Q3 2021 Pennant Group Inc Earnings Call
Yeah.
Good day and thank you for standing by welcome to the pennant group third quarter 2021 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
Please be advised that today's conference is being recorded if you require any further assistance first star zero I would now like turn the conference over to your Speaker today, Mr. Derek Bunker. Please go ahead.
Thank you <unk> and welcome everyone and thanks, all for joining US today here with me today I have any Walker, our CEO and Gary <unk> our president.
Jen Freeman, our CFO and John <unk>, our CFO before we begin I have a few housekeeping matters.
With all of our press release and 10-Q yesterday for our third quarter earnings announcement is available on the Investor Relations section of our website at <unk> Dot com.
A replay of this call will also be available on our website until five PM Mountain time on Friday December 10 2021.
We want to remind anyone that may be listening to a replay of this call that all statements are made made are as of today November nine 2021, and these statements have not been nor will they be updated subsequent to today's call.
Any forward looking statements made today are based on management's current expectations assumptions and beliefs about our business and the environment in which we operate these statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied.
On today's call list.
Listeners should not place undue reliance on forward looking statements and are encouraged to review our SEC filings for a more complete discussion of factors that could impact our results.
As required by federal Securities laws, and its affiliates do not undertake to publicly update or revise any forward looking statements where changes arise as a result of new information future events changing circumstances or for any other reason.
In addition, the pennant group, Inc. Is a holding company with no no direct operating assets employees or revenues certain of our independent subsidiaries collectively referred to as the service Center.
Abide accounting payroll HR, it legal risk management and other services to the other operating subsidiaries.
Contractual relationships with such subsidiaries.
The words pennant company we.
Our and us refer to the pennant Group, Inc, and its consolidated subsidiaries all of our operating subsidiaries and the service center are operated by separate independent companies that have their own management employees and assets.
Chances here into the consolidated company and its assets and activities.
As well as the use of the terms, we us our and similar terms used today are not meant to imply.
Should it be construed as meaning that the pennant group, Inc has direct operating assets employees or revenue.
Any of the subsidiaries are operated by the pennant group.
Also we supplement our GAAP reporting with non-GAAP metrics.
When viewed together with our GAAP results. We believe that these measures can provide a more complete understanding of our business.
They should not be relied upon to the exclusion of GAAP reports a GAAP.
<unk> to non-GAAP reconciliation is available in yesterday's press release and in our 10-Q.
I'll turn the call over to Danny Walker, our CEO Danny.
Thank you Derek and welcome everyone to our third quarter 2021 earnings call. Thank you for joining us today to discuss our third quarter results and more importantly, the steps we are methodically taking to return to the healthy growth rate we've achieved over much of our history. These ongoing multifaceted efforts.
Will position us for a stronger 2022, we're grateful for our frontline employees and resources that continue to provide exceptional care to the 23000 patients and residents we serve during the third quarter.
Our third quarter results are sobering, given the high expectations, we established for ourselves and have caused us to review our actions to identify missed steps we've taken over the past two years as a public company.
In general the demands of completing the spinoff successfully the high volume of home health and hospice acquisitions. The leadership overhaul of our senior living segment and the investment of time and resources in early stage, new business ventures, all when coupled with the unique pressures of the COVID-19 pandemic of diluted.
Our effectiveness and operating to our standards throughout our history, we have gone through periods of substantial growth followed by periods of retrenchment and concerted focus on our organic growth.
Know that sustainable clinical and financial results are achieved when our investment activity is well calibrated with the health of our current operations and the bandwidth of our leaders and resources.
We haven't struck this delicate balance well enough over the past 18 months.
We are taking immediate actions to one ensure that local each local team is executing at a high level without distractions.
To retrench around the core opportunities across both segments and three reinforce the core principles of our operating model that have led to our historical success.
We believe that these efforts will yield significant results in the short term and ensure long term health.
Now turning first to our home health and Hospice segment performance. We continued to produce solid results with segment revenue up $14 6 million or 22, 7% and adjusted EBITDA up of 0.0 5 million or three 9% both over the prior year quarter.
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Our third quarter results reflect both the strength of our same store agencies and the challenges of integrating a large number of new acquisitions.
The operating environment in the third quarter was impacted by the rise in COVID-19 cases in several of our key markets and the ongoing labor pressures across the platform.
For example, in the third quarter total home health admissions declined five 7% from the second quarter nearly a quarter of.
Of which relate to the delay in elective procedures in key markets, such as Arizona, Idaho, Utah, and the Dallas Fort Worth Metroplex.
Where we've recently acquired home health agencies.
Approximately 80% of our decline in our total home health admissions is attributable to agencies acquired over the past 24 months.
Our hospice business continued to produce steady results. Despite similar pressures related to COVID-19, and our recent acquisitions, excluding agencies acquired within the past 12 months, our hospice admissions increased 12% in the third quarter over the prior year quarter and average daily census increased one four.
<unk> over the prior year quarter.
While we see is when we see a spike in COVID-19 cases like we saw in the latter half of the third quarter.
It temporarily impacts our ability to admit and increases our cost of services as more and more staff.
Our enter quarantine protocol.
COVID-19 cases normalized in our markets.
As we exited the third quarter, we are beginning to see traction in our home health business evidenced by an eight 7% increase in total admissions in October over September.
Is that rock of our confidence in continued growth and our long term health is our relentless focus on providing exceptional exceptional clinical care to our patients and residents. We continue to achieve high marks in several quality scores across our home health and hospice segment.
With an average home health star rating of $4 two to three.
Stars According to CMS and four four stars according to real time.
Third party analytics, our hospice quality composite score continues to trend well at 95% at the end of the third quarter compared to the reported national average of 90% our emphasis on clinical quality clinical outcomes.
We will be increasingly rewarded as the home health value based purchase model is rolled out.
Nationwide through the expansion of hospice.
And through the expansion of hospice quality reporting programs.
Since 2018.
12 of our agencies have participated in the home health value based purchasing model in Washington, Arizona, and Iowa, and we achieved net positive revenue adjustments each year, just as we have successfully prepared for and navigated the implementation of the patient driven groupings model or <unk>.
Our reimbursement and prior reimbursement program changes, we look forward to the opportunity presented by the nationwide home health value based purchasing model and related value based reimbursement models to demonstrate and be rewarded for the clinical.
Quality of care that our talented teams provide.
In our senior living segment, the ongoing effort to support our leaders in executing within our unique operating model continues.
Improvement, we achieved in the second quarter and believed would continue into the third quarter was disrupted by the sharp rise in COVID-19 cases, particularly in the markets, where our senior living communities are concentrated.
During the quarter the spike in COVID-19 cases also amplify the labor pressures, we've health across our senior living communities for most of 2021 there.
There are several levers we're pulling to help address these pressures directly and help offset their impact.
Now that we've completed the implementation of our full suite of <unk> systems.
The tools and analytics available are improving our sales and marketing processes.
Ms delivery and labor management, as we build stronger senior living operations moved past the worst of COVID-19, and begin serving a growing addressable senior population our senior living segment has the potential to be a source of strength for pennant.
As we announced in our press release yesterday, we are providing guidance for the full year of 2022, we anticipate full year revenue in the range of 468 million to $478 million and adjusted earnings per share in the range of 75 to 82.
As we consider the impact of COVID-19.
COVID-19 has had on our businesses over the past 18 months, we believe and have assumed in our guidance. Some ongoing pressure similar to what we've experienced in 2021. We also believe that the external effects, we experienced in the third quarter are more transitory unlikely to dissipate in <unk>.
<unk> normalized.
Our guidance assumes accelerated results in our recent acquisitions more in line with our historical transition rates continued growth in our home health and hospice same store agencies and incremental improvement in our senior living segment.
With that I would just say that our hope remains strong and our long term value proposition and we are deeply grateful for the team members in the field and at the service center that are making the important changes that need to take place for us to unlock that value and opportunity for our shareholders with that I'll add.
Derek to provide an update on our recent investment activity Eric Thank.
Thank you Danny.
During the third quarter, we announced the acquisition of one Hospice agency in Texas, bringing the total number of new operations since the beginning of 2022 2007.
Danny mentioned, the sheer number of new operations acquired immediately before and during the pandemic.
With the ongoing pressures in our senior living segment.
Cause some short term chop in our operating results.
<unk> of the current environment, including elective procedure delays in markets in which we have acquired new agencies.
Stretched many teams that are new to our operating model.
Getting to the delays and our expected performance ramp.
Much of this pressure appears temporary and we remain confident in the underlying fundamentals of our acquisitions each of which have the potential to contribute in a meaningful way to our long term results just as many of our existing agencies continued to grow year after year.
Our growth strategy, often leads to burst of activity. When we are opportunistically deploying capital toward acquisitions led by talented local leaders.
During such periods of high activity.
Priority is ensuring that these new teams our transition into our unique operating model in a way that would lead to years of successful results.
As we focus the energy of our local leadership teams.
Refocus the energy of our local leadership teams retrench around our core business opportunities.
Enforced the principles of our operating model we.
We will create a stronger foundation from which to pursue growth opportunities in 2022.
With that I'll pass it to Jen for a review of the financials.
Thank you Derek and good morning, everyone.
Detailed financial results for the three months ended September 32021 are contained in our 10-Q and press release filed yesterday.
The three months ended September 32021.
<unk> total GAAP revenue of $111 9 million.
An increase of $13 5 million or 13, 7%.
Over the prior year quarter.
GAAP diluted earnings per share at <unk>.
Non-GAAP adjusted earnings per diluted share of <unk> 11.
Please note that our non-GAAP adjusted earnings per share results for the three months ended September 32021 include.
Benefit of the Medicare sequestration holiday as well as the effects of Covid related expenses and lost revenue.
Difficult to perfectly capture all such expenses and lost revenue.
We estimate that our third quarter results were negatively impacted by COVID-19, and the amount of approximately $2 $3 million in lost revenue.
At least $3 million, specifically identify expenses across both segments.
And approximately $1 6 million increase in wages, including over time compared to the second quarter.
The combined impact on our business will likely continue to impact our results through the end of the year, which we have considered in our updated guidance released on November one.
Key metrics for the quarter ended September 32021 include.
Hundred and $1 7 million remaining on our revolving line of credit and $3 7 million cash on hand at quarter end.
131 times net debt to adjusted EBITDA, and 175 times, if Medicare advance payments had been paid back as of quarter end.
Automatic recoupment of the advanced payments began in April 2021 on which we have repaid $17 6 million three November 5th.
'twenty one.
And we expect to repay it.
Meaning $10 4 million overtime, but then the payback period.
Cash flows provided from operations of one 5 million, excluding the impact of the automatic recoupment of advance payments and the impact of the final phase out of the request for advanced alright anticipated payment.
As Danny mentioned yesterday in our press release, we provided full year 2022 guidance of revenue of 468 million to $478 million.
And adjusted earnings per share of <unk> 75 cents to ADT.
Our guidance is based on diluted weighted average shares outstanding of approximately $31 7 million and 26, 1% effective tax rate.
In addition, the guidance assumes among other things anticipated reimbursement rate adjustments now.
Unannounced acquisitions and the estimated ongoing effect of COVID-19.
It excludes cost at startup operations share based compensation and acquisition related costs.
And our guidance development, we considered the reality of how Covid has impacted our operations.
Our 2022 guidance includes incremental improvements in our segments throughout the year.
Recognizing some revenue growth and accounting for the lingering effects of Covid on our census, and occupancy as well as costs through 2022.
Yes look through the lens of the two COVID-19 peaks that we experienced in 2021.
It included moderate recovery throughout the 2022 calendar year.
2020 proved to be less challenging than 2021 and in some ways. We benefited in the early days of the pandemic.
Covid impacted our markets more heavily in 2021 compared to 2020.
Although predicting the impact of Covid is difficult we have used our experience in 2021 to create a better picture of what to expect in 2022.
With that in mind, we included moderate revenue growth and slight improvement over our 2021 adjusted cost of service as a percentage of revenue.
Despite the setbacks in 2021, our local leaders have proven to be adept at adjusting to challenging environments.
With a focus on our core principles retrenching to focus on our core opportunities across both segments.
The emphasis on execution I am confident that results can match our historical SaaS.
And with that I'll hand, it over to Brent to highlight a couple of our local leaders.
Thank you Jan it's great to be with all of you today.
It's my pleasure to acknowledge the tremendous accomplishments of a few leaders in our organization.
At Preceptor home health and hospice in Milwaukee, Wisconsin, Chief Executive Officer, Sarah Martell, and Chief Clinical Officer, Shelley, Germany have built an incredible culture of success.
In the early days of the pandemic era Shelley preceptor team developed solutions tailored to the unique needs of the communities they serve.
Quickly increasing our reputation as the provider of choice.
Their leadership has led to consistently strong financial and clinical results, including revenue growth of 36% and the.
Third quarter over the prior year quarter, and EBIT growth of 38% over the same period.
Also improve their CMS star rating of four stars on a real time basis.
The preceptor team also exemplified our core value of ownership and supported the delivery of quality care at several of our senior living communities across the state of Wisconsin.
Building, a strong continuum of care to better serve our residents patients and their families.
Staying in Wisconsin Executive Director Genie broaden my wellness director Sue the car and the whole leadership team at Brentwood Park assisted living in Franklin, Wisconsin.
So it's possible to grow in the midst of a historically challenging operating environment.
<unk> and team have helped lead Brentwood part to revenue growth of 16% in the third quarter over the prior year quarter.
Occupancy growth of 8% over the same period.
This strong topline growth during a period when many other communities saw significant pressure on occupancy.
Brentwood team also focused on managing their business effectively while providing quality services to the residents contributing to the EBIT growth of 39% through the first three quarters 2021 over the same period of 2020.
Genie and Susie are examples of what can be accomplished by executing and our unique operating model.
And achieving success, even in very difficult operating environments.
With that I'll turn it back to Dani.
Thank you Brent and thank you Derek and Jen for your contributions today.
I'd also like to just express again, our gratitude for the pennant team members throughout the organization that are fighting through the current complexities of the operating environment to ensure short term results improve and maintain long term health in the process. We also want to express gratitude to our long term minded.
Its shareholders for their continued belief in our ability to work through these temporary headwinds and drive and unlock the long term value proposition that we believe so deeply and thank you all Chino can you. Please instruct the audience on the Q&A procedure. Please.
Alright, so as a reminder.
If you would like to ask a question. Please press star one on your telephone.
And if you would like to resolve your question press the pound key again that is star one on your telephone please stand by while we compile the Q&A roster.
First question comes from the line of Scott Fidel from Stephens. Your line is now open.
Hi.
Thanks, and hi, everyone.
First question just wanted to just drill into the 2022 guidance and just as it relates to the.
The implied margin improvement that you're targeting for next year. It works out to around an implied 150 basis points adjusted EBITDA margin improvement and in the guidance and just interested if you can talk about the tempo of that margin improvement do you see this sort of playing out just ratably throughout the year or.
Or is there some seasonality that you're expecting.
In the sort of the tempo of that margin improvement that you are baking into the guidance.
Yes, Scott. Thank you for your question that this gen.
And we are anticipating that the that the margins will improve throughout the year and that our seasonality would be in line with our typical seasonality. So we do have.
Cost pressures that occur in the third quarter, we do have some seasonality as well in the second and fourth quarter. So we would expect that seasonality to occur with the margin improvement increasing throughout the year.
Okay and then just.
Follow up just had one on each of the segments if I could.
First just on the home health and hospice business.
What you are estimating the pennant specific home health rate increase would be.
<unk> talked about a three 2% rate increase for the industry just interested if that's.
What you are estimating with all the puts and takes off for pennant and then.
Any any thoughts that you could give us on some of the same store volume assumptions that you may be thinking about for HHH in 2022.
Yes, so on the rate increase.
Estimated a rate increase of about two 3%.
And with that we are also assuming in our guidance that the sequestration holiday.
It goes away so that sequestration is reinstated so sort of a flat rate.
Year over year assumption is on.
On that side on the right on the volume we do anticipate that our volume would increase in our revenue we continue to grow both in our same store and our acquisitions I think we have.
A lot of margin opportunity in our acquisitions as Danny mentioned and in.
And our same store, we are anticipating our normal growth that we would expect year over year sales it's around.
About a 10% to 11% increase in that.
Home health and hospice segment.
Top side and I'll, just add Scott, maybe John Doctor can comment a little bit on that.
The operating environment has affected our same store operations and home health versus the new acquisitions is fairly meaningful so Don do you want to.
Im happy to comment a little bit on that Scott and I. Appreciate the question I think our expectations in what.
I think our results show throughout the year is that where we've had an operation for a consistent period of time the opportunity to develop a team we've been able to really meet these headwinds and moved through them and you see that in some of the some of the strengths we've shown year over year on the admission side.
A lot of the opportunity in kind of the untapped potential in our portfolio resides in these acquisitions that we've talked about and those are acquisitions that have occurred over the last two years and we've talked for a long time about how thats often at nine quarter process.
Moving through sort of taking an acquisition that is relatively weak from a margin standpoint from a clinical standpoint, and transforming that to operate at our level and I think what what we've experienced over the through some of the headwinds of Covid and the labor situation. We've been facing is that's taken a little bit more time. So the untapped potential is there and I think.
That's why we're very optimistic in that margin expectation, we feel like there's a lot of untapped potential that we can reach thanks John.
We've weathered the storm really well on the same store front and we look forward to providing even more clarity on same store versus new store in the future.
And Scott I, just wanted to provide a clarification so that.
Rates that I was quoting about what the impact of that on US was actually on the proposal homecare Homebase is still updating with the final rules. So we should be able to have that.
<unk> next week sometime.
Okay got it so I would assume there is probably a tad of upside that right to that 2% right trying just didn't win the final Q&A.
Ill get back in the queue and let others ask questions. Thanks.
Okay.
Alright next one on acute is Frank Morgan Your line is now open.
Good morning, I guess staying on that subject the margins could you maybe.
Talk about sort of the relative weight in contribution between this the same store portfolio that <unk> had the two years or more our land quarters whatever the measure is like what's the relative weight of that in the enterprise versus all of the things that you bought in the last.
Two years, it would be sort of in the.
The non same store bucket.
What's the waiting there and then what on a relative basis I mean are we talking about.
Our margin differential of 500 bps or 800, Vms or just any help there would be appreciated and that's my first question.
Yes, Great question, Frank and we appreciate it I think what you're seeing is a pretty significant differential between those two and that's driven by a couple of primarily by a couple of large acquisitions that we've done and that have underperformed from a margin.
So our same store.
Acquisitions that we've carried for a while they've faced some of the same labor pressures they've been impacted but they've managed really well through it.
And when you look at a couple of these acquisitions and I'll highlight our joint venture with Scripps, which was included in this quarter's financials and you see a pretty significant revenue boost from that acquisition about $3 4 million in the quarter, but you see a very minimal margin on that business and I think the untapped potential that is reflected in that acquisition that.
We've increased that acquisition, we've increased the census by 32%.
Since we took it over we have increased the quality outcomes.
Tremendous opportunity that exists and our direct costs have declined by about 13% during that same period and so we expect to see that untapped potential start to be realized really effectively both in the fourth quarter and into the first quarter of next year and so there is there is some significant upside.
In that.
These four bucket, while our same store has performed really well again do we have an exact number yes, Steve or looking at your EBITDA margin Unstained Star and <unk>.
18, 3% year to date compared to our acquire is about six 5%.
And then the percentage I think Frank was asking the percentage that are in our what we call new store bucket versus same store 27 of those.
Roughly.
Quarter, Yes, so Frank.
And then on the margin I guess, you've provided that perspective on that Brian.
And I am sorry, the quarter, what is the quarters at the same store or the new store.
New store is about is about 25% of our total.
Operations.
Okay and Thats.
Of agencies or I guess, yes, maybe it's another.
Yes.
Okay got you so it sounds like that a lot of this.
Similar pressures.
Is it fair to say that it's just basically the the lack of having a seasoned management team in place at all of these locations or was there just something that.
Happened above and beyond.
<unk>.
The impact of Covid, which is obviously not insignificant, but was there anything else that happened just some kind of unexpected.
Integration issue.
No no none of those kinds of unexpected integration issues. It really is.
<unk> is the Covid environment.
A new management team.
You are having to deal with quarantine vaccination processes.
And then in a number of the states that we're in where we did new acquisitions.
Elective procedures were shut down for a period of time in the quarter. The combination of all of that is just our seasoned leadership teams navigate those complexities and have much better than our newer teams, but theres not been any.
Major disruption to our normal acquisition process, we're just performing behind where we expected to.
And frankly, we don't like to attribute it to external factors, we were looking hard at the ways. We have made missteps things that we control and we see opportunities for improvement.
We're making those changes.
And learning from that process, but.
But really that's the story is that it is.
Like.
A rookie season gain a little tough for somebody.
Or a sophomore season.
What's going on.
Got you, maybe just two more and I'll hop just curious.
The rate growth in hospice was.
Remarkably starting up about six 1% per day.
Any color on what's driving that and then also just on the senior living setup I. Appreciate the color you gave about how things are going in October on the on the home healthcare side, but any updated color on.
The occupancy trends in senior living.
So on the hospice front.
The Scripps acquisition that we've talked about it's a joint venture and we're really excited about its overall trajectory.
A lot of those patients are first period discharges, we've seen not just in that pocket of the organization, but across the board we've seen an increase of referrals from our higher acuity setting.
And actually a decline.
Referrals in that sort of mid tier where sniffs typically reside.
Most of that is just a function of what's been happening in the hospital systems.
And what's been happening overall in the post acute census world.
So that's really the main story unless theres something to add from gender John but.
And then on the occupancy side on senior living I'll have Brent tackle that one yes. So we saw a priest.
Sustained growth up until the Middle of September August September timeframe, then we started to see a dip.
Partially because of Covid and there is some seasonality in that as well.
So right now we're still being impacted by Covid.
And so we anticipate that it will be.
There may be some occupancy pressures going into the end of the year from a seasonality standpoint November and December tend to be a little bit tougher generally.
But then things will pick back up at the beginning of the year.
And frankly, I'd add one more piece of color just on the hospice rate opportunity and that is that as our as we have grown our geographies have changed a little bit. So our traditional business. We have been very strong for many years in Utah, Idaho, Arizona as we've grown on the Pacific Coast, that's going to affect our rates. So.
We've been awarded several <unk> in Washington. This year, we're very excited about those we've completed a startup in Everett, Washington, as well as down in Olympia, Washington, and so as those have come online.
Affecting our rates just because we receive higher reimbursement in some of those geographic areas. The same thing is true of our growth in California, and so you'll see that fluctuate as we grow in different parts of our platform as well.
Got you so the geographic wage adjustment would affect that more okay. That's great.
What about length of stay it sits on top as hospice.
However.
Any loss in median length of stays.
Yes.
<unk> that's a great question, we've been really pleased actually to see that our median length of stay has remained fairly constant from the second quarter to the third quarter, we have experienced a fairly.
And declining four throughout the pandemic and so to see that stabilize a bit we're very optimistic as Danny said some of this is driven by the percentage of our patients that are coming out of the acute study, which is higher than it's ever been.
Writing about that we're excited about the fact that acute system are trusting us with their patients and we continue to work with our partners in the enzyme pennant care continuum and other facility partners to be the resources that we can be to the community, which I think will stabilize those facility avnet numbers.
Thanks Frank.
Thanks.
Alright, again, if you would like to ask a question. Please press star one.
Next one on Q is Tao Q your line's now open.
Hey, good morning, guys.
Just wanted to ask about the 2021 guidance.
In terms of the revenue guidance, 4% to 25, 1% to $30 million. It seems to imply kind of a declining revenue in the fourth quarter I'm. Just wondering what is driving that revenue decreased sequentially and just to tack on question to that.
If you look at the way you guys.
Operations any reason you'd prefer to guide EPS versus using <unk> at this point given the higher volatility there associated with EPS.
And so on the revenue side town and thank you that this is Ken.
And.
We guide to adjusted revenue so that is going to take into account that the scripts revenue is not included in the first two quarters and will be included in the second or the.
Third and fourth quarter so.
You'll just need to adjust for that particular piece, we're not anticipating a decline in the fourth quarter in revenue.
Actually is increasing it's just that that that will probably be.
As part of your difference if you're looking at GAAP revenue versus <unk> revenue.
And then on EPS.
We have traditionally guided on EPS.
Looking at the various inputs puts and takes that we have in queue.
<unk> items of revenue and cost of service.
So we've historically.
On EPS.
We will review that though thanks for the question.
We'll take it into consideration, we'll do a review of that.
Sounds good and just on the acquisition side given the strength you see on the hospital side I know that you guys see that one acquisition this quarter and I think you study up another hospice agency during the quarter.
How should we think about the pipeline of investments going towards you guys take a breather and next year home health trends and kind of focus more on.
The hospice front.
Yes, I would say.
What we are trying to communicate in the in the script is that that's a natural process for it's not a sign that we're sort of taking a break from acquisitions or something's wrong. It's just when we see significant opportunity in our already acquired opt.
Operations, we see the best return coming from continuing to.
Transition those and ensure that that's the case.
Our return to different types of acquisition opportunities will will actually be fairly uneven in that.
Certain markets in our portfolio make more progress more quickly they will they will start deploying capital sooner than perhaps others, who may have a little more.
Prolonged lifting to do.
But this is kind of a typical cycle for us where we see so much opportunity internally that it's harder to justify taking resources and deploying capital.
Externally so.
I think it would be a little lighter.
In the fourth quarter, maybe into the first quarter and then.
I expect we'll be in the trajectory, we would want to be to make sure. We're deploying more capital next year.
Okay.
Okay.
On the home health value based purchasing you mentioned that there are 12 agencies you guys have that already participating in the program.
Getting cost saves and the revenue adjustment could you quantify kind of the revenue youll see among the tall and how should we think about the program gets rolled out nationwide.
And any impact on your.
Total portfolio.
That is a good question I'm not sure we have.
We're looking it up right now.
The collectively those agencies represent a fairly small percentage of our overall home health revenue.
But we viewed them as test cases and.
Made sure well there the number a little more concrete numbers are coming but we've made we've learned a lot from those those experiences right. There's a lot of data.
Tracking and reporting that is really important on that front and we feel like those those test cases have been really positive for us, but John or Jim do you have other specifics on the numbers.
So our total the impact was a positive of about $125000 across those agencies and again as Danny said.
Those are very small some of them are mid size.
But we've been we've been very pleased overall at how our local teams have taken the data around these clinical metrics, how our service center partners have helped to scoreboard and provide education and training.
And the resulting impact has been.
The majority of those agencies have been in a positive have had a positive impact year over year and I think thats. One of the reasons. We really are excited about home health value based purchasing rolling out across the country, we see it as a way that our model has the potential to impact.
Our operational results because of our focus on clinical outcomes because of the way, we measure them and provide leaders with transparent data and their ability as clusters and local leaders to address the unique opportunities in their markets. So we're excited and those agencies accounted for 16% of our <unk>.
Home health revenue.
What that whole dollar translates to in terms of a revenue increase.
There is about 1% and that's a year to date number.
And that's just our year to date stuff.
That helped out that's very helpful. Obviously.
Lastly, I wanted to us about the vaccine and vaccine manage that Osha and CMS is pushing through I know that things are in a space, where theyre already in those state mandates.
What kind of turnover impact you're expecting.
On the.
Marketers have already gone through yet.
Thank you for that question, we have been dealing with mandates and and frankly counter forces to mandates in various states Theres Some states who've gone.
Away from that Theres been states that have done it now that the federal mandate process is underway.
There is a lot of dynamics moving both directions, depending on markets specific issues.
But.
I believe it that it hasnt contributed enormously to our overall turnover situation. Although the there is a lot going on in the labor market right now.
When we are watching it closely.
We have seen.
Fairly high adoption in those states that have had mandates and are really very modest turnover rate driven by it it's difficult for us to say, how thats affecting the rest of the marketplace. It certainly is factoring into People's decision, making.
But we've done careful reviews, we're reporting we have good data systems now to report vaccine status and.
And spending a lot of one on one time with individuals and their individual circumstances reviewing.
The nuances that go into the decision around vaccination.
We're not anticipating a significant.
Turnover.
Spike as a result of these these mandates making their way through.
We've spent a lot of time individually with with our staff members and understanding where they are at why they are in the place that they are and how we can best support them as they as they move forward. So.
We won't see the full effects of it here for probably another.
Several weeks, but.
It adds to the dynamic we feel like our culture of high Trust in <unk> and.
And local decision, making has served us well in that regard and we anticipate that we will be able to get through that without any major disruptions to the already difficult labor environment, but we don't anticipate it being something that is significantly problematic for us.
Thanks for the color.
Thank you for taking my questions.
Thank you Jeff.
And there are no further question on acute I will now turn the call over back to the presenters.
Okay. Thank you all again, thank you for joining us. Thank you for your continued belief in our story and thank you to all of our leaders and stakeholders for.
The amazing work that you do on a daily basis have a great day.
This concludes today's conference call. Thank you for participating you may now disconnect.
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