Q4 2021 Addus Homecare Corp Earnings Call
[music].
Yeah.
Ladies and gentlemen, thank you for standing by and welcome to the <unk> Homecare Corp.
Fourth 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 telephone keypad.
If you require any further assistance please press star zero.
I would now like to hand, the conference over to your speaker today.
Drew Anderson.
You may begin.
Thank you good morning, and welcome to the Adage Homecare Corporation fourth quarter and year end 2021 earnings conference call.
Today's call is being recorded.
To the extent any non-GAAP financial measure is discussed in today's call. You will also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP by going to the company's website and reviewing yesterday's news release.
This conference call May also contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, including statements among others regarding adds expected quarterly and annual financial performance for 2022 or beyond.
For this purpose any statements made during this call that are not statements of historical fact may be deemed to be forward looking statements.
Without limiting the foregoing discussion to forecast estimates targets plans beliefs expectations and the like are intended to identify forward looking statements.
You are hereby cautioned that these statements may be affected by important factors among others set forth in <unk> filings with the Securities and Exchange Commission and then its fourth quarter and year end 2021 niche waste.
Consequently, actual operations and results may differ materially from the results discussed in the forward looking statements. The company undertakes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise.
I would now like to turn the call over to the company's Chairman and Chief Executive Officer, Mr. Dirk Allison. Please go ahead Sir.
Thank you drew good morning, and welcome to our 2021 fourth quarter earnings call.
With me today are Brian Poff, our Chief Financial Officer, and Brad Bickham, our President and Chief operating Officer.
As we do on each of our earnings call I will begin with a few overall comments and then Brian will discuss the fourth quarter results in more detail.
Following our comments the three of us would be happy to respond to your questions.
Yesterday, we announced our financial results for the fourth quarter and full year 2021, and we are extremely proud of our operating performance.
Our team was able to produce record results for the quarter. Despite the pressures from both a tight labor environment as well as increasing employee quarantines due to the omicron variant of Covid, which I will discuss in more detail in a few minutes.
Our revenue for the fourth quarter of 2021 was $224 $6 million as compared to $196 million for the fourth quarter of 2020, an increase of 14, 6%.
Adjusted earnings per diluted share for the fourth quarter of 2021, or <unk> 97 cents as compared to 82 cents for the fourth quarter of 2020, an increase of 18, 3%.
Our adjusted EBITDA for the fourth quarter of 2021 was $26 $7 million as compared to $29 million for the fourth quarter of 2020, an increase of 27, 5%.
For the full year of 2021, our revenue was $864.5 million with an adjusted EBITDA of $97.7 million or 11, 3%.
This along with our strong operating cash flow during the year resulted in a cash balance of approximately $169 million at December 31 2021.
That's just been discussed over the past few months by several companies in our industry one of the most challenging issues. We face today is labor pressure.
This not only includes dealing with the challenge of hiring enough employees to care for our consumers and patients.
But also with the reality of increasing wages due to competition and the current labor market.
During our fourth quarter, we saw continued pressure in both of these areas let.
Let me give you some information relating to the Libra dynamic sporadic.
Our personal care hires per business day during our fourth quarter of 2021 were up 3.2% over the fourth quarter of last year, but were down five 7% sequentially from our third quarter of 2021.
During our fourth quarter, we started to see the effects of the omicron surge, which began in December and began to decline at the end of January .
While today, we are not yet back to our expected level of hiring for personal care. We have started to see an increase in our highest per business day in February and they are currently running above the level of cars per day, we saw in the third quarter of 2021.
We are also seeing wage pressures in certain markets for our personal care segment. However, the majority of our personal care Labor force have already received meaningful wage increases over the past few years and we have as we have experienced states increasing their minimum wage.
This has helped to keep the current wage issues in personal care to a more manageable level and primarily in our smaller markets.
Clinical care, it's where we have seen the biggest impact of recent wage increases.
In our home health and hospice segments market pressures, resulting in wage increases up approximately 4% to 5% depending on clinical specialties.
We have experienced an increase in turnover in these segments as the demand for a limited number of clinicians increases across various health care settings.
To help US meet these challenges we have added additional resources to reduce the time it takes to fill open positions. While also accelerating our standard annual wage increases to meet these market challenges. We are confident these investments will help with our labor issues.
One item, which minimally affected our fourth quarter revenue was the increase in the number of our caregivers who were in quarantine due to the surge in COVID-19 infections, resulting from the omicron variant.
This variant is caused us to experienced the largest increase to date and the number of our employees entering quarantine after having been either exposed to are tested positive for the virus.
We began to see this increase in the last few weeks of December .
By January 2022, approximately 4% of our caregivers and our personal care segment, where in quarantine at the January peak.
This level of corn team was three times higher than what we saw with the delta away and almost two times higher than our previous high point, which we saw in the fourth quarter of 2020.
With this many caregivers quarantine for up to two weeks, we have seen a reduction in hours served of around 6% for January 2022.
The good news is we have started to see a rapid decline in these foreign teams with our family February numbers back down to the level, we saw with the Delta variant.
Remember in personal care since we built Bobby our serve our revenues are immediately impacted by quarantine, but can quickly recover as our caregivers are able to return to service.
We are encouraged to see the reduction in quarantines accelerate and expect this improvement will continue as the number of cases decline across the country.
Now, let me discuss our same store revenue growth for the fourth quarter of 2021.
Our same store revenue growth for our personal care segment exclusive of the New York City have program was 8% when character.
Compared to the fourth quarter of 2020.
This growth includes the Illinois rate increase we received starting November one 2021.
However, as I previously mentioned, our same store growth in personal care hours was impacted by our quarantine levels as well as to an increase in the turnover, we saw with our market level service coordinators.
These are the team members, who helped schedule hours to be served as well has helped to onboard new caregiver fevers.
This turnover for this position has increased over the past several months as we have experienced issues with both the delta and omicron variant of Covid as well as the general labor market challenges.
We are optimistic that we will see our hours returned to more normal levels of growth as the current wave of the virus continues to decrease and our service coordinator turnover returns to our historical levels.
Turning to our clinical care operations, our home Health segment continued its strong performance.
During our fourth quarter of 2021, our same store revenue growth was seven 1% as we continued to see strong volume growth in this segment.
Although we did see an omicron related impact on volumes late in December and into January as some acute care facilities limited elected procedures.
However, since the beginning of 2021, our home health admissions have increased steadily and with favorable our overall favorable trend continuing through most of the fourth quarter.
As we have been saying over the past year. We are excited about our home health operation and will continue to focus our efforts on expanding these services.
As we have anticipated our hospice same store revenue increased one 3% over a strong fourth quarter in 2020, the first year over year revenue growth in our hospice segment.
Mid 2020.
As we saw in the third quarter of this year, our same store admissions continue approve over the prior year growing one 4% over the fourth quarter of 2020.
Although we did see a decline sequentially due primarily to expected seasonality during the holiday season and to a lesser extent the onset Obama kron in December .
We continue to make progress with our median length of stay improving to 22 days in the fourth quarter of 2021 as compared to 15 days in January 2021.
Overall, our hospice ADC increased to 2000 and 635 for the fourth quarter of 2021 as compared to an ADC of 2000 and 492 for the fourth quarter of 2020 inclusive of our Queen City acquisition completed during the fourth quarter of 2012.
<unk>.
Let me update you on the status of our vaccine progress.
As many of you know the federal government has passed a mandate that all health care employees, whose businesses operated under condition of participation with Medicare or Medicaid must be vaccinated.
This vaccination mandate covers our home health and hospice segments. In addition, New York Delaware.
L aware and the city of Philadelphia have mandated that all health care companies, including personal care must ensure that their employees in those markets are vaccinated, although most have exempted non clinical caregivers from their state mandates.
These various city state and federal mandates make it imperative that we continue to focus on getting as many of our employees vaccinated as possible.
While AD is not mandated vaccine for our employees. We have continued to take steps to encourage and incentivize our employees to get the Covid vaccine and we were pleased with the progress we are seeing.
Overall, our concern confirmed back so nation percentages, including employees with approved exemptions are 99% vaccinated in home health.
99% vaccinated in hospice and 72% vaccinated for personal care with the compliance rate between 95, and 100% and personal care markets with a currently applicable mandates.
We will continue our efforts to encourage our employees to get vaccinated. So that we will be well positioned to adhere to any future mandate implementations as they may occur.
As we have discussed on our last few calls we continue to await a decision on any additional awards of responses.
Two our appeal in the New York City Path program.
Based on the uncertainty associated with this RFP process, we have stopped accepting most new referrals for this New York program.
Both as a result of the C D and the Covid impact and our intentional approach to reducing New York C. D. Pap admissions over the past 12 months, we have seen our run rate revenue in this low margin program decreased from an annualized run rate of approximately $52 million as of the fourth quarter of 2020.
To approximately $42 million as of the end of our fourth quarter 2021.
We expect our revenues from New York City back to continue planning in the absence of new developments.
For information as we continue to limit new referrals.
However, we are pleased at the Governor of New York has included in her budget proposal for the coming fiscal year, a row back in the 1.5% Medicaid reduction we saw last year.
In addition, she is and she has.
In addition, she has proposed increasing Medicare rates by an additional 1%.
It passed into law. These rate increases will strengthen the rest of our New York business.
We are pleased that during the fourth quarter, we closed on our acquisition of summit home Health, a Medicare certified home health provider in Illinois, which allows us to provide skilled home health services in the state.
With our largest personal care operation.
In December we announced our agreement to acquire journey care hospice and not for profit hospice with an excellent clinical reputation and one of the largest hospice service operations in the Chicago Metro area.
With this acquisition, we will provide all three service lines in our Illinois market.
This transaction closed on February one 2022.
Currently we are in the early stages of the integration of journey care into Atlas and we are pleased with our progress. We are excited to have both the summit home health and journey care as part of our AD as family and I want to again welcome both teams to add us.
Well, so I'm at home health and journey care are examples of acquisitions, which align with our goal of creating markets, where we provide all three levels of homecare.
We will continue to look at opportunities in all three segments with a focus on acquiring clinical services capabilities in markets, where we currently have strong personal care coverage furthering our strategy of development and states with coverage of all three levels of homecare.
The Covid pandemic has affirmed the value of taking care of elderly and disabled consumers and patients in their homes.
<unk> not only one of the safest and most cost effective places for them to save care, but it's also the place where most elderly individuals preferred to be.
Over the past two years, we have continued to invest in planning preparation and materials to assist us in safely and effectively.
Filling her role as an important caregiver, allowing these consumers and patients their wish to stay at home.
We believe that this heightened awareness of our value of home based care is favorable for our industry and we will continue to be a growth opportunity for our company.
We also understand and appreciate that our operations and growth are dependent on our dedicated caregivers, who worked so hard providing outstanding care and support to our consumers' patience.
And their families.
I am thankful for each of our team members and I'm proud of the job they have done in the past and continue to do each day.
It is important that we all focus on achieving our mission by putting our patients first.
With that let me turn the call over to Brian .
Thank you Dirk and good morning, everyone.
Ed has had a solid financial performance for the fourth quarter, continuing our record of delivering consistent profitable growth for 2021.
Our results reflect positive trends in all three segments and the benefit of the advanced Illinois rate increase for personal care.
We are encouraged by the continued improvement in hospice care with a return to positive same store revenues and continued sequential improvement in average daily census, median length of stay in patient days.
Our median length of stay for hospice segment has not fully returned to pre pandemic levels. We're optimistic this trend will continue to improve in 2022.
With the impact of the recent omicron wave that peaked in January we anticipate our first quarter revenues to be negatively impacted by employee quarantines I believe our track record of managing through the pandemic reflects our ability to adapt to the ever changing environment and we expect to continue to produce strong operating results in 2022.
As Derek noted total net service revenues for the fourth quarter were $224 $6 million, an increase sequentially from $216 $7 million in the third quarter full.
Full year 2021 revenues were $864 $5 million up from $764 $8 million in the prior year the.
The revenue breakdown for the fourth quarter is as follows.
Personal care revenues were $175 1 million or 78% of revenue, which benefited both from the November one 2021 statewide rate increase in Illinois, as well as a retroactive rate increase for Illinois managed care organizations related to the January to March 2021 time frame.
We have previously received a rate increase for this period for all programs reimbursed directly by the state.
Hospice care revenues were $40 $2 million or 17, 9% of revenue.
These results include the addition of Queen City Hospice, which closed at the end of 2020, and the Hospice Division of Armada, which closed on August one 2021.
Home health revenues were $9 4 million or four 2% of revenue.
These results include the operations of two acquisitions, the home Health Division of Armada and summit home Health, which closed October one 2021.
In addition to our strong organic growth, we added approximately $30 million in acquired revenues in 2021, and another $55 million. So far in 2022 from a recently closed journey care acquisitions.
We look forward to seeing the incremental contribution to both revenue and earnings as we integrate charity care into our operations over the next several months and we will continue to evaluate and pursue other acquisition opportunities that meet our strategic criteria.
Other financial results for the fourth quarter of 2021 include the following.
Our gross margin percentage was 32, 4% an increase from 32% for the fourth quarter last year and up sequentially from 39% in the third quarter a.
The year over year increase is largely attributable to a higher mix of clinical services and we benefited sequentially from the Illinois rate increase to offset the previous minimum wage increase in Chicago.
As we have seen traditionally we expect our first quarter gross margin to be impacted negatively by approximately 100 basis points as our unemployment tax base resets for the new year.
G&A expense was 22, 1% of revenue slightly lower than the 22, 6% of revenue a year ago with lower acquisition related expenses.
Adjusted G&A expense was 21% of revenue up slightly from 19, 5% of revenue in the fourth quarter of 2020, primarily due to a higher mix of clinical services with a higher G&A profile with.
With the addition of journey cares operations in the first quarter, we expect to see our G and a percentage of revenue increased slightly over historical levels as our clinical business continues to grow.
The company's adjusted EBITDA increased to $26 $7 million for the fourth quarter of 2021 compared to $20 $9 million from the same period in the prior year and was $97 $7 million for the full year 2021, which was an increase from $76 9 million in the prior year.
Adjusted EBITDA margin in the fourth quarter of 11, 9% was an increase from 10, 7% in the fourth quarter of 2020, and an increase sequentially from 11, 5% in the third quarter.
For the full year 2021, our adjusted EBITDA margin was 11, 3% up from 10, 1% for the full year 2020.
Adjusted net income per diluted share for the fourth quarter was 97.
The adjusted per share results for the fourth quarter of 2021 exclude the followings.
The favorable impact of the retroactive, Illinois NCO rate increase of five cents Act.
Acquisitions de Novo expenses of nine.
Restructure and other nonrecurring costs of one set and stock based compensation expense of 11 cents.
The adjusted per share results for the fourth quarter of 2020 excluded the following.
COVID-19 expense of one acquisition and de Novo expenses up 15 cents.
Restructure and other nonrecurring costs of <unk>, <unk> and noncash stock based compensation of 10 cents.
Our tax rate for the fourth quarter of 2021 was 26, 7% for calendar 2022, we expect our tax rates will remain in the 25% to 27% range slightly higher than in prior years.
Dsos were $53 nine days at the end of the fourth quarter of 2021 fairly consistent with 52 nine days at the end of the third quarter. We continued to see strong collections from a majority of our payers and expect this trend to continue as the majority of states, where we operate currently have budget surpluses.
We continue to see very strong cash flow trends with our fourth quarter net cash provided by operations totaling $25 $2 million.
Exclusive of payments utilizing previously received government stimulus funds and the partial repayment of our deferred payroll taxes. Our net cash provided by operations would have been $28 $7 million for the fourth quarter and $67 $4 million for the full year 2021.
As of December 31, 2021, the company had cash on hand of $168 9 million to.
$224 $9 million of bank debt and capacity and availability of $376 $6 million and $143 $6 million, respectively under our revolver.
As you can see we remained well capitalized and focused on maintaining a strong financial position in order to pursue our acquisition strategy as we enter the new year.
This concludes our prepared comments this morning, I want to thank you for being with US I'll now ask the operator to please open the line for your questions.
Yeah.
At this time, if you would like to ask a question. Please press star one on your telephone keypad.
Again that is star one on your telephone keypad.
Your first question comes from the line of.
Scott Fidel.
Steven Your line is open.
Scott Fidel Your line is open you may ask your question.
Oh, sorry about that I was on mute there.
Good morning.
First question just understanding that you don't provide formal guidance and I. Appreciate some of the qualitative commentary that you did get.
But just given a few of the different moving pieces that you talked about in the first quarter and then into the second quarter with the impacts from the crime.
To be more weighted to January but having a significant impact, but then also having the journey care acquisitions coming online as well.
Maybe if you could just talk to either directionally or to the level of detail you're willing to give us thinking about how those revenue trends overall could evolve in the first quarter relative to the fourth quarter and then maybe thinking about at appropriate run rate, maybe as we get to the second quarter.
Where the impacts are mommy crime water should be much less significant.
Yes, Scott this is Bryan I think our expectation just looking at Q4 going into Q1 of the impacts of biomarker data, we've seen to date and not having full visibility yet into February and March obviously, but I think our expectation with the impact we've seen from quarantines.
Those pressures early this year is outside of the journey carrier acquisition I think our expectation is we should see revenue sequentially, probably see 2.5% to 3% reduction from Q4 into Q1.
We are pretty good proxy for our expectation of that I think journey care coming onboard February one will be additive to that.
I think as you recall from our prior conversation so journey cares about 55 million of annualized revenue, we're going to be spending probably six to nine months really integrating that and keep in mind that was a not for profit organization. So we will be making some adjustments. There. So our expectation is really not to see any real meaningful earnings for the first six to nine months.
So you'll see some revenue impact in Q1, but not really much ways earnings until we get those integration process is well underway.
Okay I appreciate that.
And then maybe similarly, just on the personal care dynamics, obviously, you had a strong print there in the <unk>.
For the same store.
The benefit of the Illinois rate increase any.
Sort of framing that that you'd want to give us in terms of how youre thinking about.
Same store growth for personal care, obviously, you did give us that detail on some of the impact of the hours in January .
From from that caregiver.
19 spot as we think out more over the full year.
How youre thinking about same store growth for personal care against a long term, 3% to 5% target.
Yes, I still think at least that we benefited in the last couple of years from from nice rate increases that have kept us above that three to five I don't think our expectation. We got this rate increase in Illinois that will baked in for the first part of 'twenty, two but I think outside of impact from any kind of additional COVID-19 waves or volume pressures on that regard our expectation is still 3% to 5%.
<unk> in personal care. So I think volume is going to be a key for us. This year I think we've got several things we're doing in tight labor market, but we've.
I made some adjustments to how we're onboarding employees et cetera. So we can get the right amount of folks coming on board with US and we mentioned Dirk mentioned the script. Our hiring numbers are are looking pretty good into February and we still think 3% to 5% is the right way to think about long term organic growth in personal care.
Got it and then just one last quick one for me.
Brian .
Thoughts on operating cash flow expectation for 2022 relative to 2021 and that's it for me. Thanks.
Yes, I think 2021 was a good proxy if you look at our net cash flow provided kind of compared to EBITDA. We run right at 69 close to 70% conversion I think with the way we've seen our payment trends from our payers over the last couple of years have been pretty pretty studies, our expectation would be a similar profile in 2022.
Okay.
Okay.
That was the hand, you're next.
And your next question comes from the line of Brian <unk> from Jefferies. Your line is open.
Hey, good morning, guys.
Just a few quick questions from me I guess.
Because I think about the inflationary environment that we live in today, we're talking a lot about labor, but how are you guys thinking of or what are you hearing from your clients in terms of the ability of the states or willingness of the states to raise rates to match broader inflation right now.
I will tell you this is probably.
Interestingly enough one of the strongest markets, we have with our states I think with all the help they received from the federal government, we're seeing a number of states.
Either consider raising rates and allow us to pass that through.
Somewhat to our caregivers so that we can help with recruiting.
Or to cover costs that we previously incurred as we tried to keep people employed and meet the markets that are out there. So I'd say, we're very comfortable and confident in our states today.
With this 10% money that's out there a lot of them are looking at new ways to use that money over the next year or two and so we're excited to see those programs come about over the next few months. So we're pretty we're pretty comfortable right now with where we sit.
Got it and then just a follow up the M&A environment.
Are you seeing out there in terms of competition for deals or anything you can share with us in terms of the pipeline of acquisition opportunities that youre looking at today.
Yeah, Brian I don't think we've seen any increased competition per se I think what we are hearing is maybe there are some folks with omicron pressure.
Wanting to kind of to hold off and then we'll come out on the other side of that but no real change from our perspective I think from a multiple standpoint, we think there could be some compression with the current environment, but otherwise we're pretty focused strategically I'm still looking for things that are are good fits for us either in.
<unk> to personal care, we are adding clinical services and our key markets I think that'll be a still up because it's a focus for us this year.
Got it and then Brian one last question for me just modeling any comment you can make on the tax rate and any other callouts you wanted us to think about as we model for 2022 and 23.
Yes, I think on tax rate I think our expectation is we'll be probably in that 25% to 27% range I think in prior years, we've seen it would be a little bit lower part of that is a benefit as our stock price has appreciated we get some benefit from that we.
We don't really where we are trading today, you're not expecting to see that probably continue so I would expect to see us in 25% to 27% range for this year.
Awesome. Thank you.
Your next question comes from the line of Matt Larew from William Blair. Your line is open.
Hi, good morning.
A couple of things on.
Labor.
One I was curious if you track any metrics in personal care like the the time from.
Interview to first paycheck.
And how that has trended and maybe how you've been working too.
Improve that and then you alluded to some of that.
Turnover I think more on the administrative side I was curious if you could quantify that.
At all and maybe indicate how that stabilized.
Since <unk> died down.
Yes. This is Brad with respect to tracking the metrics from basically application to higher we do track that now there are some things that.
You know kind of weigh into that that are state specific regarding kind of background checks and timing there. So.
I will say when you have a virus or do you have a little bit of a.
Delays in hiring just because that kind of folks on the other side that all we rely on to kind of push through background checks and that sort of thing are they struggled a little bit.
But that is an area I will tell you that.
We are getting even more focused on we're actually looking to add some additional.
Our resources to better track those metrics. So that is certainly an emphasis for us with respect to service coordinators as we mentioned as Dirk mentioned in his comments, we did see a tick up in.
Turnover with service coordinators.
I think we've taken some steps recently, we've got merit increases that are going out that should help stabilize some of that workforce. We have added additional recruiting resources, primarily on the clinical side, but also on the admin side. If you will and I think a lot of that service coordinator turnover.
Some of it is tight labor market. They have options out there I think some of it was just kind of COVID-19 fatigue with some of those are individuals that we've asked a lot of them over this past year and.
I think it kind of caught up with some of them, but you know what I'm seeing.
A light at the end of the tunnel that we're making some progress filling those positions. We certainly have some initiatives out there to work on.
Getting that turnover rate back down to where it where it was kind of pre COVID-19 .
Okay, and then just thinking about.
Again that sort of a target growth range moving forward I think the last.
Two years.
Organic billable hours have actually been down.
Down I think for the first time.
Since I've been following the company.
And I'm sure you know mostly related to the Covid Surgeons, we've had limited capacity.
But obviously that's been aided by strong reimbursement. So I guess, that's as we think about 'twenty to 'twenty two 'twenty three we move forward.
Are there any items to call out from a reimbursement perspective, you haven't already discussed maybe on a state specific level and should we be assuming that that organic billable hour.
That metric starts to flip back positive moving forward.
Yes, I think when you look at some of the potential.
<unk> on the reimbursement front.
We'd mentioned that we got the Illinois rate increase that is built into 2022, but we also have as Dirk mentioned with some of the additional 10% F map.
The ARPA funding that will provide.
Some tailwind for us so we're waiting frankly on seeing a more details around those plans with the various states that are looking to.
Provide us with some rate enhancements.
A lot of it'll be in fashion of increased reimbursement that would be passed on to caregivers to help with the recruitment and retention so that should help actually drive.
The hours volume.
Okay. Thanks, Brad.
Your next question comes from the line of Mitra around Gopal from Sidoti Your line is open.
Yes, hi, good morning, Thanks for taking the questions.
First I was just curious if it's tight labor environment.
Do you see that affecting our growth strategy at least in near term in terms of how aggressive you'd like to be.
Mitra are you talking about as far as M&A.
Yes.
Yes.
No.
The environment doesn't affect our what we want to do as far as growth. One thing we would constantly said and we will continue to be as as we tend to be somewhat disciplined buyers. So we are in the market looking for opportunities today, but if Marc if multiples remain higher than we feel justified the return we'll get from our.
Shareholders and we're not opposed to.
Stepping back and waiting for something such as Germany care journey care was something we found great operation great people not for profit environment, which needed us to come in and gave us the opportunity to come in and make some changes in the expense structure.
While we acquired that at a reasonable certainly a fair and reasonable price and so those are the type things, we'll be looking for but we are not slowing down our opportunities that we're going to look at <unk> I just add real quick with that said I think obviously when we're looking at potential deals we are part of our diligence processes.
To be cognizant of the trends in the labor market on the local and state level. So that is definitely something that we evaluate.
We're looking at deals and taken a consideration, but I think the.
The labor market today is not.
Kind of put us on a back seat as far as our strategy overall.
Okay. Thanks, that's great and then.
When I look at the peer mix I think managed care is probably at the end of this last quarter the highest.
We have seen.
Just curious in terms of if you're having increased conversations with managed care now given the environment and how do you expect that to play with over the next few years.
Yes, I think one of the great things about our strategy as it allows us to develop size and geographic coverage in certain markets. A lot of these markets. We have great relationships with managed care providers. The fact that we're able to provide services across the geographic area, which maybe some of our competitors.
The market cannot do allows us to sit across the table.
From the X M C o's and and develop.
Rising, which we're comfortable with so at this time, we have a team.
That's all they do they've done a great job of maintaining and increasing pricing as we need so we're very comfortable with our relationships with <unk> and the pricing environment.
Okay. Thanks, again for taking the questions.
Again, if you would like to ask a question. Please press star one on your telephone keypad.
Again that a star one on your telephone keypad.
Your next question comes from the line of Ben Hendrix from RBC capital markets. Your line is open.
Hey, Thanks, guys.
Quick question about with journey care and some of it now.
Now in the portfolio and having all three levels of care are in.
In that key Illinois market can you give us an idea of kind of the sources and magnitude of of upside that you can expect when you get all three levels of care the market, whether it be revenue synergies or margin synergies.
Kind of once you have those wrapped up and in place.
Yes, when you look at having three levels of care, we can look a little bit towards to what we've accomplished and the new Mexico market with our home health hospice and personal care. There is certainly a significant opportunity where you have.
Clients are patients that are actually receiving multiple levels, though they could be receiving home health and personal care or hospice and personal care. We also generate a pretty steady stream of referrals from home health to hospice we have.
We implemented a metalogic and nomex in new Mexico will be implementing that in Illinois, as well that will help identify individuals that are on home health that have a.
Probably in a position that they should transition into hospice. So you can start having those conversations with the family. So we're very excited about having those opportunities and then when you see personal care.
That's kind of the untapped piece and you look at the Illinois market I mean, that's our largest single personal care market out there and the opportunities to want to cross market Cross referral is.
Significant.
I think theres a lot of work we need to do in order to really maximize that and that's one of the reasons why we've reached out to homecare homebase to work with them to develop a system that would allow us to have.
Homecare Homebase for personal care, so that we'd have all those records in one system and then also opportunities to do some data mining there similar to what we.
We do on the home health hospice side with a metal objects.
Thank you.
There are no more phone questions.
Jonathan back to you.
Thank you very much operator, and I want to thank everyone for your interest in <unk> and for being part of our earnings call. Today Hope you have a good weekend. Thank you very much.
This concludes today's conference call you may now disconnect.
[music].
Sure.
[music].
Okay.
Yes.
Okay.
Okay.
Yeah.
[music].
Yes.
[music].
Yeah.