Q3 2021 MEDNAX Inc Earnings Call
Ladies and gentlemen, thank you for standing by your conference will begin momentarily. We do appreciate your patience and please continue to hold.
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[noise], ladies and gentlemen, thank you for standing by and walk onto the bed magazine third quarter 2021 earnings conference.
At this time all lines are in a listen only mode. Later, we will conduct a question and answer session instructions will be given to you at that time.
If you need assistance during the call Press Star and then zero and then operated will assist you offline and as a reminder, today's conference call is being recorded.
I would now like to turn the conference over to Mister Charles Lynch Senior Vice President Finance and strategy. Please go ahead.
Thank you and good morning, everyone.
Eight.
[noise] call.
And it made during this conference call me.
What does it mean.
Right.
99.
These forward looking statements.
Nathan.
In light of their experience.
Oracle friends current condition.
Another factor that they believed to be appropriate.
Any forward looking statements made during the call are made as of today and then ask undertakes no duty to update or revise any of those statements whether as a result of new information future events or otherwise.
Important factors that could cause the actual results development and business decision to differ materially from forward looking statements are describing the company's most recent annual report on Form 10-K.
Quarterly report on Form 10-Q as current.
A report on form 8-K, including the section entitled Risk factors.
And today's remark by management, we will be discussing non-GAAP financial measures.
A reconciliation of these non-GAAP financial measures most comparable GAAP measures can be found in this morning's earnings press release or quarterly report about annually.
Mmk and on our website www dot net.
Without during the call over to our CEO Mark for that.
Thanks, Charlie and good morning, everyone also joining me on today's call our Mark Richards R. CFO, Dr mechanism on intelligence and head of our pediatrics et cetera medical groups and Dr regions with pediatric contented and our Chief Development Officer.
You'll see a strong third quarter results in this morning class total growth to the hospital, where we provide NICU services were up to 8% of on the same union basis, and our NICU days were up five 6% key metrics, such as payer mix and ready to continue to be favorable compared to last year in fact for men after the oil Asia.
Revenue and adjusted EBITDA, we'll all head of the same period in 2019, we suggest that at this time our business is more than recovered some significant negative impact of the COVID-19 endemic that we experienced in 2020 and earlier this year.
We'll get some details of our comparisons to Prepandemic well.
As a result, the volume this season pre COVID-19 levels as well as tablecloth tons of the practice level and improvements in our G&A infrastructure that will detail. This morning.
Our revenue for the quarter of $493 million was above our internal expectations Edward our adjusted EBITDA of 73 million.
Just on a result, we now expect that our 2021 adjusted EBITDA will exceed hour prior internal expectation of being a up 240 million and we now instead of 2021 adjusted EBITDA of at least 250 million.
Fully expect adjusted EBITDA next year to exceed 270 million absent any major is down all of that.
And this goes preliminary viewing to 2022 and will be in a better position to provide more specific outlook. After we finish our budgeting process, but I believe we're building momentum in August.
Demand for the critical services that are affiliated condition provide not only recovered from last year's disruptions for continuing to grow. We also estimated that the growth growth efforts, we have in place supplemented as demand. So far in 2021, I'll give some detail areas, we see our growth concentrated in several areas.
First would be target opportunities to expand practices and practices.
Hands are hospital relationships and also directly improved care through the coordination of different subspecialties that many patients need to access.
And our daily operations, we strive to provide the best 24, seven support hospital to Iraq.
When you combine our patients service access initiatives, improving technology support and proven revenue cyber management efficiency recruiting the best talent and old fashioned focused managerial actions.
And third we went for acquisition opportunities, where we see a clear combination of bolstering hospital relationships, adding to our patient support and a demonstrable growth path within that acquisition.
Acquisition hasn't been a major part of our activity. So far this year, but that could play and just as important roles organic growth when we do see them strategically.
There's some of these efforts is continuing to ramp up postcode and importantly, after all of our reorganization activity frequently for.
For the 2021 year to date, we estimate that we have added approximately three percentage points to our adjusted EBITDA growth versus 2020 over and above the pure sit in store growth that are affiliated practices have experienced.
In addition to all of this activity, we recently announced our investment and raised here in a while explain why this is actually a very key piece of our growth plan.
We again believe that we are totally uniquely positioned to grow and the combined pediatric muted primary urgent care space and our major markets midnight on the hour Pdas's brand alone has the concentration of pediatricians population density hospital relationships and partnerships and Enorme.
And growing base of vital patients relationships.
And our market managerial support is already in place in our major markets.
With our nitride acquisition in place and in fact Friday, we have an English winter you can grow.
To grow we needed the engine an additional power to enable building something really meaningful great can bring scalable internal controls and patient saving technology systems and protocol that low on tape is used to create.
Primary technology.
The proprietary technologies as an operating platform debris raised <unk> hand bills of a two plus year period give patients and their parents are truly seamless experience.
It also gets great remote connectivity to clinicians through an extremely user friendly remote mobile app. So parents always have a resource entertained.
Great care systems are integrated with all facets clinical operations.
In my view of the power of the Braves system is not theoretical is proven and up and running in their existing clinics in the northwest.
Our investment in Braves, accompanied by an operating Parcher agreement that provides for a long term incentives to help us plan to develop equipped and hoped in pediatrics clinic over the coming years. The clinic will be hours and we will be led and managed by our team working alongside the Braves.
At a high level looking at our geography of existing services. We believe that there is an opportunity for us to open more than 100, pediatrics claims across our footprint within a few years and as we move forward, we will share with you how this will materialize.
We believe that our growth will include both the Novo development and acquisitions and we're already in discussions with certain existing platform that we think overlap well with us and it could integrate into our strategic growth.
In summary, looking at all these strange.
Strengthen our core of the need inpatient relationships served by our accepted leading clinicians.
Strengthen our balance sheet outgrowth effort.
And a smart strategic expansion as primary arrogant here.
Together gives me confidence in our diversified growth potential and 22 and beyond.
Now Mark will provide additional details.
Third quarter activity.
Thanks, Mark Hey, good morning, everyone.
I'll begin by providing some detail volume comparisons to 2019 to flesh out Mark's earlier comments.
And walk through where we stand on the number of projects. We've discussed so far this year and how they flow through the income statement.
And finished with our financial position as it stands today and how we're looking at our capital structure as we look forward.
Compared to 2019 on a same unit basis for the quarter or hospital volumes were up for 4% and office space volumes were up 2.8%.
Within hospital based services are NICU days were up 1.4%.
Media trick intensive care was up 42% in pediatric hospital as volumes were up 14%.
On the office space side maternal fetal medicine volume was up 8.6%, while Paediatric cardiology was down 9% with this decline likely reflecting some deferrals of appointments during the quarter due to the surge in Delta cases.
Turning to G&A.
Our overall spending Q3 was down about $4 million sequentially.
This primarily reflects sequential reductions in certain operating in legal expenses as well as RCM savings related to our agreement with our one which should increase further in queue for.
In terms of the transition of our revenue cycle activities to our one today are metrics reflect that there hasn't been any disruption in service to our practices.
Dsos in cash collection activity in the third quarter were in line with our expectations and with the prior quarter.
I will also reiterate that under the terms of our agreement we realized near term G&A savings, which are reflected in our current P&L and we also expect to benefit overtime for future improvements in <unk> performance yield in revenue enhancements.
During the third quarter. We also completed the support services related to the PSA arrangement Ah catch the last year sale of our agency or organization.
R Q3, G&A still reflects a comparable run right of course to what we were incurring previously.
And will refine our views on an appropriate G&A level as we finished up our budgeting for 22.
But you will see that our reimbursement for those costs in Q3.
Which we record in our investment in other income line declined substantially.
5 million this quarter versus about $9 million and.
A year ago period.
However, the strength of our core operations more than offset this decline and in fact in the able both year over year and sequential growth and adjusted EBITDA.
Finally, our transformational and restructuring expense in Q3 was for $2 million, which predominantly reflects the cost of terminating other third party agreements as part of the R. One transition.
All told within the hour updated internal expectation of 2021 adjusted EBITDA, We expect our fourth quarter G&A expense to be flat could deal compared to the third quarter based largely on our expectation of RCM cost savings.
This reinforces our prior review that the second half G&A will be lower than the $137 million, we incurred in the first half of the year.
Turning to our capital structure.
We continue to improve our leverage presentation in the third quarter regenerated 67 million of operating cash flow, which exceeded the investments we made in capex.
Acquisitions, and our brief care transaction.
Based on 930 that of 642 million and our 2021 adjusted EBITDA expectation net leverage stand at about 2.5 times and we would anticipate that to decline by year end based on fourth quarter cash flows.
During the quarter, we also reduced our revolving credit facility capacity from $1.2 billion to $600 million all of which is currently available to us with no remaining covenant restrictions.
As most of you know we have $1 billion in outstanding six and a quarter couponing senior notes do 2027.
Where that structure fairly inefficient, given our cash position and current that leverage.
Given that our notes or call in January of 22, we will be reviewing the best that structure for our size profitability.
And growth in capital plans.
While we haven't made any determinations, yet I anticipate that we will be able to achieve meaningful savings in interest expense. Once we determine the most appropriate capital stack for our business as it exists today and in the foreseeable future.
With that I'll turn the call back over to Martin.
Thanks Mark.
Im railroad now ready for questions.
Thank you, ladies and gentlemen, if you wish to ask a question. Please press one and then you are on your Touchtone phone.
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Once again, one and then zero when your questions or comments.
Our first question will come from the lineup pedal Tickling would you like to bank and your line is open.
Hey, good morning, Guy sticking my questions.
One for you and margins of so.
So far you guys have done an excellent job managing costs to a very volatile time period and.
And I'm not asking for 2022 guidance at this point, but conceptually can you give us some color on margin expansion. The topline grows 345, 6% how much leverage can you get on different revenue growth.
Okay.
Hey, how are Ya Mark Richard.
<unk>.
You'll you'll you'll see some very.
Nominal margin margin experiencing, particularly like Gis fig EBITDA quarter over quarter sequential way.
I point out a couple of things and that I think we've done a relatively impressive job in maintaining our overall labor costs.
Which obviously is a concern across the industry at this point in time.
With a lot of focus specifically on our local contract labor and variable costs.
Dig into where we stand on that.
Basically flat year over year, both sequentially and looking back into 19.
So with respect to that margin expansion and the concerns relative to labor growth I think we've done a really good job of managing that particularly the variable component and with continue to rate growth on the top line.
We'd expect that mile incremental increase as we continue to manage our labor force.
Great and then sort of same question does again as revenues keep growing here from a SG&A perspective like.
Talked about Archie a savings of fourth quarter, how much G&A leverage can we get sort of in the out years kind of what percentage of the year G&A is fixed versus variable I just want to get a sense for how.
How much margin leverage we can get as revenues continue to grow.
Well as as part of our RCM outsourcing arrangement, we have affectively flip a.
Fixed cost structure in our revenue collection cycle to a variable cost structure.
So so that significant ponant of our overhead.
As of.
This quarter has has effectively turned from a fixed component to available component. However.
That.
That variable component is specific to art and the rest of our G&A.
As I've touched on some of our initiatives throughout the year will continue to lead into our overall cost, but most of that continues to remain relatively checks and it's mark.
Face sized Martin Yan or we think that we are largely the fixed cost operation and we're looking at ways and continuing to chip away at our at our cost. So I think that will be leverage as as our revenue growth.
Perfect and then just one.
One more question on wage inflation, it's obviously been hot topic serve this quarter for health care service companies.
Can you refresh us sort of what percentage of year contracts with doctors are up each year. What are you were seeing on renewals from those it just is it fair to think that <unk>. It takes very little wage inflation going forward versus you know a lot of your peers simply because of a communist contracts. Thanks, so much.
Yes.
It's currently.
Keven I'll just get one observation there for you to keep in mind, you know within the Pediatrics organization.
Probably a good several hundred individual group.
Group practices.
That makes our unit size fairly small related to any incidents.
Contract renewal and the like and additionally, given that.
Many of the practices within pediatrics have been affiliated with the organization for a very long period of time.
That kind of makes the renewals cycle more of an evergreen cycle and.
And by the same token.
Within that organization, particularly for longer standing practices, there exists a fairly meaningful variable compensation component within those within the bonus pool. So.
We really look at leather.
Less a function of a renewal cycle and more a function of the underlying financial performance of individual practices added added effects compensation trends.
I hope that's helpful.
Alright, thanks, so much.
Thank you.
<unk> lineup can dispense with bank of America.
One moment.
One year hiring is great.
Great. Thanks, I was wondering if you could comment a little bit on the surprise billing regulation that came out.
Wanted to understand your views about whether it would have any impact.
When it goes into effect I guess initially if there's any item network revenue that might see compression or then to where there are there any concerns about whether it impacts the longterm negotiating dynamic between you and managed care and your ability to get sufficient right update.
Sure it's mark.
Q comments about that first remind people that we have publicly spoken against the practice of surprise building.
And we were at a fully supported the legislation was.
Which was very bipartisan in a bipartisan world.
The the ruined to came out of September 30th as an interim rule and I know that there is an enormous amount of pushed back against the which which I think will inform a lot of people's opinions before it's before us on.
I would comment that the the biggest effectiveness ruling what happened to those who have absolutely it'll take directing at Royal care and people who are already traditionally underserved. So in our view it will have a perverse effect will targeting the very patients surprise billing legislation. So I could protect so we think that the.
Very unfortunate.
As far as we're concerned look.
We are in a strong position we are overwhelmingly in network, we have very good relationships with Ah.
With our with our payers and if we have to make adjustments because of the legislative change.
And change that will adjust as necessary.
But I am not projecting.
Any long term that from this.
I hope that.
The problems was ruling are ironed.
Find out before the final rule.
Okay. So you don't see any reason why this ragged it goes into effect January one is written would impact here.
Your guidance for 270 flats next year for well again.
And I'm confident.
I'm confident in our in our 270 plus number.
I think that.
It's hard for me to speculate what the.
What the ruling will finally be and what the effects will be so I am confident that in 2022 will be fine and that we have to make adjustments for the future, we'll make adjustments to the duty.
Alright, great but.
[noise] helpful.
And then you guys put out a press release.
A few weeks ago about how COVID-19 with impacting.
The birth rate and mothers are coming down with Coleg I wanted to see if we could maybe spike out for us.
What impact if any of that had in the quarter.
And how you think about.
His COVID-19 way into that how that might have an impact on your business over the next few quarters.
And governance, Charlie I'll get a couple of us in a new Mack and wind as well.
Our nation I shouldn't be the one speaking for them, but nonetheless are clinicians.
A lot of concern throughout this year related to the potential impact two children and expecting mothers.
Just oncovin, particularly because of the pediatric side children do not have the backing available to them and as we talked about last quarter.
We had already being.
Pack to patient volumes more related to children coming out of isolation.
And contrasting respiratory ailments and the like are needing to go in and and you can see in our numbers for the quarter.
Those areas that would be impacted or impacted and take you on a piece for like.
It's harder to tease out on the maternal fetal medicine side.
The rationale for referrals to mmm.
That's always a very difficult thing to tease out.
Can be too surprised that there was.
Increase referral pattern, Andrew MFS related to expect from others when COVID-19.
And lastly, we we believe that some of the some of it.
MS Office in pediatric cardiology volumes, probably reflects the deferral of appointments that are that are regular appointment but people.
People just.
Okay, maybe just to.
On that point, there I guess, we're always trying to figure out you mentioned revenue is back about 2019 do you feel like core volume Greek excluded any benefits how they come with some businesses benefited from business. We've got impacted negatively do you believe that core volume cause it wasn't their core revenue was about 2019 or was there on that cause I.
A a negative.
I mean.
I'll answer very simply and the simple answer is that the the predominant impact to our agent volumes through 2000 explained related to covet was negative.
As we look where we are today.
It looks like that is that's larger than past and politically macy.
Cause the board in each of our lines improvement.
We also at the same time and we change so many facets of our operating protocols and the company that is hard to tease out with.
Where the where the games are from.
I think there is.
Describe discuss the strong drive for the patient access our focus our managerial functions. I think is Nathan has made everything much more cohesive coordination among some specialty that I referred to earlier is greatly improved over where it was.
So that along with it improving environment.
I think all contribute to to what we've seen.
Which is why we don't we're not going to break out because.
Because we think it's impossible, but.
So drivers.
Okay, great. Thank you.
Thank you.
Our next question will come from the line of Mack course, with BMO capital markets.
And your line is open.
Good morning. This is arianna breakdown for Matt Morris could you provide us with potential headwinds and talons that you're anticipating in 2022 and can we expect to receive any formal guidance from you in the near future. In addition to that 270, plus either to take care of you provided us with today.
Well Edwin Tailwinds.
Nothing more than that we've seen in the past.
Somebody asked by surprise.
Distillation that could be that could that could enter into the mix. We don't know we don't know that now.
Is this a change in the birth rate or something else happens some any external happens, but look I think we are we are today and very focused and expanding company and focus on women's and children's health, which is a vital area to be in.
We enjoy good relationships with our payers, we have great relationships with a hospital system. So we feel comfortable with how we're working we're running Martin.
Changes like an Rcmp to make us more efficient and better what we do internally so.
We are operating optimistically and terror.
So no change there is for guidance as I mentioned in my comments and go through the budgeting process and we can be more precise about we will be in 2022 will will share that with you just the same way we've updated.
Outdated.
Quarter this year.
Great. Thank you.
Thank you.
Our next question comes from mine, Ryan Daniels with William player.
And your line is open.
Hey, guys mixed breed got it thanks for taking my questions. I guess, so you know you you mentioned it to what the the tightness in the labor market has been a pretty big trend kind of for providers in the space.
I was wondering and for a couple of other providers, we've seen kind of things like turnover kind of increasing earlier retirements happening I've.
I'm wondering if you guys have experienced any sort of that pressure.
Or if you kind of expect that at all to take place in the future.
While I am responsible for the missing mass responsible for internal resolve it in.
So abundant discuss flavor was like day to day sure.
I think for the specialty.
There is always a limited number of clinicians available for that.
He said Marc convert our contract labor if you look at our knee for external contract labor that's decrease sequentially over the last three years and I think it speaks to the focus we have on recruiting the clinicians that we need so.
The tight labor market, but it always is.
And I think we're being successful.
Recruiting physicians that we need to stay out the program. So we have that are ongoing into separate groups.
Okay, great. Thanks, and then kind of as a follow up like for your two.
270 target for 2022 is that assuming.
Kind of sign on bonuses and salaries and benefits for new hires kind of all those assumptions say the same as they are now for the most part.
Yeah.
It assumes everything where where.
Okay, great. Thanks, and then I guess, just last won the uptick in salaries and benefits core Rover quarter has that effect loops a function of.
NICU days and that a little bit higher variable pay or I guess, what's the main driver there.
That is the main driver.
Gotcha. Okay. Thanks, So it takes statement questions have been going.
Thank you. Our next question comes from the line of with male with F. D. B nearing and your line is open.
First question just the increase in <unk> in the quarter, it's up about 20 million sequentially. A couple of days I heard you say that it was in line with your your internal expectations, but what does that increase attributed to is this just the RCM conversion.
Yeah.
A lot of it Hey, Hey, wait it's work Richard pull out of this really is just timing from period to period, our our focus through this RCM transition has been to make sure our revenue cycle, both on our billing into class collect cash collection side.
Midship Miss a beat.
And that's that's really where we are with a modest uptick of $20 million and they are.
Some of it's just timing related.
That will turn around and of course, there is with a C.
Significant transition like we're going through right now there will be a little bit of noise, but we we view that all of them to get into this timing.
And keep in mind when guys sequential increase in total revenue and activity light from key right accused pretty normal.
Yep Yep.
I get it maybe just back to the surprise billing for a second I mean, it's.
We see the movement in the market right, where where payers are proactively terminating contracts and I just want to be clear that that have you seen any disruption with contract terminations is there anything that we should kind of be aware of and just maybe internally how do you manage something like this.
In the event that there is a a unilateral termination from from any individual payer.
Well when we.
It's sort of par for the course that we negotiated with patriotism contracts and coming up there will be discussions about right. So it's not it's not surprising for us for people to say.
We wanted to adjust rates.
Lead to.
Okay.
Have we seen any any major change in that now we have.
Also the interim final rule not affected it may it may not be in effect. So so a lot of the answer to your question remains to be seen.
How do we adjust like any company you adjust to external backwards to history of healthcare include periodic legislated changes that affect the way you do business and if you're a good manager and have the strength to.
To pivot upended so.
If something.
Unintended surprising come to us I'm very confident that will will adjust accordingly.
My concern is mostly for the patients reserve because.
Oh.
Bragging wouldn't mind, new England over the 40 plus years that next we we take care of patients regardless of their ability to pay.
And this has really been a hit hard.
Or is that has already been.
Undeserved.
And so I think.
I am sure payers and legislators and the executive branch will recognize it could be unintended consequences to to patients from it.
But.
But I look I think it's par for the course pages, so we'd like to pay less less.
And.
We provide a vital service.
And we're a leader in that service.
The largest research organization.
We bad news and it's publicly available research, we don't embargo it for our own purposes, we do it because it elevates healthcare. So I think that most payers with one of his new network and was to be robust.
Yeah.
We have the best conditions out there to remember sitting sitting with me today. So.
As my as my answer.
Okay. No. That's that's helpful. Thanks, guys my shop.
Thanks very much.
Thank you.
Next we'll go to the line H a right.
Sweet and your line is open.
Hi, everybody a couple of quick questions here first just to put a finer point on the labor questions or comments I mean, it seems like to me that the tightness in labor pool is mainly in the nursing side.
Not so much on the Doctor side would you agree with that and do you have much exposure to nursing I don't really think you do.
We have.
A fairly sizable population of advanced practitioners typically within our and supporting our neonatology practices. So.
There is.
In that sense, a nursing component, although they are advanced practitioners, they're neonatal nurse practitioners.
And some of the.
Comments that Mark Richard provided around variable expense.
Barely essentially flat over the last three years that includes any definition, we would have of agency labor Logan's for positions are temporary practitioners as well as all other variable components. So it is accurate and what we referenced before agent.
Okay on the brave care in the rollout of.
Pediatric urgent care centers can you comment a little bit on how.
How much upfront startup costs, there are associated with that and then.
Time to break even time to mature margins on those clinics if you have.
A view at this early juncture, just trying to figure out.
Is this something we should factor in as a drag in the next few years Euro. This 100 targeted facilities out or is it something that's sort of de minimus.
Well if.
If you think about the opening of the clinic say, if you have roughly a couple of million dollar.
Start up costs, including including early losses, and then you have a strong and turn on that investment is a very high return on investment vehicle for us because of the overhead structure than we have in place and the relationships that we already have so.
I think it fits with what we do probably wouldn't recommend it to others.
We will detail as as we go forward, but I think what you should expect is a.
Clustered rollout in cities, where we are.
Minimize the additional overhead this requirement to do this.
I said now importantly, we have <unk>.
People to do it with the systems to do it and the relationships.
Overall.
Business. So we think it's going to be a very strong return vehicles.
Sidelight to what we do.
And then my last question.
As reference to you know what you think about the potential to refinance amount standing dead. Other things talk about Unappropriate capital structure. I guess is you're evaluating what's the appropriate capital structure is just wanted to make sure I understand what are the moving parts are variables that are still open in your mind as you are trying.
To formulate with the appropriate capital structure would be for the company.
Naturally.
We have outstanding debts, you look at the cost of that.
The Queen what can we do about it as Clark noted as you know.
Dead callable in 2022, so that is a factor for us.
About the expansion plan that we just outlined.
If we are going to be.
Making acquisitions that we also we are going to be.
Okay.
100 clinics or review your cash flow for that so I think we're evaluating all of the things that we're doing and.
And trying to keep our our controllable costs down so I think early in the early in the year will come back.
Any update on the share repurchases part of that option.
No update.
I would imagine that but obviously, obviously I think we're good stewards of our financial capital as you see as you see us being quarter by quarter steady state.
That can enable things mark choices. So we are here.
Okay, great. Thanks, a lot.
Thank you.
Thank you.
Our next question comes from the line of Ralph.
Can you help me with city.
And your line is open.
Great. Thanks. This is Jason cause for alarm around to cover this morning, I'm Gonna go back to comments around 2021 to the new 254. So I guess, if we looked at the implied <unk> EBITDA with that new flooring. It.
Looks like the sequential drop and EBITDA I guess did you did you discuss what's driving that and.
To the 2022 discussion around the 290 274, it looks like if we were to run right three Q EBITDA it'd be more of like a 290 numbers and I'm just trying to understand if you have thoughts around that and maybe F. B four Q imply EBITDA is more.
More correct run right on the Gulf War Baby.
Yeah.
Do have thoughts about that first of all.
I don't think it is analytically right annualize our third quarter numbers.
Necessarily get to that 294, which I, which I saw you guys had put out there.
We are confident that we were confident that we would do above above 240. The business has has improved more than we work more than we'd expected for all the reasons that we discussed before and that gives us confidence the year within about.
About 250 everything does.
That's right numbers.
We had our expectations were different I would say as far as next year's concerned.
I think we have said that we have the earning power to to get the 270 and now what we're saying is we think will.
Into our confidence level is very high that we will not only get to it or.
But but I don't see today.
Grounding to call out a number.
Above that.
As I mentioned in my remarks were in the middle of our budgeting process will look at the components of that housing how quickly acquisitions will will fall into place and what we'll do with our.
Other financial costs and financing cost rather.
And then we will update.
And just one.
One observation, Jason keep in mind, just from a seasonal standpoint, Arthur quarter based on our business tends to be our strongest quarter, both revenue and EBITDA is based on the Marvel seasonality of growth trends.
So.
As we look at the third quarter in a vacuum transit transitioning to cute four we would normally expect something slightly lower from Q3 Q4.
Got it okay. Thanks, it's really helpful. I guess, just pier mix in the corner I mean.
To date actually.
Seen improvement I guess over 2020, each of the three quarters, but is there any way to to discuss payer mix trends I guess relative to 2019 at this point and then.
Should we think about that is an improvement and how we're thinking about it from a compare makes sense of 2022.
And in the Gulf War basis.
Yeah, I'll take a shot at Charlton.
And can add look I think what we are seeing a trend in our pavements the toilet to related directly to 2019 and goodwill bit difficult came out of 2020. We saw the changes in 2020 has code has subsided our business has changed we've grown in a lot of ways. So I think.
I think I think.
The most instructed us to look at our current trends.
The.
It would be hard to go back to 2019, bassoon assume something different.
Yes.
I think you know our fair mix is largely finery.
On the government side is predominantly Medicaid and the rest of you remain demand count on our side.
Assange over.
Really long periods of time, leaving aside for the quarter. Our parents by volume tend to be fairly stable and over a longer period of time may be impacted by economic trends in employment trends more than more than anything else related to aging demographics are thank you might look at on the Medicare side, So empty stable.
Has been gradually improving prior to 2020, largely probably based on overall employment growth and what we're seeing so far in 2021 is really a reversion to that that pre 2020 trend. So we're pleased with that.
Yes.
We continue to have a fairly stable now.
Got it alright, thank you.
Thank you.
And at this time I'm showing no further questions in queue.
[laughter].
Great well. Thank you operator, thank you everybody for joining us this morning, and we appreciate your continued support.
Eight Q.
And maybe some gentleman that does conclude your conference call for today. Thank you for your participation Napa using AT&T executive teleconference Service you may now disconnect.