it provides additional details to my comments this morning.

The second quarter as noted in our earnings release was impacted by expenses associated with Covance 19 for purchases of PB additional supplies and employee related costs and expenses, including employee bonuses increased wages.

Wage supplements and PTCL replenishments for frontline caregivers.

And other categories of costs and expenses incurred in response to the pandemic of approximately $27.3 million or 64 cents per diluted share.

I would also like to note that of the 88.7 million and provide a really funds. We received an april onto the care Zack.

44.4 million or 27.2 million net of non controlling interest and tax was recognized in RPM now with the balance carried on our balance sheet as a deferred liability.

We also received $310.7 million and accelerated Medicare payments in April and CMS will begin we're keeping these funds later this month and over the following 180 day period.

While our full quarter revenues adjusted EPS and adjusted EBITDA reflected the lower census, and admission that did not returned to pre code leveled at home health until early may.

That is only part of the picture.

The real story within the quarter was the weekly improvement through May and June that exceeded our prior year performance throughout the month of June and got US back if not slightly ahead of where we wanted to be with our pdgm care model and our operational strategies.

The pace of the improvement has given us even more confident than we had before that we will have the right exit velocity coming out of the fourth quarter and entering 2021.

Let's break down this pace of recovery, a little bit more with some details.

Home health admissions hit a weekly low point 6169 during the week ending April 18th.

Our supplemental information shows the progression of admissions from their through June 30, and then again through the week ending August 1st we saw us have 8012 admissions that week.

For the end of June for the week ending June six three last week, we have ban on an 8000 plus home health admission pace each week, except for the July 4th week.

We have also very closely tracking our missed visits due to covert 19.

Our highest point, what the week ending March 28, which resulted in 8585 missed visits.

Since then we've cut that number down to less than 200 covert 19 related admit visits per week by quarter end.

We have seen that number increased slightly over the last few weeks and we're at 245 through the week ending August 1st.

Our expected LIBOR rate is between eight and 9% of total home health episodes.

We saw this numbers by 12.5% during the week ending April whore, but it is now trending at the pre Ecova 19 level of around eight quarter percent last week.

Since the we ending may 16th we have been within our expected LUPA rate range staying between eight and 9% each week.

We're also tracking the number of patients that declined admission due to cover 19.

We hit a high of 336 patient refusals the week ending March 21.

But the number of patient refusals due to cover 19 had improved to only 18 last week.

Home Health average daily census went from the low point of 74000, not 36 week ending April 18th to approximately 82000 for the week ending June 27.

And with up to 83061 last week.

This improvement has come despite some of our state slow to fully lifted the ban on elective procedures.

Our Alsace continued to be a strong performer in the quarter climbing from an average daily census of 222 in the first quarter to 257 in the second quarter.

Today the census in our LTX is 262 as of this morning.

We received full eltek reimbursement for every patient at mission for the entire second quarter, which brought our revenue per patient day 1385, as compared to 1270 last year.

The public health emergency related relief, which was set to expire on July 20 fit for the FX was officially extended for an additional 90 days through October 23rd 2020.

Another area, where we have seen both substantial momentum and validation of a key differentiator of our organic growth isn't the number of new referral sources.

Keith mentioned this earlier and we broke it down by month on our last call.

For the first quarter, we had 3915, new sources for home health referrals with the strongest year over year pace, obviously in January and February.

That was driving our 12% organic growth for home health admissions pretty code.

Margin declined year over year, as we might expect at the onset of the pandemic.

However, if we look at the progression. Since then the trend is more telling and explains why we're so confident on the organic growth pace and exit velocity as we enter 2021.

In the second quarter, we had 1205, new referral sources in April.

1294 in May and another 1497 in the month of June.

The month of May and June were year over year increases of 10.7 and 37.2% respectively.

This brought us up almost 4000, new home health referral sources for the second quarter, which is an increase of 16% over the second quarter last year and were up 9.3% for the first half of the year.

As I noted before this trend as an early indicator of market share gain potential.

Particularly when when combined with our industry, leading quality scores and our efforts to continue earning the confidence and trust from these new referring physicians.

Another contributor to our momentum and new referral sources and admissions has proven to be our partnering with physicians hospitals and other healthcare providers and caring for KOVA 19 suspected and confirm patients.

As Keith mentioned earlier, we have provided care for 4700 confirmed to covert 19 patients and have an additional 880 to covert 19 suspected patients currently on service.

Of the 4700 Kelvin 19 confirmed patients 4451 have received care from one of our home health agencies with the remaining 249 patients on hospice care.

Oh, the 882 co in 19 suspected patients 820 are currently on home Health service and 62 on hospice.

Our industry, leading quality and patient satisfaction ratings, along with our best in class infection control procedures.

The partner of choice for referral sources, who desire for their covert 19 patients to be cared for in the safety and comfort of their home.

Before I turn to the segment performance I would remind you that among his many provisions that help the industry the care Zach temporarily suspended Medicare sequestration for the period of May 1st through December 31, 2020.

As a result healthcare providers received an increase in fee for service Medicare payments by approximately 2%.

For LHC group, we recognized $5 million and additional revenue in the second quarter due to this has been the suspension of sequestration.

We estimated to be an approximately $15 million to $20 million positive impact revenue for us during 2020.

Within home Health I believe it is instructive to break down our revenue per episode and speak to all the factors that influence within the quarter, particularly as it relates to PDGF and this sequestration effect.

Our revenue per episode was down approximately 2.5% and the second quarter.

Compared to prior year was reflects both the impact of Pdgm anecdotally 19.

Offset by the suspension of sequestration effective may onest.

Coven 19 caused increases in lupus and increased our community admissions as a percentage of overall admissions.

We also experienced a shift of our patient mix from early payment periods or as we call them PD ones to late payment periods for FY two as we continue to care for vulnerable patients to ensure they continue to receive the care they need while in the safety of their home.

All of these factors negatively impacted revenue for episode by approximately 3%.

PDGF on had an approximate negative impact of 1% in the second quarter, which was an improvement from the 3% negative revenue headwind, we experienced from Pdgm in the first quarter.

These were offset by an approximate 1.5% increase from sequestration or $3.9 million of additional revenue in the second quarter for home health.

As a result of our focus on Operationalizing Pdgm, we continue to see rate improvements on episodes and progress, which gives us confidence in our ability to mitigate the remaining portion of the impact of Pdgm as previously planned what the impact from Cowen 19 stabilizes.

The lower revenue per episode was offset by cost savings associated with greater efficiencies driven by our Pdgm care model.

As we exited Q2, we are ahead of our original expectation on revenue per episode as well as our cost initiatives associated with Pdgm.

On hospice and Alsac segment.

We continue to perform well with volumes improving year over year end sequentially.

The revenue impact from sequestration in these segments were 769000 and $339000 respectively.

Deltak also received an additional $2.9 million in revenue from the change to full LTAC payments on site neutral patients as were acquired by the cares Act during the PHG.

Our home and community based services segment reported a 260 basis point decline in EBITDA for the second quarter of 2020 as compared to the second quarter of 2019.

However, there was a sequential improvement of 390 basis points over the first quarter of this year.

During the second quarter, we experienced an impact related to cover 19 with billable hours and CBS declining 15%.

In the second quarter of 2020 as compared to the same period last year.

We continue to see this number improve and are currently pacing back over 170000 billable hours. This week.

With our recent EMR system conversion and the related headwinds now behind us and barring no unforeseen digression in the service line from Cowen 19, we should see the CBS service line began to gain momentum throughout the year and enter 2021, the strongest we have ever seen in this segment.

Now that we're back on or at least close to the pace, we were setting pre Cohen and we believe we're prepared to operate under the new realities of KOVA 19, with our Pdgm care model, we have elected to reinstate 2020 revenue adjusted EPS and adjusted EBITDA.

Yes.

We're now expecting net service revenue to be in the range of $2 billion to $2.05 billion.

Adjusted EPS to be in the range of $4 and 60 sets the $4, an 80 cents and adjusted EBITDA less in fee to be in the range of 220 to 230 million.

As we discussed when we originally gave our initial outlook for this year, we were expecting our performance to be heavily weighted in the second half of the year as we position the company with our new Pdgm care model and operational strategies.

The main goal was to be positioned with maximum exit velocity in the fourth quarter. This year to fully benefit in 2021 and beyond and we're still on pace for entering 2021 as planned.

Let me provide an example of what I mean.

There are a number of best practices, we have incorporated from lessons learned during our response to the ccrone of hours pandemic.

We have taken advantage of technology and remote learning platforms for new hire account executive sales training.

New remote leadership development training through a third party partner and new remote format. It leader training for our excellence by design program.

These and other lesson started off as necessities, but it becoming ingrained mode of operations, enabling us to drive further efficiencies and maintain our momentum.

Turning to page 27 of the supplemental deck, we have updated all of our debt and liquidity metrics for the quarter end.

We have over $507 million of liquidity with cash availability on our credit facility and an accordion feature for up to 200 million of additional capacity net of the Medicare advanced accelerated payment funds.

I'm very pleased with our adjusted free cash flow that was at $58.7 million for three months ended June 32020.

Additionally from a cash perspective as I mentioned on our last call. The cares act permits employers to defer the deposit and payment of the employers portion of social security taxes that otherwise would be do between March 27, and December 31st this year with half deposited by the end.

The 2021 and the other half by the end of 2022.

In the second quarter, we deferred 17.8 million.

And we still expect the cash benefit to us to be approximately $50 million and 2020.

As expected Dsos improved to 61 days in the second quarter compared to 62 days in the first quarter.

We continue to expect us to settle into a new normal rate of 55 to 60 days in the remainder of 2020 and as a really good momentum of cash collections as we execute too.

Moving now to our joint ventures, Keith discussed how closely we have been integrated with our joint venture partners throughout the pandemic.

We have been able to provide proved thailin again, how essential we are to them and delivering the highest level of quality in the most cost effective setting.

A few examples of might help drive this point home.

One we have continued communication regarding capacity planning.

He availability CMS waiver updates and among other topics as it relates to our hospitals current challenges.

Two we are constantly collaborating with and sharing development and execution of coven 19 protocols with our partners.

Three we have worked closely with some of our partners on a skilled placement program.

With the challenges skilled facilities are facing we are working with hospital partner case managers and physicians and focusing on accepting patients at the top of the home health acuity capability that historically were discharge the skilled facilities.

And for we're having continued calls with partners to determine real time needs and determine Wade our home health hospice for HCV AD agency could better facilitate care and eliminate patient and family concerns of exposure to the crown of ours.

With regard to our differentiated joint venture strategy, we noted last quarter that we would.

Most likely experienced some delays and finalizing new joint ventures during the pandemic and that will certainly the case.

However, it did not take long for us to get back on track with the announcement in late June and subsequent Finalization on August Onest of a new joint venture with Orlando Health.

We were able to combine three of Orlando held home health and CBS service locations with three of our own.

Our latest partner is want to Florida is largest not for profit healthcare networks with nearly 450 locations spanning across and across nine counties.

We believe that we have just scratched the surface with the first few locations and this new partnerships should provide a strong growth opportunity for us for years to come.

I would also echo what Keith mentioned earlier about how the success, we have had improving our value proposition. During the pandemic has had a positive impact on our M&A pipeline for future joint ventures.

The pipeline remains robust with our in house corporate development team remaining laser focused on acquisition and JV opportunities across each of home health and our hospice segment.

And to the extent that our potential partners are able to focus on this aspect of their business. Our pace is expected to pick back up through the back half of this year and into next.

While it has not been on the front page of all the challenges and priorities we have needed to focus on throughout the pandemic the historic consolidation opportunity within the highly fragmented home health industry is still there and as compelling as ever.

Our increase in the number of new physician referral sources show that we are already capturing some of this opportunity through organic growth and market share gains.

Our Pdgm care model is in place supplemented with improvements we have added from lessons learned during the coven 19 pandemic as well as an industry, leading quality and patient satisfaction scores.

We expect those organic gains will continue and we believe we are a natural fit for any independent home health hospice provider and that should further compel our inorganic growth for M&A activity later, this year and in 2021 and beyond.

To sit here today with a much better outlook than we did three months ago is a true testament to the commitment and dedication of our employees as well as the culture that exists within LHC group to consistently adapt and grow with new challenges and turn them into opportunities to provide the highest quality of care and compassion.

For more patients and partner with more referral sources.

As a result, our mission is as volatile as ever and our value proposition even more compelling.

That concludes my prepared remarks, operator, we're ready to open the floor for questions. Thank you.

Ladies and gentlemen, if you have a question or comment at this time. Please press Star then one telephone keypad.

For your question has been answer to you wish to remove your set for the Q simply press the pound cake.

Again, if you have a question or comment at this time. Please press Star then one on your telephone keypad.

Our first question or comment comes from a line of Kevin Fischbeck from Bank of America. Your line is open.

Great. Thank you.

To get a little more color about these new referral sources that you're getting I don't know is there any way for you dependent size.

What's the opportunity is still left in your markets as far as the weather referral sources already getting 50%, 70% 30% of the available.

For all sorts of today.

I'll take that get method as keys at the good question.

So we don't have that right now, but it's something that we're looking at each other we could easily Ron market by margins and we love data So thats.

Then I think we can start tracking.

Okay.

And then again.

Wanted to understand your commentary a little bit about how you. Initially you 2020, and how you're currently doing 2020 as far as that Ken that ramp up.

Up off point, when we think about 2021 are you, saying that more or less.

The path that you expect to beyond based upon this new guidance as far as ending this year and therefore entering next year is pretty much.

Where you thought you would be back in in January and therefore, the view on 2021 should be pretty much the same as as it would have been back in January that Tonight.

Yes that correctly.

Yes, Kevin this is Josh.

You are thinking about that correctly.

But a little fine point on it so as you recall in our original guidance, we had a little bit of a back end weighted.

Progression to our year end 2020 that started to ramp a little bit in Q2, and then really accelerate in Q3 and four.

As evidenced by our results in the second quarter and some of the Franco said during prepared remarks.

I couldn't be more pleased with how really our operators throughout the country have.

Operationalized and handled not only the pandemic, but have really.

Incorporated our key care pathway strategies under Pdgm, even at a earlier clip than we expected. So we are no. We've executed on some of the cost strategies that we had coming into the year that we saw would happen more kind of in the third quarter heading into Q4 already so that gives us a lot.

I have confidence in the trajectory of got for Q3, and four which led to us feeling confident to reinstate guide, but as I look at it and map it out Q3 and four rarely.

Similar to each other than we had originally thought but Q4 to your point will still be additive not a little bit up ahead of pace for entering 2021 from where we thought entering the year.

Okay Thats it could be my last question, which was just kind of implied guidance. It because it seemed like there wasn't a lot of.

Thats a fair the improvement in volumes for Q3 to Q4 their reason for for what.

Indicate.

Yes, Kevin I would say as it relates to volumes.

In our implied guidance.

From a revenue in the volume perspective, we're still quite frankly being a little bit conservative.

Due to the uncertainties around the pandemic.

Bill extremely confident from a EBITDA margin perspective, and even perspective as those sorts of things.

What we wanted to take into consideration on the topline side, the unknowns around potential disruptions from future spikes and and that sort of thing as it relates to the pandemic. So I would tell you we've got a pretty conservative spread of the revenue. If you look just at the midpoint.

Of the guidance range.

I would put you at somewhere between 500 and tend to 515 million of revenue each quarter.

I would expect that Q4 would be a little bit better and you will continue to have that ramp of growth.

But again damping that down a little bit for the unknowns of the pandemic, but Kevin I want to say one thing a round that as it relates to growth and the momentum because you can tell we're very bullish on the kind of market absorption and market share gains that we had been experiencing throughout the year and we think thats.

Due in part to a lot of factors, whether its pdgm disruption whether it coded related.

No our sales team members I, just want to tip my hat to them here publicly they have really going above and beyond and found new ways to still interact with referral sources and create new relationships in the face of some new social distancing protocols and alike, but one thing that we spent a lot of time last week.

Our EMEA large as you know we have monthly operations Revusiran LHC group every month and last week was that session for US here and one thing you know I spent a lot of time talking with our division presidents of operations.

And sales on was the growth potential in the back half of the year and really the only item that could potentially.

Disruptive to that based on where we sit today would be if you had an uptick or an exacerbation in the volume of your visiting clinicians that are in quarantine for any reason due to exposure or potential exposure to the corona virus, so that really.

Pardon me as you know.

We're very much data driven around here, we track that every week, we have a tracking mechanism that dr. no gay who all.

Tagging here in just a minute has been leading for us since the pandemic began to really watch and monitor our employees across the entire country and I'm real pleased with even as the number of positive cases throughout the country have continued to grow.

Just to put it into perspective for you Kevin we have just over 10500.

Field clinicians field visiting staff and home health.

And throughout the entirety of the pandemic, we have been anywhere between 100 to just under 200 of those clinicians on quarantine at any point in time.

So to put that into percentage your anywhere from 0.9% to 1.9% of your failed clinicians in home health that might be on corn team for a few days pending a test or upwards of 10 to 14 days, depending on the situation, but the most encouraged with his since the latest spikes in co.

That is started happening throughout the country.

Throughout July we're only having somewhere between 30 to 40, new employees per week that are having to go on corn, saying, which is less than half a percent. So if you've managed to year infection control protocols to a point that you can keep that low of a number having to be quarantine.

And on a weekly basis than the ones that had previously been on quarantine are starting to roll off and go back into.

Active duty and able to see patients.

Gives me confidence in our systems and in the way we've been taking care of our employees and then on the hospice front. We've got about 1600, two field employees that C patients and only about 20 to 30 or so at any point in time have been on quarantine so about 1.5%.

Dr Band, you want to maybe provide some color on that topic.

Certainly thank you Josh.

We began a very strict infection control program. The first week in March before you, except that our first patients and we've refined that and kept abreast of all changes from CDC guidelines World Health organization and other health systems.

Which begins first thing every morning about an hour to two hours prior to entering work for all 32000, plus employees undergoing a in electronic questionnaire that everyone. In this room as well as all of our staff must to answer before attending work.

Any questions that are answered any possible exposure immediately goes into an algorithm for our contact tracing team.

That follows up on every single one of those to guide them and give them advice on a low medium or high risk exposure, which may result in a stay at home full quarantine or seek testing our physician visits.

Thats continues as they arrive to work mandatory wearing masks and temperature checks and.

Our son checking temperatures.

Asking them about their questionnaire to ensure again that that has been completed in the right people who have been notified.

As that progresses.

I'll also staff must maintain six feet of business grow their workstations, most of which greater than six feet, along with plexiglass dividers in many cases as well as any mobility.

In our agencies are home offices must be done while wearing a mask and anytime you are great year less than six feet. Apart. This continues on with our clinical staff.

As they both limit their interaction with our support staff.

When they come to pick up equipment is for us for PB.

Questionnaire doesn't only extend to our employees, but also our patients before every visit in the home questionnaires asked of our patients also their caregivers and family members that may have been present from the last time, we had seen them.

Upon arrival that is repeated from a distance and pull pp depending on the patients situation as.

Keith mentioned all visits are done with.

Medical mask and gloves, and all suspected toasted 19 positive patients require for PD for all of our clinicians and then of course any confirm positive also has full PB.

From a PE standpoint, I think it was mentioned that we have we're very proud of the process that we've put in place that appoint admission of any patient we assess the entire episode and how many visits may be made and we have immediately distribution. We distribute immediately the total amount of PB that our clinicians may require for that patient stake.

Not on a daily or weekly basis, but for an entire episode that is done automatically and updated and with checks and balances throughout the day and as mentioned before our equipment can be shipped from more than one location to shoot to ensure any stoppage of work due to those individuals getting coven 19 or any other natural disaster that we can continue to.

Provide that to all of our clinicians, which improved the health and safety of not only them, but all of our employees as well as their family members, but probably the two key points that I think both Josh and Keith mentioned was that one our contact tracing efforts that are ongoing and began at the time of questionnaire before work our time of temperature check.

Or a ton of any notification throughout the workday, we have immediate group on standby that can start breaking down and questioning and starting to assess the situation.

Our goal is to do it in 10 minutes or less.

We have been very able to do especially during working hours.

We also have in addition to do that the coven inbox that is manned everyday seven days a week five by our most senior nursing staff very select group of overseen by myself, who is a Brent practicing primary care physician. Following each of these instances so that we can give accurate up to date, but more importantly vary.

Consistent information.

Again that occurs with less than an hour darrin business hours and at the beginning in the end of each day, along with ending each day with an all employee E mail, giving them any updates or any changes from CDC guidelines are from Meyer from our own state restrictive guidelines throughout our service areas, we always use the most restrictive.

Season in place for our company so as a whole I see this has reduced as a key to both the communication and the assessment of each possible incident that has led us to as Josh mentioned less than 2% of our clinicians requiring quarantine in any one given time and this is what allows us to continue to care for our over 100000.

Patients on service as well as be available for new AD mids, each and every day for both comp for both Cobot 19, and Noncovered 19 patients to decompress hospitals.

And in many cases, although we are now admitting higher acuity with more to say disability patients.

To avoid congregate living facilities with sniffed diversion and high acuity high skilled process and protocols in place.

Great. Thanks stock, Ben and Kevin I know that was a lot of an answer but really wanted to give them. Some color to everything we're doing to maintain our growth momentum and ensure that doesnt get in the way in the back half a year.

That's that's actually really helpful printing presses that and that's it for me. Thanks.

Thanks.

Thank you our next quarter question or comment comes from the line, Brian Tanquilut from Jefferies. Your line is open.

Hey, good morning, guys and thanks for all the colors. So.

Thank you quick answer short answer your question.

Josh if I think of the guidance, you're giving for the year, what's embedded in their answers the care money organic growth assumption and then again I know.

You recognize.

Eight ido benefits were gained share in Q3.

Lee, although insurance they'll either low ml ours. So how are you thinking about the.

Uplift from that as we think about the guidance and I guess.

Related to that if I look at your visit per episode down almost five year over year like how sustainable is that or how much are you thinking that can move from that 0.4 level.

Sure sure.

And thanks, Brian.

So I'll try hit everything you just mentioned on so.