Q4 2020 Addus Homecare Corp Earnings Call
Hello, Ladies and gentlemen, and welcome to the Atmos Homecare Corp, fourth quarter 'twenty 'twenty earnings Conference call.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session.
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As a reminder, this conference call is being recorded.
I would now like to turn the conference over to your host.
Anderson. Please go ahead.
Good morning, and welcome to the other Homecare Corp, fourth quarter and 2020 earnings Conference call. Today's call is being recorded to the extent any non-GAAP financial measure is discussed in today's call. You will also find a reconciliation of that measure the most directly comparable financial measure.
Calculated according to GAAP by going to the company's website and reviewing yesterday's news release.
This conference call May also contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, including statements among others regarding add as expected quarterly and annual financial performance for 2021 or beyond.
For this purpose any statements made during this call that are not statements of historical fact may be deemed to be forward looking statements without limiting the foregoing discussions of forecast estimates targets plans beliefs expectations and the like are intended to identify forward looking statements.
You are hereby cautioned that these statements may be affected by important factors among others set forth in added filings with the Securities and Exchange Commission and its fourth quarter and 2020 news release and consequently, actual operations and results may differ materially from the results discussed in the forward looking statements.
The company undertakes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise.
At this time I would like to turn the call over to the company's President and Chief Executive Officer, Mr. Dirk Allison. Please go ahead Sir.
Thank you drew good morning, and thank you for joining us for our 2024th quarter earnings call with.
With me today are Brian Poff, our Chief Financial Officer, and Brad Bickham, our Chief operating officer.
As usual I will begin with some overall comments and then Brian will discuss the fourth quarter results in more detail.
Following our comments, we would be happy to respond to any questions.
As we've been saying for the past 11 months. The pandemic continues to create many challenges as we experienced a substantial new surge of Covid cases, beginning midway through the fourth quarter of 2020.
While I expect the environment to remain operationally challenging over the next several months. We are encouraged by the progress being made with the Covid vaccine rollout and the steady reduction in Covid cases since the peak in late December.
We look forward to the time when this pandemic is no longer a significant disruption to our operations.
In spite of the ongoing pandemic related challenges my optimism about the future of both the homecare industry and add has remained strong.
I'm, especially proud of our dedicated team of leaders and team members that have demonstrated their ability to meet our mission and execute upon our strategy. This.
This past year has been a unique challenge for our country and I believe all of our Atlas team has been a vital part of keeping our elderly citizens safe.
As you saw with the financial results, we announced yesterday, we continued our solid operating performance in the fourth quarter of 2020.
Our revenue for the fourth quarter was $196 million as compared to $192 4 million for the fourth quarter of 2019.
Adjusted earnings per diluted share for the fourth quarter of 2020 was 82 cents up from 73 for the fourth quarter of 2019, despite the impact of COVID-19 on revenues during our latest quarter.
Our adjusted EBITDA for the fourth quarter of 2020 was $20 9 million as compared to $18 8 million for the fourth quarter of 2019, an increase of 11, 6%.
Our adjusted EBITDA margin increased to 10, 7% for the quarter up from 10, 1% sequentially.
During the fourth quarter of 2020, our revenues continued to be adversely impacted by the COVID-19 pandemic with a decline of 2% to 3% from our pre Covid 2020 run rate.
As was the case in our third quarter of this year. This reduction occurred to varying degrees in all three segments, our business, but particularly in the New York personal care market and in our new Mexico Hospice operation, where we still see a number of facilities limiting access, which hinders our ability to work with new patients.
As a result of the recent increase in Covid cases during the last couple of months of 2020, and the ongoing Covid precautions for our caution is in place. We estimate our first quarter 2021 revenues will continue to be negatively affected by approximately 2% to 3% as compared to our pre pandemic.
Right.
For the full year 2020 on.
Our revenue was $768 $4 million as compared to $648 8 million for 2019, an increase of 17, 9%.
Adjusted earnings per diluted share for 2020 was $3.08 from $2 50 for 2019, an increase of 23, 2%. Despite the 10 month impact of COVID-19 on revenues.
Our adjusted EBITDA for 2020 was $76 $9 million as compared to $58 $7 million for 2019, an increase of 31%.
Our adjusted EBITDA margin increased to 10 per cent for all of 2020 up from 9% for 2019 as we continue to see leverage from our increasing size along with the growth in our higher margin clinical services.
Our fourth quarter 2020, operating cash flow exclusive of.
The government stimulus advance was solid at approximately $24 million.
During the fourth quarter of 2020, many other states, where we operate have continued to prioritize timely payment for homecare providers. We continue to be grateful to these states into R. M. C. O partners, who have remained committed to making profit I missed to providers, even with the challenges of the virus.
On December one 2020, we closed on two additional acquisitions Queen.
Queen City hospice, a large provider of hospice services in Ohio, and sunlight home care, a personal care provider in Tucson, Arizona.
The integration of these operations into Arris has been proceeding consistent with our expectations and on schedule.
Both of these acquisitions will help us expand our services into existing markets with Queen City hospice, adding hospice services to our Ohio personal care presence.
I want to again welcome all the team members from Queen City and sunlight to add his family.
We continually monitor legislative activity in both Washington, D C and our various states relative to each of our service lines on.
Obviously, the Covid relief legislation expected in budget reconciliation.
Is projected to be significant and providing general financial relate to states suffering revenue losses from the pandemic.
We are encouraged by the provision included in the proposal that would provide an additional 7.35% in federal matching funds, specifically for Medicaid home and community based services.
Increasing the federal minimum wage is another proposal we are watching closely that may or may not become law regardless.
Through our various trade associations, we are developing proposals focused on making sure that states have the necessary resources to raise reimbursement rates commensurate with any rise in the federal minimum wage.
And we were extremely pleased to see the congressional budget office to our knowledge for the first time score the cost impact on minimum wage increases on Medicaid and Medicare programs.
On the state level, we were disappointed that Illinois delayed the scheduled January one 2021 rate increase until April 1st of this year. However, the Illinois Governor introduced his fiscal 'twenty 'twenty two budget on February 17th and this rate increase is included.
Effective April one 2021.
The Governor also included funding in his budget for an additional rate increase to offset the upcoming July 1st $1 minimum wage increase in Chicago. However, this increase is scheduled to be delayed six months, becoming effective on January one 2022.
This is the last scheduled minimum wage increase for Chicago.
I also want to update you on recent developments pertaining to our New York business.
We currently operate two types of personal care and the state P.
P C a which is a type of personal care services that represent the majority of our overall revenue and secondly, C. D. Pap, which is a special program, where we act as the fiscal intermediary for certain individuals who hire and employ their own caregivers.
In New York City Pep, we are technically not considered the employer of the caregiver, even though they are paid as W. Two employees as the client is responsible for hiring training scheduling and direction of caregivers.
Recently, the state announced the winners of an open bidding process that had been underway for a number of months related to the C. D pack program.
On an effort to reduce the number of providers and reduce cost.
Even though we are a relatively large provider of CDK pet Cat C. D path services in the state we were not selected as the winning bidder as part of this process.
We know other large providers who were not selected.
Our current revenue from this services approximately $52 million annually.
At that time at this time it is unclear whether the selected parties will have the ability to fully meet the program's needs.
We believe that any transition of clients as a result of this process will not place take place during the next six to 12 months during which time, we will continue to explore our options, including a recently filed a protest which may allow us to continue to provide these services.
Let me now turn it back to Covid for a minute.
In late September we began to experience an increase in the number of reported suspected positive COVID-19 cases for both our patients and caregivers.
The weekly average number of confirmed or suspected cases more than tripled between September and December.
Our weekly case numbers began to particularly accelerate from early November to the middle of December.
Our peak employee cases occurred mid December and have continued to trend lower each week since that time.
This surge of the pandemic affected our visits particularly in our personal care segment, but also to a degree in our clinical care surface loans.
Our personal care segment was primary impacted on the substantial increase in personal care staff, who are subject to a mandatory 14 day quarantine period.
Our clinical service lines were impacted due to a further tightening of facility access restrictions and hospitals limiting elective surgeries due to increased COVID-19 related hospitalizations in certain hard hit communities.
For the fourth quarter of 2020, our personal care same store revenue growth was two 6%.
This growth rate was negatively affected by the increase in Covid cases, we experienced across our markets.
This new surge of the pandemic led to a number of challenges for our company.
As discussed above during November and December we saw a significant increase in the number of our caregivers who had to enter into quarantine.
We also saw client call offs increase again, starting in November with this increased lasting until the first week of February.
Our caregiver hires.
For August through the for the August through October timeframe were up approximately 9% over the same period in 2019.
However, during November and December.
When we saw the increased virus counts are hiring slowed to where we were down one 3% versus the same two months in 2019.
While our January 2021 hiring levels were still down slightly from 2020, we did see a nice sequential increase from the hiring numbers. We saw in December of 2020.
For the fourth quarter of 2020, our hospice same store revenue decreased 10, 6% as we saw our average daily census day decreased 13, 5% year over year, primarily due to continuing facility access issues in our New York, Mexico Hospice.
Programs with.
With continued limits on access to the Sunday based settings, such as assisted living facilities on skilled nursing facilities on.
Our team has encountered challenges indentified and working with new patients who need to hospice services.
We did however experienced sequential same store hospice admission growth of approximately 7%.
Due primarily to an increase in our non facility referral base.
Our home health same store revenue decreased by eight 2% year over year.
We were having our best month of the year in October when we experienced the increase in Covid cases, and saw some of our new Mexico hospitals resume holds on elective surgeries.
Since the beginning of 2021, our home health admissions have increased steadily with this favorable trend continuing into February.
Our acquisition pipeline and liquidity position remains strong and while we are being appropriately cautious we continue to believe that we can close additional acquisitions. During the next several months, we are primarily focused on acquisitions, which strengthened our coverage in existing markets or add clinical services to our personal.
Her business.
On purchase multiples for clinical services remain high we will continue to pursue transactions transactions that bring both revenue and operating synergies to address.
As I look back over the past 11 months I am proud of our team as they have continued to do a tremendous job of living our mission. During these extraordinary times.
Our caregivers have been able to positively affect the trajectory and impact of the COVID-19 pandemic I continually serve the needs of our consumers and patients in their homes.
All caregivers in all segments of health care deserve our appreciation for their commitment to patient care I, especially want to thank the <unk> team for continuing to put patients first.
Before I turn the call over to Brian I want to remind our team on the value of our services, while the Covid virus is still a challenge for our country as well as the world we need to continue to live our mission and values, while serving our consumers and patients each of these individuals need to be in their homes, where we can help to keep them.
From this virus, while providing much needed care.
With that let me turn the call over to Brian.
Thank you Derek and good morning to everyone.
<unk> had another solid financial performance in the fourth quarter of 2020 and for the full year continuing to demonstrate consistent profitable growth. Despite the ongoing challenges and disruptions related to the COVID-19 pandemic.
As Dirk noted total net service revenues for the fourth quarter were $196 million. The revenue breakdown is as follows.
Personal care revenues were $164 $4 million or <unk> 83, 9% of revenue.
Hospice care revenues were $27 $6 million or $14 one per cent of revenue at home health revenues were $4 million or 2% of revenue.
Our revenues for the full year 2020, $764 $8 million up 17, 9% from the prior year with contributions from both organic growth and acquisitions and we continue to execute our growth strategy with favorable results.
Our overall volumes were fairly consistent with the third quarter and continued to trend modestly below pre COVID-19 levels.
Over we have a strong business model in place and believe we are well positioned to meet expected demand, especially as vaccines are more widely distributed consumers become more confident in a less restrictive environment and volume has returned to historical levels.
Our results also reflect the incremental benefits of the for acquisitions, we completed in 2023 of which closed on the fourth quarter.
Other acquisitions completed over the past two years have combined annual total revenue of approximately $214 million.
We continue to evaluate and pursue additional acquisition opportunities and have a robust pipeline of potential transactions that meet our target criteria.
Going forward, we believe the market landscape in 2021 will be advantageous for us to enhance our current operations, while looking to complement with clinical services and expansion into select attractive markets.
Other financial results for the fourth quarter of 2020 include the following R.
For gross margin percentage was 32% compared with 29, 9% for the fourth quarter last year, we continue to benefit from the increased mix of clinical services. Most recently with our Queen City acquisition in December.
Well, we have been impacted by the recent increase in Chicago minimum wage without an offsetting reimbursement increase we anticipate the recovery of that version with the upcoming on April one statewide rate increase in Illinois.
G&A expense was 22, 6% of revenue for the quarter up from 27% last year, primarily related to higher M&A expenses associated with our recent acquisitions. Adjusted G&A expense was 19, 5% of revenue up slightly from 19% sequentially with a higher mix of skilled business with a higher G.
On a profile.
The company's adjusted EBITDA increased $29 million for the fourth quarter of 2020 compared to $18 $8 million on the fourth quarter of 2019 adjusted.
Adjusted EBITDA margin was 10, 7% an increase from nine 8% for the fourth quarter of 2020 and up sequentially from 10, 1% in the third quarter.
Adjusted net income per diluted share was <unk> 82 for the fourth quarter up from 73 in the prior year quarter.
The adjusted per share results for the fourth quarter of 2020 exclude the following <unk>.
COVID-19 expenses of <unk> M&A.
<unk> expenses of 15 cents restructuring and other costs of three cents and.
Noncash stock based compensation of 10 cents.
Our adjusted per share results for the fourth quarter of 2019 exclude the impact of the retroactive, Illinois rate increase 12 cents.
M&A transaction expenses of eight cents.
Restructuring and other costs of <unk> and noncash stock based compensation of eight cents.
Our tax rate for the fourth quarter of 2020 was 22, 4% consistent with our expectation.
On a recent legislation and extension of certain tax benefits. The company has experienced historically for 2021, we continue to expect our tax rate to remain in the low to mid twenties.
Dsos were 68 days at the end of the fourth quarter of 2020, compared with 55 eight days at the end of the third quarter. We continued to see consistent payments from the majority of our payers with home and community based service providers being prioritized and many of our markets.
Our fourth quarter net cash provided by operations totaled $36 $1 million and $109 4 million for the year, a new annual record for Otis.
As Dirk referenced we did apply for and receive provider relief funds during the fourth quarter without which our cash provided by operations would've been approximately $24 million for the quarter.
We intend to utilize the Medicaid based relief funds to benefit our frontline team as they have continued to work tirelessly even in the midst of this pandemic.
At December 31, 2020, the company had cash of 105 hundred $45 $1 million.
Third $96 $6 billion of bank debt and $112 $6 million in availability under our revolver.
Even after our most recent acquisitions, we continue to benefit from low net leverage and remain well positioned to continue to execute on our acquisition strategy.
This concludes our prepared comments this morning I want to thank you all for being with US I'll now ask the operator to please open the line for your questions.
Yeah.
Thank you.
Ladies and gentlemen, if you have a question at this time. Please press Star then the number one on your Touchtone telephone. Please make sure that you are on a landline when asking your question if you're on a speakerphone. Please pick up your handset before asking your question.
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Your first response is from Matt Borsch of BMO capital markets. Please go ahead.
Yeah, I was hoping that you could talk a little bit more about if you are able to about.
About <unk>.
The contract that you were and.
And other large providers were.
Excluded from either a characteristic to those that.
Either a new or continuing with the program as opposed to those.
That were shut out and how do you would you have any thoughts on how you think the protest process will go from here.
You know, we don't know of any characteristics. Some of the providers that were selected quite honestly are quite small and have very little business. So it's a little bit of a black box of how the formula was undertaken we have requested.
Information from the state so that we can better understand what went on we have not yet received that information.
As far as the protest you know we believe that enough people are protests that have not received on the contract.
There may be an opportunity for the state to re look at how they did it but from our standpoint, we're not just stopping with the process. We're looking at other things.
Its not honestly its not extremely profitable business for us in fact, it's probably one of our lowest margin businesses across the country.
But it is something we will continue to look at as an internal team.
<unk> talked to the state about and see what's the best direction for the company going forward.
No that makes sense, maybe just one more question if I could.
On the M&A pipeline, particularly on the personal care side.
Hi.
Thank you.
Maybe it was across all three segments that you had on.
Some good opportunities in some of that for me out of difficulty.
T continuing difficulty zone.
The smaller organizations to manage.
Pandemic and maybe that was worsened by what happened with the virus surge in November December.
Yeah, I think Matt. This is Brian I think we've seen especially on the personal care segment, you know several opportunities of various sizes on a couple of factors. There I definitely think it's been a little challenging for folks to manage through on a smaller setting in this environment. We are also seeing you know more states, particularly this year moving into E V, which I think we've talked about on the past.
Yeah, a lot of those folks have kind of moved that can down the road just a bit on but a lot of other states. We're starting that transition process, which I think is making business for some of the smaller providers a little more difficult for a little more likely to be attractive for us.
Got it thank you.
Thank you for your next response is from Brian Ken.
Ken <unk> of Jefferies. Please go ahead.
Hi, Good morning. This is Jack slevin on for Brian. Thanks.
Thanks for taking my questions.
First one.
On the New York State budget.
When did you know we've been getting a lot of them questions from investors wanted to see if you guys had any thoughts on the budget overall, what the impacts from that proposed cut could be and then also if you've seen any sort of pass through or impact from the retroactive cut a day managed care plans.
Yeah, Yeah, Jack we are.
Trying to to tell you.
What's come out of the New York budget is really difficult I am not even sure debt.
Everybody understands what is in there.
At the state level.
Certainly from the Medicaid standpoint, I think it's talking at a potential 1% additional reduction in Medicaid.
Based on we'll see if that comes through.
You know for.
From our standpoint.
We are just trying to make sure that in that state. We are operating as efficiently as we can because of the challenges we see with the overall status financial status of the state.
Yeah. This is Brad we have not seen any impact to the rates are currently.
Right now we just recently went through contract renegotiations and payer rates with most of our large providers regarding minimum wage pass throughs and those went successfully so.
So we're not exactly sure how that will if it all passed through to us.
Okay, Great. That's helpful. And then one more for me just on that day employment market outlook, particularly for personal care I think over the past couple of years, we've we viewed.
The rate limiting factor for growth in that personal care segment is really on the supply side of things just wondering you know if there's.
Any color you could give on the the outlook for that end point in market incremental for some other commentary you gave on on what hirings looked like recently.
Yeah. This is Brad again.
Certainly on the with respect to the other.
Appointment, we've done a pretty good job recruiting we saw some significant decline in November and December due to the Covid surge number started coming back up in January have continued to increase slightly into February when we're looking at long term.
You know with the elevated unemployment rates I think there's a there's the potential there now theres going to be some dampening effect of that is with respect to the proposal on the $400 unemployment benefits. That's currently out there currently proposed so that may in the near term caused some.
Challenges for us, but I think once that expires there should be some good opportunities for us to ramp up recruiting.
Yeah.
Great Thanks, and congrats on a good quarter.
Thank you.
Thank you for your next response is from Scott Fidel of Stephens. Please go ahead.
Hey, guys. This is a killer bees on for Scott.
I'm just wondering if you could help size the impact from the Illinois rate increases for 2021 on an annualized basis.
And then just given that you were able to absorb the minimum wage increases in the second half 'twenty without much margin impact I'm wondering how we should think about the potential margin impact from the rate increase for 2021, given that there is the Chicago minimum wage like coming down over the summer. So we're just wondering if this is kind of more net neutral or if theres a directional margin impact from other.
Those two dynamics.
Yes, I think we expect a similar to prior years and we've had a similar dynamic in play when we do get the statewide rate increase keep in mind, we saw a higher minimum wage only on our Chicago market. The rate increase we're going to get is gonna be statewide and at that time, we will.
On a cyclical negotiations with the union on all other non Chicago workers and those wage rates. So typically how we've seen those trans transpire on how we would expect it to in the next couple of instances in April other in January of next year as an increase in revenue with a corresponding kind of typical margins that we would see in that market. So we feared for us I believe in.
On the past is the rate increase we expect to get on April should be on an annualized basis. You know just north of $20 million on additional revenue and then some margin on that so the rate increase expected for January of next year would be similar in profile.
That's it for me thanks, guys.
Please go on you.
Your next response is from John Ransom of Raymond James. Please go ahead.
Hey, good morning.
Derek I'm, just curious where you see market multiples now for particularly homecare assets, where there just hasn't been a lot of M&A.
M&A recently.
Yeah John.
Certainly it's no surprise for anybody that's followed a health care services that the multiples.
For preclinical service, particularly have been increasing and been quite high I mean, if you look at the hospice multiples they've been.
12, 14 or so.
On an adjusted run rate basis.
We suspect.
Debt home health is probably near that maybe slightly below but again, there's not been as many quite as many home health deals announced.
At this point in time, but certainly the clinical services are in that 12 to 14 plus range. It at least at this point on personal care.
Again personal care has been a little bit quiet.
The last six to nine months.
We have always targeted our personal care the smaller deals that six to seven times, maybe the larger deals eight times eight and a half times.
Our guess is you know those multiples will probably still pretty common.
Common where we think there'll be we don't think day has been a great uptick in the.
Personal care market as far as valuation at this time.
Right.
Second question just on your you know obviously labor is a perennial.
The issue I mean, just something you've got to manage through every year are you able to.
Assist with getting your personal caregivers a vaccination.
Or are they kind of kind of on their own or from that standpoint.
This is a this is brad.
Great question, we have assistance from the standpoint, we've offered a stipend for them to incentivize them to get both doses of the vaccine, that's going pretty well, but as far as being able to schedule for them. That's been challenging our what we have done is blasted out information as we get it to.
City of vaccines, and how to register and that sort of thing and I'll also put out a fair amount of educational materials to help them understand the vaccine the safety of it the efficacy of it.
And then some a couple of markets, New Mexico, mainly where we have us skilled services that are.
Located co located in the same buildings as the personal care. They have participated in some drags through vaccinations.
And do you have an estimate on what percentage of your workforce has been able to be vaccinated.
You know, it's it's I wish the numbers were greater I mean, right now we.
We don't really collect that information until they get that second dose and they submit their verification for payments. So it's going a little slower than we would like but you know.
At least we are seeing steady progress.
And I would guess I mean given.
Not majority, but just the prevalence of family on family.
Debt less of an issue in aggregate for you than say for home health.
Personal care versus home health.
And on the falling down I'm guessing, but less of an issue.
I mean, that's probably correct I mean, certainly on the skilled side when you are.
Providing services in a facility setting that's something that they're going to be looking for so we have certainly been promoting and encourage younger folks on the skilled side to get vaccinated quickly. They also have the easy easier opportunities there and that the first tier folks to get vaccinated. So we're seeing a higher percentage on that.
Skilled side, but I agree with you on the personal care side.
Talking about family caregivers is you know is probably not as.
That's a critical because until everybody gets vaccinated in the home.
Right.
And I know you've got operations everywhere, but did the Texas weather issue debt.
The day ripples into your operations are.
You guys are all okay and had water empower all that stuff that look terrific, but did that cause any issues. This quarter that we should do it.
Yeah.
Fortunately in Texas, we have just the skilled services. So they werent as impacted from you know as a personal care would be that being said, Texas certainly got the lion's share of the headlines are related to the storm, but we did see some impact and you know, particularly downstate, Illinois some of the more rural markets that we serve that also got.
Hit hard with the weather.
Gotcha Okay.
Okay. Thank you that's it for me.
Okay.
Again to ask a question. Please press star one on your telephone keypad.
Your next response is from Mitra from Paul He's got other Sidoti. Please go ahead.
Yes, hi, good morning, and thanks for taking the questions for.
For us personal care business, certainly held up well despite the pandemic, but on the hospice home health side those lagged a little I was just wondering how comfortable are on a constant you are in terms of resumption of organic growth in those segments as we've called it this year and beyond.
This is Brad.
We certainly saw the more significant impact on the hospice in the home health and first off on the home health. These are other business you know our assets are primarily located in new Mexico.
Hit pretty hard with the surge we saw some other hospitals there curtail elective procedures in the November and particularly more on the December timeframe, what we have seen on home health actually is a pretty good.
Back in January and February.
With admission volume, so feel pretty comfortable on the home health side with respect to hospice.
We've looked at the data you know several different ways and you know even though we've had you know good.
Good admissions sequential admission growth between Q3, and Q4 and we've actually seen that trend continue into January and February.
You know I think there's a lot of it is short length of stay patients and when you look at the data we've seen R.
Length of stay.
Particularly with the you know we look at the patients that are on service for less than 30 days.
That percentage has increased but even within that segment. We've seen the average length of stay for those decline a couple of days and it's going to take a while to a little while to see that trend reversed that I think will have.
And impact on the ADC I can tell you January ADC stay.
Stabilized for.
We're a D. C has ticked up over January so we're seeing an encouraging steady increase but it's going to probably take a little while to get back on track on the hospice side I would look more to the second half of the year.
For kind of getting back to normal.
Okay, that's very helpful. Thanks.
Then on the acquisition front dark I know you mentioned you know you have a really strong pipeline across all the segments. I was just curious if is there.
Gonna be a greater emphasis in terms of entering a new geography, so to speak or.
Before the consolidate in terms of the existing markets at this point.
No Mitra R.
Our real focus is strengthening the markets in which we currently operate.
If you look at the number of states I believe its 23 now.
A couple of very small states.
Consolidated that business back into other markets.
Our goal going forward is to take those states, which we operate and we want to drive hopefully eventually three levels of care in those markets and try to backfill and do that with our acquisition strategy now it doesn't mean that if we had an opportunity in a substantial way to enter into new market, where we felt we could then get.
Two two or three levels of care in that market and we would certainly look at that but you can for most of what we're looking at today, it's more on the markets and where we are currently operating.
Okay. No that's great and then finally I'm just going back to New York are do you see that sort of a one off or potentially a risk with maybe some other states adopting similar approaches in being to you potentially.
Being locked out for some of these on contracts.
You know New York has always been special.
Yes.
From our from our standpoint it it's the state that is kind of an outlier as it looks at this we don't anticipate we have no.
With everything we know when the other states that we operate this is not even something they they would be looking at there are some states that are going to more.
Adding some self directed programs, which we work very well with as an agency with self directed care, but as far as the true C D Pap, where the where the.
Patient themselves are the really the employer of the caregiver and we're just kind of that fiscal intermediary.
That is not something we see elsewhere nor thing for spirit.
Okay. Thanks, again for taking the questions.
Yeah.
I am showing no further questions at this time I would like to turn the call back over to Dirk Allison.
Thank you operator, and I want to thank you all today for your interest in <unk> and for being part of our earnings call. Today. We hope you have a great week. Thank you.
Yeah.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation have a wonderful day and you may all disconnect.
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