Q1 2021 Aveanna Healthcare Holdings Inc Earnings Call
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Good morning, and welcome to the Avianca Health Care Holdings first quarter 2021 earnings Conference call. Today's call is being recorded and we have allocated 1 hour for prepared remarks and Q&A at this time I'd like to turn the conference over to Shannon Drake, Avi honest, Chief legal officer and corporate Secretary.
Thank you you may begin.
Thank you Melissa good morning, everyone and thank you for joining US today speaking on today's call are Rod Windley Aviano's Executive Chairman, Tony Strange I'll be honest, Chief Executive Officer and President.
David <unk>, our Chief Financial Officer, and Jeff Shaner, Avi honest Chief operating officer.
Before we begin I have a few housekeeping matters, we issued our earnings press release and filed our 10-Q yesterday. These documents are available on the Investor Relations section of our website at Ww Dot Aviano Dot com.
Also a replay of this call will be available until June 2nd 2021, we want to remind anyone that may be listening to a replay of this call that all statements made are as of today May 26, 2021, and these statements have not been nor will they be updated subsequent to today's call.
Also today's call may contain forward looking statements, which may be identified by words, such as May could will expect intend plan and other similar words and expressions. All forward looking statements made today are based on management's current expectations assumptions and beliefs about our business and the.
And in which we operate these statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on today's call listeners should not place undue reliance on forward looking statements and are encouraged to review our SEC filings for a more complete discussion of factors that could.
<unk> our results, including in particular, those risks disclosed under the risk factor headings of our filings.
Sept as required by federal Securities laws I'll be honest does not undertake to publicly update or revise any forward looking statements. Subsequent to the date made as a result of new information future events changing circumstances or for any other reason.
Also we supplement our financial results reported in accordance with certain non-GAAP financial measures. When we're when do you together with our GAAP results. We believe that these measures can provide a more complete understanding of our business and operating results, but they should not be relied upon to the exclusion of our financial results reported in accordance with GAAP.
In addition, a reconciliation of any non-GAAP measure mentioned during our call to the most comparable GAAP measure will be available in our earnings press release and 10-Q, both of which are available on our website and on the SEC's website at Ww Dot FCC Dot Gov. Following todays prepared remarks, we will open the call to questions.
Please limit your initial comments to 1 question and 1 follow up so that we can accommodate as many callers as possible in the a lot of time with that I will turn the call over to I'll be honest executive Chairman Rod Windley Rod. Thank you Shannon and welcome to all the honest first earnings call I'd like to take a moment and thank every <unk>.
1 on the call today for your interest and commitment to ASEAN eye as we move forward as a public company and.
In addition, I'd like to thank everyone, including our board of directors, our accountants and lawyers and most of all our employees. Your hard work has culminated in the important milestone that brought aviano to NASDAQ to the NASDAQ exchange on April the 29th.
We are extremely proud of our results for this quarter and our continued growth through acquisitions as previously disclosed our recent acquisition of Doctor's choice further expands our footprint in the state of Florida, 1 of the fastest growing geriatric markets in the country, our pipeline of acquisitions remains robust and we.
To continue to accelerate our growth through this process as we move forward.
Finally, we are excited to announce the Doctor Erika Schwartz has been appointed to the board of directors of Aviano Doctor Schwartz brings a wealth of knowledge and experience to the boardroom, having previously served as deputy surgeon General and cheap of health services for the U S Coast Guard, we are thrilled to have doctors.
Schwartz join our team and with that let me turn it over to Tony and the team to discuss our Q1 results Tony.
Thanks, Rod and good morning, everyone and thank you for joining I'll be honest first quarter earnings call as well as I'll be honest first call as a publicly traded company. We're excited to share our results and to have you participate in our Aviano story on behalf of Rod and myself and the entire executive team, we'd like to thank all of our shareholders are.
Analysts for your participation in our IPO and we look forward to building shareholder value together.
In addition, we'd like to thank all of the employees of Aviano, especially the caregivers in the home without you. None of these results are possible.
As a reminder, I'll be on it is a diversified home care company, providing services to children adults and seniors through a scaled platform across 30 states. We deliver these services with a focus on providing the highest quality clinical outcomes and customer satisfaction.
On a consistent and compassionate manner.
Today, the company engages over 42000 caregivers to provide service to inaccessible 60000 patients as noted in our mission statement. We do this 1 patient at a time.
As outlined in our S..1 our 10-Q as in our press release, we provide these services through 3 business segments.
Our largest segment private duty services provides hourly base care in the patient's home.
While we provide both skilled and unskilled services in this segment. The majority of our hours are skilled nursing care for medically fragile right.
Our newest and currently fastest growing segment is home health and hospice.
It has always been our strategy to leverage our operating systems and experienced management team across a broader home care platform.
Having established I'll be on it as the leader in private duty services. The time had come for us to enter the home health and Hospice Arena.
In October of 2020, we acquired 5 points, marking our entry into the geriatric homecare market.
The 5 points transaction provided not only desirable geographical footprint, but also a seasoned leadership team most of whom we have worked with us in the past, which will serve as our home health and hospice platform going forward.
Subsequently, we have closed 2 additional acquisitions recover hill, which closed in late December and Doctor's choice, which closed in April of this year.
Currently we provide home health and hospice services through 65 locations across 13 states inclusive of Doctor's choice.
First quarter results would indicate that this segment is already in excess of $200 million of revenue on an annualized run rate.
In the past 6 months, we believe that we have positioned to Avi honor to be a leading provider of home health services.
While we provide both home health and hospice services in this segment, 95% of these revenues are derived through home health.
We plan to focus our M&A efforts in this segment owned traditional home health that may or may not contain hospice.
But we believe the likelihood of us acquiring a standalone hospice at this time is somewhat low.
As a result, when Jeff provides more details on our segment results in his his comments and metrics, we'll be focused on our home health business.
This brings us to our third segment medical solutions.
In this segment, we supply nutritional support to patients in the home the primary services the provision of enteral nutrition as well as the equipment and supplies necessary for delivery.
The growth in this division has been fueled by patients from private duty services.
Home health and hospice as well as Standalone referrals as a result, our medical solution Division has consistently delivered double digit growth for I'll be honest.
Given the diversity of our service mix over the 3 business segments as well as the geographical mix across 30 states.
I'll be on a benefit from a diverse yet stable reimbursement environment.
Including Doctor's choice traditional Medicare makes up approximately 9% of our overall revenues. However, given our appetite for growth. We expect this number to grow rapidly.
We view this Medicare reimbursement environment, as a stable and providing rates that are neutral to modestly positive over the next several years.
The balance of our revenue was reimbursed primarily through Medicaid or Medicaid managed care.
Both of which have similar rates for private duty services.
As a reminder, the reimbursement for private duty services quite simple we are paid by the hour and we pay our caregivers by the hour. All services are provided through some type of prior authorization process. As a result, there's very little complexity or ambiguity related to payment.
We operate under 36 different Medicaid payment systems, and over 200 separate and distinct M. C O contracts with no single payment source and private duty services, making up more than approximately 6% of our total revenues.
We believe that this payer diversity benefits all biana in 2 ways..1 it gives us downside protection from a significant change or reduction from a single payment source and 2 it has provided us with a DSO that runs from the high thirties to the low forties, which is consistently lower.
Then the industry comparable Dave will provide more additional color on the dsos in a few minutes.
In short we believe the diversity of our business model provides a significant competitive advantage for aviano moving forward.
Before I turn to our results I wanted to spend a moment focused on our viewpoint as it relates to Avi honest growth our compounded aggregated aggregated growth revenue growth rate from 2018 to 2020 was approximately 17% and our Q1 results are consistent with that trend.
Our growth is driven by better than market organic growth rates in each of our 3 business segments.
Our sales infrastructure, along with our investments in payer and government relations provides us with the ability to win both on volume and rate growth.
This accompanied by our appetite for M&A gives us confidence that we'll be able to maintain a mid to high teen growth rate in the foreseeable future.
Now turning to our results revenues for the quarter were approximately $417 million and adjusted EBITDA was approximately 44 million, which resulted in an adjusted EPS of 8 cent per fully diluted share.
I'm proud to report these results are not only within but on the high side of the range that we provided in our Q1 flash reported and in the S..1.
Company has consistently performed despite the headwinds created by COVID-19, and the weather events in February our operating teams have done an exceptional job in adjusting for softer volumes through disciplined expense management.
These results along with the resiliency of our business and our operators abilities to execute give us comfort in providing the market. This morning with guidance for the full year of 'twenty 'twenty 1.
Last night, our press release contained guidance for revenues that meet or exceed 1.745 billion and adjusted EBITDA of at least $185 million.
Well, we are competent and while we are confident in our M&A pipeline, our ability to continue to grow through acquisition. This guidance excludes any future M&A activity.
Before I turn the call over to Jeff for further insights into our segment results are once again wanted to say thank you to our business leaders for making these results a reality with that I'll pass the call over to Jeff Jeff. Thank you Tony.
It brings me great pleasure to share our Q1.2021 operating indicators in key metrics.
I will focus my comments at our 3 operating segments.
Judy services home health and hospice and medical solutions.
We report each segment has a unique business unit with a full complement of operations.
Sales and recruitment payer and government relations clinical support and technology to support the delivery of our care.
Each operating segment has a fully dedicated management team established key indicators and a strong commitment to the <unk> core values and commitment to compliance.
Now, let me introduce our private duty services segment results for Q1.
Today, we are 1 of the nation's leading provider of private duty nursing services and private duty services remains the foundational platform for our overall business as we work to expand our service offerings.
I'd like to cover a few key points about our private duty services business first.
We are a scaled national provider with significant investments in recruitment training payer relations clinical systems and support.
As a large diversified segment, we have great comfort in our payer diversity state and geographic diversity, which creates a very stable rate environment.
Third our Pds patient profile is such that our relationship with our patient last a very long time on average our pds length of stay is approximately 5 years.
This relationship has created a stable revenue and gross margin profile for our Pts segment.
Finally, our private duty services home care model is the lowest cost health care setting while also being patient preferred.
Now onto our Pts segment indicators.
During Q1, we produced $358 million of revenue or 9.5% year over year growth.
Revenue was driven by an impressive 9.9 million hours of care provided during the quarter or 11, 1% growth over Q1.2020.
This growth rate is consistent with our strategy to grow private duty services with both organic and M&A activity.
I am pleased with how 2020 Pds acquisitions are now fully integrated into our Avi on a family.
We expect to continue to see solid private duty services volume growth rates throughout 2021.
Onto our revenue per hour of $35.40.
Which was down 55 from Q1 of 2020.
This was primarily driven from a change in business mix between skilled and unskilled services as the Covid pandemic continued to have a more significant impact on our skilled nursing businesses, primarily in schools and pediatric day health centers.
We expect this trend to begin to normalize in the second half of 2021 with the expected return to school in the fall.
Turning to our cost of labor and gross margin metrics. We continue to experience stability in gross margin was $101.8 million in Q1 or 29% gross margins.
This equates to a growth of 10% year over year on gross margin dollars.
Gross margin improvement was driven by our Pds cost per hour of $25.13 down 44 cents an hour from Q1.2020.
Pds cost per hour is benefiting from the unskilled business mix shift I mentioned above.
Lastly, our spread per hour and important metric balancing revenue and labor costs for the Pts segment maintained its stability at $10.28 per hour.
I expect pds spread per hour to continue to be in the $10 to $10.50 a range for the foreseeable future.
Although weather events are a normal course of business at Aviano ice storm early caused a significant multi day outage for our Pts segment within dense markets and essentially United States.
We lost approximately 72000, pds hours or $3.5 million in revenue and approximately $1.1 million and gross margin dollars.
I am proud of the Avianca spirit and perseverance that our teams displayed through this storm and how we cared for our employees patients and referral sources.
I continue to be impressed with how resilient, our pds business is and how our leadership team's rebounded from this weather event and return to the business of providing high Tech nursing care.
Moving on to our home health and Hospice segment for Q1, where we experienced substantial growth home.
Home Health and hospice is currently our fastest growing business segment and this rapid and accelerated growth has been a point of emphasis for us as we work to expand our national home health presence.
I want to highlight a couple of key points about our triple H segment.
Home Health and hospice is a natural extension for our home care platform, we have a seasoned management team with decades of experience in this segment.
We acquired 5 points healthcare as our home health and Hospice management platform and we have been leveraging aviano's infrastructure to accelerate its growth.
Like our private duty services segment, we have a long term commitment to clinical excellence technology and compliance.
Also our dedicated integration management office or I M. O is committed to fully integrating companies into aviano.
On that note, both 5 points and recover health integrations are substantially complete.
Both teams are now a part of the Aviano family and the businesses are trending ahead of our expectations. Meanwhile, our doctor's choice integration is underway and progressing nicely.
I expect doctor's choice to be 1 of the best transactions, we've done at Aviano to date.
Lastly, home health and hospice is the lowest cost and patient preferred setting for adult and geriatric patients. We are proud to be back in this business and we'll continue to expand our service and offerings throughout 2021 and beyond.
Now to home health and Hospice segment indicators for Q1.2021.
As this is our first full quarter reporting home health and hospice metrics. Therefore, we will not provide year over year comparisons until Q1 of 2022. However, we will report sequential quarterly growth throughout 2021.
During the quarter, we produced $31.5 million in revenue.
This was driven by 5800 total admissions approximately 66% being episodic admissions.
And 5700 total episodes of care.
I am pleased with the organic growth rates of our home health business, the home health and hospice team have already built a growth oriented culture, even through the integration process.
Lastly revenue per episode for Q1 was $2962 and in line with industry expectations under the P. D. G M reimbursement model.
From a cost and margin perspective, gross margins were 45% for the quarter.
We believe there is continued room for improvement in home health and hospice gross margins and expect the doctor's choice business to have a positive net impact all along with continued focus on episodic payer mix.
As our home health and Hospice Division homes, the best practices from all 3 acquired businesses and completes the integration into Aviano I have great confidence in our continued execution of this business and its overall growth impact on Avianca.
Lastly, our ASEAN a medical solution segment results for Q1.
Our medical solutions business provides interim nutrition and other medical supplies directly to our patients' homes. Some of its key attributes are the need for insurance nutrition is complementary to our private duty and home health patient populations.
Our payer and referral community value the continuity of care benefit Avianca has by providing medical solution services, along with our Pds and <unk> businesses.
Medical solutions patients often have a longer length of stay needs approximately $2.5 years. This drives a solid a reoccurring revenue stream, which is accompanied by very stable gross margins.
And lastly, medical solutions has demonstrated strong growth trends driven by a organic growth through a dedicated clinical sales team and be de novo growth in new states. We currently do not serve.
Again medical solutions as a home care business that is patient preferred and provides interim nutritional care and the lowest cost setting the home.
Now to medical solutions segment indicators for Q1.2021.
During Q1, we produced $34.8 million of revenue or 15, 2% year over year growth.
Revenue was driven by 73000 unique patients served UBS during the quarter or 10, 6% year over year growth.
This double digit growth is consistent with our strategy to grow medical solutions with both strong organic and de novo activities.
We are currently serving over 26000 patients per month, and our medical solutions business with plenty of geography for continued growth.
Our revenue per you PFS of $476.92 was up 4.6% from Q1, 2020, primarily driven by product mix shift.
I expect both volume growth and revenue to continue to benefit from the growth of our Pds and home health and hospice segments.
Turning to our cost of goods and gross margin metrics, we continue to experience great stability in gross margins with $15.7 million in Q1 or 45% gross margins percentage.
This equates to a year over year growth of 100 basis points in gross margin percentage.
Gross margin improvement was driven by product mix shift and overall efficiencies in our delivery model I expect gross margins to remain in the 45% range.
I am proud of our medical solutions team and Theyre demonstrated ability to scale the interim nutrition business on a national basis.
In summary, all 3 of you on our business segments are off to a great start in 2021.
I look forward to updating you will get at the end of Q2 on our continued progress with that I'd like to turn the call over to David as far our CFO.
<unk>.
Thank you Jeff.
Tony and Jeff have given us some great color on our quarter and the positive outlook that we have right now I'll now provide some more details on the results of operations adjusted EBITDA and liquidity.
Some recent events in Q2 that we're very proud of in 2021 guidance.
With respect to results of operations revenue was $417.2 million for the first quarter of 2021 as compared to $355.2 million for the first quarter of 2020, an increase of $61.9 million or 17, 4%. This increase was driven by growth across our key segments, including.
Have a $30.3 million or 9.5% increase in Pds revenue.
A 27.0 million were 604% increase in our home health and hospice revenue.
And a $4.6 million or 15, 2% increase in medical solutions revenue.
And Jeff mentioned, it but our Pts segment volume growth was a robust 11, 1% with both organic volume growth and new volumes contributed by the numerous acquisitions, we completed in 2020.
Our home health and Hospice segment revenue growth of 27 million resulted from the incremental revenue generated by the to 2020 home health and hospice acquisitions that we closed in the fourth quarter 5 points and recover health.
And as I will elaborate on later, we've continued our home health and hospice M&A in 2021 with the acquisition of Doctor's choice in April or.
Medical solutions segment volume growth was 10, 6%.
On the right side of things, while our Pds revenue decreased 1.6% overall due to the change in business mix that Jeff mentioned earlier, we view the Pds reimbursement rate environment is a tailwind, resulting from both permanent and temporary rate increases issued by various state Medicaid programs, and which is positively benefiting our pts businesses.
Revenue rate in our medical solutions business increased 4.6% from the year ago quarter.
Turning to gross margin our gross margin was $131.7 million or 31, 6% of revenue for the first quarter of 2021 as compared to $107.5 million, 33% of revenue for the first quarter of 2020.
The 22, 4% growth in our gross margin compares favorably to our revenue growth of 17, 4%.
Our gross margin percentage increased 130 basis points in the current quarter as compared to the year ago quarter.
Operating income was $28.3 million for the first quarter of 2021 were 6.8% of revenue as compared to $17.9 million or 5% of revenue for the first quarter of 2020, an increase of $10.4 million operating.
Operating income for the first quarter of 2021 was positively impacted by an increase of $14.5 million or 32% and field contribution as compared to the first quarter of 2020, the $14.5 million increase in fuel contribution was delivered by a $61.9 million or 17, 4% increase.
<unk> consolidated revenue combined with a 140 basis point improvement in our fuel contribution margin to 14, 9% for the first quarter of 2021.
An increase from 13, 5% for the from the first quarter of 2020.
Fuel contribution in fuel contribution margin are important metrics to us because it helps us assess and make decisions about the operating performance of our core field operations prior to corporate and other costs not directly related to our field operations that helps guide us in determining whether a branch and regional administrative expenses are appropriately sized.
To support our caregivers and direct patient care operations.
Moving on to net income net income decreased $31.8 million for the first quarter of 2021 as compared to the first quarter of 2020.
While that looks like a significant decrease in net income if you exclude the 50 million legal settlement. We received in the first quarter of 2020, our net income actually increased by approximately $18.2 million in the current quarter as compared to the year ago quarter, and that's primarily as a result of the 10, the $10.4 million increase in operating income I mentioned earlier and an 8.
<unk> 3 million net decrease in valuation charges associated with our interest rate swaps and net settlements incurred with swap counterparties.
Moving to adjusted EBITDA adjusted EBITDA was $43.7 million for the first quarter of 2021 as compared to $29.8 million for the first quarter of 2020, an increase of $13.9 million or 46, 7%. We're very pleased to see expansion in our adjusted EBITDA margins from 8.4% in the first quarter.
2020 to 10, 5% in the first quarter of 2021 as the quality of our adjusted EBITDA has improved primarily due to the 180 basis point improvement in our operating income as a percentage of revenue.
With respect to liquidity, we had strong liquidity at April 3.2021 with cash on the balance sheet of $67 million and availing available borrowing capacity under our revolving credit facility of $55 million, resulting in total liquidity of $122 million at the end of the first quarter and this is after returning in the first quarter.
$25.1 million of provider relief funds to the federal government and $4.3 million of stimulus funds to the state of Pennsylvania, both of which we received during 2020.
With respect to our cash collections and DSO were pleased with how our revenue cycle teams continue to perform in a remote work environment. Our focus is integrating the collection operations of the companies, we have acquired and normalizing our collections processes for the new electronic visit verification requirements.
Proud of how collaborative our revenue cycle and operations teams worked to drive excellence in cash collections, which is 1 of our 5 sees our DSO was 42 days for the first quarter of 2021 as compared to 49 days for the first quarter of 2020.
We expect our DSO to increase over time, as we grow our home health and hospice business as those businesses generally have longer collection cycles.
Our capital expenditures in the first fiscal quarter of 2021 were 0.6% of revenue as compared to 1.8% of revenue in the first quarter of 2020, we typically view our capex in a range of 1 to 1.2% of revenue our.
Our capex in the first quarter of 2021 was lower than normal due to timing of current year expenditures.
I'd like to now cover a couple of recent events in the second quarter of 2021.
Yeah.
On April 16, 2021, we closed the acquisition of Doctor's choice for purchase price of $115 million as we continued to execute our M&A plans.
In a short period of time, we've grown our home health and hospice business to $200 million of annual revenue on a pro forma basis inclusive of Doctor's choice based on first quarter results we.
We financed the doctor's choice acquisition in part with a $67 million incremental second lien term loan. This incremental second lien term loan was repaid with proceeds from our IPO, which I'll speak to next.
On April 28th we became a public registrant and on May 3rd we closed our initial public offering what a milestone and a tribute to our caregivers and support staff without whom this would not have been possible.
Including the Green shoe that we recently, partially exercise was recently partially exercised by our underwriters, we sold approximately $42 million of our common shares and raised approximately $507 million of gross proceeds from the from the offering in total net of bank fees, we received approximately $478 million, we use those funds.
Primarily to repay debt and accrued interest, but also to pay for offering costs and related items funding the remainder of the cash to the balance sheet for general corporate purposes and future M&A.
Specifically with respect to debt repayment, we used $307 million of IPO proceeds to fully repay and extinguish our $240 million original second lien credit facility as well as the $67 million incremental second lien term loan borrowed in the second quarter of 2021 to finance our acquisition of Doctor's choice.
And we used 100 million to make a principal payment against our first lien credit facility pro forma for these principal payments that we made with the IPO proceeds we had $862 million of total credit facility debt as of the end of Q1 'twenty 1.
And lastly, we upsized, our revolving credit facility in connection with the IPO, which further enhances our liquidity. We have now increased total capacity under the credit facility from 75 million to $200 million.
As a result of our initial public offering and repayment of debt. The rating agencies have taken positive actions on may 3.2021, S&P upgraded our issuer and issue level credit ratings from b minus or to be minus from Triple C plus with a positive outlook on.
On may 4th Moody's upgraded our corporate family rating to be too from B, 3 and affirmed our <unk> rating on our senior secured first lien credit facility with a stable outlook. We were pleased with these ratings actions.
And turning to our full year 2021 guidance, we anticipate our revenue to be at least 1.7 and $4.5 billion.
We anticipate our adjusted EBITDA to be at least $185 million.
And for the reasons outlined in the press release, we are not providing guidance at this time on net income.
1 other item. We also currently plan to provide guidance on adjusted net income per share in the future as we mature as a public company.
In summary, we've entered 2021 from a position of strength with first quarter earnings that exceeded our expectations. Additionally, we're pleased to have returned $29.4 million of provider relief and stimulus funds in aggregate that we received during 2020 to the respective government agencies in the first quarter of 'twenty 1 the <unk>.
Seeds, we received from our IPO and the debt. We retired as a result has reduced our leverage and related debt service costs in the second quarter.
With our improved capital structure as well as recent positive rating agency actions. We believe we are even better positioned to capitalize on the market opportunities before us.
And with that operator, we're ready to open up the call for questions.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star 1 on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press star 2 if you'd like to remove your question from the queue.
Participants using speaker equipment, it may be necessary to pick up your handset before pressing the starkey.
To allow for as many questions as possible. We ask that you. Please keep to 1 question and 1 follow up.
Our first question comes from the line of Steven Valiquette with Barclays. Please proceed with your question.
Great. Thanks, good morning, everybody.
Good morning, Steve how are you doing all right. So a.
A couple of questions here first just regarding the revenue rate in the Pts segment that was down a little bit year over year, you mentioned the change in the business mix between skilled versus unskilled services and how that should normalize start to normalize in the back half of the year.
I guess, if we think about that recovery how granular you can get an additional color around this but should we assume that that revenue rate can move back up in the high thirty's during that recovery. This year should we still think of that more like a mid $30 type number.
During that recovery phase.
Following up on the same subject to just the.
Any additional color you can provide just on the environment for collective state rate updates on how that is also impacting your outlook for that metric for the rest of the year.
Well first of all Steve that's a that's a very insightful question and.
And I think we can give you some color so I think that the.
The change that Jeff talked about in the rate I think it's probably most important to recognize what it's not it's not a change in payment rate or payment methodology from a payer or from a state. So it is as Jeff described it as a change in the business mix between skilled and unskilled.
And so as it relates to how we're thinking about it.
For the rest of the year, Jeff why don't you talk a little bit about the seasonality piece and how we expect that to shift with schools and so Steve as Tony said and as we in our comments.
But really really.
Tied to the Covid pandemic, we have seen a.
Slight downturn in our school business and is much from the from the workforce side of it as much from from our nurses, who are staying at home with their children and unable to to to work. So some of that skill business that we would normally have and then as Tony mentioned, we have a decent amount of of school skilled nursing.
Hours, where our nurse actually goes to the school with are medically fragile then obviously would be the height.
Sensitivity around our children in a COVID-19 pandemic most of our kids have not attended school in person. Both in Q4 of last year Q3, Q4 of last year as well as Q1 and now early Q2 of this year, we see good trends in and how the vaccination process is working we've talked to a lot of R.
Our parents and they are intending on.
Putting us putting their kids back in school in the fall.
That really starts to move for us in August and certainly by Labor Day September our schools are back in full session. So as I think as we said in our prepared remarks, we expect that to really normalize both both from a volume standpoint on our skilled business skilled nursing business as well as our overall rate and I think as Tony mentioned we.
We feel very good about that so Steve the second half of your question was related to the really the payer end state environment.
I'll go all the way back to the beginning of Covid.
Many of our states put through rate increases during during the first half or the middle of 2020, and some of those states put those rate increases through as temporary rate increases. However, since that time a lot of those states have moved now moved those right.
Increases to permanent rate increases going forward.
So in the second half of 2020 in the first quarter of 'twenty..1 I will tell you that our overall rate environment has been positive and we see that continuing I'll give geoff and his payer relations team some credit here.
Made an investment back in the first part of 2020 in a in a government relations and payer relations strategy and these are these guys who have done an outstanding job in not only keeping rate positive, but moving rate forward.
And and so we've got additional a rate relief coming in 'twenty, 1 and we think for the foreseeable future rate is going to be a positive story in our Pts segment.
Okay. That's helpful. Thanks.
Thanks, Steve.
And thank you for your support.
Thank you. Our next question comes from the line of Matt Borsch with BMO capital markets. Please proceed with your question.
Thank you.
And congratulations on everything you've accomplished in the last.
2 months.
I wanted to ask about.
How you see the timeline to normal trends.
How much do you anticipate this is going to look like what the business looked like prior to Covid.
Versus where do you see the impacts from the pandemic as you.
You'll go through the rest of this year.
Okay, well first of all Matt that was a compliment. Thank you we don't get a lot of those so anytime anytime we do we celebrate for a second so so I appreciate the kind words.
As it relates to the kind of the normal timeline and your question about when do we get back to that I'll tell you I think we're back to that today matter of fact I in my opinion I think we're for the most part back to there in Q1 of 'twenty 1 not because we are where we were prior to COVID-19, but I believe that the.
Of normal has now changed and I think that where we are today is where we're going to continue to build from going forward.
So I'm not we're not expected Jeff I'll ask you to jump in but were not expected.
Okay well in June all of a sudden things are going to go and change in some way or another we think we're living in what's going to be our normal world going forward, but any color you want to add as well said I think our investments, Matt and technology that we invested in 19 and 20 infrastructure around recruitment as Tony talked payer and government relations.
And systems point of care assistance for our business have really helped us benefit from an operating leverage standpoint, Dave talked about the improvement and what we call field contribution you see the improvement in adjusted EBITDA and I attribute that to as Tony talked about Theres, a new norm post COVID-19 and we have found a way to operate the business more.
<unk> I don't think we we don't plan on going back to the old way.
I think Matt maybe I read a little bit more into your question. If you think back to prior to Covid recruiting new caregivers nurses for us was difficult.
Host Covid recruiting nurses and caregivers is difficult and I think that's just the world that we're all going to live in and we can't solve that problem, but what we're going to do is make it better for us.
Than anybody else and so the investments that Jeff talked about into our recruiting structure.
I believe is going to pay off for us in the long run now granted our country is struggling with getting people back to work and while that's above my pay grade as the as the as the unemployment benefits subside and people find the need to go back to work.
It might make our jobs, a little bit easier, but we're not waiting around and hanging our hat on that where we were operating as if this is the new normal for us.
Fantastic. Thank you.
Thanks, Matt.
Thank you. Our next question comes from the line of Lisa Gill with Jpmorgan. Please proceed with your question.
Great. Thanks, very much and good morning, I just wanted to follow up on 2 things..1 can you just remind us the size of the pipeline of acquisitions that you had and then secondly, I heard the comment that I.
You don't have any acquisitions currently in the guidance that you gave us for 2021 can you just remind us how long it would take to close the transaction is there the potential that you would have that opportunity to close something here before the end of the calendar year.
So certainly Lisa let me and I'm going to take your question kind of in reverse and I will start with the guidance and then Ryan I'll ask you to jump in and talk about our pipeline.
So our guidance does not include any future M&A. So so we closed doctors in April of this year and that's the only transaction that we have closed in 2021.
And so so the 1.745 billion in revenue the 185 million in EBITDA does not include any other acquisition other than the Doctor's choice acquisition that we discussed with that we do have a robust pipeline.
<unk> been managing that pipeline Rod why don't you give a couple of comments about the size of the pipeline and how long it takes to from a from beginning Dan Yeah Yeah.
Yes, Lisa the current pipeline today is roughly 300 million that we're working with on a daily basis. Those are acquisitions in that $20 million to $80 million range as our previous we have previously disclosed we normally kind.
Work on acquisition pipeline of around this much now we're very disciplined and that doesn't mean that we've got we've got candidates coming on and going off all the time, we don't do every acquisition that comes our way we look at a fair amount when we don't close a lot. So a very particular and discipline with regard to our approach.
I think that that we have previously disclosed it takes us about 45 days from the date that you sign a transaction to to closing it.
And we fully integrate every acquisition within 12 months, but I think Lisa the way that I would think about our acquisitions going forward.
As you know we don't have control over when some of these assets come up for sale or the timing of that so it's a little bit hard to predict the timing of closed. So that's why we don't include it in our guidance. However.
Internally, we're going to continue to grow through acquisition and somewhere between 150 and $200 million a year is a pretty good number for us and and we believe that we'll be able to achieve that not only in 'twenty, 1 but in 'twenty 2 in the years following that so.
Going to continue to be very assertive as it relates to our growth through acquisition.
Just given the focus on home health do you find that the competitive landscape has changed at all over the last 12 months for these assets as we think about acquisition.
No leases route again, the competitive landscape really hasn't changed really at all other than the fact that it's not so much strategic buyers that are out there in the market is more private equity and that's the only that's the only change I've seen.
1 of the things that.
1 of the things that we've been successful at is that there's a broad talks about with the private equity competitors. In these deals is that when we identify transaction that is a good strategic fit for Avi on it we're going to close that transaction, our synergies have a lot of value and and we can exploit those values and our pricing.
And so if it's a good asset and it's a good fit for Aviano, we're going after and we're going to close that transaction.
Okay, great. Thank you so much.
Sure.
Thank you. Our next question comes from the line of a J Rice with credit Suisse. Please proceed with your question.
Oh, hi, everybody.
Maybe just.
Look at the cost side for a minute you you alluded to labor, obviously being a.
Relatively tight supply can you give us a little more flavor on the.
Private duty side as well as the adult home care side, what you're seeing how much of a constraint that is I think there was a I mentioned that you've got some.
People that are at home with kids and other things that.
Do you expect to see schools reopening all opening back up how much of a constraint is that right now and how much of a swing could that be for the back half of the year can you just give us a little more granular discussion around your labor trends.
Yeah. Jay this is Jeff Thanks for the question I think.
I'll tackle both sides of it 1 I think.
From the cost side of it we haven't seen really any leakage on margin or or even it being a cost issue.
Which is nice it so so I think as we think about our margins as we think about the rate increases the known rate increases and the ones. We're still working on for the latter half of 'twenty 'twenty, 1 going into 2022 legislative cycle I think we feel really good on the cost side of it.
I think we've seen kind of in the back half of Covid. It's it's really not a nurse, saying I need another 50 cents an hour down an hour. It's just it's just getting that nurse back into the workforce Tony alluded to it.
And I think we've heard some of our peers talk about it the macro trends with unemployment, we ultimately do need unemployment checks to come down in the value of the dollar value over time.
We're certainly not waiting on that we're certainly not betting on that but but that macro trend will help our industry and certainly help us.
I think the biggest thing for US is really getting kids back to school I mean, we talked about it getting kids back to school really helps us from a.
Our revenue growth strategy, because our kids are patients will go to school, but it's also you know that.
To that nurse, who named who may be a single mom has got a couple of kids. It it doesn't matter if we pay our dollar more an hour if she's got 2 kids at home she can't fill a ship she she's got a got to stay home and so that that macro trend moving back to both schools and also federal and state unemployment rates coming down a little bit.
I think I think will help us, but I think as you think of our growth rates that you saw on first quarter I think as we think of 2021 those won't but we don't see it materially changing.
We think those growth rates than the ones, we talked about on the roadshow are still.
They are very solid for our Pts segment as.
As well as our home health and Hospice segment, you know, we can always use tons, you're talking about a J, we can always use more nurses.
Not an issue of we have too many but I think it's something that we just find the ability to fight through every day and age.
J J F Gateway that Jeff gave a metric in his prepared comments and he talked about the spread in private duty services and that spread is a key metric and 1 that we.
We gave we deliberately put that out there for folks to follow.
And I think in his comments he he framed that out and it says that the spread is going to going to fluctuate between 10 and $10.50, and I think that answer is is ultimately the answer to your question is that we think that spread is going to continue to be in that 10 to $2.50 range and if you ask us well what about it by the end of.
'twenty 1 nothing nothing that we can see on the horizon would change or how we're thinking about that metric. So if I were in your shoes that would be the piece of the private duty business that I would anchor to.
Okay, and maybe just.
Further on the cost side, it looks like your branch and regional expense as well as your corporate expense in terms of the ratios relative to revenue were a little better than we were thinking they were going to be can you talk a little bit about the potential for leverage there as you grow the business.
What are the implications for long term margin.
Enhancement opportunities as you get leverage on those lines.
Sure a J as.
As we've grown over the past year, we have already leveraged our branch and regional.
Infrastructure as well as our corporate infrastructure and so yeah. We're pleased.
With the results that we've turned in.
And we think we have some leverage to gain in the future as well so.
Strong cost control as you know Tony and Jeff mentioned, it our operators have done an exceptional job of growing the business, but at the same time controlling costs and so you know we think we've got leverage both in both in the field as well as incorporate.
Yeah.
As a reference point a J if you go back a couple of years ago.
Our corporate expense, Dave they've put it in our press release last night, our adjusted corporate expense number is down to about $4.7.
<unk> of revenue, we picked up 200 basis points in the last couple of years, just on corporate overhead and so as we continue to grow you know in that mid to high teens year over year, we're going to continue to gain leverage against at corporate and regional.
SG&A. So we think we've got runway left.
Okay. Thanks, a lot.
Okay.
Thank you. Our next question comes from the line of Joanna <unk> with Bank of America. Please proceed with your question.
Hi, Good morning. Thank you for taking the question. So my first follow up on the commentary around organic growth.
Each of you are in your each of your business like do you expect to continue to outpace the market. So what was the organic growth I guess in your in your home health market and your phone segment.
So we didn't we didn't break out organic growth from acquisition growth.
Primarily in our Q1 numbers, there's no new acquisitions in in that number all of the acquisitions that were done were done better in our Q1 numbers were done in 2020 and as Jeff alluded to we get after integration very quickly through our <unk>.
Gration management office and this I M. O team begins integration literally before we even close and so because of that we are when we have overlapping locations. We consolidate those locations and those just become a part of our organic story.
So we've not broken out.
Our growth rates organically versus that through acquisition with that said.
Our businesses.
We have talked publicly depending on who you read the home health market is growing.
4% to 7% year over year in home health and our home health organic growth is outpacing that by a few hundred basis points. So and we believe that trend will continue.
Okay, and that's what Archie I'm just.
Okay and your market share when you come.
Coming into the market when you acquire these assets and you just kind of improved operations and be able to grow faster than the market rate.
Yeah, and Julien This is Jeff I don't think as we identify as I'll use doctor's choice. It was a great a great example.
We're not looking to necessarily take that to choice and just grow it faster. We are we bought it because we think the growth story of not just choice is spot on as Tony talked about we are going to gain leverage in doctor's choice through back end synergies and then making it part of the family, but we we are extremely pleased with.
Doctor's choice organic growth rate, it's outgrowing, the Florida market and most of its peers in the market and that's part of why we bought it we we like that asset a great density but.
And to Tony's point, we are we're 30 about 30, coupled at 30 days entity.
The closure of that and we're already in in integration, we're already off and running the team is doing great.
It's exceeding our expectations right out the gate. So it's not as much about changing the growth story, it's really about getting the synergies and then bring it into our family and most importantly, as we mentioned with both recover health and 5 points is growing through the integration process and I think we're really pleased this.
Year to date 2021, with how the home health business has grown through the integration process and Joanna if it's helpful. I think we have made this comment already publicly we expect our home health and hospice business to continue to grow in that high single digits approaching low double digit growth year over year.
We don't see we don't see that slowing down at all.
Great. That's that that's why I always say Oh, Okay. And then my question was on that.
I guess on the home health side of things in terms of your targets.
Well acquisitions are you talking about growing revenue.
In the mid to high teens going forward, including acquisitions. So how should you think about that kind of stuff.
The amount of revenue.
I expect to acquire and then how will you be financing these transactions going forward.
Okay, well I think we made we I think we've tried to.
Put bookends on that in a few minutes ago on any given year.
We think that we'll be acquiring $150 million to $200 million of revenue.
On any given year now now I will caution you that's not all in home health and hospice, we're going to be opportunistic about continuing to grow our private duty services business as well and when opportunities to acquire quality assets come up in that space, we'll take those on as well.
But but I think if you if you were to use a range of $150 million to $200 million a year. That's a that's a that's probably a pretty good place to land as it relates to pay inform as Dave outlined we've got strong cash on the balance sheet.
As we discussed in our press release and in our Q, we've executed on our additional shares through the shoe that.
That brings us probably to about $90.90 million to $95 million available to do M&A with cash on our balance sheet.
We'll continue to use leverage where it makes sense.
We did we were in.
We were planning on bringing our leverage ratio down to between 3 and a half in 4.
Our our IPO was a little bit shorter than we had anticipated so leverage ends up being between 4 and 4 and a half.
Gross leverage versus net leverage we're certainly comfortable in there we can continue to use our balance sheet to grow.
<unk> also mentioned we have access to another we increased our revolver to $200 million. We've so we've got access to us to be in or out of the revolver to continue to grow and then on top of that we have our we have our equity both.
Could we could execute on in a secondary offering and and raise capital that way. We have sponsors that are highly supportive of growing this business and lastly, we could use our stock as a currency now granted that's not something we've talked about thus far but it's something we've got all of those tools in our bag.
I don't think I don't think access to capital is going to constrain our growth through acquisition at all.
Thanks Joanne.
Very helpful. Thank you.
Thank you. Our next question comes from the line of Peter Chickering with Deutsche Bank. Please proceed with your question.
Good morning, guys. Thanks for taking my questions 2 clarifications here your margin this quarter.
Very strong at 10, 5% and also generally in line with guidance for 2021 you.
You did reference a continued room for gross margin improvements in home health and hospice plus additional SG&A leverage. So I was wondering if you can walk us through the margin progression throughout 2021.
What would prevent you from getting to the 11 plus range by.
By the fourth quarter.
Okay.
Well I think in terms of the outlook on 'twenty, 1 I think about all we're going to be able to say is that does that.
The guidance that we've given 1 billion 745, and revenue and not less than a 185 million in EBITDA with that.
I do believe that there are there is again clear runway for us to continue to improve margins.
And Jeff mentioned it in his remarks, our home health margin today runs about in the mid Forty's as.
As we are bringing on new acquisitions, those acquisitions are running at higher gross margins already because they've had a little bit more time under P. D. G M and we think that as we grow that business, we will see that margin expand at gross margin expand to the upper forty's or even low fifties and we'll continue to.
Make it investments and enhancements in our business to get that.
I think in our private duty services business I think.
I think our margins are kind of where they're going to be I don't know.
Again, it's a it's not a very complex business. We are we get paid by the hour and we pay our caregiver by the hours. So gross margins are relatively fixed.
And so likewise, Jeff said it earlier I don't think Theres, a tremendous downside with wage pressure in.
In the.
In the immediate future, but on the flip side of that I don't think there's a tremendous upside.
Because of wage pressure as well so our gross margins are kind of be flat. There are gross and then in the medical solutions business. While it is much smaller our gross margins are going to run mid Forty's, that's kind of a.
Somewhat of a commodity and that's just kind of where that's going to be now with all that said I do believe there is additional margin expansion that can be had through the leverage of overhead.
We've talked about it.
I think a J asked the question did so did Lisa.
That as we continue to grow you think about that mid mid to high teen growth as we grow that revenue, we're not going to have to grow our corporate infrastructure. We have a we have a very robust compliance program within our corporate infrastructure, we don't have to duplicate that because broad brings us another.
$80 million of acquired revenue and so we'll continue to to gain that leverage going forward and so I think that's going to afford us the opportunity for margin expansion.
Okay, Great and then a follow up question on the Pds side on the skilled versus unskilled any testing.
Can you quantify the split between those 2 businesses in the first quarter and how do you expect that to rebound at back half of year do you think that you can recruit.
Just select demand historically I believe that our recruiting with the limitation of growth in TTS. So I wanted to understand make sure I understand but the demand from kids going back to school and recruiting of nurses the back half of the year to fit that demand. Thanks, so much.
So that's a great.
Question, Peter and Jeff and I will tag team that let me set the table width.
We're not going to disclose.
Skilled versus unskilled because then we get into all sorts of other services.
Within private duty services, whether it be through our pediatric day health centers or a fair therapy component of the clinical pump next thing you know where we are.
We're trying to parse that out into 17 different pieces. So so we're not going to we're not going to disclose further below our private duty services segment with that said, though we will try to provide you with some color Jeff why don't you talk a little bit about the kind of patients who are skilled and unskilled on what causes them to go up and down yes and Peter.
Really the reason we've seen the not only the consistency, but even the growth through the unskilled side of the business is its really a family member a neighbor a distant relative who is providing that unskilled service and so through COVID-19, there's a high level a higher level level of trust between the family and the.
Caregiver, there and it was.
Yes, it was just easier to keep that group connected.
Both both a family member or neighbor, who's providing that unskilled care to the family that that business has just stayed much more connected and even honestly has grown through the COVID-19 process.
De health centers going back a year ago, our day health centers back in April I think we're fundamentally shut down for like 60 days, we didn't have a single a single patient and then slowly.
Florida opened up Pennsylvania, some of the states opened up and allowed day health centers for us to start bringing the kids back in and so.
At this point, we've seen that business, primarily rebound there is still a little bit, Pennsylvania still opening up from 75% capacity to 100% capacity at the end of this month, which allows us to kind of round out that business and then again I just keep pointing back to schools and just this just this the school business is a nice is all <unk>.
<unk> services so it's.
It's a it's in our internal Pea and that that meets the family at the home and rides the school bus with our multi factor child. So it's a skilled service in nature connecting that business. It's you brought up recruitment, it's an easier job for us to recruit for because it's primarily a 730 to $4.35 days a week.
It's a good setting in a school setting and so it's a much easier.
Position for us to fill from a recruitment standpoint and in some ways. It almost feels itself. If you will so so just connecting that business and as Tony said, it's not going to merely just show up on a on August 1st but as it phases back in over the course of August September October and really really the end of the year that'll be a great signal.
US that states are really starting to get back to a normal a sense of normality post COVID-19 I think that ultimately we see that as a great sign for our business and even the ability to enhance our our growth rate.
Great. Thanks, so much nice quarter guys.
Thanks, Thank you.
Thank you, ladies and gentlemen to allow for as many other questions as possible. We ask that you each keep to 1 question at this time. Our next question comes from the line of Brian Jaffe.
Jefferies. Please proceed with your question.
Hey, good morning, guys and congrats and nice to have you guys back in the public markets.
Since we're down to just 1 question I just wanted to ask if we can level set post IPO.
The right share count for 2022, and then I guess, the right debt levels to be thinking about for end of Q2 just for modeling purposes.
Thanks, Brian as.
As far as the share count you know today, we've got $184 million of shares outstanding. When you think about the shares that may be outstanding at the end of the year next year Theres still some mechanics, we're working through with respect to the performance component of our options and so I don't have a number for that for you on that right now, but it's something that we're still we're working through.
And then as far as.
That is.
As Tony said I think the way to think about it as well.
We see ourselves in the 4 to 4 and a half.
Turns of leverage range.
Pro forma for the IPO, we were at $862 million in gross debt.
And we see it is 4 to <unk>.
Low to mid fours in terms of leverage going forward.
Awesome. Thank you.
Thanks, Brian I appreciate you.
Thank you. Our next question comes from the line of Frank Morgan with RBC Capital markets. Please proceed with your question.
Good morning, I actually wanted to ask about the home health care side of the business I know that across the 3 units, whether it's 5 points recovery health, our doctors where are they in the PD GM process. Do you think you really maximize the rate opportunity. There I know you talked about the margin opportunity in home health. So is it more on the rate side from refining.
D G M or is it more on a cost mix that question. Thanks.
So let me let me start with the idea of getting back into the Medicare home health space.
Think we spent the first half of 'twenty, making sure that we understood PD GM and understood. How it was going to separate winners from losers in the kind of metrics and systems that you're happy to have in place to appropriately manage P. D. G M I think ultimately.
We got extremely comfortable with with with doing that.
<unk>.
I think the companies that we bought 5 points.
Recover as well as doctors choice I think have done an exceptional job clinically and they provide great care.
I'm going to I'm going to change your wording because I don't think we don't have an initiative to maximize reimbursement.
And what we look to do is to deliver the right level of care to each patient under the orders of physician the reimbursement will sort itself out and so I think 1 of the things that we're going to do over time is we're going to bring a consist.
Consistency through each of those businesses that you just described we're going to bring those into 1 clinical operating system going forward and we will use technology to make sure that our clinicians are documented appropriately and that we are following physician's orders and that were being compensated.
<unk>, Oh, and I think if we if we let that be our driving force I think the outcome will be that we're going to be reimbursed appropriately for the services we're providing.
Thank you. Our next question comes from the line of John Ransom with Raymond James. Please proceed with your question.
Hey, guys.
Just my 1 question is if we step back and look at what you're building here.
Market's not ever seen a pediatric company combined with an adult care company.
Other than just the normal back office.
Clients in accounting.
Is there a natural synergy between those 2 businesses. There should we think about it is this is a great platform, but it gives us a chance to rebuild again a great outcome.
Well I think so I'm going to start with the.
The way you asked the question.
Because I thought it was insightful.
In terms of traditional synergy between the 2 I think the answer is no. We don't there's not a lot of overlap with staffing theres not a lot of overlap with referral sources.
Uh huh.
Theres not a lot of overlap with billing the reimbursement piece.
And to your point there is a there is a significant ability to to leverage overhead across a much larger platform and we will continue to benefit from from from being able to leverage our corporate expense across multiple platforms.
However.
I do believe that there is a there is I'm going to have a pseudo synergy that exist because we really diversify the risk profile of our business and granted.
From where we sit today, the horizon looks pretty clear and and so for the foreseeable future rates look.
Table to positive growth looks stable.
Stable to positive our acquisition pipeline looks stable, but somewhere out there theres a storm on the horizon and I think that having a diverse business platform that would allow us to take a hit here or there.
Without it being devastating across the entire business I do believe is a is.
A strategic advantage for us going forward so if.
If if the waters where to get choppy in any 1 of those 3 business segments.
At the other 2 business segments gives us the ability to weather those kind of storms and we think that is a competitive advantage. So hopefully somewhere in there I answered your question.
Thanks, Tony appreciate it.
Thanks, John.
Not sure if the laugh was no you didn't answer it.
[laughter].
Thank you. Our next question comes from the line of Scott Fidel with Stephens. Please proceed with your question.
Hi, Thanks, good morning.
Wanted to just follow up question just on getting the skilled mix back up to more normal and in pediatrics and it sounds like the school reopening as a key lever to that.
Interesting.
You have your conversations with the parents and and in terms of getting your kids back into school because obviously they do have these these more significant medical complex medical situations are you getting any feedback in terms of is there.
Their parents looking more to get.
Their kids vaccinated because of that or do you just think that in general just the vaccination rates more broadly for teachers and other staff have increased so much there will just be more comfort with the parents in terms of putting that cash back into the schools.
Scott.
It's a great question and I'll tell you from from the parents, we've talked too not unlike the parents that we or they want their kids back in school. So so they understand even though that their child, the medically fragile child and as it's especially utilize environment.
They ultimately want their child back in school, they want them back in a safe manner, which goes to your point on not only not only their vaccination, but the kids in the schools vaccination. The teachers vaccinations, which I think is the primary driver while they were out the majority of last year and still.
So year to date.
But now when we talk to the parents. They know the socialists socialization education that has gained for their kids is absolutely worth it and they they are working with the school systems to build a path back in <unk>.
These parents are very vocal there theyre very motivated.
They work hard on their shoulders behalf and they're excited to get back in the end of the school setting in most of these most of these parents received at home nursing services to so we're in their home on.
On the off school hours.
So we know where they are in the evenings and nights and certainly weekends, but the idea of getting their school getting their chilling back to school is very important to them. So I think though they're helping to solve the equation there helping to schools to solve the equation and I think secondary in your question is really the vaccination rates I think I think is where we see both the the national <unk>.
Nation rates, but also the vaccination rates within our own nursing pools at Aviano, we feel we feel confident that 2021 is really going to crest, the whether its their herd immunity or the majority of people getting vaccinated, we feel like by 2021 is the year that that happens.
Tony anything you'd add no I think you said it well.
Okay, great well I'm sure if I noticed parents is probably tougher having those kids at school that were at home than anyone else. So it certainly makes sense okay. Thanks.
Thanks Scott.
Thank you ladies and gentlemen, that's the end of our question and answer session I will turn the floor back to Mr. Strange for any final comments.
Thank you and we appreciate your help during our call.
To like to in closing like to welcome Dr. Schwartz to our board on behalf of the entire executive team. We're looking forward to working with you buckle up.
Also like to thank all of our employees again without the work that you guys. Do every single day. None of these results are possible and we really appreciate all of the effort and then lastly, I would like to thank the folks who took time out of their day to join our call. We appreciate your support you guys have been great. During this process and we look for.
Forward to many future calls and being able to share our success with you. Thanks a lot operator.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.