Q3 2020 Ensign Group Inc Earnings Call
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Ladies and gentlemen, todays conference is scheduled to begin shortly please continue to standby. Thank you for your patience.
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Ladies and gentlemen, thank you for standing by and welcome to the Enbridge Inc. Q3, 2020, <unk> earnings conference call at this time, all but she's been a legitimate.
Because for education, there will be a person and answer session.
Good question at that time. Please press Star then one when you touched on the telephone.
Generally the conference call is being recorded I would now.
Jay Helsinki host Mr. Keetch, Sir you may begin.
Welcome everyone and thank you for joining us today as always before we begin I have just a few housekeeping matters. We filed our earnings press release and 10-Q yesterday. This announcement is available on the Investor Relations section of our website at Www Dot enzyme group dot net.
A replay of this call will also be available on our website until five P.M. Pacific on Friday December 4th 2020.
We want to remind anyone that may be listening to a replay of this call that all statements made are as of today October 29, 2020, and these statements have not been nor will be updated subsequent to todays call.
Also any forward looking statements made today are based on management's current expectations assumptions and beliefs about our business and the environment in which we operate these.
These statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on todays call.
Listeners should not place undue reliance on forward looking statements and are encouraged to review our SEC filings for a more complete discussion of factors that could impact our results.
Except as required by federal Securities laws enzyme and its affiliates do not undertake to publicly update or revise any forward looking statements where changes arise as a result of new information future events changing circumstances or for any other reason.
In addition, the enzyme group Inc. as a holding company with no direct operating assets employees or revenues.
Certain of our wholly owned independent subsidiaries collectively referred to as the service center provide accounting payroll human resources information technology legal risk management and other services to the other operating subsidiaries through contractual relationships with set subsidiaries.
In addition, our wholly owned captive insurance subsidiary, which we refer to as the captive provide certain claims made coverage to our operating subsidiaries for general and professional liability as well as for workers compensation insurance liabilities.
All of our operating subsidiaries, including the service center and the captive are operated by separate wholly owned independent companies that have their own management employees and assets references herein to enzyme or the consolidated company and its assets and activities as well as the use of the terms, we us our and similar terms used today.
They are not meant to imply nor should it be construed as meaning that the enzyme group inc. has direct operating assets employees or revenue or that any of the subsidiaries are operated by the enzyme drew.
Also we supplement our GAAP reporting with non-GAAP metrics when viewed together with our GAAP results. We believe that these measures can provide a more complete understanding of our business, but they should not be relied upon to the exclusion of GAAP reports a GAAP to non-GAAP reconciliation is available in yesterday's press release and is available on our 10-Q.
And with that I will turn the call over to very poor our CEO Barry.
Good morning, everyone. We're pleased to announce another record quarter. Despite the continued challenges arising from the global pandemic.
With the surge of coven 18 that occurred during the third quarter in some of our largest states, including Texas, Arizona and California.
Our local teams were faced with an unprecedented challenge and it and have again demonstrated incredible agility and responsiveness to the evolving landscape.
True to form they remain as committed as ever to the cause of quality outcomes and excellent patient care.
They come to work each day in the most difficult circumstances to serve our nation's most vulnerable on the true frontlines of this worldwide trial.
They deserve all the praise that we could possibly provide them for the courageous and selfless service.
As a result of their heroic efforts, our local operators and caregivers have translated their passion into record breaking results.
For the third quarter in a row, we achieved record earnings which came in at 78 cents per share an increase of 95% over the prior year quarter. We also reported a 95% increase in our adjusted net income of $44 million.
The strong results came from quarter over quarter improvements in skilled mix across the portfolio improved admission trends availability of more frequent and broader coven testing.
Increased managed care revenues cost saving initiatives improved collections sequestration suspension and improved Medicaid rates.
Our local leadership teams continue to make clinical and operational improvements that are tailored to conditions they face in their local market.
Our operations have continued to see an increase in the number of higher acuity patients, including some COVID-19 positive patients and an increasing number of managed care patients.
With the surgeon COVID-19 patients and many of the surrounding communities. We serve we continue to see state and County health leaders and local hospital systems turned to inside affiliated operations to care for all varieties of high acuity patients that can be safely admitted to remain under our care.
As we expected when positivity rates for COVID-19 increase in the surrounding community, we see occupancy decline and skilled mix increase in July we saw overall occupancy decline, particularly in areas of high coded positivity rates, like Texas, Arizona, and California, while skill sets.
This remains strong then.
Then when COVID-19 cases begin to stabilize during the quarter occupancy began to recover and that trend has continued in October.
After living in the code environment now for two and a half quarters. We are encouraged by the recent strength in occupancy.
If theres another surge uncovered during fourth quarter or in 2021, we are confident that lower occupancy costs will be offset by higher skilled mix.
In early July we returned all of the carriers Act provider relief funds, we received from the government and our results do not include any benefit related to these relief funds.
In doing so we joined other well capitalized healthcare providers by returning approximately $109 million and provider grants.
And announced yesterday that we will also be returning approximately $23 million in the latest round of relief funds accordingly.
We either have returned or plan to return all provider relief funding under the cares Act rounds, one through four.
As we said last quarter, we take the responsibility that comes from receiving revenues, which are largely funded by American taxpayers very seriously in.
In addition, as a for profit healthcare company, our organization paid tens of millions of dollars a year in taxes, when we consider our healthy balance sheet and liquidity, which we have taken great care to protect and moving forward. When we reflect on the financial performance during the pandemic, we decided not to accept any cares.
Act funds.
If there are additional future grants.
We will reevaluate the purpose the needs of those grants, specifically considering potential costly testing requirements or other newly mandated regulations and the terms and conditions that accompany those funds.
The third quarter presented continued challenges as we experienced a significant surging cases in some of our largest states.
We are grateful that we were able to apply many of the lessons learned in the second quarter to prevent and treat coated in our operations in these geographies.
As of October 14, 2020, the company's 217 affiliated skilled nursing operations across 13 States had 207 confirmed COVID-19 patients in house.
Also as of October 14th 2028 operations had over 20 COVID-19 positive cases, 48 operations had less than 20 cases, and 161 operations had no confirmed cases of COVID-19 in house to add some additional context two of our operations.
Path at the request of the local health care community proactively and intentionally did dedicated their entire campus to the care of Covance positive patients and another 36 operations have dedicated entire wings to covert positive patients.
Our local leaders and caregivers with the assistance of their service Center resources continue to methodically acquire sufficient levels of PE and other supplies and equipment and are providing the latest fit best practices in both clinical protocols and safety measures at a significant expense, including taking advantage.
More readily available testing.
We continue to learn a great deal through this process and our local leaders are proactively preparing for and executing on plans to provide care for all patient types, whether coded positive negative or unknown.
We are pleased to report that these efforts are going very well and we have seen improved clinical outcomes and infection control practices amongst our patients and caregivers.
We reported yesterday that during the quarter.
Combined same store in transitioning occupancy declined by 2.4% and skilled mix increased by 2.9% from second quarter as the pandemic worsened in many key states.
The vast majority of these declines in occupancy occurred in early July.
However for mid July to mid September our census remained flat with a slight decrease in skilled mix days.
Towards the end of the quarter and into October as elective care procedures picked up in the number of COVID-19 cases in the community stabilize.
We experienced an increase in our occupancy and skilled mix days.
Between mid September to mid October combined same store in transitioning occupancy increased by approximately 1% and skilled mix increased by 4%.
This increase in skilled days was driven by an increase in overall facility acuity, which includes complex nursing services for COVID-19 patients and other skilled patients.
We're also encouraged to report that admissions continued to progress simply increased throughout the quarter demonstrating that the flow patients has improved as certain markets have begun to loosen restrictions on admissions and as the sentiment towards post acute care has continued to improve.
We have been watching our admissions trend very closely and are encouraged to see those numbers trending up as healthcare communities move away from a hunker down approach to one of operating more carefully and effective effectively within the context of the pandemic.
Another trend we have been watching closely relates to our managed care census, we're pleased that our managed care census has also begun to make some meaningful improvement with our overall managed care days, increasing by 7.3% in combined same store and transitioning operator operations during the quarter.
These managed care increases are being driven by increasing confidence by managed care payers that their patients can be safely cared for in the post acute setting and in a cost effective way that is not always and that it is not always necessary to hospitalized kobin positive patients.
It is also a reflection that certain elective procedures that have been put on hold are beginning to occur even in the context of the pandemic while occupancy they are lower than they were a year ago. At this time our results. This quarter demonstrate again, the resilience of our model and the local leaders ability to adapt to change.
Gene circumstances in their local health care markets.
While the future of this pandemic remains unclear we are confident that our local leaders caregivers and other frontline staff will continue to provide amazing service to their patients families and our society as a whole.
They're endurances strength is truly inspiring and we can't take them enough for their selfless service as they continue to earn the trust of acute care providers physicians managed care payers and most importantly, their patients and families. They truly are heroes and doing some of the hardest work during one.
In the most challenging times in our industry's history.
We hope our communities will join us in recognizing and thanking them for all that they do.
We are increasing our 2020 annual earnings guidance to $3.04 to $3.12 per diluted share and maintaining annual revenue guidance of $2.42 billion to 2.45 billion.
Well, we have seen and expect to continue to see a significant impact from the pandemic on the fourth quarter and beyond we are confident that we can continue to perform well in the context of additional COVID-19 surges.
We are also providing guidance for 2021.
With annual earnings per share guidance of $3.44 to $3.56 per diluted share and annual revenue guidance of $2.62 billion to $2.69 billion.
The midpoint of this 2021 guidance represents an increase of approximately 14% over the midpoint of our newly increased 2020 guidance.
We are confident that we can provide this guidance for several reasons. We are excited about the enormous upside that still exists in all of our newly acquired operations, which have seen delays in the transformation that we typically see in our newly acquired bucket coupled with the.
The solid acquisitions that we see on the horizon in.
In addition, we are seeing marked improvement from some of our newer markets and struggling operations, which represents significant additional upside but more importantly, we believe when this pandemic is behind us that our operations are prime to rebuild occupancy and gain additional market share as a result of the deepened relationships.
Insurance with acute providers and other healthcare partners that have developed because of our response to the pandemic.
As with this year the road to achieve these results could vary dramatically based on how the pandemic plays out in the coming months, but we see several pathways to reaching this guidance and with that I'll ask Chad to give us an update on our recent investment activity chat.
Thank you Barry the company paid a quarterly cash dividend of five cents per share of enzyme common stock.
Due to our strong liquidity, we are pleased to continue our long long standing practice of paying a dividend to shareholders enzyme has been a dividend paying company since 2002, and we look forward to continuing this practice as one of many many ways. We can provide a return to our shareholders.
We had a relatively quiet quarter on the acquisition front as all operators were focused on dealing with the summer surge. However in August we announced the acquisition of the real estate and operations of a post acute care retirement campus located in Tempe, Arizona.
Which included Tempe post acute 62 bed skilled nursing facility and desert Marigold senior living of Tempe, a senior living center with 72 assisted living beds and 90 independent living units.
This was one of several acquisitions that we had in the works when cobot appeared on the scene and is the first closing we've had since the pandemic started.
Our transition process was a little different this time, but we are confident that our one of the time clinical and operational plan will allow us to selectively acquire in this current environment.
With this addition, our growing portfolio is now comprised of 226 operations 24, which includes senior living operations and other ancillary businesses across 14 states.
Enzyme now owns 94 real estate assets 64 of which we operate.
This portfolio of owned assets took less than five years to acquire as compared to the 15 years. It took us to acquire the 94 assets, we spun out to sea Jerry in 2014.
As we indicated last quarter, we had several deals in the pipeline that we halted temporarily as we're responding to the cobot threat a handful of those operations are now slated to close in the fourth quarter and in early 2021, while others will require a fresh look later this year and early next.
Everything is taking a little longer than usual, including the due diligence process has access to buildings is still limited.
Despite all of that our pipeline remains strong and we continue to see new opportunities coming to us every week in some cases some of the deals we expect to see this year have been delayed as cares Act funding has provided additional capital to provide temporary assistance to undercapitalized are struggling operations.
However, we anticipate that there will be a significant influx of older and newer deals that come out of this pandemic.
Whether we are acquiring the real estate or entering into long term lease arrangements. The health of our balance sheet will always remain paramount we.
We will continue to focus on paying fair and reasonable prices using historical performance not pro forma or future results that we create through our for our own performance.
We also want to remind you that most of the operations, we acquire start out with lower occupancy and lower CMS star ratings, which is built into the purchase price.
So when our occupancy is go down we have significant cushion built into our model.
As we mentioned in our in our release yesterday, we have well over $300 million in available capital right now, which we could use to grow. In addition, we have 74 completely unlevered real estate assets.
We continue to work on unlocking some equity value in seven or eight of our owned an unlevered real estate assets through long term fixed rate HUD debt.
This process takes several months and will not be completed until next year, but we are preparing now for a wave of new acquisitions, we see on the horizon and are excited about the deals. We are working on now and the new opportunities that are on their way.
We also remind you that in addition to the five operations Weve acquired so far this year, we added 26 operations last year.
If you look back at our history, we often take a breather on new additions after a large growth year to allow us to transition and integrate the newly acquired operations into their local clusters and to rebuild our leadership pipeline.
These periods are very important and part of our disciplined growth strategy and this year with the cobot outbreak that no one could have predicted.
The slower growth has been very helpful. As reviews, the extra bandwidth to focus on the existing portfolio and driving organic growth.
And with that I'll pass the call back over to Barry for some more additional detail around operations. Thanks Chad.
We're very pleased to report that we continue to see some very encouraging clinical outcomes across the organization, while simultaneously limiting the spread of the virus, reducing pressure on local hospitals and doing so in a cost effective manner to further benefit the overall expense to Medicare and Medicaid programs.
While this continues to be a dangerous virus, our caregivers have worked tirelessly to provide excellent care to their patients adopting the latest advances and intervention and treatment to maximize patient outcomes, which has only added to the confidence of their local healthcare communities by.
By applying the best practices across several geographies and by providing the local leadership with tools and resources rather than direct is not only are we accomplishing high quality outcomes, but our operations have been able to build census, amongst all payer types include.
King with managed care patients to.
To help illustrate this let us offer an example.
One of our sub acute facilities located in upland, California, upland rehabilitation and care Center led by CEO kit Mcmillan and COO Reconcepting have been laser focused on driving market, leading metrics like low richert returned to acute percentages compressed lengths of stay and improve responsive.
This during pandemic conditions.
They have leverage these outcomes through consistent and transparent data sharing and regularly scheduled joint review meetings with all of the prominent local managed care providers. This is not only strengthened existing partnerships, but has also led to new relationships as has happened with Kaiser earlier this year.
As a result their managed care AIDC has grown by 54% along with overall occupancy growth of 280 basis points, both compared to third quarter of 2019.
This has contributed to earnings growth of 172% year over year during an unprecedented time in the market.
We've also seen impressive overall census recovery in many of our key markets for example.
The color healthcare resort of Colorado Springs, where CEO, David Dunion and COO Shannon Collins have led their team and reaching all time highs in skilled and overall census over the past quarter disc.
Despite the traditional summer census headwinds and additional challenges presented by the pandemic. The healthcare resort has booked all trends in their markets reach a 100% occupancy.
The facility strong results came from an unrelenting commitment to clinical excellence and strong relationships with acute and downstream providers at.
At multiple touch points during the third quarter. The 97 skilled bed facility not only achieve full occupancy, but did so with over 60 skilled patients.
And for the quarter and achieved a 6.5% improvement in occupancy, which translated to a 17% increase in revenue and a 41.9% increase in EBITDAR compared to the third quarter 2019.
As we continue to remind you our local leaders and our operational model are the reasons why we have adapted and we will continue to adapt during this unprecedented times and it's one of the reasons why we have seen our acuity and outcomes improve.
Our leaders have used universal testing to identify infected patients earlier and more consistently which has resulted in fewer outbreaks in our buildings and lower mortality rates.
In addition by keeping patients in place we have been able to reduce the risks inherent in moving these phone vulnerable patients and further exposing them to possible carriers of the virus.
Not only has this resulted in better clinical care, but both of these efforts have resulted in savings that are possible only as a result of available testing the waiver for the three day hospital stay and select managed care relationships.
Most importantly, our CEO caliber leaders and their clinical partners with the support of a World Class Service Center are very carefully working with local governments hospitals and their managed care partners to be a solution. During this pandemic.
Now I'll pass the call over to Suzanne to provide more details around the quarter and our guidance Suzanne Thanks, Barry and good morning, everyone detailed financials for the quarter are contained in our 10-Q and press release filed yesterday and additional highlights for the quarter included.
Net income was 43.1 years.
The increase of 94% over the prior year quarter. Adjusted net income was 43.7 million an increase of 95% over the prior year quarter.
Same store skilled revenue increased by 19% over the prior year quarter, and the 8% sequentially fueled by increased the Medicare days at 34% and 10% respectively.
Transitioning skilled revenue increased by 27% over the prior quarter with a 20% increase in managed care revenue at 27% increase in Medicare revenue.
The company's liquidity remained strong for the nine month ended September 30, with cash generated from operations at 282 million and free cash flow at 244 million.
As of September 30, we had cash and cash equivalents.
Ladies hundred 75 million and 342.
Double capacity under the revolving credit facility.
As Todd mentioned, we also earned 94 assets 74 of which are unlevered with significant equity value that provided us with even more liquidity.
In March 2020, the federal government is going to undertake numerous legislative regulatory initiatives designed to provide really.
Health care providers during the COVID-19 pandemic, including.
Labor at the three though Paul Thanks, Paul Cures Act funding, which provides among other thing direct relief fund and.
And an advanced payment program for Medicare, which for US what are approximately 104 million.
As Barry mentioned, we have a plan to return.
Provider relief from the carry back.
More specifically in addition to the approximately 109 received upfront of around one.
The company recently received from the customer 23 million on for.
As with the first three rounds, we have determined to retract from four are the very same reasons, we expected the first freightliner.
We are grateful for the assistance. So we believe we have the resources to meet the customer requirements.
I am determined in preference to return funds at this time.
Through January we expect to receive millions more related to round for infection control from.
Also returned from the government.
As we said before we will continue to evaluate teachers special funding that comes from the government I want to decide to accept or reject based on the situation related to those funds in a responsible way.
In addition, the card act temporarily suspended the automatic key percent reduction as Medicare reimbursement otherwise known as peak registration for the period of neighbors 2023 December 31, 2020. This suspension of sequestration half and we'll continue to have a positive impact on our revenue declining.
Hi, the pandemic effect on Medicare census for the remainder of galore.
The federal government also increased by 6.2% rents depending upon this will provide increased Medicaid reimbursement okay.
The temporary increase in Franklin timing of clinic very insightful.
Eight of the states in which we operate have approved frankel.
With this latest Seg funding has been extended until January 2021 to coincide with the federal declared a state of emergency.
As Barry mentioned, we are increasing our previously announced 2020 and our guidance to $3.04 to $3 from 12 cents per diluted share.
From our previous guidance of $3 $3.10 per diluted share.
We are maintaining our previous annual revenue guidance Accupoint point to bring the 2.45 Berlin.
The midpoint of this increased 2020 guidance represents a 58% increase over our 29 consultants are looking for.
We are also providing our 2021.
Starting Saturday, a $3.44 to $3.56 per diluted share on your revenue guidance of 2.62 from 2.69 Berlin.
The midpoint of 2021 problem represent approximately 14% increase over our 2020 now.
Our 2020 2021 guidance is based on diluted weighted average common shares outstanding.
55 points from 57.7 million from 2020 2021, respectively.
Our tax rate of approximately 25% the inclusion of acquisitions closed in 2020, and the first half of 2021.
Completion of losses associated with startup operations, which are yet stabilized.
Inclusion of anticipated Medicare and Medicaid reimbursement rate increases net of provider tax.
Recovery as the carve up 19 pandemic.
Principal and primarily intrusion comes from stock based compensation.
Additionally, other factors that could impact when we perform include variation in reimbursement system delays and changes in state budgets.
The mounting occupancy and skilled mix.
The influence of books on the comedy Central.
Stopping short term impact of our acquisition activity.
Are you listening insurance accrual surges in carpet growing team I think banking, what Bob I'm going to turn the call back over to Barry Barry.
Before we move on to questions, we want to thank our operational leaders and their frontline teams for their inspirational efforts that require more than most could ever really imagine as they come.
Care for our country's most fragile and vulnerable in the most innovative healthcare settings. They continue to show up to work each day.
Dining and uncomfortable mass gown eye protection and other protective equipment to do some of the most challenging but.
But important work during the most difficult time and our industry's history.
We want to thank each of them from the bottom of our hearts for doing so with the utmost professionalism and selfless selfless dedication.
Our leaders caregivers and other frontline staff are deserving of all the praise we can muster.
We're also grateful to our share shareholders for your confidence and support we cannot adequately express our appreciation to our colleagues in the field and the service center for making US better every single day. So thank you all.
And with that we'll turn it over to the Q and a portion of our call I'd also like to introduce Spencer Burton, our COO, who will join us for Q and a Sri can you. Please instruct the audience on acuity procedure.
Of course, ladies and gentlemen, as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please stand by while we compile the Q and a roster.
Once again, ladies and gentlemen that Star then one to ask a question.
We do have a question from Frank Morgan with RBC capital markets. Please go ahead.
Thank you I guess I would love to go to the commentary about the skill mix and the growth in the managed care census.
Is that when you think about that census is it mainly coated or is it just business that might otherwise have been treated in the hospital in any kind of color about what's the driver behind the managed care group.
It's not just coded Frank it's it's really.
A mix.
I think what we believe we're seeing is that.
Managed care had some some pent up demand and a lot of those patients are now going through the healthcare system more normally and so to us. It represents the start of a normalization and an adaptation to kind of the new environment.
Yes, and when we drill down and are looking at are diagnosed and other things we can see that role what a patient characteristics are not associated with some of the crescent associated with Capex and the aggressive associated with other characteristics that are non capex related.
Gotcha and.
If you think about this phenomenon and if assuming we have obviously theres theres it seems to be a rise on co that again going on right now in certain parts of the country at least.
Is there anything you've learned from the kind of what I'll call. The first two waves.
Between how you count them.
But anything different that you see you'll be doing for this wave if what we have right now turns into be another big way anything different that you'll be doing or any learnings from this from your prior days.
From the prior surge.
So I think it's a great question. There's a couple of things obviously, if we don't learn from our experience we're not we're not managing correctly and we've learned a whole lot.
We also have a number of tools at our disposal that we didnt have early in the pandemic, we're seeing less pressure on things like our PPD.
We have much more availability of testing, including rapid testing that allows us to go.
Getting to get diagnosis of Covance quickly for staff and also for residents, even even new admissions that in the past we had to wait longer to know their covance status. So all those tools, having those arrows in our quiver so to speak really give us an advantage we are seeing significant surges in the communities and research suggests.
Skilled nursing prevalence of Covance is very tied to community prevalence, but I do think that we are encouraged that with these additional tools were not only able to prevent that spread through infection control techniques weve developed over the past six months, but also were able to catch things quickly isolate more more accurately and quickly.
Keep the spread more limited when it does happen.
So anyway.
Encouraged that we have more availability to fight it spread also.
We're also encouraged freight that you know our admissions trends in spite of kind of the uptick in cases very recently has has continued to be positive, which which is another indicator that theres an adjustment in in the healthcare environment to to work with select.
Partners and ensure that the.
There is continued patient flow and treatment outside the acute setting.
In any particular areas I mean is this more of a west coast phenomenon or is is kept Texas or is this just across the board where you see in this this.
This increase in managed care.
Well the increase in covered or the increase in managed care just the increase in overall.
Volumes of managed care I'm sorry.
Across the board and I would say that's the same thing like that that Santana row liking at F., Rob mentioned, we're seeing a nice.
Overall increase across the board on our scale like submission.
Got you and then I guess on the on the rate side, obviously, the benefits of the relief from sequestration and I do think there were some states that were having adding incremental payments during the cold period could you maybe give us an update.
On how long that runs it is that through year end or the carry over the next year or any prospects at some of those payments would be would be extended further app.
Absolutely fair to say question, obviously, you're right now as a prius for the any of the year December 31st.
Moving on to the full for ask Matt.
Got a couple of different things going on in some states have.
Don more of what I will call it daily rate payment.
And all this fall, including some of our larger stands like California, Texas, Washington, All those will go to the end of the emergency right now which is slated in the middle of January and then states like Arizona square as more of a lump sum payment and said that the next on some holding a schedule for Q4 and then the other some other stuff.
Haven't done programs are just on carriers related programs that we haven't participated in Canada that Arsenal.
Got you one more and I'll hop back in the queue.
Looking at the cash flow from ops I think the number may be worked out to about 110 million in the third quarter.
Im just curious how much of a how much of a benefit were.
Some of the eight of advances or some of the other parts of that cares act to that number and then when we think about obviously, you've given us some guidance for for next year in terms of revenues and earnings but.
Hi, any special considerations or call us, we should think about on how cash flow from ops might look next year. Thank you.
Yes, great Great Great question, Frank with regards to kind of some hope that continues and one of the things that we do have it different payroll taxes of about 33 million year to date, helping that out that's the number that's occurring we could have some offsetting things in the current quarter actually though we had a replay.
Our overall.
Overall federal tax payment and so that actually pretty much offset that additional benefit we got from the different payroll tax so that nets out basically there. They continue to have accelerated payments of about 100 million that we won't have to repay back until April of next year and so overall from really.
Good things.
That are in there, but as Lynn highlights one of the biggest things that we have going for US is just an improved collections in our App front and that is something that is sustainable beyond some of the help that we're getting from the outside and so that that is a huge benefit that we continue to full coming through on the cash flow.
And with regards to revenue and earnings for next year I think you know.
Obviously, it's a continuation of the same thing in themes facing us in the past, we're really executing on that local operator model.
Okay. Thank you.
Thank you and speakers I'm showing no further questions in the queue. At this time I would like to turn the call back over to Mr. Barry point for any further remarks.
Thank Sri and thank you all for joining us today.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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Jacob.
Mr. Keetch, Sir you may begin.
Welcome everyone and thank you for joining us today as always before we begin I have just a few housekeeping matters.
The earnings press release, and 10-Q yesterday.
Now it's one is available on the Investor Relations section of our website at Www Dot enzyme group dot net.
A replay of this call will also be available on our website until five P.M. Pacific on Friday December four 2020.
I want to remind anyone that may be listening to a replay of this call. All statements made are as of today October 29, 2020, and these statements have not been nor will be updated subsequent to todays call.
Also any forward looking statements made today are based on management's current expectations assumptions and beliefs about our business and the environment in which we operate.
These statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on todays call.
Well, it's in or should not place undue reliance on forward looking statements and are encouraged to review our EPS. They see filings for a more complete discussion of factors that could impact our results.
Except as required by federal Securities laws enzyme and its affiliates do not undertake to publicly update or revise any forward looking statements where changes arise as a result of new information future events changing circumstances or for any other reason.
In addition, the enzyme group Inc. as a holding company with no direct operating assets employees or revenue.
Certain of our wholly owned independent subsidiaries collectively referred to as the service center provide accounting payroll human resources information technology legal risk management and other services to the other operating subsidiaries through contractual relationships with such subsidiaries.
In addition, our wholly owned captive insurance subsidiary, which we refer to as a captive provide certain claims made coverage to our operating subsidiaries for general and professional liability as well as for workers compensation insurance liabilities.
All of our operating subsidiaries, including the service center and the captive are up.
Operator by separate wholly owned independent companies that have their own management employees and assets.
For instance, here at the enzyme or the consolidated company and its assets and activities as well as the use of the terms, we us our and similar terms used today are not meant to imply nor should it be construed as meaning that the enzyme group inc. has direct.
The operating assets employees or revenue or that any of the subsidiaries are operated by the enzyme <unk>.
Also we supplement our GAAP reporting with non-GAAP metrics when viewed together with our GAAP results. We believe that these measures can provide a more complete understanding of our business, but they should not be relied upon to the exclusion of GAAP reports.
GAAP to non-GAAP reconciliation is available in yesterday's press release and is available on our 10-Q.
And with that I will turn the call over to very poor our CEO Barry.
Good morning, everyone. We're pleased to announce another record quarter. Despite the continued challenges arising from the global pandemic.
With the surge of COVID-19 that occurred during the third quarter in some of our largest states, including Texas, Arizona and California.
Our local teams were faced with an unprecedented challenge and it and have again demonstrated incredible agility and responsiveness to the evolving landscape.
True to form they remain as committed as ever to the cause of quality outcomes and excellent patient care.
They come to work each day and the most difficult circumstances to serve our nation's most vulnerable on the true frontlines of this worldwide trial.
They deserve all the praise that we could possibly provide then for the courageous and selfless service.
As a result of their heroic efforts, our local operators and caregivers have translated their passion and a record breaking results.
For the third quarter in a row, we achieved record earnings which came in at 78 cents per share an increase of 95% over the prior year quarter. We also reported a 95% increase in our adjusted net income of $44 million.
The strong results came from quarter over quarter improvements in skilled mix across the portfolio improved admission trends availability of more frequent and broader coven testing.
Increased managed care revenues cost saving initiatives improved collections sequestration suspension and improved Medicaid rates.
Our local leadership teams continue to make clinical and operational improvements that are tailored to condition they face in their local market.
Our operations have continued to see an increase in the number of higher acuity patients, including some COVID-19 positive patients and an increasing number of managed care patients.
With the surgeon COVID-19 patients and many of the surrounding communities. We serve we continue to see state and County health leaders and local hospital systems turned inside affiliated operations to care for all varieties of high acuity patients that can be safely admitted to remain under our care.
As we expected when positivity rates for covenant I see an increase in the surrounding community, we see occupancy decline and skilled mix increase in July we saw overall occupancy decline, particularly in areas of high covered positivity rates, like Texas, Arizona, and California, well skilled census remains.
Strong then.
Then when koby 19 cases begin to stabilize during the quarter occupancy began to recover and that trend has continued in October.
After living in the code environment now for two and a half quarters were encouraged by the recent strength in occupancy.
If theres another surgeon covered during fourth quarter or in 2021.
We are confident that lower occupancy costs will be offset by higher skilled mix.
In early July we returned all of the carriers that provide a relief funds we receive from the government and our results do not include any benefit related to abuse relief funds.
In doing so we joined other well capitalized healthcare providers by returning approximately $109 million and provider grants.
And announced yesterday that we will also be returning approximately $23 million in the latest round of relief funds accordingly.
We either have returned our plan to return all provider relief funding under the care stack rounds, one through four.
As we said last quarter, we take the responsibility that comes from receiving revenues, which are largely funded by American taxpayers very seriously.
In addition, as a for profit healthcare company, our organization paid tens of millions of dollars a year in taxes, when we consider our healthy balance sheet and liquidity, which we have taken great care to protect and movement. When we reflect on the financial performance during the pandemic, we decided not to accept any cares.
Act funds.
If there are additional future grants, we will reevaluate the purpose the needs of those grants specifically considering potential costly testing requirements or other newly mandated regulations and the terms or conditions that accompany those funds.
The third quarter presented a continued challenges as we experienced a significant surging cases in some of our largest states.
We are grateful that we were able to apply many of the lessons learned in the second quarter to prevent and treat covance and our operations in these geographies.
As of October 14th 2020, the company's 217 affiliated skilled nursing operations across 13 States at 207 confirmed COVID-19 patients in house.
Also as of October 14th 2028 operations had over 20 Covenant 18 positive cases, 48 operations had less than 20 cases, and 161 operations had no confirmed cases of Covance Knight team in house.
To add some additional context two of our operations have at the request of the local health care community proactively and intentionally did dedicated their entire campus to the Carol covered positive patients.
Another 36 operations have dedicated entire wings to covert positive patients.
Our local leaders and caregivers with the assistance of their service Center resources continue to methodically acquire sufficient levels of PE and other supplies and equipment and are providing the latest fit best practices in both clinical protocols and safety measures at a significant expense, including taking advantage of.
More readily available testing.
We continue to learn a great deal through this process and our local leaders are proactively preparing for and executing on plans to provide care for all patient types, whether coded positive negative or unknown.
We are pleased to report that these efforts are going very well and we have seen improved clinical outcomes and infection control practices amongst our patients and caregivers.
We reported yesterday that during the quarter.
The line same store in transitioning occupancy declined by 2.4% and skilled mix increased by 2.9% from second quarter as the pandemic worsened in many key states.
The vast majority of these declines in occupancy occurred in early July.
However from mid July to mid September our census remained flat with a slight decrease in skilled mix days.
Towards the end of the quarter and into October as elective care procedures picked up in the number of COVID-19 cases in the community stabilize.
We experienced an increase in our occupancy and skilled mix days.
Tween mid September to mid October combined same store in transitioning occupancy increased by approximately 1% and skilled mix increased by 4%.
This increase is skilled days was driven by an increase in overall facility acuity, which includes complex nursing services for COVID-19 patients and other skilled patients.
We're also encouraged to report that admissions continue to progress simply increased throughout the quarter demonstrating that the flow patients has improved at certain markets have begun to loosen restrictions on admissions and as the sentiment towards post acute care has continued to improve.
We have been watching our admissions trend very closely and are encouraged to see those numbers trending up as healthcare communities move away from a hunker down approach to one of operating more carefully and effective effectively within the context of the pandemic.
Another trend we have been watching closely relates to our managed care census, we're pleased that our managed care census has also begun to make some meaningful improvement with our overall managed care days, increasing by 7.3% in combined same store in transitioning operator operations during the quarter.
These managed care increases are being driven by increasing confidence by managed care payers that their patients can be safely cared for in the post acute setting and then a cost effective way that is not always and that it is not always necessary to hospitalized kobin positive patients.
And it's also a reflection that certain elective procedures that have been put on hold are beginning to occur even in the context of the pandemic while occupancy they are lower than they were a year ago at this time.
Adults this quarter demonstrate again, the resilience of our model and the local leaders ability to adapt to changing circumstances and their local health care markets.
While the future of this pandemic remains unclear we are confident that our local leaders caregivers and other frontline staff will continue to provide amazing service to their patients families and our society as a whole there endurance and strength is truly inspiring and we can't thank them enough for their selfless service as they can.
Venue to earn the trust of acute care providers physicians managed care payers and most importantly, their patients and families. They truly are heroes and doing some of the hardest work during one of the most challenging times in our industry's history.
We hope our communities will join us in recognizing and thanking them for all that they do.
We are increasing our 2020 annual earnings guidance to $3.04 to $3.12 per diluted share and maintaining annual revenue guidance of $2.42 billion to $2.45 billion.
Well, we have seen and expect to continue to see a significant impact from the pandemic on the fourth quarter and beyond we are confident that we can continue to perform well in the context of additional covenant 18 surges.
We are also providing guidance for 2021.
With annual earnings per share guidance of $3.44 to $3.56 per diluted share and annual revenue guidance of 2.62 billion to 2.69 billion.
The midpoint of this 2021 guidance represents an increase of approximately 14% over the midpoint of our newly increased 2020 guidance.
We are confident that we can provide this guidance for several reasons. We are excited about the enormous upside that still exists in all of our newly acquired operations, which have seen delays in the transformation that we typically see in our newly acquired bucket coupled with the.
The solid acquisitions that we see on the horizon in.
In addition, we are seeing marked improvement from some of our newer markets and struggling operations, which represents significant additional upside but more importantly, we believe when this pandemic is behind us that our operations are prime to rebuild occupancy and gain additional market share as a result of the deepen relationships.
Conscious with acute providers and other healthcare partners that have developed because of our response to the pandemic.
As with this year the road to achieve these results could vary dramatically based on how the pandemic plays out in the coming months, but we see several pathways to reaching this guidance and with that I'll ask Chad to give us an update on our recent investment activity chat.
Thank you Barry the company paid a quarterly cash dividend of five cents per share of enzyme common stock.
Due to our strong liquidity, we are pleased to continue our long long standing practice of paying a dividend to shareholders enzyme has been a dividend paying companies since 2002, and we look forward to continuing this practice as one of many many ways. We can provide a return to our shareholders.
We had a relatively quiet quarter on the acquisition front as all operators were focused on dealing with the summer surge. However in August we announced the acquisition of the real estate and operations of a post acute care retirement campus located in Tempe, Arizona.
Which has included Tempe post acute 62 bed skilled nursing facility and desert Marigold senior living of Tempe, a senior living center with 72 assisted living beds and 90 independent living units.
This was one of several acquisitions that we had in the works when cobot appeared on the scene and is the first closing we've had since the pandemic started.
Transition process was a little different this time, but we are confident that our one other time clinical and operational plan will allow us to selectively acquire in this current environment.
With this addition, our growing portfolio is now comprised of 226 operations 24, which includes senior living operations and other ancillary businesses across 14 states.
Enzyme now owns 94 real estate assets 64 of which we operate.
This portfolio of owned assets took less than five years to acquire as compared to the 15 years. It took us to acquire the 94 assets, we spun out to sea Jerry in 2014.
As we indicated last quarter, we had several deals in the pipeline that we halted temporarily as we're responding to the covert threat a handful of those operations are now slated to close in the fourth quarter and in early 2021, while others will require a fresh look later this year and early next.
Everything is taking a little longer than usual, including the due diligence process has access to buildings is still limited.
Despite all of that our pipeline remains strong and we continue to see new opportunities coming to us every week in some cases some of the deals we expect to see this year have been delayed as cares Act funding has provided additional capital to provide temporary assistance to undercapitalized are struggling operations. However.
However, we anticipate that there will be a significant influx of older and newer deals that come out of this pandemic.
Whether we are acquiring the real estate or entering into a long term lease arrangements. The health of our balance sheet will always remain paramount.
We will continue to focus on paying fair and reasonable prices using historical performance not pro forma our future results that we create through our for our outperformance.
We also want to remind you that most of the operations, we acquire start out with lower occupancy and lower CMS star ratings, which is built into the purchase price.
So when our occupancy is go down we have significant cushion built into our model.
As we mentioned in our release yesterday, we have well over 300 million and available capital right now, which we could use to grow. In addition, we have 74 completely unlevered real estate assets. We continue to work on unlocking some equity value in seven or eight of our owned an unlevered real estate assets through long.
Term fixed rate HUD debt.
This process takes several months and will not be completed until next year, but we are preparing now for a wave of new acquisitions, we see on the horizon and are excited about the deals we're working on now and the new opportunities that are on their way.
We also remind you that in addition to the five operations Weve acquired so far this year, we added 26 operations last year.
If you look back at our history, we often take a breather on new additions after a large growth year to allow us to transition and integrate the newly acquired operations into their local clusters and to rebuild our leadership pipeline.
These periods are very important and part of our disciplined growth strategy and this year with the covert outbreak that no one could have predicted.
The slower growth has been very helpful. As we've used the extra bandwidth to focus on the existing portfolio and driving organic growth.
And with that I'll pass the call back over to Barry for some more additional detail around operations. Thanks Chad.
We're very pleased to report that we continue to see some very encouraging clinical outcomes across the organization, while simultaneously limiting the spread of the virus, reducing pressure on local hospitals and doing so in a cost effective manner to further benefit the overall expense to Medicare and Medicaid programs well.
While this continues to be a dangerous virus, our caregivers have worked tirelessly to provide excellent care to their patients adopting the latest advances and intervention and treatment to maximize patient outcomes, which has only added to the confidence of their local healthcare communities.
By applying the best practices across several geographies and by providing the local leadership with tools and resources rather than direct is not only are we accomplishing high quality outcomes, but our operations have been able to build census, amongst all payer types include.
Staying with managed care patients.
To help illustrate this let us offer an example.
One of our sub acute facilities located in upland, California, upland rehabilitation and care Center led by CEO kit Mcmillan and COO Recanvassing have been laser focused on driving market, leading metrics like low richert return to acute percentages compressed lengths of stay and improve response.
Passiveness during pandemic conditions they.
They have leverage these outcomes are consistent and transparent data sharing and regularly scheduled joint review meetings with all of the prominent local managed care providers. This is not only strengthen existing partnerships, but has also led to new relationships as has happened with Kaiser earlier this year.
As a result their managed care AIDC has grown by 54% along with overall occupancy growth of 280 basis points, both compared to third quarter of 2019.
This has contributed to earnings growth of 172% year over year during an unprecedented time in the market.
We've also seen impressive overall says this recovery in many of our key markets for example.
The color healthcare resort of Colorado Springs, where CEO, David Danion and COO Shannon Collins have led their team and reaching all time highs and skilled and overall census over the past quarter. Despite the traditional summer census headwinds and additional challenges presented by the pandemic the healthcare resort.
It has been all trends in their markets reach a 100% occupancy the.
The facility strong results came from an unrelenting commitment to clinical excellence and strong relationships with acute and downstream providers at.
At multiple points during the third quarter. The 97 skilled bed facility not only achieve full occupancy, but did so with over 60 skilled patients.
And for the quarter and achieved a 6.5% improvement in occupancy, which translated to a 17% increase in revenue and a 41.9% increase in EBITDAR compared to third quarter 2019.
As we continue to remind you our local leaders and our operational model are the reasons why we have adapted and we'll continue to adapt during this unprecedented time as one of the reasons why we have seen our acuity and outcomes improve.
Our leaders have used universal testing to identify infected patients earlier and more consistently which has resulted in fewer outbreaks in our buildings and lower mortality rates in.
In addition by keeping patients in place we have been able to reduce the risks inherent in moving these four vulnerable patients and further exposing them to possible carriers of the virus.
Not only has this resulted in better clinical care, but both of these efforts have resulted in savings that are possible only as a result of available testing the waiver for the three day hospital stay and select managed care relationships.
Most importantly, our CEO caliber leaders and their clinical partners with the support of a World Class Service Center are very carefully working with local governments hospitals and their managed care partners to be a solution. During this pandemic now I'll pass the call over to Suzanne to provide more details around the quarter and.
Our guidance Suzanne Thanks, Barry and good morning, everyone detailed financials for the quarter are contained in our 10-Q and press release filed yesterday and additional highlights for the quarter included yes.
Net income was 43.1 yelling.
Chris of 94% over the prior year quarter.
Adjusted net income was 43.7 million an increase of 95% over the prior year quarter same store skilled revenue increased by 19% over the prior year quarter and that 8% sequentially fueled by an increase in Medicare days at 34% and 10% respectively.
Transitioning skilled revenue increased by 27% over the prior quarter with a 20% increase in managed care revenue at 27% increase in Medicare revenue.
The company's liquidity remained strong for the nine months ended September thirtyth with cash generated from operations at 222 million and free cash flow of 244 million.
As of September 30, we had cash and cash equivalents of approximately 175 million and 342 million of available capacity under the revolving credit facility.
As Todd mentioned, we also earned 94 assets 74 of which are unlevered with significant equity value that provided us with even little liquidity.
In March 2020, the federal government begin to undertake numerous legislative regulatory initiatives designed to provide relief to health care providers during the COVID-19 pandemic.
Creating a labor at this riddle Paul Thanks, Paul Cures Act funding, which provides among other thing direct relief sand.
And an advanced payment program for Medicare, which for us totaled approximately 104 million.
As Barry mentioned, we have a plan to return our provider relief funds under the care that.
More specifically in addition to the approximately 109 million received as part of around one Q3. The company recently received an additional $23 million for.
As with the first three rounds, we have determined to reject from slower for the very same reasons, we adjusted the first freightliner.
We are grateful for the assistance Holly.
I believe we have the resources to meet the husky requirements.
Determine and Pepperidge return refunds at this time.
Through January we expect to receive millions more related to rounds for infection control from me well also return those funds to the government.
As we said before we will continue to evaluate future special funding that comes from the government I will decide to accept or reject based on the situation related to the fans in a responsible way.
In addition, the carriers are temporarily suspended the automatic 2% reduction of Medicare claims reimbursement otherwise known as peak registration for the period of May 1st 2020 through December 31st 2020, this suspension of sequestration and.
And we'll continue to have a positive impact on our revenue depending upon how the pandemic affect our Medicare census for the remainder of the year.
The federal government also increased by 6.2%, which depending upon the state will provide increased Medicaid reimbursement.
The temporary increase in banking and the timing of payments varies by state but.
The states in which we operate hot approved funding.
With this latest sorry, Tiffany has been extended until January 2021 to coincide with the federal declared a state of emergency.
As Barry mentioned, we are increasing our previously announced 2020 and our guidance to $3.04 to $3.12 per diluted share up from our previous guidance of $3 to $3.10 per diluted share and we are maintaining our previous annual revenue guidance at 2.42, Brian.
0.4 5 billion.
The midpoint of this increased 2020 guidance represents a 58% increase over our 2019 minutes after comes up.
We are also providing our 2021 annual earnings guidance yesterday, a $3.44 to $3.56 per diluted share on your revenue guidance of 2.6 to Brian The 2.69 Berlin.
The midpoint of the 2021 guidance represents an approximate 14% increase over our 2020 garden.
On 2020 2021 guidance is based on.
Rated weighted average common shares outstanding of approximately 55.7 and $57.7 million for 2020 2021, respectively.
Tax rate of approximately 25% the inclusion of acquisitions closed in 2020, and the first half of 2021, the exclusion of losses associated with startup operations, which are yet stabilized.
Inclusion of anticipated Medicare and Medicaid reimbursement rate increases net of provider tax rate.
Recovery as a COVID-19 pandemic.
Principal and primarily exclusion comes from stock based compensation.
Additionally, other factors that could impact quarterly performance include variation in reimbursement systems delays and changes in state budgets.
Banality occupancy in scope luck.
The influence of the general economy on a synthesis backing the short term impact Deborah acquisition activity variation in insurance accruals surges in corporate banking and other factors, what Bob I want to turn the call back over to Barry Barry.
Before we move on to questions, we want to thank our operational leaders and their frontline teams for their inspirational efforts that require more than most could ever really imagine as they care for our country's most fragile and vulnerable in the most intimate of healthcare settings. They continue.
The show up to work each day.
Donning an uncomfortable mask down I protection and other protective equipment to do some of the most challenging.
But important work during the most difficult time and our industry's history.
We want to thank each of them from the bottom of our hearts for doing so with the utmost professionalism and selfless selfless dedication.
Our leaders caregivers and other frontline staff are deserving of all the praise we can muster.
We're also grateful to our share shareholders for your confidence and support we cannot adequately express our appreciation to our colleagues in the field and the service center for making US better every single day. So thank you all.
And with that we'll turn it over to the Q and a portion of our call I'd also like to introduce Spencer Burton, our COO, who will join us for Q and a Sri can you. Please instruct the audience on the Q and a procedure.
Of course, ladies and gentlemen, as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please stand by while we compile the Q and a roster.
Once again, ladies and gentlemen that Star then one to ask a question.
We do have a question from Frank Morgan with RBC capital markets. Please go ahead.
Thank you I guess I would love to go to the commentary about the skill mix and the growth in the managed care census.
Is that when you think about that since this is it mainly coated or is it just business that might otherwise have been treated in the hospital in any kind of color about what's the driver behind the managed care growth.
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It's not just covered Frank it's it's really.
A mix.
Hi, what we believe we're seeing is that.
Managed care had some some pent up demand and a lot of those patients are now going through the healthcare system more normally and so to us. It represents the start of a normalization and an adaptation to kind of the new environment.
Yes, and then really drilled down kind of looking at our dad network and other things we can see that really what a patient characteristics are not associated with some of that growth is not associated with Kevin some of the growth is associated with other characteristics that are non capex related.
Gotcha and.
If you think about this phenomenon and if assuming we have obviously theres theres it seems to be a rise on co that again that going on right now in certain parts of the country at least.
Is there anything you've learned from the kind of I'll call. The first two waves.
You mean, how you count them.
But anything different that you see you'll be doing for this way. The if what we have right now turns into be another big way anything different that you'll be doing or any learnings from this from your prior days.
From the prior surge.
So I think Thats a great question. There is a couple of things obviously, if we don't learn from our experience we're not we're not managing correctly and we've learned a whole lot.
We also have a number of tools at our disposal that we didnt have early in the pandemic, we're seeing less pressure on things like our PPD.
We have much more availability of testing, including rapid testing that allows us to go.
Get diagnosis of cobot quickly for staff and also for residents, even even new admissions that in the past we had to wait longer to know their covance status. So all of those tools, having those arrows in our quiver so to speak really give us an advantage we are seeing significant surges in the communities and research suggests.
Skilled nursing prevalence of Covance is very tied to community prevalence, but I do think that we are encouraged that with these additional tools were not only able to prevent it spread through infection control techniques weve developed over the past six months, but also were able to catch things quickly isolate more more accurately and quickly and.
Keep the spread more limited when it does happen.
So and.
Encouraged that we have more availability to fight it spread also.
Also encourage freight that you know our admissions trends in spite of kind of the Upticking cases, very recently has continued to be positive, which which is another indicator that theres, an adjustment and in the healthcare environment to to work with silver.
Ex partners and ensure that.
There is continued patient flow and treatment outside the acute setting.
And any particular areas I mean is this more of a west coast phenomenon or is this kept Texas or is this just across the board where you see in this.
This increase in managed care.
Well the increase in covered or the increase in managed care just the increase in overall.
Volumes of managed care I'm sorry.
Across the board and I would say that's the same thing with the sense Asmara liking yet if Rob mentioned, we're seeing a nice.
Overall increase across the board on our scale like submissions.
Gotcha, and then I guess on the on the rate side, obviously, the benefits of the really from sequestration and I do think there were some states that were having adding incremental payments during the cold period could you maybe give us an update.
On how long that runs it is that through year end or does it carry over the next year or any prospects that some of those payments would be would be extended further.
Absolutely. So just a question obviously right now as appropriate for the end of the year December 31st.
Moving on to the states for ask Matt and we've got a couple of different things going on in some states have.
Don more of what I would call a daily rate payment.
And all other states, including some of our larger states like California, Texas, Washington, All those will go to the end of the emergency right now on what just slated in the middle of January and then states like Arizona as more of a lump sum payment and said that the next on some pulmonary scheduled for Q4 and then the other some other stuff.
Just haven't done programs are just on carriers related programs that we haven't participated in some of those others. Thanks.
Got you one more and I'll hop back in the queue.
Looking at the cash flow from ops I think the number may be worked out to about $110 million in the third quarter.
I'm just curious how much of how.
How much of a benefit were.
Some of the eight of advances are some of the other parts of that cares act to that number and then when we think about obviously you'd give us some guidance for for next year in terms of revenues and earnings but.
Hi, any special considerations or call us, we should think about on on how cash flow from ops might look next year. Thank you.
Yes, great Great Great question, Frank with regards to kind of some hope that continues and one of the things that we do have it deferred and payroll taxes of about 33 million year to date, helping that out. That's that's the number that's growing we just have some offsetting things in the current quarter actually though we had a replay.
Our overall.
Overall federal tax payment and so that actually pretty much offset that additional benefit we got from the deferred payroll tax so that nets out basically to zero, we continue to have.
Accelerated payments of about 100 million that we won't have to repay back until April of next year and so overall some really good things.
That are in there, but highlights one of the biggest things that we have going for US is just and then for his collection and our upfront.
And that is something that is sustainable beyond some of the helps that we're getting from the outside and so that that is a huge benefit that we continue to see coming through in the cash flow.
And with regards to revenue and earnings for next year I think you know.
Obviously, it's a continuation of this banking themes facing us in the past, we're really executing on that local operator model.
Okay. Thank you.
Thank you and speakers I'm showing no further questions in the queue. At this time I would like to turn the call back over to Mr. Bay point for any further remarks.
Thank Sri and thank you all for joining us today.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.