Q4 2021 ATI Physical Therapy Inc Earnings Call
Details on our relationships with these non-GAAP measures to the most comparable GAAP measures.
A reconciliation of historical non-GAAP financial measures can be found in the press release posted on <unk> website.
The SEC.
And with that I'd like to turn the call over to Jack.
Thank you Joanne and welcome to all of you joining us this morning with me on the call today is Joe Jordan, Our Chief Financial Officer, and Ray Wall, Our Chief operating officer.
I'll begin with a few comments on our 2021 performance and move on to the more current and more interesting discussion of where our business is headed as well as the activities. We have underway that will set the foundation for growth in 2022 and beyond I'll.
I will then pass the call over to Ray for a discussion on whats happening in our clinics and with our staff and finally, Joe will provide a detailed review of fourth quarter and full year 2021 financial results along with our 2022 outlook. Then of course, we will take your questions.
To start I want to thank all of our team members for their hard work and dedication.
Simply put I could not be working with a better bunch of people the team accomplished quite a bit in 2021, including standing up our company for the public markets continuing to operate through the challenges and uncertainty presented by the multiple waves of COVID-19 and throughout all of that staying true to delivering high quality patient care that we're known for.
Sure.
First we achieved our revenue guidance for the year and generated approximately $40 million and adjusted EBITDA, which approximates the low end of our guided range that we shared with you during our last call.
This marks a change from earlier quarters and.
And you should very much read into this a deep and sustaining commitment to our stakeholders to do our very best to deliver on what we say we will do.
If not we will be absolutely forthright about it.
For the year, we added 58, new clinics right on top of our earlier guidance.
The new clinics consists of 51 opened clinics and seven acquired clinics located predominantly in the southwest southeast and northeast. This brings our total clinic count to 910 clinics across 25 states.
Now in our last earnings call I highlighted two areas that we're going to be laser focused on the first was to stabilize and grow our clinical workforce by both increasing retention and recruiting and Onboarding new team members.
Ray will discuss the really great things, we've done in this area and without stealing all his thunder I'm happy to report that annualized turnover continues to decline decreasing 400 basis points from 41% in the third quarter of 2021% to 37% in the fourth quarter and hiring remains strong in the fourth quarter.
With this we have nearly 2500 clinical ftes as of 2021 year and putting US just slightly ahead of our planned staffing levels going in to 2022.
During our last call I also called out unacceptably low levels of visit volume most acute in the Midwest and northwest.
And our need to drive higher referrals in order to realize more clinic visits.
Since then we've completed a top to bottom review of our sales strategy conducting a market by market assessment of past present and potential referral sources.
And revamped their respective calling priorities equally as important we've identified the gaps we have in our sales teams coverage of those referral sources, we created several new field based sales positions and those gap areas and have already filled several of them with the remainder to be completed in the first half of 2022.
Our business development managers continued to serve as the main point of contact to referring providers, ensuring they have access to the right ATI clinicians and physical therapy expertise as needed to accelerate their patients returned to full health.
And while I think it's absolutely critical to build our market muscle back up again.
Im even more excited about our strategy of getting 600, or so of our clinical field leadership more actively in the mode of relationship building with referral sources.
Community event participation and backing up their development managers with joy relationship calls focusing on the quality of their patient outcomes.
Moving from 50, or so salespeople to leveraging the 600 or so high quality clinical leaders should move the growth needle in 2022.
While its early innings, and bringing our development partners and clinicians together for joint selling opportunities in recent weeks. We have returned to pre omicron visit per day volume levels and Joe will have more to say on this in his section.
I'd also like to point out that our patient sat metrics continued to remain very high with a net promoter score of 78 and the Google Star rating at four eight in the fourth quarter of 2021.
This is to the full credit of our clinic leaders and our care teams.
Finally on a more financial note. This morning, we announced the refinancing of our credit agreement and capital structure that reduced our leverage extended maturities and increased our liquidity.
This transaction provides a strong financial foundation to support our operations continue to invest in our people and pursue our growth strategies, Joe will provide more details on this recap as well as our 2022 outlook and the financial review.
So with that Ray would you, let us know what's going on in the clinics and with our teams there.
Sure. Thank you Jack and good morning.
Like to spend a moment, providing some operational highlights for the fourth quarter as well as some more detail on the current environment and trends that we're seeing in the field.
As a reminder, the labor market has been challenging over the last couple of quarters. We made some what I would consider significant adjustments in our hiring practices compensation model and how we think overall about the individual provider I am excited to say, we are seeing great traction, adding 131 net FTE in the fourth quarter of 2021 alone.
What I'm most excited about is the results from our most recent round of market visits.
This is really my opportunity to not only review the market quantitatively with the district director, but also discuss qualitatively how the business is progressing.
Im getting various and very consistent examples of our providers, reaching out and appreciating the changes we've made to their roles specifically.
We're always going to work hard towards being an employer of choice for my conversations over the past few months solidify my thoughts that we're going down the right path when it comes to thinking about the individual <unk>.
So let's touch briefly on <unk>.
As you've probably seen the number of Covid cases attributable to arm our crime variant started to accelerate in December , particularly in the last two weeks of the year.
Data collection from our patients regarding reasons for their cancellations show Omicron head up to a 4% impact on visits per day during that same time period.
This led to volume softness, particularly in certain parts of the country like the southeast and northwest as we entered into the new year.
On the Crown also impacted our team members throughout this period with over 100 clinical FTE in quarantine at the highest point.
Well on the current continued into January we started to see some normalization in February thankfully, we're starting to see on <unk> impact on both patients and our providers decreased significantly.
Jack also mentioned a change in our sales strategy, which I would like to add a little bit more color too.
Our last call indicated an opportunity to drive more referrals.
While investing further in our sales team is core to our strategy, we've been working hard to develop a platform where our in clinic leadership team can play a more active role in relationship development.
We believe not only adding additional coverage, but the clinical perspective provided will improve support from the medical community.
To sum things up overall from an operational perspective, our team has done a great job of persevering through another year of the pandemic in 2021, we ramped hiring and integrated over 1000, new team members brought down attrition and made improvements to our sales force structure.
All of this sets a great foundation for 2022, and I couldnt be more excited about where we are and where we're heading.
Now I'd like to turn the call over to Joe for a financial review.
Thank you Rick and thanks to everyone for joining the call today.
We'll cover our fourth quarter and full year 2021 financial results I will touch on the debt refinance that was announced this morning and review our 2022 outlook.
Starting with 2021 result, net operating revenue in the fourth quarter was $156 million.
One 7% increase year over year from $153 million in the fourth quarter of 2020.
Patient revenue was $140 million, increasing two 5% year over year, while other revenue was $15 million declining four 8% year over year.
Visits per day per clinic during the quarter was $22 eight sequentially decreasing <unk> three visits from $23 one in the third quarter.
While the fourth quarter is typically flat to marginally lower than the third quarter due to holiday.
We were targeting the fourth quarter to increase as we made progress in stabilizing our workforce and continue to add clinical FTE.
The quarter over quarter decline was primarily driven by visit volume softness during December when the omicron variant disrupted operations through increased cancellation a decline in scheduled appointment and increased clinical absences.
Visits per day per clinic was $22, two and $29 eight in the fourth quarters of 2020 and 2019, respectively.
With 2020 also significantly impacted by Covid and 2019, representing our clinic level operation at normal capacity utilization.
Okay.
Per visit during the quarter was $104 51 sequentially decreasing 1% from $105 56 in the third quarter and 5% year over year year over year from $109 98 in the fourth quarter of 2020.
The decreases in rate were due to a gradual mix shift from higher paying category, such as workers compensation to commercial and government.
Mix also shifted in 2021 towards lower reimbursing payers as our geographic footprint continues to broaden.
Finally, the 2021 Medicare physician fee schedule reimbursement rate for physical therapy was approximately 3% lower than the 2020 rates.
Salaries and related costs in the fourth quarter of 2021, with 88 million and 11, 3% increase year over year from $79 million in Q4 of 2020.
PT salaries and related cost per visit during the quarter with $55 73 sequentially, increasing three 8% from $53 70 in the third quarter.
And six 9% year over year from $52 16 in the fourth quarter of 2020.
The increases in cost per visit were primarily due to lower labor productivity.
Visits per day per clinical FTE was $8 three during the quarter.
Compared to eight eight in each of Q3 2021 in Q4 of 2020 as we continue to trainer influx of new team members, while simultaneously seeking to increase referral volume.
Rent clinic supplies contract labor and other in the fourth quarter of 2021 was $48 million and 11, 6% increase year over year from $43 million in Q4 of 2020.
PT rent and clinic costs and other cost per clinic during the quarter was approximately 51000 <unk>.
Sequentially, increasing 3% from 49000 in the third quarter of 2021 and.
An eight 1% year over year for 47000 in the fourth quarter of 2020.
The increases were primarily due to greater use of contract labor in select markets as we work to fill open positions.
Provision for doubtful accounts during the quarter with $2 million or one 5% of PT revenue.
And has continued to trend favorably when considering the fourth quarter of 2020 and 2019 at two four and two 1% of revenue respectively.
SG&A during the quarter with approximately $30 million essentially flat as compared to Q4 of 2020.
Higher non ordinary legal and regulatory spend was offset by lower transaction costs incurred and business optimization expenses.
Operating loss in the fourth quarter of 2021 was $12 million.
Increasing year over year from $2 million as we maintained our clinical team and support structure in place in anticipation of increased visits.
Given the refresh sales and marketing strategy that Jack and Ray talked about and as the impact of Omicron variant Wayne.
Notable below the line items during the quarter included income, resulting from the decrease in fair value of certain liabilities acquired in connection with our business combination in June specifically warrants and contingent common shares totaling $10 million.
The mark to market to fair value was based on evaluation and analysis as of 12 31 2021.
Interest expense during the quarter was $7 million compared to $16 million in the fourth quarter of 2020, which is consistent with the reduced debt outstanding at year end 2021 compared to the prior year.
We also had other income of approximately $6 million during the quarter, which was primarily due to the gain on our home health services line.
Income tax benefit for the quarter was $12 million compared to $2 million in the fourth quarter of 2020 net income during the quarter was $9 million compared to $2 million in the prior year.
Finally revenue during the full year was $628 million.
A 6% increase year over year from $592 million and this compares to revenue guidance of $620 to $630 million.
While visits per day increased 12, 8% year over year rate per visit declined 6% attributable most mostly to unfavorable mix shifts.
And payer states and services. Additionally.
Additionally, there was an approximate 3% reduction in the Medicare physician fee schedule as previously discussed.
Adjusted EBITDA during the full year 2021, with approximately $40 million decrease year over year from $64 million in 2020.
This approximates the low end of our adjusted EBIT guidance of $40 to $44 million as Jack mentioned.
We had certain nonrecurring expenses in late Q4 2021, such that excluding these one time costs adjusted EBITDA would have been at the midpoint of our guided range specifically.
Specifically due to rising Covid cases, we decided to cancel our annual leadership meeting planned for January when our nationwide team gathered each year to discuss strategy share ideas and collaborate.
The nonrefundable portion of this expense was booked in December <unk>.
Additionally, during the fourth quarter, we restructured our sales and marketing organization and engaged a consulting firm to allow us to more quickly complete the sales and marketing strategy refresh that both Jack and Ray touched on earlier, which resulted in incurring professional fees and one time severance costs.
Cash used during 2021 with $94 million broken down between 42 million used to fund operation.
$40 million used in investing activity and $12 million used in financing activities.
Cash used in operations included $18 million of payments in connection with the cares Act.
As of December 31, 2021, we have zero drawn against our revolver and available liquidity was approximately $68 million, which comprised of $48 million in cash and cash equivalents.
$20 million and available revolver capacity.
Moving on to the refinancing.
As Jack mentioned, we refinanced our first lien term loan and revolver of this week, we paid off our existing debt and entered into a new credit agreement and issued preferred stock.
Our new $500 million first lien term loan matures in 2028.
And our new $50 million revolving credit facility matures in 2027.
Additionally, we issued $165 million and preferred stock with detachable warrants.
The transaction extended our debt maturity and enhances liquidity, adding approximately $77 million of cash to our balance sheet to support our operation and allow us to continue to invest in growth and scale the business.
Looking ahead to 2022.
We expect revenue to be in the range of $675 to $705 million, which equates to year over year growth of roughly seven five to 12, 5%.
We anticipate continuing to ramp visits steadily throughout the year as we continue to grow clinical head count and execute on our sales strategy put in place at the end of 2021.
It'll take a few quarters to reignite prior referral rate relationship and to set the groundwork to build long term connections with new target referral providers.
Accordingly, we expect to return to pre Covid visit volume levels at the end of 2022.
For PT rates, we are modeling a slight 1% reduction in rates in 2022 forecast as compared to the fourth quarter of 2021. This considers the 2022 Medicare physician fee schedule changes and anticipated onset of federal budgets sequestration.
We anticipate adjusted EBITDA to be depressed in 2022, while we continue to ramp to full clinic capacity and target labor productivity.
As we act on the sales and marketing front that Jack Henry outlined we've opted to hire clinicians in advance incurring higher labor holding costs in the meantime to ensure that we have the people in place to meet the increasing referrals and visit.
While utilization of existing clinics is expected to steadily improve as we progress throughout the year labor productivity may be uneven from quarter to quarter.
<unk> as the business continues to ramp we will better leverage our fixed cost and generate increasing earnings.
With the anticipated visit ramp profile in 2022, adjusted EBITDA is expected to be in the range of 25% to $35 million for the year.
January got off to a slow start at 19300 visits per day on average with both weather and omicron impacting volume.
We are already experiencing ramping volumes with mid February increasing to nearly 22000 visits per day on average.
We have built time into our plan for sales initiatives to drive volume growth into our clinics.
With higher earnings to follow as fixed costs our leverage.
Keep in mind.
We believe our current clinic staffing level has capacity to absorb approximately 500 more visits per day as seasonal trends and the aforementioned sales initiatives take hold.
That additional volume would yield an incremental EBITDA of approximately $3 million per month at current staffing level.
And we intend to continue adding clinicians throughout 2022 as referral growth accelerate.
Our marginal adjusted EBITDA flow through per 1000 visits per day beyond current staffing level.
It's roughly $1 million per month.
To the extent, our labor and sales strategies align and generate results quicker there is an ability to outperform our guided range.
Finally in terms of new clinic growth plans, we expect to open approximately 35, new clinics in 2022 as.
As we ramp our existing clinics. We also continue to see outsized growth opportunities in select markets.
With that I'd like to turn the call back over to Jack.
Thanks, Joe before we open the call to your questions I would once again like to thank the entire ATI team for their hard work and efforts.
<unk> 2021 was indeed, a challenging year.
For me Im glad to be moving on but we made the necessary changes and investments to drive long term growth and ATI remains well positioned to gain share as the secular growth story for our industry continues to play out operator, we are now ready to open the call to questions and answers.
At this time I would like to remind everyone. If you would like to ask a question. Please press Star then the number one on your telephone keypad.
Your first question comes from the line of Steph Wissink with Jefferies.
Thank you good morning, everyone. We have two questions. The first is related to here.
The detail you gave on kind of the leverage in the business model. I think you said 1000 visits per day above your existing capacity is about $1 million in EBITDA per month, how do you think about that.
Leverage ability as you layer in clinicians I understand that's based on your current capacity, but you're indicating you're going to be increasing your labor loads.
Should we think about the the incrementals potential as you go forward throughout the course of the year.
Yes, I think thank you for the question I think Joe did a good job explaining not only are.
Incremental potential margin by using our current labor complement to its full capacity, but also once we get there the additional incremental EBITDA available once we get to two over that current staffing level central would you.
Yeah, Hey, thanks for the question. So just to reiterate what I said on the call and I know Youre digesting. It real time, we would actually have about 500 visits per day capacity with our current staff and that flow through is about $3 million beyond that once we once we absorb the capacity we have in our current staff as we add.
<unk> clinicians and create more capacity when you take into account the labor cost the contribution is obviously slightly less.
In that instance, the additional thought every thousand visits per day would give you about $1 million of flow through.
That latter number that you quoted is contemplating adding labor, but just to re highlight the former number with the current capacity about 500 visits per day and $3 million of adjusted EBITDA.
Got it very helpful. Okay, then I wanted to skip over and just talk a little bit about your recruitment strategies and maybe help us think through the year I don't know if you wanted to talk about it as a.
Our sequential pathway are two semesters first half second half, but it does sound like the EBITDA is going to be more depressed in the first half of the year as you layer in labor and then you start to realize the benefits of that labor in the back half. So help us think through kind of the cadence of how you'd like us best to model that the EBITDA flow through the year. Thank you, yes, yes.
Youre right on that it is going to be.
More back half weighted in particular, Theres, a lot of labor holding cost in the first quarter.
Not just because we were adding labor in advance of volume, but omicron, certainly had an impact and we weren't going to make a decision.
Retract labor because of uplift that we thought would be temporary and knowing that omicron would wane.
We plan to add labor kind of on an even pace throughout 2022, roughly knowing that there are a few hiring windows, where we may accelerate that hiring and and we certainly know that the sales initiatives that we kicked off will take time to take hold and we would expect those to manifest even more so in the back half of the year, but the labor would be there.
<unk>.
Okay very helpful I might throw one more in just you could you give us NPS score, which is your customer satisfaction metrics do you have a similar internal metric that you used for your Labor Force is there a way to create a feedback loop, where you have a feedback loop that reinforces that your clinicians are actually experiencing greater levels of satisfaction and enjoyment as well.
Alongside your customers.
Hey, Scott this is Jack.
So we certainly measure very closely the rate of attrition and turnover in all of our clinics and that's probably one of the more objective measures, but on a more subjective basis.
We intend to starting this quarter to begin to do quarterly pulse surveys of all of our clinicians in all of our support teams and begin to build that that sort of foundation to understand where we're at and then measure progress going forward.
That's encouraging to hear thank you so much.
Your next question comes from the line of Jason <unk> with Citi.
Yeah.
Great. Thanks, guys Scott Good morning here, So just Tom.
The guidance implies a return to pre pandemic visit volumes by the end of the year, but is there a way to consider the pressure on volumes between the impact of Covid and then your other considerations around labor and referral sources in terms of getting towards that pre pandemic baseline. So if you're if you're at call. It 80% pre pandemic visit levels currently is the volume differential.
Covered maybe five for some of that pressure and that remaining 15 is around labor and referral dynamics or just trying to understand how that works as you're thinking about the ramp for the rest of the year.
Yes. This is Jack I'd say directionally that's.
Probably feels about right.
Joe went through the.
The math of marginal contribution on additional visits.
And I think.
Of the EBITDA performance.
We are by and large a fixed cost organization. So to the extent that we can raise not by a lot one or two visits per day per clinic, we get extraordinarily strong performance as an organization. So most of the difference I would say is at this point volume related and it's something that we're really focused on with.
With the refresh and reorganization of our sales teams and our sales strategy.
Okay. Thanks, so much.
Question here I want to close the clinician headcount traveler in the quarter I guess back in <unk>, you suggested that the annualized turnover kind of improved from 50% in July to 30% in September .
Based on your disclosure you saw some improvement I guess quarterly sequentially at 37% for full quarter, but.
I guess that would suggest turnover maybe picked up from that 30% baseline in September and my thinking about that correctly and if so maybe just help out on what's causing maybe that incremental pressure on the quarter. Thanks.
Yes, Hey, Jason This is ray so attrition is definitely improved, especially as we headed into the back half of the year.
Like I mentioned earlier in my prepared comments, we've spent a lot of time going out to the field.
And making ensuring that we are addressing the issues that they've seen.
One of them.
They care about and then they are important to them. So we've seen some changes in terms of what we're focusing on and that's directly reflected into the number.
Even more encouraging is that we step into January and so far in February those numbers continue to improve now were still getting our arms around those but every months. It continues to improve and I think thats because of the changes that we made back in July it's just taking time to kind of settle in.
Okay, great. Thanks for the color.
Once again, if you would like to ask a question. Please press Star then the number one on your telephone keypad.
Your next question comes from the line of Larry Solow with CJS Securities.
Hi, good morning.
Just a couple of questions on.
The planned opening 35, new clinics.
That is obviously down.
Pretty significantly from our initial expectations.
No.
Expected, but is that a function of.
Capital is that a function of not being able to the environment. The hiring is difficult. So you don't want to bite off too much more than you can chew.
I'm just trying to figure out.
The decrease.
And the outlook over the multi years I know I'm not looking for an exact outlook, but has that substantially changed from your 1900 plus expected openings over the next 10 years.
Hey, Larry this is Jack.
Youre right, our new clinic opening plan is arguably more conservative in 2022, then I think we've been staking out before and I think it's it is a mix of perhaps a little more conservativism in 2022, while we.
Rebuild some of the.
Our capabilities in the company around sales and the like.
I don't I would tell you it's not a function of us starting our underwriting model for new markets I would tell you it's not a function of seeing plenty of white space out there to plant new flags.
It's really it's really a it's really a function of us wanting to focus on what's really important in the next six to 12 months and that's to make sure we get our sales strategy in place keep our attrition in check.
Build out our clinical sales teams and filled the clinics that we have more than they're filled today, but absolutely no commentary on the future of additional expansion there at all.
But no comments here, but do I mean.
And maybe you are not right. You've asked this question, but do you still see those general parameters haven't changed right I mean.
Well the estimate you gave were those.
The targets you had given where the pie in the sky are they.
Are they still potentially.
Seeing that there is still there right I mean so.
Or was that was that too aggressive of a plan.
I figure that out.
Larry It's Joe So so the direct answer is no. The the outlook for the future has not changed the opportunities that exist in the market have not materially changed of course demographics and geographies will change a little by little year to year, but that that pie still exist, but to Jack's point the focus for us in the short term.
Don.
Taking a wave that growth, it's just pairing it back a little bit while we focus on sales marketing and growing the core business back to normal and I think it's just.
Slowdown in the short term more than anything else.
Okay that makes sense and then just lastly, just a follow up on the on the previous question about the impact to <unk>.
Volumes between Covid.
And just a labor issues could maybe just said another way or asked another way.
So could you just give us a quick some color on some of the facilities are regions that are back to pre COVID-19 levels versus some of the areas that are 20% or maybe more than that below pre COVID-19 levels.
These areas where labor.
It only works is there any way to sort of.
Break that out if you will yes, I'm going to ask Ray to take us for a tour around the country on those risks sure right. So as we think about and look at volumes in coming back from from the pandemic. I mean, we do have a couple of different regions that are performing really really well the northeast portion is coming back and nearly at pre.
Pandemic levels, and we're really excited about our southwest region.
We have quite a bit of momentum there in terms of growth in that market and we've exceeded our pre pandemic levels. There as we said earlier, we've had some challenges in the Illinois central market and in the northwest as well some of that is related to a larger impact on COVID-19 , but some of it is also impacted by our staffing levels.
And we're obviously working on that both through bringing on talent and then also our sales strategy that we've mentioned and then finally in the southeast the South East has continued to grow particularly over the last quarter here in Q4, and we're back up to pre pandemic levels down in that market as well.
Great I appreciate the color thanks, a lot.
Your next question comes from the line of Bill Sutherland with benchmark.
Yes.
Hey, thanks.
Good morning, everybody.
I'm just curious back to the attrition question.
37% that you are at right now what is.
Kind of the comfort range that you guys would like to be in.
Yes. This is Jack I'll, maybe I'll start and ask ray to jump in.
Just want to echo his comments that the 37% is obviously a quarterly average and we were starting much higher than the rate we were.
Coming out of the quarter for full time equivalents.
Of a target long term rate.
We tend to circle something in the 20% to 25% range would be I think ideal it we're going to have normal turnover just based on the demographics of our clinical teams.
And I think we're trending certainly not there yet in the first quarter, but I think our attrition is continuing to improve <unk>, yes, I would just add to that I mean, I don't I don't think we have a number pegged, but I think youre right like that mid twenties.
It is a realistic goal for us.
Prior to the pandemic we.
We had attrition rates that were lower than that but I don't think we're going to return to that environment I think thats not only for physical therapy, I think that's health care and possibly other industries as well so like I said, we've implemented a lot of different programs, we're driving towards that number we're making progress month over month quarter over quarter. So that's directionally the <unk>.
We're looking for.
Where we think we should be as an employer.
Okay.
And one more labor question.
Are you trying to implement an extender strategy in certain in certain situations too.
Just to improve the productivity of the PT.
Yes, yes, so when you say its tender I'm going to assume that youre regarding referring to ptas. So when I think of all right.
Yes.
Got it got it so.
So yes, we are.
Right now we said roughly at about a two to one PT to PTA ratio, which is right, where we want it in terms of our care model, ensuring that patients are getting not only the right care, but they're getting care at the right time, So we're able to get them in quickly so.
Our budget will build us a little bit higher than that where we are now the two to one but directionally I think where we want to be in.
In regards to the rehab tax we call them OS versus.
And right now, we said right around 20% to $1 20 visits per day to one Oss.
And we're finding out that thats the right ratio for us. So we're where we want to be when it comes to ancillary staff and having the right support in the clinics. So providers can do what they love to do and Thats treating patients. So we feel good about that number.
Great and then on the go to market strategy as you.
I know, there's a heavy emphasis obviously your primary channel is the referral channel.
Positioning <unk>.
Any.
Resumed focus or has it changed in terms of just direct to consumer and also direct to employer.
Let me start on the primary channel I'll ask <unk> to jump in on the direct to employer side.
As we prioritize where we think we can.
Be most successful near and we think we can be most impactful by focusing on the primary channel as we've said.
We characterize the work we've done in sales as a refresh but let me assure you is it was more than a refresh it was a rebuild.
Return, rather a rebuild in terms of hiring new people. We've we've selected the best athletes from the existing sales team armed them with far better data and far better tools as they make their referral calls not only on prior referral sources, but also on new referral sources that we know have referred.
<unk> again that we may not have focused on in the past. So that's really kind of a top to bottom.
On the direct to employer side. We've also got a very interesting business and we have not lost focus on that in regards to jump in on that one sure. So our direct to employer part of that is what we call our AWS service line.
We're providing employers health care providers athletic trainers exercise physiologist physical therapy assistance on the floor of their of the different plants and companies to ensure that it's a safe environment that service line continues to grow there's a lot of opportunity. There. We also have some very interesting really.
<unk> ships partnering with primary care Ahmed companies in terms of helping them control their EMS case spend which is what our AWS service lines specializes in so we've always focused on it we're going to continue to focus on it and we think that there's a lot of opportunity as we further our relationships with some of those.
Other companies that I mentioned.
Okay.
The last one for you Joe.
On cash and cash strategy.
How should we think about.
That's the trend in cash and what your plans are for management.
Hey, Bill so from a cash perspective, I talked about on the call.
Change in capital structure that we announced today, meaning the refinancing transaction that refinancing transaction added $77 million of cash to our balance sheet. So we had a high burn last year at about $94 million Theres. Some unique items in that burn we were pretty heavy on new clinics last year. We had cares act dollars of roughly 25 ish million that we.
Repaint.
And some of that repeat this year, we still have about $20 million of cares Act run off that will happen in 2022, that's discrete and 2022. It runs out primarily in the first half there is a social security piece of that payment of.
$5 5 million in December , but that will run off and.
Beyond that as we rebuild our EBITDA in 2022, you can imagine there is going to be more of a cash burn in the first half of the year, but as we exit the year getting closer to sort of that cash flow neutral.
Cash flow.
Beyond 2022.
Yes.
So youre comfortable with.
This expansion plan that you have in terms of the cash required for investment.
Yes, absolutely and the cash that we put on the balance sheet with the transactions that closed yesterday I'm certainly give us liquidity that allows us to support the operations, while we move through 'twenty, two but I think also get a little bit on our front foot and invest in growth.
Mhm, Okay. Thanks for all the color guys. Thank.
Thank you next question.
Your next question comes from the line of Steph Wissink with Jefferies.
I wanted to just ask about the CEO search I believe you talked about it in your prepared remarks. So it really appreciate any update there.
Update on progress or even just characterizations of the type of individually youre looking for to lead the company at this time. Thank you. That's good good catch I did not speak about it in your prepared comments, but fully expecting it here.
So let me let me let me answer that in reverse what are the expectations and how are we speaking out the role.
Most importantly, we're looking for somebody who has.
A really good understanding more than just an indirect exposure, but really direct hands on experience in field based clinical management clinical organizations distributed operations I think.
I've spoken to a lot of potential candidates, who somewhere in their backgrounds have been exposed to that but I'm really interested in bringing somebody on who is really.
In the vernacular been there done that so I think for me, that's first and foremost.
I think the second third and fourth would be certainly skilled around finance public companies.
Have a good a good background in in the the economic dynamics of running a very large distributed organization. So so I would say that's the general specification specifically.
We've spoken with a lot of really qualified candidates and.
I guess I'm.
Qualifies me, saying that I am thinking where we're coming nearer to completion on our search I have nothing really to offer in particular today, but I think we're down to two the near the end and I hope to have something to announce here in the near future.
And that's about all that's about all the zooming in on timing I can I can give you at this point.
Very helpful. Thank you. So much you bet next question.
And there are no further questions at this time.
Okay.
Okay.
Well if there are no further questions I want to thank you all for your time, we appreciate your attention.
And as I said earlier I hope our performance in 2021 as the starting point on the meeting the commitments, we make and keeping those commitments as we go.
And I'm looking forward to working with all of you as we go into 2022. Thank you so much.
This concludes today's conference you may now disconnect.
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