Full Year 2020 Viemed Healthcare Inc Earnings Call
Greetings and welcome to the Biomed fourth quarter and year end 2000, and 'twenty results Conference call. At this time all participants are in a listen only mode. A brief question answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
And is now my pleasure to introduce your host Todd Zehnder, Chief operating officer of iPad thinking that for Zander you may begin.
Great. Thank you Devin.
Everyone. Please note that our remarks and this conference call May and May include forward looking statements under the U S. Federal securities laws or forward looking information under applicable Canadian Securities legislation, which we collectively referred to as forward looking statements.
Such statements reflect the company's current views and intentions with respect to future results or events and are subject to certain risks and uncertainties, which could cause actual results or events to vary from those indicated in forward looking statements.
Examples of such risks and uncertainties are discussed in our disclosure documents filed with the SEC or the securities regulatory authorities and certain provinces of Canada.
Because of these risks and uncertainties investors should not place undue reliance on forward looking statements. The forward looking statements made in this conference call are made as of the date hereof and the company undertakes no obligation to update or revise any forward looking statements, except as required by law, the fourth quarter and annual financial results news release <unk>.
And the related financial statements are available on the SEC's website now I'll turn it over to Casey to get things started.
Okay. Thanks, Todd and welcome everyone. We appreciate you joining our call. This morning, and once again thrilled to have the opportunity to be reporting on yet another record breaking quarter for by met them.
And I'm looking forward to share the details that contributed to our positive results, but before I do let me first recognize our biomet employees when we treat like family.
The resiliency of our people at every level throughout the company has been nothing short of incredible and 2020.
And a pandemic year, where we saw limited access to referral sources with most competitors struggling we were able to grow our core business by 21 per cent.
And our folks have been willing to adapt and many changes this year and have done so with Grace respect and continued passion for delivering the best patient care throughout the communities we serve.
I remain honored and privileged to be leading these people and can say with great certainty that they are the reason we continue to achieve these exceptional financial results. Thank you so much for your perseverance and dedication to our company.
And I will talk a lot about the activity and the fourth quarter surrounding the investments and changes we made during the pandemic and we expect will enhance the core business in 2020 one.
I'll report and our technology Rollouts and speak to how they have begun to provide value and land new business as well and update everyone on behavioral health and behavioral health offerings through our new division by Meg clinical services.
So in addition to update and everyone on our organic business, we will update our audience on many of our initiatives includes the technology behavioral health and a brand new published studies and respiratory medicine, and the new contact contract, we executed with Commonwealth ACO.
I'd like to start with an update on the core business our traditional organic growth strategies are all in place and remain at the top of the priority list, we were able to launch nine new areas with nine new sales reps and the fourth quarter of 2020.
We are currently hiring sales reps and even faster rate and Q4 with 10, new reps coming on board year to date.
I want to radio and reiterate that growing our core business organically by 21% and a year, where many health care companies experienced revenue declines, it's something that I am very proud of.
We have an internal goal of adding 60, new areas throughout the country with our organic growth model.
Our training recruiting and sales offerings have never been more robust and scalable and they are now many investors fall behind that as a COVID-19 story during 2020, but we feel the exposure to our name and gave our new investors and understanding that we were and organic growth engine.
With that being said.
We continue to book Covid related business, mainly through our contact tracing call center and our employees continue to serve as a meaningful resource and we expect to keep the calls coming in until the state has a grip on the pandemic.
And then a later and equipment sales related to Covid have stabilized throughout the country, However, and increasing the demand for in home oxygen at that and all the time Paul.
Our oxygen business grew by over 200 per cent and 2020, and we expect it to trend that way for 2020, one as well.
The continuing for care for Covid patients as making a shift from hospital and invasive ventilation to home noninvasive ventilation and coupled with oxygen.
While home services for Covid patients usually results in a shorter length of stay the demand for quality homecare providers could not be greater.
At the VA, we are actively participating in a pilot program, which stands to prove the cost savings associated with treating COPD patients with and I V.
Our first phase goal is to show these savings and have the VA adopt and IV is the gold standard of care for their veterans struggling with to go Pee Dee.
The second phase would be to have the VA utilized by Matt and help nationwide with their hospital at home initiatives.
On the regulatory front, there's really nothing new to report other than happened O. Two competitive bidding results were reported and Q4 and bids submitted provided no further savings to the Medicare system.
And some instances products were shown to have come in as high as 160 per cent over the allowable Medicare rate.
The competitive bidding program remains on course with no real momentum to come back online at this point and time.
We are thrilled to announce that we have moved from pilot mode and into a national rollout phase of our technology investments engage and view.
As a refresher on how our technology functions, we built the engage and view platforms, which placed hubs and the home designed to remotely gather data from compatible devices with Bluetooth connectivity.
And in our case, our hubs specifically talked to activity watches scales blood pressure cuffs pulse oximeter ventilators paths and many more.
We also provide a tablet and the home to provide telehealth visits and captured data directly from the patients.
Our vision has always been to improve our T workflows and drive longer length of stay for patients our ability to interact on a real time basis.
The results of our pilot showed that we were able to improve our T workflow and efficiencies, while improving our 90 day attrition numbers.
And the future. We believe we will have more data to present that should reflect an increase in and out and our overall length of stay.
We also are seeing early success with our remote physiological monitoring program, which we call viewed it.
In conjunction with our bearish that partners view gives physicians the ability to bill for the monitoring of devices and physiological data associated with their patients. We've had many clinical success stories of driving positive outcomes with patients on RPM and <unk>.
<unk> are also thankful to have a tool that loops them into patient care and the home, while driving incremental revenue to their practice.
RPM has helped our sales force differentiate themselves from the competitors and drive major value for our referral sources at a time when they need it most.
Another program assisting our sales reps to grow is the offering of behavioral health services through our division called by Med clinical services.
D C S. As our new Division, which consists of license clinical social workers hired and trained to treat the behavioral health components, which often lead to ER visits and and necessary facility visits as well.
With emotion and anxiety relating to over 50% of hospital admissions were seeing BCS as a critical component for our value prop.
Physicians hospital systems and Acos throughout the country are extremely excited about this offering and we believe it will help us land new business and we're seeing that and the first quarter.
One example of new businesses, the Commonwealth ACO contract signed and the fourth quarter.
Commonwealth is a collaboration of independent providers, who are actively seeking to improve the quality of health care and decrease the cost for patients living and thought of Arizona.
The ACO is approximately 10000 patients within their network and was specifically lean on biomed to coordinate and deliver care inside of the home to reduce readmission rates.
Our partnership with and ACO has been a long time goal of the company and would not have been possible to fulfill had we not had the quality data metrics and present to them.
I'm happy to report that our most recent study was published and the respiratory Medicine Journal.
This study was completed by by image Chief Medical Officer, Dr. William Frazier and was published in December.
The study evaluated clinical outcomes in patients with chronic respiratory failure consequent and C. O P D treated or not and I V and.
And compared to similar patients with chronic respiratory failure consequent and COPD, who did not receive and IV treatment study.
The study results were similar to our previous KPMG and precision and Harvard Medical School studies, we found that for every five and a half patients we put on therapy, we save a life. We also found that we reduced all cause mortality by 50% reduced hospitalizations by 28% and ER visits by 52 per cent.
The study title noninvasive ventilation at home improved survival and decreases health care utilization and Medicare beneficiaries with COPD and see our Rab is.
As the first of its kind of be publish this type of beta is exactly what our sales force needs to penetrate the 95 per cent of patients and our market who qualify for our event today, but cannot access due to a lack of physician awareness.
For further detail on our operations capital market efforts and financials I'll turn the call over to our Chief operating Officer, Todd Zehnder Fat Alright, Thanks, Casey and are reviewing the financial results. All figures are in U S dollars and the full results have been made available and the FCC website as well as SEDAR.
Our core business generated net revenue of $26 1 million during the fourth quarter of 2000, and 'twenty as compared to net revenues of 21 4 million and the fourth quarter of 2019, which equates to a 22% increase Additionally, rather revenue attributable to our core business was up approximately 5% sequentially.
Which is another good growth rate as we continue navigating the ongoing COVID-19 pandemic.
During the current quarter, we generated approximately $5 1 million of equipment and service revenue from the ongoing pandemic.
The Covid related revenue resulted primary from contact tracing services and sales of PP&E.
For an annual basis, our core revenue grew approximately 21%, which is lower than our historical organic growth rate, but still a number that we are quite proud of with all the disruption pause from COVID-19.
When factoring in the Covid sales our revenue grew 64% over 2019.
Our margin percentages, both gross and EBITDA continue to fluctuate as Covid related product sales during the current year skew comparability.
We once again posted very strong margins during the quarter.
Our fourth quarter gross and EBITDA amounts came in at $19 2 million and $9 $5 million respectively.
Our year and gross and EBITDA amounts came in at $80 1 million and $41 3 million respectively.
Our diversification efforts have continued to pay off as our fourth quarter revenue from Vince was approximately 81 per cent of our core revenue as compared to 85% and the fourth quarter of 2019.
Our SG&A for the year totaled approximately $52 8 million as compared to 41 4 million in 2019, we.
We had another successful year of hiring although we were slowed down during the initial wave of Covid.
We've done a good job of pivoting the ways that we trained new employees and the Covid World and our historical investments have paid off.
Our initiatives, such as technology payer relations and marketing and inside sales have given us more resources to assure that our new employees are successful and we will be able to continue to spread our model around the country.
We will continue to support these world class investments to stay awake to say ahead of ways to outperform the market from an organic growth standpoint.
Our balance sheet with strength and organically during 2020 with approximately $31 million and cash at year, and $12 4 million or they are and and overall working capital balance of roughly $24 1 million.
We have positioned our company to be able to grow inorganically by under utilizing leverage since our spin out our long term debt is approximately $6 $6 million and being serviced with operating cash flow.
As we sit here at year and our long term debt to EBITDA is point to our healthy balance sheet opens up various ways to finance or partially finance any acquisition that we find we'll make strategic sense.
Our company is perfectly positioned for rapid growth as we expect to come out of the Covid pandemic during the current year.
Along the lines of inorganic growth, we are reviewing several opportunities that could augment our normal organic growth, but doing so and a measured way we.
We are committed to continuing our organic growth model, but our sector has many tail winds that are generating a number of opportunities. We are excited about pairing our historical strategy with an inorganic arm.
Moving onto the first quarter, we have provided net revenue guidance and the $25 five to $26 $5 million range related to our core business and have also guided approximately $2 3 million to $3 3 million of revenue related to the COVID-19 pandemic.
Our organic revenue was relatively flat sequentially and is up 12% to 16% over the first quarter of 2020.
We've continued to see new patient set up to run at a slower pace as the virus picked up again and until the vaccine is rolled out more widely.
Additionally, with the first quarter, having a higher number of insurance reauthorization and face to face visits still being challenging our active patient count hasn't grown as fast as normal.
We fully believe that we will get back to a more traditional growth levels as the system begins to normalize.
The COVID-19 revenue during the quarter is primarily related to the contact tracing work that we have continued to fulfill and we will continue to look for ways to help out with supplies the various states and systems.
On the capital markets fronts, we've been actively marketing to institutional investors through non deal Roadshows and the new age of virtual tours and Additionally, we have participated in several sell side virtual conferences recently, and we were visiting with new and existing investors as the space has been quite active and the last six months.
We continue to visit with other sell side firms as well.
We are very proud of the growth that we've achieved and feel very optimistic and the future for our company and our shareholders.
At this time I'd like to turn it back over to Casey to wrap things up.
Thanks Todd.
While challenging and navigate the pandemic has really provided by mad and opportunity to showcase our clinical capabilities, while doubling down on investments that will drive the core business.
Our strongest for home health care industry was before Covid now we believe we will have even more families payers physicians and case managers choosing the safety and comfort of treatment and the home over more costly and higher risk facilities settings.
The Covid environment and December through February of 2021 seems to be comparable to the March through may environment of 2020.
We have been strategically positioning our company to excel in this new normal and fully expect and not only outperform but to get back to pre COVID-19 growth rates in 2020 one.
To do so we recognize that not only do we have to adjust with new offerings that help complement and drive our organic business, but we must also capitalize on acquisition growth opportunities as well.
And a healthy balance sheet and a long standing recipe for operational efficiency. We strongly believe that many synergies can be realized by being acquisitive.
In closing I'd like to thank my management team once more as we sit here today and look back on another record year, it's amazing to see how many twists and turns we've made throughout the year.
Our company looks way different today than it did before the pandemic and we've never been more postured for growth since I've been running this organization.
We are as energized enthusiastic as we've ever been and it wouldn't be this way without surrounding each other with the best working health care professionals and the country.
I think everyone on the call for their interest and investment entire mission and look forward to answering further questions. This concludes our prepared remarks, we'll now open up for Q&A.
Thank you we will now conduct a question and answer session. If he would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is and the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing.
And the Star Keys, one moment, please while we poll for questions.
Our first question comes from the line of Brooks O'neil with Lake Street Capital markets. Please proceed with your question.
Good morning, guys I want to remind you that more are bigger is not necessarily better.
[laughter] Thanks, Brett.
I, just thought I, better and better make sure you understand our point of view on this thing.
Anyway. So obviously your comments there are tied towards the end of the prepared remarks related to you know.
Perhaps a little slower.
The growth of the vent business.
Have you begun to see any light at the end of that tunnel or do you think.
It remains to be seen whether you know falling COVID-19 cases, and accelerated vaccine administration is going to return the business to a more normal environment.
Yeah, we definitely seen green shoots if you want to call and that Brooks and we've seen them a few times during the pandemic you know we've had these falloff and then we come back and it it feels like there. It's it's about back to normal and and we get hit with another you know another surge or something but yeah. This is just a I think this is just a continued.
Asian of the peaks and valleys that we've seen over the last you know almost 12 months now and it just where we're up against a quarter, where there was no real COVID-19 to speak up in the first quarter of last year. So our growth rates just aren't as high.
And we fully believe and I think we said it while it's not we don't guide long term, we fully believe our platform is positioned to get back to our historical growth rates and those are all you know we are always striving for 30% to 40% organic growth.
And when that day comes we're not exactly sure. We're trying a lot of different ways to get there sooner than later, but I guess ball and the answer to say, yes, there are pockets, where green shoots are there and.
People are getting vaccinated at a high level, our employees are getting vaccinated at a high level physicians hospitals are getting vaccinated at a high level, so clinics will reopen and they'll reopen and we believe sometime in the first half of this year.
Yep.
Okay. That's good.
When you guys think about the business I have a sense that organic growth and the core business is still the highest priority but.
Would you say strategic partnerships and acquisition opportunities and the short term might take precedence or do you just kind of continue to view the business and the long term context, and I think these will all play a role and your growth going forward.
Yeah, I mean, the the ladder and it's all going to play a role and driving our organic growth with strategic partnerships and initiatives with health systems and Acos are very much a part of our growth model for 2020. One I mean real true you know we've been talking about doing deals with acos for about a year and.
And a half two years now it's now at the point, where we have some successful acos that are actually generating savings there understanding the value of post acute care and how it prevents readmissions COVID-19 and shining a light too on how we need to treat more of these folks and the home and keep them safe and so that's all playing.
And in our hands because we were in search of a provider that was was very resourceful and useful to them throughout the pandemic. It's opened a lot of doors for us to have some more C level and strategic discussions that are transparent and we don't have to have everything and figure it out we figured it out together because theres not many folks out there that are.
And doing these value based types of contracts are even contracts with acos.
Post acute home health companies such as us.
So.
To sum it all up with it it's very much a part of our focus and we expect it to drive the organic growth part of the business as well.
Cool.
Last question and I confess I zone that for a second when you were talking about the VA, but have you have you begun to get traction at the D. A or is that still a work in process and your opinion.
I was that dynamic whenever I was presenting the VA and thank you alright.
For now.
Yeah that the VA, we have a pilot program that we've been really and the beginning phases of for the past six months that is now starting to take off and it's a it's a program that is funded by the VA for us to enter patients into our system and treat them.
And on noninvasive ventilation as for COPD patients very similar to the way that we performed all three of our studies. Our goal is to generate the same results that we've already proven and these three studies. So we're working with our care and innovation team and to be a which is a little bit unique. It's it's not like we're working with one VA system.
It's above all the VA systems and that part is exciting for us they have initiatives beyond just noninvasive ventilation to treat COPD patients. They they want to take advantage of more in home programs more hospital to home type of programs, specifically designed to treat some of their rural pockets that up.
Our veterans and I can't get into the facilities and so all of that eventually will play into our hand, but right now we're focusing and this pilot on just cost savings and that is really just setting it up to be designed just like the KPMG study or are the precision or our the Harvard Medical School study as well.
And what's the timing on that.
When we're saying and how we started and I always.
Starting in April but for US we're dealing with the VA. So you can't tell me to their time and whenever we're talking about.
Alright.
And I appreciate it keep up all the good stuff guys.
Thanks Brooks.
Thank you. Our next question comes from the line of Anton Hie with RBC capital markets. Please proceed with your question.
Good morning, guys and and I.
I appreciate all the color you provided on AWN clearly a lot of stuff going on there.
I Wonder if we could just a focus for a minute on.
You know I guess, I guess back and <unk> question sort of the opportunity to accelerate out of the I guess, you said kind of the 12% ish normalized kind of core growth and the.
And the first quarter.
You know do you see that kind of.
And working its way back up to the 20, 20% plus that you got in the and in fiscal 'twenty and the core or do you think we can get back to the the 30 per cent by year and is there anything structurally that that sort of prevent that from happening whether that's just a lower starting point with with you now.
Baseline of new patients.
Yeah, and Tom I'll take it and obviously, we're coming into the year with a little bit slower rate, but low.
We fought through 'twenty, and 'twenty and grew 21% and what we hope will be the toughest year. So while it's not formal guidance, we sure expect to grow higher than we did in 2020 from an organic standpoint, and the way that we're rolling out new initiatives new product offerings are hiring that we've already gotten year to day.
And the training programs that we've implemented.
And there's no reason for us to wake up every day, not expecting to grow 30, or 40% organically and it kind of goes back to Brooks last question, where and organic growth company and we're going to continue to push the envelope and hold ourselves accountable for growing this thing organically at a much faster rate and other people and the industry.
Yeah.
That's great and you kind of touched on it there with the hiring.
I guess you already a good start on the year.
A lot of the companies we follow are having some trouble with.
With some clinical staffing.
Obviously, a very different model that you guys run Bardy are you running against any any difficulties in finding.
Yeah, and talented staff that you can you can train up and and get in the field.
Short answer is no I mean, we the the challenge that we have and as always try to train clinicians how to sell that can be challenging just to find a good quality sales rep, that's going to stick and be productive and the event that theyre not usually pulled them back into service, but another way to think about the opportunity to come work for <unk>.
Broke through the lens of the respiratory therapist is this is an opportunity the next advancement and the next step and their career and they've been working and the hospital doing double shifts and and.
Or maybe even working for a mom and pop D and me.
And whenever you put them in a vehicle and their own and they have a lot more flexibility and they still maintain those the connection with their patients to drive clinical value that is the next advancement and their career that make it a little bit more money than they were and the hospital and so on and so forth. So they're usually happy campers for us to reach out to.
Them and recruit them.
And the challenges on probably more on the sales side, and just converting them into salespeople and and that can take time and usually you know and by my.
About three years or so we will know what theyre going to work out or not.
Yeah.
Okay, and then one more and I'll jump back the you mentioned the diversification away from events a little bit up from 85 to 81, just wondering if there is sort of a and eventual target for that mix and if that.
And is informed by the AR and the comments you made on on possibly expand and kind of M&A targets given your low leverage thanks.
Yeah, we've never really set a goal from the standpoint of percentage because we've always thought we want to grow we gotta go all of our products at a extremely rapid rate and knowing that Vince growth. So fast generally for our company, it's hard to set of and existing target, but knowing also that we've rolled out oxygen countrywide last.
Year, we're rolling out past and more of a national rollout, it's probably natural for that number to gravitate down where does it ultimately normalize we're not exactly sure, but I could see it ticking down another 5% this year, if oxygen and Pat on a national level has as much success just because.
And it's it's just so much green pasture out there for those products.
But once again, it's not like where we're putting a line and this day and saying we got to get here because that's important and we just we want to service as many patients with as many products as possible.
And just you're kind of pushing that through the existing.
Sales channels and context that you have right.
Yes, that's correct that's correct most of our most of our product diversification is happening with existing salespeople now we are looking at adding some more products for specific salespeople throughout the organization. If we find a hot market, but think about it is just leveraging the.
The existing platform to start things off.
And that's great. Thanks, guys.
Thanks Anton.
Thank you. Our next question comes from the line of net quicker and with acumen. Please proceed with your question.
Good morning, and thanks for taking my questions. The first one just has to do with <unk>.
Revenue per patient and I think you're going to a little bit on the.
Diversifying away from Dan do you see that revenue per patient growing overtime.
Well you know we've always just disclosed our vent patients. So when youre looking at revenue per patient just on the event, yes, it's gonna as as we continue to diversify and that number will inherently get larger.
Great and then switching gears for the Covid revenues and the contact tracing now contract that you have do you have any indication how long they'll continue on for.
You know right now calls are continuing at a very high rate. There as you know we had a year long contract, but I think I was pretty.
Transparent last year that it doesn't mean that it will last for a year. We just we're going to continue to serve as this resource for the state is longest cases are coming in obviously at some point vaccinations are gonna start catching up with the new cases and that'll in but for right now we still have a very full staff of people taking a bunch of calls every day.
Day, but it's hard for me to predict anything outside of the current quarter.
Great. That's all for me thanks for taking my questions.
Yep.
Thank you. Our next question comes from the line of Doug Cooper with Beacon Securities. Please proceed with your question.
Hi, Good morning, guys and congrats on another great year kicked you can we just start ups can you remind me how many states you're operating and though.
Roughly 38.
Dish okay.
Okay and is there any on me and you want to expand that this year and is there any sort of the big ones on the list and we should be looking at.
Yeah, I mean, we're definitely going to be expanding that this year.
Yeah, we we we hope that we grab some states that were not in through and acquisition of some sort in 2020 one.
Looking at geographic areas, where we have pockets that were not in with contracts that we don't have and so where we're doing a lot of homework on some of the quality providers that are in those spaces at that point in time and you can see as Brad six or seven states at one time and possibly but again as you know Doug I mean, we've talked about this.
And and the reason it doesn't just roll up and took my tongue is because we we are we have lots of growth opportunities inside of our coverage area as well and that's why we just portfolio new areas with the new reps, but but yeah. The geographic pockets that were not and could come through a land grab by acquisition.
Okay.
Just on the getting back to the patients and.
And the vent patients and particular and you guys have had a bunch of efficacy data sort of out there is there any reason to believe that the doctors now who are prescribing the therapy.
Arent, even more comfortable amount and they were say 12 months ago. So the when it opens up.
You know you really will have that sort of catch up trade and and accelerate through.
Even if maybe at a faster rate than historically.
For sure definitely they are very much more up to speed and educated on and ventilation and the different modes the different abilities of the dip of the machines and.
And you know the problem is is that every pulmonologist right now is actually working inside of the hospital, they're just not and their clinics and they are still in roll up your sleeves mode and treat the masses of patients of Covid patients that are headed their way. So once they settle back in and to normal treatment mode and once folks are comfortable.
Go and see their pulmonologists that their clinic like they were pre COVID-19, we expect that our organic growth rates will get back to where they were you know between 30 and 40%.
And I guess my last question and sort of just a broad question and the last 12 months, you've had some pretty big health care companies go public college to adopt health and as you know catapulted its way into a top maybe too.
And I'll provider Opry, and we went public a month or so ago do you feel that there you know what do you think their strategy is in terms of the areas of Euro and and do you expect to see any more competition and maybe specifically on the on the bedside all day.
But there.
I don't think the launch into the public markets will change that Doug and I think you know those companies will continue to have a active role in all of the sectors. Both of our both of those are you know.
Much larger than ours, and other areas and don't focus on the chronically ill patients in the home like we do it so it's a different model, which we respect their models tremendously. We just have a different one so I don't think that anything and them.
And then coming to the capital markets will change that strategy could I could be wrong, but we're excited to have more peers in the space that we are it is definitely driven by side interest into our name, which we benefit from and are we respect them clinically and you know just don't think it's gonna.
Change just because they now have a ticker symbol.
And maybe just one final one the cash.
Balance continues to grow if you don't do any acquisitions are you know would you ever consider share buybacks.
I guess the short answer is yes, we've done them in the past you know right now we've always been very clear that the best investment opportunity for US is to continue to buy equipment and get new patients.
Right now we've put a clear number two as being acquisitive and then I would say the third would be just like we did last time potentially buy back stock at some point right now we don't have and in CIB in place and we don't have and active one working but in the event that we wanted to we've proven that we could execute on that.
At like we did a couple of years ago.
Okay, great. Thanks, that's it for me.
Hi, Doug Thanks.
Thank you as a reminder, ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad. Our next question comes from the line of Antonio for LP, and I with Bloomberg and please proceed with your question.
Hi, Thanks for taking my questions I, just have some housekeeping ones and so.
So firstly on your SG&A and there was a sequential decline this quarter and even though you mentioned that you hired from additional sales reps and I'm, just wondering where the cost savings came from and also if you think your SG&A lufti stable and and the relative near term.
Probably the biggest things there were a little less costs related to some of the unusual items that are related to COVID-19.
You know things like commissions or just legal fees cost incurred.
And when navigating a bunch of the unusual items. The other thing would probably be the volatility and the stock price that has an impact on the mark to market of our Phantom shares.
Those two would make up the lion's share I would say of the volatility and you know I would say that for the first quarter. We would probably think it's going to be relatively flat and you know where we're going to continue to grow people were very clear that we're trying to grow a bunch of salespeople, which means we're going to grow.
And therapists and other initiatives that we've been talking about so you should expect some increase over time, but I don't see it as a massive increase in 2021.
Okay, and then on the margins and there was also an improvement there. So just wondering if that's primarily due to you know it just shifts I got for away from Covid sales or if its other.
Other products and exchanges, which.
Our improving your margins over time.
It's probably the former when Youre looking at the overall when you have less of the total revenue coming in from Covid like sales.
And that's going to improve our gross margins and you know generally what we've said is the core business runs at a higher gross margin than when Covid involved but COVID-19 was very good from our EBITDA margin standpoint, it almost dropped straight to the bottom line. When you got to growth. So that's probably the day.
Main driver of it as we've said as we continue to diversify the product based on the percentage margin might have a little bit of weakness on it we made ticked down a point or two over a year or so, but the notional amount and what that does for our business, having multiple products on patients and having the <unk>.
And that form of one sales person one Archie and all the infrastructure we have back at home office is a very accretive.
Accretive thing for us and it's the right thing to do for patients and referral sources.
And then finally can you maybe just remind us.
Whether you have seen seasonality and your business with regards to the number of Vantiv patients and also revenue per patient.
You know, we've we've never really talked too much about.
Seasonality, although generally speaking new patient referrals are stronger during cold months and not as strong during the warm months, but with that said our patient attrition due to you know patients expiring generally is higher during the cold months and not as high during the.
Warm months, so we've never had too much of a issue with that during the current time like I've said current referrals are a little slower with like Casey said practices being shut down pulmonologist being leaned on to serve as you know really triage doctors in E ours, and then specific.
And at the beginning of the year, we face a lot of re authorizations from insurance companies.
And that many times takes a patient having to go see their doctor face to face. So patients don't want to go to clinics and sometimes clinics aren't open and so we're navigating through that the last piece is the cold really got a it was really cold down here for about you know a few weeks and that that did impact us and the state of Texas and Louisiana and.
And without power people had to go back into facilities for up to a certain extent. So you add all that up there was some seasonality this year, but it's not it's not something that we normally have to contend with and a major way.
Okay.
That's all for me thanks.
Thank you.
Our next question is a follow up question from the line of Anton Hie with RBC capital markets. Please proceed with your question.
Hey, guys you kind of answered it already I was wondering I get a follow up just to try and get some.
Visibility on the effect of the the kind of mid February winter storms.
I guess the main issue really is access to two.
And to patients and and being able to get that that normal kind of.
Start of the month billing cycle and I am I right on that.
Yeah. It was really probably the major thing from the the mid February thing is that when patients lose power that event doesn't last forever right and it only has a start and battery time. So if they are you know many of our very very sick patients had to go into facilities and depending on when their billing cycle that that might cause us to lose that month.
So that's part of it the other is like I said, just having access to physicians and having patients actually get to their positions for reauthorization and face to face and notes.
And it's done at us to assort and extent, but we're working through it. It's a it's just part of the normal day to day operations and we should we should be coming out of it here pretty soon.
That's great and then one other one that you touched on and our previous answer that the.
As for my curiosity on some of the you know all these great growth initiatives that you have going on possible M&A.
And new strategic.
And our partnerships just talk a little bit if you could.
And can you talk occasionally about the I guess the scalability of the organization you know they're from from HQ.
Yeah, I mean, if you take a step back and think about how we always have gotten business up and to this point, it's just been onesie twosies knocking on doors patient by patient that comes through the hospital.
It comes from the physician clinic.
Now, we have and opportunity with 10000 patients that may use the ACO and the Commonwealth contract. As an example, they've got over 10000 patients in that network and so what they want us to do is go in there find identify.
The candidates for our care and then get them on our noninvasive vents permit the readmissions and and let's analyze how many how much cost savings are at stake for where we can take it to the next level and and do a risk value base shared agreement.
We're going to see more and more of this but it's the first opportunity that we've had where we're getting one lease and patients and a higher volume and.
And so you know you you knock down and one of these and you produced some results there and it's really easy to tell that story to the next one and we've already started doing that and.
And so on and it's the you know where where we hope to be talking about more of these strategic partnerships here in 2020, one as we knock them down.
But do you feel like you have the.
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And it was organized and the organizational structure to support you.
You know going into these with some size.
Absolutely and and and I'll just comment too that our technology platform is a big selling point for these guys as well.
Not only you want to see the human interaction and the home, but they they want to see the technology benefits that inefficiencies that you create and and being able to talk to their EHR and report back on the real time outcomes is such a huge part of this and piece of this and.
And as well as offering their physicians and their network are way up.
Effectively managing through remote physiological monitoring, which is our view platform. That's another incremental revenue stream for them and it drives good clinical value and just just last month, we had one doctor that thinks that he prevented for strokes.
From analyzing some of the remote physiological monitoring.
And his patient database. So we're seeing those those type of good clinical results once we get that we're off to the races.
That's great. Thanks, a lot guys.
Yeah.
This does conclude today's question and answer session I'd like to turn the floor back over to management for closing comments.
Yep, Thanks, Devin for the help today and thanks to all of you who are listening and asking questions. We are we will be available for follow ups, either through Bristol ourselves and look forward to catching up next quarter.
This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation and have a wonderful day.