Q2 2021 Select Medical Holdings Corp Earnings Call

August 6, 2021

2021 results and the company's business outlook.

Making today are the company's executive Chairman and co founder Robert Ortenzio, and the company's executive Vice President and Chief Financial Officer, Martin Jackson manner.

Management will give you an overview of the quarter and then open the call for questions.

Before we get started we would like to remind you that this conference call may contain forward looking statements regarding future events or the future financial performance for the company, including without limitation statements regarding operating results growth opportunities and other statements that were for.

For 2 select medicals plans expectations strategies intentions and beliefs.

These forward looking statements are based on the information available to management of select medical today and the company assumes no obligation to update these statements as circumstances change.

At this time I will turn the conference over to Mr. Robert Ortenzio.

Thank you operator, good morning, everyone. Thanks for joining us for select Medical's second quarter earnings conference call for 2021.

We're very pleased with our financial results for the quarter as well as a number of other business schools that we accomplished during the quarter.

We experienced top line growth in all 4 of our business segments compared to both the same quarter last year and pre pandemic.

Same quarter in 2019, the volumes in our inpatient outpatient business segments are trending very nicely.

And are well above pre pandemic volume numbers.

In addition to the volume growth, the inpatient and outpatient rehabilitation hospitals and clinics posted their highest quarters for adjusted EBITDA in the history of the company.

Can centralize made nice strides strides with volume improvement.

More industries, such as airlines hospitality municipalities and schools reopen.

On the development front.

On May 1 Scripps health care entered into our existing joint venture partnership with UC, San Diego Health on a 110 bed critical illness recovery hospitals on San Diego, California.

In June we closed on a new outpatient joint venture with Mont Health in West, Virginia, which marked our entry into the state for outpatient rehab.

On July 1 we entered into a new long term acute care hospital joint venture with Ascension Saint Thomas in Nashville, contributing our 70 bed Nashville hospital to the joint venture and moving forward with plans.

So add a 30 bed satellite hospitals within a hospital at the St. Thomas West campus later this year.

Also on July 1 we entered into a new joint venture with CHS Northwest Health care in Tucson, Arizona and acquired a 47 bed long term acute care hospital cure at Tucson, which from plan to relocate to northwest Medical Center later this year.

And earlier that earlier this week, we entered into a new outpatient rehab joint ventures with Cedars Sinai is on Los Angeles, California, contributing 26 outpatient clinics in that market to the joint venture.

We continue to work on finalizing the acquisition of acuity health care, which operates 5 long term acute care hospitals through joint venture partnerships in New Jersey, and West Virginia, We expect the deal to close sometime late Q3 or early Q4.

Our development pipeline remains strong as we continue to look for opportunities to expand our footprint and partner with leading health care institutions throughout the country.

In addition last week U S News and World report released their annual ranking of top rehabilitation hospitals in the country.

Our Kessler Institute of rehabilitation in New Jersey was ranked number 4 in the country, it's 29th consecutive year of being named among the nation's best.

In addition, this year for the first time, we have 3 of our joint venture partner hospitals, making the list. They are Baylor, Scott and White Institute for rehabilitation and Dallas at number 13 Ameren.

<unk> rehabilitation hospital in Atlanta at number 26.

Ohio Health rehabilitation hospitals in Columbus, Ohio at number 34.

I couldnt be more proud of our clinician clinical and operational teams at these hospitals and throughout the rest of our portfolio of hospitals for their hard work expertise and dedication to the care and treatment of our patients.

2 other items I wanted to note are the centers for disease control, the CDC and select medical collaborated on a clinical study regarding long term impact of COVID-19, which was recently published in the more morbidity and mortality weekly report.

Finally as noted in our earnings press release yesterday, our board has declared a 12.5 cent.

Per share dividend debt will be payable August 30 to shareholders of record on August 18th.

As we've done over the past year, we have outlined our business segment monthly revenue volume and occupancy statistics on our earnings press release, a public filings.

This quarter. We also included monthly results from 2019 to provide a data point of where each of our business segments, where prior to the pandemic compared to where they are currently.

We will continue to include this information as long as it provides meaningful insight to the impact of COVID-19 on the company's financial performance.

Overall for the second revenue for the second quarter increased 26, 9% to $156 billion.

And for the and for year to date has increased 17, 5% to $311 billion revenue on our critical illness recovery hospitals segment in the second quarter increased 4.7% to $544 million compared to 520 million on the same quarter last year patient days.

We're down 1.4% compared to the same quarter last year with 273000 patient days in the quarter occupancy in our critical illness recovery hospitals segment was 69% in the second quarter compared to 72% in the same quarter last year and 69% in the second quarter of 2019.

Revenue per patient day increased 6.4% to $1986 per patient day on the second quarter.

Case mix index in our critical illness recovery hospitals was 133 in the second quarter compared to $1.32 in the same quarter last year.

As we had mentioned in our most recent earnings call staffing remains an issue on the critical illness recovery hospitals.

And it did have an impact on the number of patients we were able to admit for the quarter. We had a number of our hospitals that were unable to accept patients.

Due to lack of clinician availability.

This cap and census represents a reduction of occupancy of approximately 1.5% I would like to point out that day staffing challenges have been isolated to our critical illness recovery hospitals, and we have not experienced this issue in any of our other business segments.

Revenue in our rehabilitation hospitals segment in the second quarter increased 26, 1% to $213 million compared to $169 million in the same quarter last year patient days increased 24, 8% compared to the same quarter last year with almost 105000 patient days occupancy in.

Our rehab hospitals was 85% in the second quarter compared to 71% in the same quarter last year and 75% in the second quarter of 2019 revenue per patient day increased 1% to $1849 per day in the second quarter.

Revenue on our outpatient rehab segment in the second quarter increased 67, 8% for $280 million compared to $167 million in the same quarter last year patient visits were up 79, 2% with 2.4 million visits in the quarter compared to $1.3 million visits in the same quarter.

<unk> last year and $2.2 million visits in the second quarter of 2019.

Our revenue per visit was $102 in the second quarter compared to $106 per visit in the same quarter last year. This reduction in rate is due to a change in our payer mix caused by the pandemic and related lockdowns.

Revenue in our Concentrix segment in the second quarter increased 46, 1% to $456 million compared to $312 million in the same quarter last year for the centers patient visits were up 49% to 3 million visits compared to $2..1 5 million visits in the same quarter last year and 3.

1 million visits in the second quarter of 2019 revenue per visit in the centers increased 125 increased to $125 in the second quarter compared to $124 in the same quarter last year.

I also want to highlight that we recognized $98 million and other operating income in the second quarter related to funds that we received under the cares act provider relief for incremental cost and loss revenues incurred as a result of the Covid pandemic last year, we recognized $55 million on other operating income related these funds the adjusted EBITDA.

Result for our critical illness recovery hospitals rehabilitation hospital and outpatient rehab segment do not include any recognition of this income we recorded other operating income related to those segments under our other activities adjusted EBITDA results for our Concentrix.

Segment included recognition of this income, including $32.3 million in the second quarter of this year and 800000 in the same quarter last year.

Total company adjusted EBITDA for the second quarter increased 91, 3% to $342 million compared to $178.8 million in the same quarter last year. Our consolidated adjusted EBITDA margin was 21.9 for the second quarter compared to $14.5 for the same quarter last year.

Our critical illness recovery hospitals segment, adjusted EBITDA was $72.9 million in the second quarter compared to $89.7 in the same quarter last year adjusted EBITDA margin for the segment was 13, 4% in the second quarter compared to $17.3 in the same quarter last year.

We experience experienced a deterioration of EBITDA margin in the quarter due to significantly higher nursing cost, which was driven by both an increase of both ours and rates of agency staffing.

Our rehabilitation hospitals segment, adjusted EBITDA increased 83, 9% to $58 million from the second quarter compared to 27.6 million on the same quarter last year adjusted EBITDA margin for the rehab hospitals segment was 23, 9% in the second quarter compared to 16, 4% in the same quarter.

Last year.

Outpatient rehab adjusted EBITDA was $45.6 million in the second quarter compared to adjusted EBITDA loss of $6.3 million in the same quarter last year.

Adjusted EBITDA margin for the outpatient segment was 16, 3% in the second quarter.

Our concentrix adjusted EBITDA increased 233% to $137.1 million from the second quarter, including the $32 million in cares Act payments recognized in the quarter. This compares to $41 million on the same quarter last year, which included 800000 in cares payment.

Adjusted EBITDA margin was 30% in the second quarter compared to $13.3 in the same quarter last year, excluding the $32.3 million of cares Act payments. The adjusted EBITDA margin would have been 23% for the quarter.

Earnings per common share increased 213% to $1.22 for the second quarter compared to 39 for the same quarter last year in.

In both periods our earnings per common share was positively affected by the cares Act provider relief funds recognized in the respective quarters. Excluding the cares Act income earnings per share would have been 72 in the second quarter. This year and 9 <unk> per share in the same quarter last year.

On the regulatory front last week CMS issued the final inpatient rehab rules for fiscal 2022 effective October 1 of this year. The final rule includes a 2.3% increase in the standard payment amount, which is slightly less than the $2..5 included in the proposed rule. In addition, the high cost outliers for.

<unk> increased by 20%, which was slightly worse than what was in the proposed rule. The CMG relative weight in average length of stay values were also updated in the final rule.

Finally, this week CMS also issued the final <unk> rules for fiscal 'twenty to the final rule included 2.2% increase in the federal base rate again slightly less than the 2.5% increased outline on the proposed rule for.

The high cost outlier threshold was increased 21% and the MSL LTC DRG relative weights and expected length of stays were also updated in the final rule.

That concludes my remarks, and I'll turn it over to Marty Jackson for some additional financial details before we open the call for questions.

Thanks, Bob Good morning, everyone for the second quarter, our operating expenses, which include our cost of services general and administrative expense were $1.33 billion or 84.9 percentage of revenue for the same quarter last year operating expenses were $1.1.

$2 billion and 95% from revenues.

Cost of services were <unk>.

<unk> 2.9 billion for the second quarter. This compares to 1.8 billion.

<unk> billion dollars in the same quarter last year.

As a percentage of revenue cost of services was 82, 6% for the second quarter. This compares to 87.8 percentage in the same quarter last year.

G&A expense was $35.7 million in the second quarter. This compares to $33.5 million on the same quarter last year.

G&A as a percentage of revenue was 2.3% for the second quarter compared to 2.7 percentage of revenue for the same quarter last year.

As Bob mentioned total adjusted EBITDA.

Was $342 million and adjusted EBITDA margin was $21.9 million for the second quarter. This compares to total adjusted EBITDA of $178.8 million and an adjusted EBITDA margin of 14, 5% in the same quarter last year <unk>.

Excluding the <unk> income recognized in the quarter adjusted.

Adjusted EBITDA margins would have been 15, 6% from the second quarter this year and 10% in the same quarter last year.

Depreciation and amortization was $51 million from the second quarter. This compares to $52.3 million in the same quarter last year, we generated $11.8 million in equity and earnings of unconsolidated subsidiaries. During the second quarter. This compares to $8.3 million on this.

Same quarter last year.

Interest expense was $33.9 million on the second quarter. This compares to $37.4 million in the same quarter last year.

We recorded income tax expense of $65.7 million in the second quarter. This year.

Which represents an effective tax rate of 25, 1%. This compares the tax expense of $23.3 million and an effective rate of 25, 7% in the same quarter last year.

Net income attributable to Noncontrolling interest were.

Were $31.3 million in the second quarter. This compares to $15.8 million in the same quarter last year.

Net income attributable to select medical holdings was $164.9 million in the second quarter and earnings per common share were $1.22.

At the end of the second quarter, we had $3.4 billion of debt outstanding.

Over $800 million of cash on the balance sheet, our debt balance at the end of the quarter included $2.1 billion in term loans $1.2 billion 6 in the quarter senior notes and.

$70 million of other miscellaneous debt.

Net leverage based on the credit agreement EBITDA dropped to 251 times at the end of the second quarter. This is down from 3.2 times at the end of the first quarter and 348 times at the end of the year.

On June 2nd we completed an amendment to select in Concentrix revolving loans, we increased the availability on select revolving loon from $450 million to $650 million and simultaneously canceled for $100 million concentrix revolving loan.

Which was set to mature in March of next year.

For the revolving loans had any borrowings outstanding.

Operating income operating activities provided $123.1 million of cash flow in the second quarter.

Our day sales outstanding or DSO.

It was 54 days at June 32021 is.

This compared to 56 days at both March 31, 2021, and December 31.2020.

During the second quarter, we repaid $73 million on Medicare advances and as of June 32021, we have $251 million remaining on the balance sheet. We expect similar quarterly recruitment until the advancements are fully repaid.

Investment activities used $35.7 million of cash in the second quarter.

The use of cash included $36.7 million in the purchase of property and equipment.

$8.4 million acquisition of investment activity in the quarter.

We also generated $9.4 million on proceeds from the sale of assets for the quarter.

Financing activities used $34.3 million of cash from the second quarter. This included $16.9 million on dividend payments.

$9.8 million in net payments and distributions to Noncontrolling interest.

$6 million of repayments of other debt in the quarter.

Our total available liquidity at the end of the second quarter was almost $1.4 billion, which includes the $800 million of cash and.

On close to $595 million and revolver availability under the select credit agreement.

Additionally, in our earnings press release, we provided an updated business outlook for calendar year 2021.

For the full year of 2021, we now expect revenue in the range of $5.85 to $6.5 billion.

Expected adjusted EBITDA to be in the range of $970 million to $1 billion.

And expected earnings per common share to be in the range of $2.91.

$2.3.

Yes.

This concludes our prepared remarks and at this time, we'd like to turn it back over to the operator to open up the call for questions.

As a reminder to ask a question you will need to press star 1 on your telephone.

Draw your question press the pound key please standby, while we compile the Q&A roster.

Our first question comes from Frank Morgan of RBC capital markets. Please proceed.

Good morning, and good good results first question on Labor certainly a common theme this quarter across earnings calls I'm. Just curious when you you identified this issue to be specific to your critical care units.

Just curious is why do you think its more prevalent in that particular area.

Versus other settings, and then and then maybe talk about the contract labor usage. You said it was the continued during the quarter to be higher but maybe any more recent trend sits in the since the end of the quarter related to either usage or rate.

Yeah, Thanks, Frank it's Bob.

Yes. It is curious I think a lot of people assume that in our specialty hospital environment, whether it's rehab <unk> experienced the same nurse or same staffing challenges is really not the case.

In the critical illness recovery hospitals, we really compete with the general acute care hospitals and we have a.

Typically.

A higher threshold for nurses oftentimes their critical care nurses and they are being recruited heavily by acute care hospital industry and there's just it's just a difficult environment in many nurses are leaving that environment and I think that's probably consistent with what you've heard from.

On the other providers.

So that's really the reason why the clinical shortage, primarily nursing is has been isolated to our critical illness recovery hospitals, and not the rehab hospitals or our outpatient or the concentrix segment from adds.

As to the agents, who use I'll, let Marty make a few comments on that yes. Frank would we have seen is in the first quarter of 'twenty 1.

We had really peaked with regards to the increase in the.

Nursing rates there was a significant increase from Q3 of 'twenty to Q4 of 2000, and then Q1, we really saw that increase we saw that drop this quarter now having said that.

I would anticipate that we would see it either be flat or start to increase a little bit we're starting to see significant referrals on that.

Our operators are telling us are related to the delta variant.

So, which just means we're going to need more nurses.

So I wouldn't expect that to continue probably at least through the next quarter.

Got you and then on the rate set for the contract labor I'm guessing that's probably still elevated.

Yes. It is.

Got you and then any change in the I think you called out some admission holds maybe no specific numbers, but just generally speaking has that gotten any better or is it about the same.

We think it has gotten better.

What we've done is we've increased the rates that we will pay for agency nurses. So we have started to see that flow.

Got you.

And then maybe switching over I guess day.

On Labor you did have a competitor who specifically called out.

Labor shortages and issues on the outpatient setting, but just wanted to.

Maybe it gets a reiteration on that side, specifically on the outpatient clinic or the Concentrix business no PT staffing issues.

Well there are shortages.

I think our team has handled it quite well and it has not resulted in us not being able to to see patients and I think that you can tie that just to overall employment difficulty attracting people on the general employment market.

Got you.

Just last 1 on the guidance and I'll hop back in the queue.

When you think about the second half of the year.

I'm assuming that your.

Looking for a more normal seasonal pattern in the second half of the year and maybe just when.

When you think about between third and fourth quarters could you maybe give us some relative weightings between those 2 when you think about where you are getting.

Yes, Frank what we have done in our expectations for Q3, and Q4 should really be based off of what we've seen historically.

You go back and you take a look at through 2019, typically first and second quarters were were higher than the third and the fourth quarter. So what we basically.

Forecasted as debt that third and fourth quarter is going to go back more towards 2019 as opposed to 2020.

Okay. Thank you.

Thank you. Our next question comes from Justin Bowers of Deutsche Bank. Please proceed.

Hey, good morning, everyone. So.

Just sticking with the guide there is there either I understand this you are looking for a normal return to seasonality, but are there any other.

Kind of notable items to call out either on <unk> or for Q.

And then the follow up to that would be are you is there any.

Relief funds assumed.

In the back half of this year as well I know that there is still some on the balance sheet.

Yes, Justin there are no additional carriers dollars that are included in Q3 in Q for most of those have been.

As a matter of fact, almost all of those have been taken in the second quarter.

With regards to pointing out.

The third and the fourth quarter.

All of the businesses are doing very well from a.

From a volume perspective, we're very pleased with what we see on inpatient rehab on outpatient rehab can center has done a great job.

And we're starting to see some traction on the critical illness recovery hospitals as I just mentioned so no we feel pretty confident with.

What is out there as far as the guidance is concerned for the full year.

Yeah.

Got it and then yes, there was definitely.

Impressive performance on the outpatient side and bolt on.

And then can sentra on.

As we think about those businesses kind of like 2022.2023.

<unk>.

Where do you think.

Normalized margin.

Can settle.

And kind of.

Either segment and then.

Ken Sentra, there is theres, just a lot of moving parts with that right now and you have kind of.

Potential opportunities from which returned to work and return to school. So just can you help us think about.

Kind of how you see that business in the back half of the year as well.

I'll, let Marty comment on on margins I will say on and it's a good callout to consensual debt. They have just on a remarkable job now. This is a business that historically has been very sensitive to employment and you saw them be able to.

Be pretty nimble during COVID-19 when visits were down dramatically and still post some pretty impressive numbers through testing and vaccination and working with employers even when employment where people were not back to work.

At this point they are really enjoying the benefits of the really strong employment environment. So a lot of our employer clients are hiring and is back to work and visit starting to pop back up so.

We expect a concentric just to continue to capitalize on the market share and the relationships that they built for COVID-19. So I'm very optimistic about that business now it will it will continue to be seasonal as it always has been but that business is as strong as it has ever been and also on the hour.

Patient rehab side of the business, which was.

The segment that was.

The most significantly affected as you can see from us.

A year ago, and you've seen visits come back very strong there and from what we're seeing and assuming that we don't have further shutdowns.

And Youre looking at.

Surgeries orthopedic elective coming back to the acute care hospitals that that's good for our outpatient rehab segment and we feel very good about where they are are as well.

Marty do you want to make any comments on margins for that for that business on a go forward sure.

Adjusted on the Concentrix side.

Our thoughts are.

On a longer term basis, youre going to have very high teens.

Margins in that.

In that business segment.

As Bob had mentioned on the operators have done just a terrific job.

We expect that to continue.

All of the on the outpatient side, we think margins in that 15% to 17% are achievable.

Youre seeing on the inpatient rehab side, we would expect to see those margins continue north of 20%.

And then on the critical illness recovery hospitals, it's really a function of what's going on with the labor markets.

And we think it would certainly will remain in the teens.

If the if we see.

On the <unk> of the shortages on the clinical side that can be in the higher teens.

Okay.

Understood and then just just 1 more quick 1.

In terms of.

The guidance.

Thanks for you I'll hop back in queue. Thank you.

Okay. Thanks.

Okay.

Thank you. Our next question comes from Kevin Fischbeck of Bank of America. Please proceed.

Hey, guys. This is courtney on for Kevin today, Thanks for taking my question.

I guess just to continue the conversation on the guidance I wanted to clarify what assumptions you guys are baking in in terms of how COVID-19 is going to pan out in the back half of the year and just wondering you know are you seeing any markets with more COVID-19, our delta varied impact than others in Q3 to date.

The only thing we've heard from our operators is on the critical illness recovery hospitals side and that is they are seeing some impact from that which would which would mean increased census for us we've seen referrals from the short term acute care hospitals really start decline.

Okay. Yeah. That's helpful. And then just to clarify I guess 1 thing on the on the Labor comments you gave I guess the prepared remarks, you guys for you, but really helpful. But I'm curious to know if youre seeing issues more so on the actual sourcing for labor or on the retention right.

It's a very good question Courtney, it's really it's really both.

I mean, what's interesting is when you when you take a look at retention.

Our people have done a very very good job retaining nurses, but when you start to see nurses have the ability to make double their income.

If they go to agency.

There is some clinicians that are jumping for for that and we've seen that.

Third fourth quarter of 'twenty, and then certainly the first and second quarter of 'twenty 1.

Okay. Yeah. That's that's really helpful. And then I guess 1 last question I squeeze then.

You guys, obviously announced a whole bunch of JV partnership that Monday, acuity health acquisition, and a little over a month ago.

Just any update on how the JV and deal pipeline are looking today.

Well I think it's very strong.

And as you know, we don't announce any of our.

Joint ventures until they are signed and so.

I mentioned, a number of them today in the prepared remarks, but I would say that the pipeline is very good and.

1 of the things if you go back a year or so ago, mostly all of the joint ventures that were announced were.

Rehabilitation, only and typically rehab hospitals, and then sometimes outpatient and now what we're seeing as we've become.

No I think a provider of choice to partner in all of our segments.

More joint ventures, and the critical illness recovery hospitals, which you really didn't see a year or 2 ago and announcing more outpatient joint ventures, I think our outpatient joint venture with Cedars in Los Angeles. This is of particular note and.

So that's really our opportunity for growth and it is.

Filling the pipeline more because there's joint ventures across.

All of our business segments.

Okay. Thanks, guys that's really helpful.

Thank you. Our next question comes from Bill Sutherland of the Benchmark Company. Please proceed.

Hey, good morning.

Everyone's doing well.

Hi.

Was curious on the on.

On all the activity that you guys are doing now with.

JV developments sort of way for us to get on.

Just a very general sense of the implications for.

For growth as you look into next year.

To what degree this is.

And Q2.

Points to your total growth outlook.

Yes, we do.

I think it wouldn't be difficult for you to do that the nature of our partnerships because of the profile of the systems.

You say, it's really hard for us to predict.

When they come in so I can report to you that we have a robust pipeline, but it's difficult to project when they will actually be signed and and then put into play so.

Even for example are our joint venture that we did with rush and Chicago, which is very large and very important to us. It does also have.

On.

In the state, which the timeline is somewhat uncertain then we have construction and so it is more difficult for us to give any kind of guidance on that we do think about our our pipeline and what we have in our in our guidance. So as you know.

Note that in when Marty gives guidance, we don't exclude acquisitions or development or include them, but.

The guidance does take into account.

Our sense and I think it would be difficult to guide more than that.

Okay.

That makes sense on.

On occupancy issue.

Critical illness.

Do you have you all kind of made a decision to just go with it.

The agency rates, so that you can fully staff and.

And.

You know.

How do you make that decision on the tradeoffs in terms of the EBITDA impact.

Yes, Bill we have made a decision that we're going to bring in all of the patients that we can and we're going to staff, even if it means that the labor rates are higher.

So we have made that decision.

Okay.

The way on the labor front.

Across either of the businesses business lines have you seen any regional disparities that.

Notable.

Absolutely I mean, we've seen significant disparities to the tune of if you take a look at.

Clinical costs on the agency side I mean, we've seen rates that are in the $76 an hour range all the way up to $166.

So yes significant debt.

Variation.

And as far as being able to actually find people just supply issue regionally.

It is.

A typical supply and demand.

Okay.

Makes sense and then lastly on zoom out for a second.

You decided to address the home hospice segment through a JV and.

I wanted to see if there is any.

Anything to update there and also.

Are you finding that your proportion, particularly on outpatient rehab for proportionate visits that are virtual is that remaining a little more meaningful or is it.

Have you kind of gone back to.

Free Covid kind of from.

Mix. Thank you.

Yes, Bill with regards to.

On telemedicine Tele rehab, that's really pretty much going back to pre pandemic volumes.

You had mentioned something about <unk>.

Home health.

Well I'm not sure if you could be more specific there.

You guys announced and there's a couple of years ago now with alternate alternate solutions Health network.

You've called it select at home.

Because it just the collaboration you setup.

Yes, it's very small.

Colin not material, we've really brought that on so that we'd have an option for our joint venture partners.

They needed it so it's it still exists but not material to our results.

Figured as much.

I wanted to ask thanks, guys great quarter gentlemen.

Thank you we have a follow up question from Justin Bowers with Deutsche Bank. Please proceed.

Hey, Thanks for letting me hop back on so just a couple quick ones.

Okay.

The.

The JV is in the.

And the.

The old Tech deal that you announced earlier this year is that in the guide right now and then.

Kind of a follow up to that would be the pipeline.

How would you characterize the pipeline as it is it.

More heavily I'll tack on herk related or what's kind of the mix there and then on him.

1 more follow up after that.

I would say that the <unk> comment on the pipe on the pipeline I think it's across the board.

Theres many deals in the pipeline some of which we'll get to the finish line and some won't so it's difficult to say, whether it's more heavily weighted to critical illness rehab outpatient I think it's fair to say that there are projects in the pipeline in each of those areas.

And the second question Mark.

The second question was.

The joint ventures that we've announced are those numbers in the back end of the year.

They are Justin but I think it's important to note debt for the most part those are negative numbers.

We're moving our hospitals around.

At the end of the day.

We also have 2 on the larger 1 acuity, we're going to be installing.

Systems, we're going to be doing a whole bunch of different things. There. So you can assume that those are going to be.

Losses for the back end of the year.

Yeah.

For the most part what Youll see is the benefit in 'twenty to 'twenty, 2 and debt.

That helps explain the back half guide a little bit and then just a quick follow up.

No debt.

So last year you guys the best.

Divested the C box and Thats been.

Got it.

Plus million quarterly drag.

Drag in <unk> and <unk> I was just.

Curious about what the timing of that 1.

I remember the announcement in the fall, but I wasn't sure when that actually closed so I'm just trying to.

Figure out when we lap that.

Yes, I think it was the first for the second quarter of 'twenty I think it was the first quarter of 'twenty when it was price.

Yeah.

Third quarter.

And the $20 million a quarter you are talking about is really on the top line basis.

Yes, yes.

Okay.

Alright, Thank you Sir.

Youre right on a year over year basis that that is a that was.

A headwind right.

Sure.

Yes, I mean, it was a couple of points each quarter.

Yes, this year alright.

Alright, I appreciate the follow ups.

All right Justin.

Thank you I would now like to turn the conference back to management for closing remarks.

No closing remarks, thanks, everybody.

For joining us for the for report on the quarter.

Look forward to updating you next next quarter.

This.

Today's conference call. Thank you for participating and you may now disconnect.

[music].

Uh huh.

[music].

Good morning, and thank you for joining us today for select Medical Holdings Corporation's earnings conference call to discuss the second quarter 2021 results and the company's especially outlook speak.

Speaking today are the company's executive Chairman and co founder Robert Ortenzio, and the company's executive Vice President and Chief Financial Officer Martin Jackson.

Management will give you an overview of the quarter and then open the call for questions.

For 2 select medical plans expectations strategies intentions and beliefs.

These forward looking statements are based on the information available to management of select medical today and the company assumes no obligation to update these statements as circumstances change.

At this time I will turn the conference over to Mr. Robert Ortenzio.

Thank you operator, good morning, everyone. Thanks for joining us for select Medical's second quarter earnings conference call for 2021.

We are very pleased with our financial results for the quarter as well as a number of other business goals that we accomplished during the quarter.

We experienced top line growth in all 4 of our business segments compared to both the same quarter last year and pre pandemic.

Same quarter in 2019, the volumes in our inpatient outpatient business segments are trending very nicely.

And are well above pre pandemic volume numbers.

In addition to the volume growth, the inpatient and outpatient rehabilitation hospitals and clinics posted their highest quarters for adjusted EBITDA in the history of the company.

Sentra has made nice straight strides with volume improvement.

As more industries, such as airlines hospitality municipalities and schools reopen.

On the development front.

On may 1st scripts health care entered into our existing joint venture partnership with UC, San Diego Health on a 110 bed critical illness recovery hospitals on San Diego, California.

In June we closed on a new outpatient joint venture with them on health in West, Virginia, which marked our entry into the state for outpatient rehab.

On July 1.

We entered into a new long term acute care hospital joint venture with Ascension Saint Thomas in Nashville, contributing our 70 bed Nashville hospitals to the joint venture and moving forward with plans.

To add a 30 bed satellite hospitals within a hospital at the St. Thomas West campus later this year on.

Also on July 1 we entered into a new joint venture with CHS Northwest Health care in Tucson, Arizona and acquired a 47 bed long term acute care hospital cure of Tucson, which we plan to relocate to northwest Medical Center later this year.

Our development pipeline remains strong as we continue to look for opportunities to expand our footprint and partner with leading health care institutions throughout the country.

In addition last week U S News and World report released their annual ranking of top rehabilitation hospitals in the country.

Our Kessler Institute.

Our rehabilitation in New Jersey was ranked number 4 on the country its 29th consecutive year of being named among the nation's best.

In addition, this year for the first time, we have 3 of our joint venture partner hospitals, making the list. They are Baylor, Scott and White Institute for rehabilitation and Dallas at number 13.

Emory rehabilitation hospital in Atlanta at number 26, and Ohio Health rehabilitation hospitals in Columbus, Ohio.

<unk> 30 for I couldnt be more proud of our clinician clinical and operational teams at these hospitals and throughout the rest of our portfolio of hospitals for their hard work expertise and dedication to the care and treatment of our patients.

2 other items I wanted to note are the centers for disease control, the CDC and select medical collaborated on a clinical study regarding a long term impact of COVID-19, which was recently published in the more.

For <unk> and mortality weekly report.

Finally as noted in our earnings press release yesterday, our board has declared a 12.5 cent per.

Per share dividend that will be payable August 30 to shareholders of record on August 18th.

As we've done over the past year, we have outlined our business segment monthly revenue volume and occupancy statistics on our earnings press release, a public filings.

This quarter. We also included monthly results from 2019 to provide a data point, where each of our business segments, where prior to the pandemic compared to where they are currently.

We will continue to include this information as long as it provides meaningful insight to the impact of COVID-19 on the company's financial performance.

Overall for the second revenue for the second quarter increased 26, 9% to $1.5.6 billion.

Revenue per patient day increased 6.4% to $1986 per patient day on the second quarter cash.

<unk> index in our critical illness recovery hospitals was 133 in the second quarter compared to $1.32 in the same quarter last year.

As we had mentioned in our most recent earnings call staffing remains an issue on the critical illness recovery hospitals.

And it did have an impact on the number of patients we were able to admit for the quarter. We had a number of our hospitals that were unable to accept patients.

Due to lack of clinician availability.

This cap incentives represents a reduction of occupancy of approximately 1.5% I would like to point out that day staffing challenges have been isolated to our critical illness recovery hospitals, and we have not experienced this issue in any of our other business segments.

Our rehab hospitals was 85% in the second quarter compared to 71% on the same quarter last year and 75% in the second quarter of 2019 revenue per patient day increased 1% to $1849 per day in the second quarter.

Last year at $2.2 million visits in the second quarter of 2019.

Our revenue per visit was $102 for the second quarter compared to $106 per visit in the same quarter last year. This reduction in rate is due to a change in our payer mix caused by the pandemic and related lockdowns.

Revenue in our Concentrix segment in the second quarter increased 46, 1% to $456 million compared to $312 million in the same quarter last year for the centers patient visits were up 49% to 3 million visits compared to 2.15 million visits in the same quarter last year and 3.

1 million visits in the second quarter of 2019 revenue per visit in the centers increased 125 increased to $125 in the second quarter compared to $124 in the same quarter last year.

I also want to highlight that we recognized $98 million and other operating income in the second quarter related to funds that we received under the cares act provider relief for incremental costs and lost revenues incurred as a result of the Covid pandemic last year, we recognized $55 million on other operating income related these funds the adjusted EBITDA.

Our result for our critical illness recovery hospitals rehabilitation hospital and outpatient rehab segment do not include any recognition of this income we recorded other operating income related to those segments under our other activities adjusted EBITDA results for our concentric.

Segment included recognition of this income, including $32.3 million in the second quarter of this year and 800000 in the same quarter last year.

Total company adjusted EBITDA for the second quarter increased 91, 3% to $342 million compared to $178.8 million in the same quarter last year, our consolidated adjusted EBITDA margin was $21.9 for the second quarter compared to $14.5 for the same quarter last year.

Our critical illness recovery hospitals segment, adjusted EBITDA was $72.9 million on the second quarter compared to $89.7 in the same quarter last year adjusted EBITDA margin for the segment was 13, 4% in the second quarter compared to $17.3 in the same quarter last year.

We've spirit, we experienced a deterioration of EBITDA margin in the quarter due to significantly higher nursing cost, which was driven by both an increase in both ours and rates of agency staffing.

Last year.

Outpatient rehab adjusted EBITDA was $45.6 million on the second quarter compared to adjusted EBITDA loss of $6.3 million in the same quarter last year.

Adjusted EBITDA margin for the outpatient segment was 16, 3% in the second quarter.

Earnings per common share increased 213% to $1.22 for the second quarter compared to 39 for the same quarter last year in.

On the regulatory front last week CMS issued the final inpatient rehab rules for fiscal 2022 effective October 1 of this year for final rule includes a 2.3% increase in the standard payment amount, which is slightly less than the $2..5 included in the proposed rule. In addition, the high cost outlier through.

<unk> increased by 20%, which was slightly worse than what was in the proposed rule. The CMG relative weight on average length of stay values were also updated in the final rule.

Finally, this week CMS also issued the final <unk> rules for fiscal 'twenty to the final rule included 2.2% increase in the federal base rates again slightly less than the 2.5% increased outlined on the proposal.

The high cost outlier threshold was increased 21% and the MSL LTC DRG relative weights and expected length of stays were also updated in the final rule.

That concludes my remarks, and I'll turn it over to Marty Jackson for some additional financial details before we open the call for questions.

Thanks, Bob Good morning, everyone for.

For the second quarter, our operating expenses, which include our cost of services general administrative expense were $1.33 billion or 84, 9% of revenue.

For the same quarter last year operating expenses were $1.

$1.2 billion and 95% of revenues.

Cost of services were $1.2 9 billion for the second quarter. This compares to $1.8 billion in the same quarter last year.

As a percentage of revenue cost of services were 82.6 percentage for the second quarter.

The 87.8 percentage in the same quarter last year.

G&A expense was $35.7 million in the second quarter. This compares to $33.5 million on the same quarter last year.

G&A as a percentage of revenue was $2.3 percentage in the second quarter compared to 2.7 percentage of revenue for the same quarter last year.

As Bob mentioned total adjusted EBITDA.

Excluding the cares act income recognized in the quarter adjusted.

Adjusted EBITDA margins would have been 15, 6% from the second quarter this year and 10% in the same quarter last year.

Same quarter last year.

Interest expense was $33.9 million on the second quarter. This compares to $37.4 million in the same quarter last year.

We recorded income tax expense of $65.7 million in the second quarter. This year.

Which represents an effective tax rate of 25, 1%. This compares to a tax expense of $23.3 million and an effective rate of 25, 7% in the same quarter last year.

Net income attributable to Noncontrolling interest were.

Were $31.3 million in the second quarter. This compares to $15.8 million in the same quarter last year.

Net income attributable to select medical holdings was $164.9 million in the second quarter and earnings per common share were $1.22.

At the end of the second quarter, we had $3.4 billion of debt outstanding.

Over $800 million of cash on the balance sheet, our debt balance at the end of the quarter included $2.1 billion in term loans $1.2 billion 6 in the quarter senior notes and.

$70 million of other miscellaneous debt.

On June 2nd we completed an amendment to select in Concentrix revolving loans, we increased the availability on select revolving loan from $450 million to $650 million and simultaneously canceled for $100 million concentrix revolving loan.

Which was set to mature in March of next year.

For the revolving loans had any borrowings outstanding.

Operating income operating activities provided $123.1 million of cash flow in the second quarter.

Our day sales outstanding or DSO.

It was 54 days at June 32021.

This compared to 56 days at both March 31, 2021, and December 31.2020.

During the second quarter, we repaid $73 million on Medicare advances.

As of June 32021, we have $251 million remaining on the balance sheet.

We expect similar quarterly recruitment until the advancements are fully repaid.

Investment activities used $35.7 million of cash in the second quarter.

The use of cash included $36.7 million and the purchase of property and equipment.

$8.4 million acquisition of investment activity in the quarter.

We also generated $9.4 million on proceeds from the sale of assets for the quarter.

Financing activities used $34.3 million of cash from the second quarter. This included $16.9 million on dividend payments.

$9.8 million in net payments and distributions to Noncontrolling interest and 6 million for repayments of other debt in the quarter.

Our total available liquidity at the end of the second quarter was almost $1.4 billion, which includes the $800 million of cash and.

On close to $595 million and revolver availability under the select credit agreement.

Additionally, in our earnings press release, we provided an updated business outlook for calendar year 2021 for the full year of 2021, we now expect revenue in the range of $5.85 to $6.5 billion.

Expected adjusted EBITDA to be in the range of $970 million to $1 billion.

And expected earnings per common share to be in the range of $2.91.

$2.3 and heat sales.

This concludes our prepared remarks and at this time, we'd like to turn it back over to the operator to open up the call for questions.

As a reminder to ask a question you will need to press star 1 on your telephone.

Try your question press the pound key please standby, while we compile the Q&A roster.

Our first question comes from Frank Morgan of RBC capital markets. Please proceed.

Just curious is why do you think its more prevalent in that particular area.

Versus other settings, and then and then maybe talk about the contract labor usage. You said it was the continued during the quarter to be higher but maybe any more recent trend sits in the at the end of the quarter related to either usage or rate.

Yeah, Thanks, Frank it's Bob.

Yes. It is curious I think a lot of people assume that in our specialty hospital environment, whether it's rehab <unk> experienced the same nurse earned for the same staffing challenges is really not the case.

In the critical illness recovery hospitals, we really compete with the general acute care hospitals and we have a.

Typically.

A higher threshold for nurses oftentimes their critical care nurses and they are being recruited heavily by an acute care hospital industry and there is just its just a difficult environment in many nurses are leaving that environment and I think that's probably consistent with what you've heard from.

Kind of other providers. So that's really the reason why the clinical shortage, primarily nursing is has been isolated to our critical illness recovery hospitals, and not the rehab hospitals or our outpatient or the concentrix segments from adds.

As to the agents, who use I'll, let Marty make a few comments on that Frank would we have seen is in the first quarter of 'twenty 1.

We had really peaked with regards to the increase in the.

Nursing rates there was a significant increase from Q3 of 'twenty to Q4 of 2000, and then Q1, we really saw that increase we saw that drop this quarter now having said that.

I would anticipate that we would see it either be flat or start to increase a little bit we're starting to see significant referrals.

Our operators are telling us are related to the delta variant.

So, which just means we're going to need more nurses.

So I would expect that to continue probably at least through the next quarter.

Got you and then on the rates for the contract labor I'm guessing that's probably still elevated.

Yes. It is.

Got you and then any change in the I think you called out some admission holds maybe no specific numbers, but just generally speaking has that gotten any better or is it about the same.

We think it has gotten better.

What we've done is we've increased the rates that we will pay for agency nurses. So we have started to see that flow.

Got you.

And then maybe switching over I guess staying on labor you did have a competitor who specifically called out.

The labor shortages and issues on the outpatient setting, but just wanted to.

Maybe it gets a reiteration on that side, specifically on the outpatient clinic or the Concentrix business no PT staffing issues.

Well there are shortages.

Got you.

Maybe just last 1 on the guidance and I'll hop back in the queue.

When you think about the second half of the year.

I'm assuming that your.

Looking for a more normal seasonal pattern in the second half of the year and maybe just when.

When you think about between third and fourth quarters could you maybe give us some relative weightings between those 2 when you think about where you are getting.

Yes, Frank what we have done in our expectations for Q3, and Q4 should really be based off of what we've seen historically.

If you go back and you take a look at through 2000.

19, typically first and second quarters were were higher than the third and the fourth quarter. So what we basically.

Forecasted as debt that third and fourth quarter is going to go back more towards 2019 as opposed to 2020.

Okay. Thank you.

Thank you. Our next question comes from Justin Bowers of Deutsche Bank. Please proceed.

Hey, good morning, everyone. So.

Just sticking with the guide there is there either I understand there is youre looking for a normal return to seasonality, but are there any other.

Kind of notable items to call out either on <unk> or <unk>.

And then the follow up to that would be are you is there any.

Relief funds assumed.

In the back half of this year as well I know that there is still some on the balance sheet.

Yes, Justin there are no additional carriers dollars that are included in Q3 in Q for most of those have been.

As a matter of fact, almost all of those have been taken in the second quarter.

With regards to pointing out.

The third and the fourth quarter.

All of the businesses are doing very well from a.

From a volume perspective, we're very pleased with what we see on inpatient rehab on outpatient rehab can center has done a great job.

And we're starting to see some traction on the critical illness recovery hospitals as I just mentioned so no we feel pretty confident with.

What is out there as far as the guidance is concerned for the full year.

Got it and then yes, there was definitely.

Impressive performance on the outpatient side and both on.

And then can sentra on.

As we think about those businesses kind of like 2022.2023.

<unk>.

Where do you think.

Normalized margins.

Can settle.

And kind of.

Either segment and then.

Can sentra there is theres just a lot of moving parts with that right now and you have kind of.

Potential opportunities from which returned to work and return to school. So just can you help us think about.

Kind of how you see that business in the back half of the year as well.

I'll, let Marty comment on on margins I will say on and it's and it's a good callout to consensual debt. They have just done a remarkable job now. This is a business that historically has been very sensitive to employment and you saw them be able to.

At this point they are really enjoying the benefits of the really strong employment environment. So a lot of our employer clients are hiring and is back to work and is a visit starting to pop back up so.

We expect concentric just to continue to capitalize on the market share and the relationships that they built for COVID-19. So I'm very optimistic about that business now and will continue to be seasonal as it always has been but.

That business is as strong as it has ever been and also on the outpatient rehab side of the business which was.

The segment that was.

The most significantly affected as you can see from <unk>.

A year ago, and you've seen visits come back very strong there and from what we're seeing and assuming that we don't have further shutdowns.

And Youre looking at.

Surgeries orthopedic electives coming back to the acute care hospitals that that's good for our outpatient rehab segment and we feel very good about where they are are as well.

Marty do you want to make any comments on margins for that for that business on a go forward sure.

Adjusted on the Concentrix side.

Our thoughts are.

On a longer term basis, youre going to have very high teens.

Margins in that.

And that business segment.

As Bob had mentioned on the operators have done just a terrific job and we expect that to continue.

On the on the outpatient side, we think margins in that 15% to 17% are achievable.

Youre seeing on the inpatient rehab side, we would expect to see those margins continue north of 20%.

And then on the critical illness recovery hospitals, it's really a function of what's going on with the labor markets.

And we think it would certainly will remain in the teens.

If the if we see.

On alleviation of the shortages on the clinical side that can be in the higher teens.

Okay.

Understood and then just 1 more quick 1.

In terms of.

The guidance.

On.

Actually I will hop back in queue. Thank you.

Okay. Thanks.

Okay.

Thank you. Our next question comes from Kevin Fischbeck of Bank of America. Please proceed.

Hey, guys. This is Matt Courtney on for Kevin today, Thanks for taking my question.

Okay. Yeah. That's helpful. And then just to clarify I guess 1 day on the on the Labor comments you gave I guess the prepared remarks, you guys were really helpful. But I'm curious to know if youre seeing issue more so on the actual sourcing for labor or on the retention price.

Thanks.

It's a very good question Courtney, it's really it's really both.

What's interesting is when you when you take a look at retention.

<unk>.

Our people have done a very very good job retaining nurses, but when you start to see nurses have the ability to make double their income.

If they go to agency.

There is some clinicians that are jumping for for that and we've seen that.

Third fourth quarter of 'twenty, and then certainly the first and second quarter of 'twenty 1.

Yeah. That's that's really helpful. And then I guess, 1 last question I squeeze in.

You guys, obviously announced a whole bunch of JV partnership that meant the acuity helps the acquisition on a little over 9 months ago.

Just any update on how the JV and deal pipeline are looking today.

Well I think it's very strong.

And as you know, we don't announce any of our.

Joint ventures until they are signed and so.

I mentioned, a number of them today in the prepared remarks, but I would say that the pipeline is very good and.

1 of the things if you go back a year or so ago, mostly all of the joint ventures that were announced were.

Rehabilitation, only and typically rehab hospitals, and then sometimes outpatient and now what we're seeing as we've become.

No I think a provider of choice to partner in all of our segments.

So that's really our opportunity for growth and it is.

Filling the pipeline more because there's joint ventures across.

All of our business segments.

Okay. Thanks, guys that's really helpful.

Thank you. Our next question comes from Bill Sutherland of the Benchmark Company. Please proceed.

Hey, good morning.

Everyone's doing well.

Hi.

Was curious on the <unk>.

On all the activity that you guys are doing now with.

JV developments sort of waits for us to get on.

Just a very general sense of the implications for.

For growth as you look into next year.

To what degree this is.

And a few points to your total growth outlook.

Yes.

I think it would be difficult for you to do that you know the nature of our partnerships because of the profile of the systems that you say, it's really hard for us to predict.

When they come in I mean, so I can report to you that we have a robust pipeline, but it's difficult to project when they will actually be signed and and then put into play so.

Even for example are our joint venture that we did with rush and Chicago, which is very large and very important to us. It does also have C O N E.

The state, which the timeline is somewhat uncertain then we have construction and so it is more difficult for us to give any kind of guidance on that we do think about our our pipeline and what we have in and are in our guidance. So as you know.

And then Marty gives guidance, we don't exclude acquisitions or development or include them, but.

The guidance does take into account.

Our sense and I think it would be difficult to guide more than that.

Okay that makes sense.

On the occupancy issue and critical illness.

Do you have you all kind of made a decision to just go with it.

For the rates so that you can fully staff and.

And.

No.

How do you make that decision on the tradeoffs in terms of the EBITDA impact.

Yes, Bill we have.

Made a decision that.

We're going to bring in all of the patients that we can and we're going to staff, even if it means that the.

On the labor.

Rates are higher.

So we have made that decision okay.

Okay.

On the labor front.

Across either of the businesses lost.

Business line, so have you seen any regional disparities that.

Notable.

Absolutely I mean, we've seen significant disparities to the tune of if you take a look at.

Clinical costs on the agency side I mean, we've seen rates that are in the $76 an hour range all the way up to $166.

So yes significant debt.

Variation.

And as far as being able to actually find people just supply issue regionally.

It's the typical supply and demand okay.

Okay.

That makes sense and then lastly on zoom out for a second.

You decided to address the home hospice segment through a JV and.

I wanted to see if there is any.

Anything to update there and also.

Are you finding that your proportion, particularly on outpatient rehab. The proportion of visits that are virtual is that remaining a little more meaningful or is it.

Have you kind of gone back to.

Free Covid kind of from.

Mix. Thank you.

Yes, Bill with regards to.

On telemedicine Tele rehab, that's really pretty much gone back to pre pandemic volumes.

You had mentioned something about <unk>.

Home health.

Well I'm not sure if you could be more specific there.

You guys announced in this couple of years ago now with alternate alternate solutions Health network.

And you called it select at home.

Is it just the collaboration you setup.

Yes, it's very small.

Not material, we've really brought that on so that we'd have an option for our joint venture partners.

If they needed it so.

It's still exists, but not material to our results on.

I figured as much since I haven't heard about it but I wanted to ask thanks, guys great quarter share.

Thank you we have a follow up question from Justin Bowers with Deutsche Bank. Please proceed.

Hey, Thanks for letting me hop back on so just a couple quick ones with.

Okay.

The JV is in the.

And the.

The old Tech deal that you announced earlier this year is that.

And the guide right now and then.

Kind of a follow up to that would be the pipeline.

How would you characterize the pipeline as it is it.

More heavily I'll tack on her related or what's kind of the mix there.

1 more follow up after that.

I would say that the <unk> comment on the pipe for the pipeline I think is across the board. There is theres many deals in the pipeline some of which we will get to the finish line and some won't so it's difficult to say, whether it's more heavily weighted to critical illness rehab outpatient I think it's for.

Fair to say that there are projects in the pipeline in each of those areas.

And the second question Mark.

The second question was.

The joint ventures that we've announced are those numbers in the back end of the year.

They are Justin but I think it is important to note debt for the most part those are negative numbers.

We're moving our hospitals around and.

At the end of the day.

We also have 2 on the larger 1 acuity, we're going to be installing.

Systems, we're going to be doing a whole bunch of different things. There. So you can assume that those are going to be.

Losses for the back end of the year.

For.

For the most part what Youll see is the benefit in 'twenty to 'twenty, 2 and debt.

That helps explain the back half guide a little bit and then just a quick follow up.

No debt so last year you guys the best.

Divested the C box and Thats been.

About 20 plus million quarterly drag.

Dragon <unk> I was just.

Curious about what the timing of that was.

I remember the announcement in the fall, but I wasn't sure when that actually closed so I'm just trying to.

Figure out when we will have that.

Yes, I think it was the first for the second quarter of 'twenty I think it was the first quarter of 'twenty when it was.

Yeah.

Third quarter.

And the $20 million a quarter you are talking about is really on the top line basis.

Yes, yes.

Okay.

Alright, Thanks, Youre right Youre right on a year over year basis that that is a that was a.

A headwind right.

Yes, I mean, it was a couple of points each quarter.

Yes this year.

Alright, I appreciate the follow ups.

All right Justin.

Thank you I would now like to turn the conference back to management for closing remarks.

No closing remarks thanks.

Thanks, everybody for joining us for the for report on a quarter.

Look forward to updating you next next quarter.

This concludes today's conference call. Thank you for participating you may now disconnect.

Q2 2021 Select Medical Holdings Corp Earnings Call

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