Q4 2020 Ensign Group Inc Earnings Call
[music].
Ladies and gentlemen, thank you Dick and by and welcome to the Ensign Group Q4, and fiscal year 'twenty and 'twenty earnings Conference call. At this time, all participants on a listen only mode.
Please and presentation there'll be a question and depression.
Ask the question of deposits and quite broad and one on you touched on telephone.
As a reminder, grade cough and cold is being reported.
I will now turn the comparable to our host Mr. Chad Keetch, Chief investment Officer, you may begin.
Thank you operator, and welcome everyone and thank you for joining us today.
And their earnings press release yesterday, and it is available on the Investor Relations section of our website at Ensign group Dot net.
A replay of this call will also be available on our website until five P. M Pacific on Friday March 5th 2021.
We want to remind any listeners that may be listening to a replay of this call that all statements are made as of today February four 2021, and these statements have not been nor will be updated subsequent to today's call.
Also any forward looking statements made today are based on management's current expectations assumptions and beliefs about our business and the environment and 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 today's call listeners should not place undue reliance on forward looking.
Rents 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 Ensign 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 and.
In addition, the Ensign Group, Inc. Is a holding company with no direct operating assets employees or revenues certain of our wholly owned independent subsidiaries collectively referred to as the service center provide accounting payroll human resources information technology legal risk management, and and other services to other operating subsidiaries through.
Actual relationships with such subsidiaries and.
In addition, our wholly owned captive insurance subsidiary, which we referred to as the captive provides certain claims made coverage to our operating subsidiaries for general and professional liability as well as for workers' compensation insurance liabilities.
The words enzyme company, we our and US refer to the Ensign Group, Inc, and its consolidated subsidiaries.
All of our operating subsidiaries the service center and the captive are operated by separate wholly owned independent companies that have their own management employees and assets.
And with references here and to the consolidated company and its assets and activities as well as the use of 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 operating assets employees or revenue or that any of the subsidiaries are operated by the enzyme group on.
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 and yesterday's press release and is available and our form 10-K.
And with that I'll turn the call over to Barry Port our CEO Barry.
We're happy to reported another record quarter as we achieved our highest adjusted earnings per share and our history.
In spite of the continued challenges brought on as a result of the ongoing pandemic.
I want to emphasize that the work our front line partners, our field leaders and our service center folks are doing is on firing and at the heart of our performance.
Their determination to remain indispensable and responsive during this global trial has saved and improved countless lives.
These local teams have shown incredible strength and consistency, while doing everything and their power to care for their patients residents and the healthcare community they serve.
Rather than hunkering down and waiting for the storm to pass they've rolled up their sleeves and work tirelessly to find ways to make clinical and operational adjustments that are tailored to meet the needs of their existing and potential and potential patients and their local market.
And they have done so the medical community and the patients families have entrusted them to care for their residents with increasingly complex clinical needs.
As evidence of that confidence our medical communities have and our local clinical leaders our operations, some market improvement and patient volumes, especially with high acuity and skilled patients.
On the Medicare front, we saw Medicare days for our same store and transitioning portfolio increased seven 2% from second quarter, and a third quarter and increase again by 10, 8% between third quarter and fourth quarter.
The increase and Medicare census continues to be the result of our operator's efforts to take on higher acuity patients, including many COVID-19 positive admissions and an effort to ensure that hospitals have the needed capacity to deal with the most critically ill patients.
During the quarter, we admitted and cared for over 5000 Covid positive patients.
Not only has this helped preserve hospital, Quebec capacity, but it has also strengthened our reputation as a partner of choice to hospitals health plans.
And senior living communities and our markets.
And strengthen our standing and the continuum of care.
As we have gained more experience with COVID-19 treatments and greater access to testing.
And our facilities outcomes and confidence and treating COVID-19 patients have improved.
Most importantly, this evolution has also helped.
<unk> provided a much needed solution to our vulnerable seniors, allowing them to receive the latest treatments and care and helping them to thrive rather than languish and their existing setting extending their health and preventing countless others from further infection and spread.
Similarly on the managed care front, we saw on managed care days for our same store and transitioning portfolio increased by six 2% from second quarter to third quarter and increase again by five 7% between third and fourth quarter.
These increases and our managed care volume are being driven by growing confidence from managed care payers that their patients can be safely cared for and the post acute setting and a cost effective way.
And that is not it is not always necessary to hospitalized COVID-19 positive patients.
It is also a reflection that certain elective procedures that have been put on hold or beginning to normalize even in the context of the pandemic.
While occupancies are still lower than they were a year ago. At this time our results this quarter, yet again show the resilience of our model and our local leaders ability to adapt to changing circumstances and their local health care markets.
Also this improvement and our admissions trends not only demonstrates that we can continue to perform well as the pandemic stubbornly persists.
But it also gives us insight into the post pandemic environment and demonstrates that we earned and an excellent position and see occupancies normalize to pre pandemic levels a pattern that we have noticed and some of our largest markets.
We've been working arm and arm with our longtime hospital and managed care partners and formed our relationships with new partners and several markets to care for complex patients and solidify the critical role, we play and and post acute care continuum.
As an essential and cost effective setting for high acuity patients.
Our strong results and the quarter do not come from any one thing, but rather is the aggregation of continued improvements and skilled mix across the portfolio improves admission trends availability and more frequent and broader COVID-19 testing increased managed care volumes cost saving initiatives improved cash collection collection.
<unk> sequestration suspension and improve Medicaid funding and certain states.
During the latest and most significant surge of COVID-19, positivity rates and states like Texas, Arizona and California.
We saw and accompanying increase and skilled mix.
Unlike prior quarters, where COVID-19 searches were accompanied by occupancy declines during the fourth quarter. We saw consolidated Occupancies remained flat.
Just as Covid positivity rates vary market to market. So has the impact on our occupancies.
Most notably we have seen some very encouraging trends emerging, particularly and our most mature operations more specifically, we have seen over 30% of our same store operations improved and our occupancies to over 80%, which is at or near our consolidated pre COVID-19 levels.
And some markets like Utah, we have seen entire clusters already reached pre COVID-19 levels.
And this drove many things and our business. It's typical to see trends and certain markets Act is very reliable indicators for what is to come and our other geographies and while we have a long way to go we like where we are and the direction and which we are headed.
We are again reaffirming our guidance for 2021 with annual earnings per share guidance of $3 44 to $3 56 per diluted share and annual revenue guidance of $2 six 2 billion to $2 69 billion.
And the midpoint of this 2021 guidance represents an increase of approximately 14% over the midpoint of our 2020 guidance, which as a reminder, we increased twice during 2020.
We remain confident that we can achieve this guidance as we begin to see the positive impact of vaccination efforts and begin to realize the enormous upside and our newly acquired operations coupled with the opportunistic acquisitions that we see on the horizon.
But more importantly, we believe when this pandemic is behind us.
And our operations are prime to rebuild Occupancies and continue to gain additional market share as a result of these deepened relationships with acute care providers and other health care partners.
We again and remind you of the results for the quarter and the year do not include any benefit related to cares Act provider relief funds. We have returned all of the relief funds. We have received to date, which included approximately $109 million and provider grants from July.
$33 million and the fourth quarter and on an additional $5 million we received in January.
We are aware of the ongoing discussions in Washington D. C related to additional cares Act funding. If there is another round of funding we will reevaluate the purpose and needs of any future grants spin.
Specifically, considering potential costly testing requirements or other newly mandated regulations and the terms and conditions that accompany those funds. However, when we consider our healthy balance sheet and liquidity, which we have taken great care to protect and reflect on our financial performance. During the pandemic we are committed to.
To operate as best we can without cares Act funding.
While this pandemic continues to evolve 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.
We have great hope that as the vaccines continue to become available that we will see significant reductions and infection rates and our operations and the communities at large.
And we can't even begin to express our love and appreciation for all of our amazing team members.
And all that they're doing to help get us through this unprecedented time.
We look forward to 2021 and to continue to show our dedication to all those that have entrusted us with the care of their loved ones and with that I'll ask Chad to give us an update on our recent investment activity Chad.
Thank you Barry we're pleased to announce that we are making progress and our effort to highlight and ultimately unlock the growing value and our owned real estate.
As a first step starting in the fourth quarter of 2020, we began reporting the results of our real estate portfolio as the new segment.
This new real estate segment is comprised of properties owned by us and leased to skilled nursing and senior living operations 64, which we operate and 31 of which we leased to the pennant group.
Each of these properties are subject to triple net long term leases that generated rental revenue of $61 3 million.
$46 1 million of which was derived from our own operations.
Also for 2020, we generated $49 5 million and <unk> and increase of 51, 6% over the prior year of $32 7 million.
Our goal and separating us real estate business from our operations is to demonstrate the enormous inherent value that these real estate assets have and will have over time.
We hope that this extra disclosure will be helpful to our current and prospective investors as they evaluate this growing part of our business.
At the same time, we are narrowing in on a framework that will go even further to demonstrate the true value of this real estate.
While allowing us to stay legally and culturally connected to the assets.
This strategic structure would enable us to more aggressively pursue and acquire attractive assets, including accretive acquisitions for enzyme and also some operations that for one reason or another are not a good fit for enzyme to operate.
Such as operations that are in markets, where we don't currently have available leadership.
We continue to engineer and carefully consider a solution that builds upon the many lessons we learned from the 2014 spinoff of our then owned real estate as.
As we look to ways to apply those lessons are priorities or protect our culture and to make sure that we and our real estate partner remained unified and our joint mission to protect the health of the operator first and in doing so ultimately create long term value and the real estate.
While we are often approached by many potential buyers that would love the chance to purchase and leaseback. Our real estate. We do not believe that approach is the best way to advance our mission and maximize long term shareholder value.
We will continue to provide more detail as this develops and future quarters and.
In the meantime, our focus is on continuing to build equity value and these assets by making them essential within the care continuum to each market they serve.
During the quarter, we paid a quarterly cash dividend of five and a quarter cents per share.
This is the 18th consecutive year that we have increased our dividend, which we hope shows our continued confidence and our operating model model and our ability to return long term value to shareholders.
And because our liquidity remains strong we have no current plans to suspend future dividends.
Also during the quarter and enzymes affiliates acquired the following skilled nursing operations.
The medical loss of Amarillo, and 82 bed operation located in Amarillo, Texas.
He is and nursing and rehabilitation center and 116 better operations located in San Marcos, Texas.
Golden Hill post acute and 99 bed operation located in San Diego, California.
St Catherine healthcare and 99 bed operations located in Fullerton, California.
Camino healthcare and 99 bed operation located in Hawthorne, California.
And San Pedro manner, and 150 bed operation located in San Antonio Texas.
Our recent growth in the midst of a pandemic is a true statement to our local team of clinical and operational leadership and their experience planning and preparation.
Given the unique effort required to transition during a pandemic, we've been even more selective and unusual and therefore, each and every one of these have been handpicked by our local operators.
On the extra Covid precautions, we had to take with each one of these we have had extra time to prepare and in some cases, we were even allowed early access.
Because of that we feel on extra measure of confidence that these operations are poised to contribute to our overall results very soon.
In addition to these new acquisitions, we still have several deals on the pipeline that are taking longer than usual to get to the finish line given the extra precautions that we are taking.
Another half dozen or so of these opportunities are now slated to close and the first quarter and early second quarter, and we look forward to announcing those trends transactions when they close over the next few months.
As we noted in our release yesterday, we have well over $340 million and available capital right now to grow.
In addition, we have 74 completely unlevered real estate assets, we continue and we continue to work on unlocking some equity value and seven or eight of our owned assets.
And that our unlevered through long term fixed rate HUD debt.
This process can take several months and will not be completed until later in the year, but we are preparing now for a wave of new acquisitions, we see on the horizon and are excited about the deals and were working on now and the new opportunities and are on their way.
As I reminded you on the recent past our primary constraint to growth is not capital or supply of available available <unk> operations to acquire.
Rather it is the availability of locally driven clinical and operational leaders.
When we evaluate each opportunity there are many factors, we use to determine our level of interest, including the availability of local leadership, the building's reputation and the long term return potential.
Our acquisition decision, making process relies on those local leaders and the health of their neighboring operations.
When they are strong it fuels, our growth and because we are healthy and becoming healthier and many of our markets. We have the ability to be aggressive and our growth when prices are right.
And whether it is one or two at a time or a larger deal that spans over several of our markets our transition process and scalable across several markets at the same time.
We look ahead as we look ahead to 2021 the pipeline for our typical turnaround opportunities and exciting strategic opportunities remained strong currently with more deals available and we have the capacity to transition and.
And some cases the deals we expected to see last year have been delayed as the cares Act funding has provided additional capital to provide temporary assistance to undercapitalized are struggling operations.
We're still being very selective and keeping plenty of dry powder on hand for what we believe will be and attractive buyer's market. Once the pandemic related dust settles and the government relief funds run out.
We look forward to growing within our existing geographical footprint as we see significant advantages to adding strength in markets, we know well, including some of our newer emerging markets as they continue to mature and prepare for growth.
And with that I'll turn the call back over to Barry Barry.
Thanks, Chad before Suzanne runs through the numbers, we'd like to share a few examples that represent improvements we've seen and occupancy during the quarter and some of our larger markets. For example, our San Diego market comprised of 15 operations saw a rapid decline.
Klein and occupancy and the second quarter of 2020 and connection with high Covid positivity rates. During those three months, we saw occupancy dropped from 92% to a low of 83% and the third quarter our.
Our operations responded by developing innovative innovative approaches to confront these declines including strategic partnerships with upstream and downstream continue and partners and increasing clinical competencies to treat high acuity patients, including those that are COVID-19 positive.
Some operations added Covid wings, while others became COVID-19 dedicated facilities, enabling and an important offloading of strained hospital capacity.
And as a result occupancy rebounded nearly four percentage points during the fourth quarter up to 87% the San Diego market continues to adjust and while the recovery process doesn't always and allow for a smooth curve upward.
Our leaders' ability to rebuild census has proven to be an important indicator of our field driven leadership model success.
Likewise, our skilled nursing affiliates and Arizona a market comprised of 32 operations saw occupancy decline from second to third quarter from 81% to a low of 74%.
After working alongside their acute care partners and managed care partners to develop new strategies for operating and this new environment.
Occupancy has recovered to 77% in January with and accompanying all time high skilled mix of 46% and increase of 18% over the second quarter of 2020.
Our Arizona leader showed tremendous resiliency as they are forged through this recovery process. In fact, some of our most mature operations have returned to pre pandemic occupancies like Montecito post acute care and rehabilitation, a 222 bed campus and Mesa, Arizona.
Who are again, 100% full in spite of a 12 percentage point drop during the third quarter as case and surged.
Early in the pandemic, the Utah State Emergency response team and members of the largest acute care provider community chose milestone our collection of Utah affiliated operations to be their strategic partner and formulating a COVID-19 plan for post acute care they contracted with four inside affiliated facilities.
To ensure that all geographies within the state would have a preferred COVID-19 positive sniff provider.
City Creek post acute on 108 bed skilled nursing facility and Salt Lake City, Harrison point Health care rehab, a 63 bed recovery center and Ogden.
Or and rehab and nursing, a 120 bed campus, and Utah County, and Coral Desert rehabilitation, a 60 bed operation and St. George Utah, All are playing a pivotal role and the recovery and cure for Covid diagnosed patients across the entire state of Utah.
These contracts proved very successful and allowing hospitals to maintain debt availability, even during the height of the latest search by transferring COVID-19 positive patients, who didn't require and acute level of care to our designated skilled nursing facilities.
These facilities received extra training and specialized equipment and we're able to provide the latest medical and rehabilitative treatments. The model also prevented outbreaks and deaths and other facilities by allowing them to quickly transfer newly identified COVID-19 cases to our specialty facilities.
During the fourth quarter of 2020 alone over 720 Covid positive patients were admitted to these facilities. This model proved so successful that representatives from other western states reached out to Utah to learn from their model and some of them in turn contracted with ensign affiliated.
<unk> and their area and.
In addition to the clinical benefits our ability to specialized and these facilities stabilized our census by increasing our admissions and reducing unplanned discharges during a time when most providers occupancy has plummeted.
As we mentioned earlier, our San Diego, Arizona, and Utah leadership are showing us a realistic path that others can follow to grow occupancy during the pandemic and ultimately return to normalcy once the pandemic is over by strengthening existing partnerships and creating new ones and most importantly.
<unk> clinical capabilities and favorable outcomes are localized operating operating strategy will allow us to repeat these experiences across all of our markets.
With that I'll turn the time over to Suzanne to provide some more detail on the company's financial performance and our guidance and then we'll open it up for questions Suzanne.
Thank you Barry and good morning, everyone detailed financials for the year are contained in our 10-K and press release from yesterday and the additional highlights for the year and the quarter and crude the following GAAP.
GAAP diluted earnings per share for the year were $3 and <unk>.
Representing an increase of 87% over the prior year and adjusted diluted earnings per share for the year were $3 and 13 Sac.
And increase of 76% over the prior year.
GAAP diluted earnings per share for the quarter.
<unk>, which represents an increase of 67% over the prior year quarter and adjusted diluted per share for the quarter from Haiti and.
And increase of 33% over the prior year quarter.
Consolidated GAAP and adjusted revenue for the year with Q4 guidance and.
And increase of 18% over the prior year.
GAAP net income was $175 million per the year and increase of 86% over the prior year and $46 3 million per the quarter and increase of 69% over the prior year quarter and adjusted net income for the year with $174 6 million and increase of 75% over there.
Prior year, and $44 9 million for the quarter and increase of 34% over the prior year quarter.
Other key metrics as of December 31st include cash and cash equivalents of 230 book.
$6 million.
And $342 4 million of availability on our revolving line of credit and we.
We maintained our lease adjusted net debt to adjusted EBITDA ratio of two eight times as of year on <unk>.
Kris on one seven and seven times from last year.
Also on cash flow from operations for the year with $373 4 million. These improvements are attributable to growth in our EBITDA from same store.
<unk> and newly acquired operations as well and enhance cash collection.
As Todd just mentioned, we also earned 94 assets 74 of which are unlevered with significant equity value that provide effort, even while that quickly.
And March 2020 per federal government and began to undertake numerous legislative and regulatory initiatives.
Designed to provide relief to health care providers during the COVID-19.
And creating.
A waiver of a three day to day.
And the cares Act funding, which provides among other things direct relief fund and advance payment from Medicare, which Brad totaled approximately 105 nine.
As Barry mentioned, we have returned all of the provider relief fund under the cares Act, which as of January 2021 totaled $147 million and.
In addition, the cares act temporarily suspended the automatic 2% reduction of Medicare claim reimbursement.
And is now sequestration from.
The period from May one 2020 through March 31, 2021.
The suspension of sequestration path and we'll continue to have a positive impact on our revenue and depending upon how the pandemic affects our Medicare census.
The federal government also increased by six 2%, which depending upon the state for providing increased and Medicaid reimbursement.
A temporary increase in funding and the timing and the payments vary by state.
All other states and which we operate have a pre standing with the latest COVID-19 surge and as anticipated that states will continue to fund and Medicaid program to coincide with the and at the Federal Day clinic, David and latency.
As Barry mentioned, we are reaffirming our 2021 and your guidance to $3 and 44 from <unk>.
$3 from 56 cents per diluted share and annual revenue guidance of $2 62 billion to $2 69 billion.
The midpoint of the 2021 guidance represents and overall, 14% increase from our 2020 capital, which we raised twice during the year.
For 2021 guidance is based on diluted weighted average common shares outstanding of approximately 57 million and tax rate at 25%. The inclusion of acquisitions closed on the first half of 2021.
Exclusion on losses associated with start up operations, which have not yet stabilized the inc.
Inclusion and anticipated Medicare and net of pooled reimbursement rates and the provider tax group.
Recovery on Kevin 19th and dental with the primary exclusion coming from stock based compensation.
Additionally, other factors that could impact quarterly performance include variations in reimbursement systems delays and changes and say, Patrick seasonality and occupancy and skilled mix.
Group that the general timing on our census, and staffing the Saar.
And part of our acquisition activities variations and insurance accruals the surge in COVID-19 and perfect.
And <unk>.
And with that I'll turn it back over to Barry Barry.
Thanks, Suzanne we want and again, thank you for joining us today and express our appreciation to our shareholders and their confidence and support and we recognize the heroic efforts of our nurses therapists and other front line care providers, who are courageously face this pandemic and provided life enriching care to our residents.
Especially during the very difficult COVID-19 surge that our nation faced during the fourth quarter.
And we're also very appreciative to our colleagues and the service center, who are working tirelessly to support our operations and enabling us to succeed in spite of the challenges we faced thank you from making us better every day.
Michelle we will now turn to the Q&A portion of our call.
Ladies and gentlemen, if you'd like to ask a question. Please press Star then one if your question has been answered and you'd like to remove yourself from the queue Preston and Keith.
Our first question comes from Scott Fidel with Stephens. Your line is open.
Hi, Thanks and.
Good afternoon, everyone.
The first question and actually just wanted to just follow back up on Suzanne was talking a bit about some of the additional flexibilities and supplemental rates that had been provided during.
The public health emergency and just interested and how youre thinking about some of the changes that have played out EBIT. Since you had provided you are.
Initial 2021 guidance.
Between the year and spending bill.
Agreement and then also weighted job with the later net divided administration and sent out to the states around <unk>.
Continuing the snap so obviously it looks like now the enhanced maps may continue through the end of the year.
We didn't know that when you had it.
<unk> provided guidance and then.
Some of the other things too like three day to day waivers and other things. So just interested and in terms of how youre thinking about that and your guidance now relative to when you had initially provided that.
Scott that's great question and I think when we initially provided that we knew and going to GAAP and <unk>.
Sheila with that.
And that first quarter and and.
At that time, we also had hit Q4 COVID-19 ways that occurred and so really when you have day and Kevin weighted that occur.
A lot on that additional asked and that that's out there.
And by the additional supplies that we are utilizing to treat COVID-19 positive patients and so and.
We're excited that it could continue to the end of the year.
And I think that debt.
Up in arms and debate right now with the gathering we're sending that letter on average Washington to see if it does actually continue and.
But we think it.
It could help us as we go throughout the year and realize it got some of those long term and additional requirements or other things that could come with that money as well, which.
John debate and tax.
Got it.
And important theme and remember about that funding is that we're really only utilizing that funding to offset actual costs.
No.
We don't recognize it unless we need it so it's one of those helpful things that our.
<unk> at is.
And was.
As the costs associated with the pandemic start to ease our use of the net funding would also ease.
Got it.
And from my second question.
Interested if you can maybe just address <unk> rapid use just as it related to your.
Your prior revenue guidance and I know that.
The timing of deals being closed certainly influenced that and the fourth quarter box.
And I'm just interested and in terms of as you take the <unk> revenue is and then think about your M&A pipeline that you've updated us on how that all sort of rolls forward into.
Your thoughts around your 2021 revenue guidance range, which I know you did reaffirm.
And the earnings release.
Yes, Youre correct.
And putting that guidance out there for 2021 of the things is that we did expect from those acquisitions that ended up closing in Q1, 'twenty and 'twenty, one to curve and Q4.
And Covid, we had quite a few.
Operations that were also shut down for admissions as a result of that turbocharge and Q4, so that in and Mcdonald's and all of that later, but as we roll into 2021, and we look at where we're at with 2021 look at the acquisitions on to.
To date and pipeline that we have and.
And to have and included in the guidance the first half of 2021 from.
And I'm confident with what we've put out there for 2021 guidance.
And Thats why we did reaffirm that.
Got it and just Walmart for me and then I'll get back in queue.
And just interested and I appreciate the disclosures around the real estate portfolio and I'm sure all of us will be planning on tracking that.
Is there any guidance you can give us just on on how to think.
About if we wanted to model that out going forward.
And how you how you may suggest doing that for example, and you've got the 90 for real estate assets. Currently is there like and annual target that you have in terms of how many.
On assets, you may look to add or any types of trends that you can provide to us to think about modeling that bad debt and real estate portfolio and now that youre going to be disclosing that after segment.
Yes.
Yes, Thanks, Scott I appreciate the question.
I guess related to your question around.
Growth goals and anticipated acquisitions.
We are very.
Careful to not look at it that way.
We don't sit around before the year starts and say, okay. We want to acquire X number of assets this year.
And we are very much.
More kind of opportunistic and situational about that we were going to be disciplined and grow and it makes sense to grow and and some years that might mean lighter growth is and you are.
You have a pandemic like last year and and other years and when prices are rising and our leadership is strong.
We can be a lot more aggressive and have been and the recent past.
So ill.
We're definitely going to.
Grow and when it makes sense to grow and it won't have sort of a smooth curve to it for sure.
Non intentionally so.
And I know that doesn't help you with modeling but.
We'll try to guide you and give you some sense for.
And what we think the pipeline looks like and those sorts of things in terms of modeling and looking at that segment I guess the first point is we don't think that.
And.
And it's anything that should.
Shift or adjust your modeling sort of R. R.
Our typical.
Operating business and.
And we really look at this as additive and it's and additional business segment that we have and should really be something that look too. In addition to all the opportunities we have as an operator.
So.
I think the.
Again, this is something thats, new that will continue to add more detail over time, but but shouldnt really adjusted all the.
The growth prospects and everything else, so that we normally look to it and our and our traditional business segment, so through that and anything to add to that yes, I think Scott great question and I think the day information that we provided and.
This quarter again, Mike had mentioned the first time, but we're hopeful that you'll see that cash and this is how much they're charging themselves. This is how much they're charging and third parties. Okay. Now you have a $61 million run rate business.
No debt, we have 97 assets and to now instead of just having net book value that you have visibility and insight to you also have the value and what we're putting through on the P&L and so on.
And our thought is that you guys can use that as a jumping point from there to actually transform and something Thats really book value based into something that has more of an evaluation based approach.
And help translate that model over in.
And what you guys are putting out.
Okay, Alright, great and I appreciate the thoughts thanks, Thanks Scott.
Our next question comes from Frank Morgan with RBC capital markets. Your line is open.
Yes.
Good afternoon, everyone.
I guess I'd like to start with.
Clearly the very strong skilled mix in the quarter.
And I.
I know you did have the waivers of the three day stays and those kind of things, but can you.
Is there a way to kind of.
Pencil around how much of that growth and skill mix. It was a direct result of being able to get people out of hospitals quicker with less than three days just curious how much of a factor that would it be on and driving a really strong steel mix.
If I can I'll start Dan and you can maybe.
And that's some color.
It's a significant benefit and the quarter for sure and our ability to.
Have the kind of on the unnecessary transition of care at a time like this has been tremendously beneficial for outcomes and you can imagine on already vulnerable patient.
Debt get sick to send them to a new.
Our new.
Setting and then back after just what usually amounts to a three day observation stay and maybe maybe a little bit more if they're really acute.
And then coming right back as the big disruption for the individual from a care standpoint so.
We have been utilizing the waiver for patients that need immediate intervention isolation.
And then further treatment.
Kind of avoid debt so specifically on the Covid front its been really beneficial from from that standpoint, and as you can you can hear we treated over 5000 patients COVID-19 positive patients and the quarter. So so from that standpoint alone and some of those are new admissions. Some of those are scale and place we don't really break that out.
<unk>.
But so from that standpoint, Frank it's been it's been hugely beneficial and necessary during this time.
Our hope is that CMS sees the benefits from this on an ongoing basis because there. It's also beneficial for non COVID-19 patients that need.
Triaging and intervention.
And that can be done without a transition of care and utilizing things like telemedicine and and leveraging your medical director and their knowledge and training.
With with.
With trading skilled patients it becomes a situation where you can accomplish a lot with with.
Very little disruption.
For the patient so we don't we don't necessarily break that out.
And quite frankly, we don't track it.
Internally, how much is this versus that but but.
There is a.
Transition happening now with the with that waiver there are some nuances to where we won't necessarily be utilizing it for.
And for certain aspects of Covid treatment.
I think youll see a kind of a waning from that standpoint with how much.
And what our skilled mix looks like going into the beginning of the quarter, but.
And we're encouraged by the retraction were getting with our managed care partners as well.
We've seen we've seen that occupancy.
Grow.
Substantially sequentially since the beginning of the pandemic.
As managed care providers are starting to function during the pandemic rather than prevent their members from getting treatments and and and.
And procedures. So so we're encouraged that there is kind of a shifting more and more of a normal skilled mix that you've typically been used to seeing us.
And we anticipate that that will start to.
Become more normal over the over the course of the next few quarters, Yes, and I would just add to that remember that managed care has always had the ability to not utilize the three days day and the hospital and so when you see those numbers that we're seeing on the managed care front.
And it gives us some of the confidence that we have with regards to skilled mix and thank you Sir.
Yes, good point and.
And I guess staying on.
The guidance and on modeling from our perspective.
And in a typical year.
First quarter fourth quarter and first quarter.
Usually better quarters.
Relative to the second and third but.
How should we think about just the cadence the sequential cadence this year I mean, it sounds like.
Some of the acquisitions that you thought you would get in the fourth quarter, maybe they rollover and the first quarter second quarter, but.
I guess any color there that you can help us kind of think through that process, and then and I guess from a <unk>.
Starting point from market and see that sounds like maybe just.
Using a and.
And on average occupancy and the fourth quarter may not necessarily be a good way to do it given the fact that.
And like your occupancy is they have recovered later, but just any color there that'd be appreciated. Thanks.
Yes, it's a great question Frank honestly.
Regardless and the pandemic Q4, and Q1 tend to be seasons, where we see more acute patients.
And I don't think getting a or anticipate that that will change.
That said, obviously, the cadence might might be a little bit.
Different than normal this year, though.
I'm not sure how much more different and it will be I can tell you that from our perspective.
Our traction with the vaccine and seeing the infection rates decline, especially with our patient population fairly rapidly.
They make us more and more.
And more positive and then really we've ever been and the path at least couple of quarters about.
And the potential for normalcy to to kind of.
Return.
Return probably faster than I think we originally expected and given the examples we highlighted today, but the examples we we mentioned represent almost a third of our portfolio and seeing how occupancy can rebound as quickly as it has and did.
And those markets.
And it gives us a lot more assurance.
Okay. Thank you.
And there are no further questions I'd like to turn the call back over to Barry for any closing remarks.
Okay.
Yes. Thank you everyone and for your questions are grateful for our share shareholders and our employees for joining us today and have a great day.
Ladies and gentlemen, this does conclude the program you may all disconnect everyone have a great day.
Okay.
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