Q1 2022 Select Medical Holdings Corp Earnings Call
Good morning, and thank you for joining us today for select Medical Holdings Corporation's earnings conference call to discuss the first quarter 2022 results and the company's business outlook.
Speaking today are the company's executive Chairman and co founder Robert or 10 deal and the company's executive Vice President and Chief Financial Officer Martin Jackson.
So it will give you an overview of the quarter and then open the call for questions before we get started we would like to remind you that this conference call may contain forward looking statements regarding future events or the future financial performance of the company, including without limitation statements regarding operating results growth opportunities and artist statements that refer to select Mehdi.
<unk> plans expectations strategies intentions and beliefs. These forward looking statements are based on information available to management of select medical today and the company assumes no obligation to update these statements as circumstances change at this time I'll turn the conference call over to Mr. Robert Ortenzio.
Thank you operator, good morning, everyone I'd like to welcome you to select Medicals earnings call for the first quarter of 2022.
I would like to first command and thank all of our operators and clinicians for their continued professionalism and dedication during the last two years of the pandemic.
The prolonged challenges we have faced resulted in us emerging I believe is a stronger a more unified organization now.
Every day, we continue to be amazed by the stories, we hear from grateful patients and employees getting back that reaffirms our vision of improving the quality of life for the communities in which we live and we work our clinical teams continue to overcome obstacles and provide exceptional patient care.
I want to preface my remarks today by noting that we are modifying our format. This quarter to provide more commentary on each of our four business segments. The financial details. We normally provide on this call are available in our earnings release and Form 10-Q that was provided last night and I will only provide highlights in my remarks.
From a broad perspective.
Order all four divisions of the company experienced revenue growth with an increase of 3.4% even as we continue to operate in a very challenging labor environment labor.
Labor costs continue to put pressure on performance, primarily driven by elevated nursing agency costs and incentive bonuses for employees staff in our critical illness Hospital segment.
For the quarter total company adjusted EBITDA was $163 $8 million compared to $258 3 million in the prior year.
Our consolidated adjusted EBITDA margin was 10, 2% for Q1 compared to 16, 7% in the prior year.
I would note however that the results.
Of Q1 prior year included $16 1 million of cares grant income and $17 9 million related to the positive outcome of litigation with CMS within the critical illness illness segment.
Excluding these items the adjusted EBITDA margin would have been 14, 5% for Q1 2021 compared to 10.2% in Q1 of this year.
The Delta in EBITDA margin is entirely attributed to increased labor costs within both in patient segments, and our outpatient rehab division.
As the quarter progressed, we experienced improvement in our labor cost, which has continued into the second quarter. We remain optimistic that the labor environment will stabilize as the year progresses.
In regards to our allocation and deployment of capital our board of directors declared a cash dividend of <unk> 12, and a half cents payable on June one 2022 to shareholders of record as of the close of business May 19 2022.
We will continue to be optimistic and evaluate stock repurchases reduction of debt and development opportunities.
Now I'll provide some data points in commentary on each of our operating divisions.
Our critical illness division experienced an increase of one 2% of net revenue due to a rise in revenue per patient day from $2024 $2075. This was offset by a decrease of our average daily census of forty-three RK.
Our case mix index remained consistent with prior year.
While our occupancy decreased to 71% from 75% in the prior year.
Many of our referral short term acute care hospitals had lower volumes in their IC use which contributed to the decrease in our census, compared to prior year for the quarter our.
Our census in April however was right in line with prior year.
The relationships that we've built with the short term acute care hospitals in our community partners. We believe are stronger than ever and is our expectation that when the IC Boyd ICU volumes in many of our referring hospitals increase we will continue to see those patients into our facilities.
EBITDA margin for the critical on the rehab hospital or recovery hospitals was 6% for Q1 compared to 19%.
In the prior year.
As I mentioned earlier the results of Q1 of prior year include $17 $9 million with.
Related to the positive outcome of litigation with CMS.
Excluding this item EBITDA margin would've been 16% for Q1 2021.
The increase in nursing agency costs, along with incentive bonuses for employees staff or the drivers for the decrease in our EBITDA margins.
The salary wages and benefit revenue ratio for critical wellness increased 18% from prior year Q1, but improved by 2% from Q4 2021.
Nursing agency rates and usage levels significantly increased from prior year Q1 and.
Q1, they are an agency rate per hour increased by 21% from prior year and by 4% from Q4 2021.
Additionally, the utilization of art agency nurses increased by 36%.
Prior year Q wanted to remain consistent with Q4 2021.
Within the quarter, our agency utilization was relatively consistent however, we did see a decline in the agency rates for Rins as the quarter progressed with the improvement continuing into April .
In Q1, we opened a new critical illness recovery hospitals in Nashville, as part of our joint venture with Ascension.
In addition, we are expanding our footprint in Youngstown, Ohio market with a two hospital acquisition expected to close at the end of the second quarter or early Q3.
We have also signed agreements with joint venture partners to open four hospitals in Jackson, Tennessee, Tucson, Arizona, Venice, Florida in Alexandria, Virginia, all expected to open by the end of this year or the first half of 2020 three.
Finally in April in the long term acute care hospitals proposed rules were posted by CMS.
If adopted we would see an increase in the standard rate of 277% and an increase in the high cost outlier thresholds.
We expect the rule to be finalized in August after the required comment period.
I'll turn to the inpatient rehab division, which experienced an increase of six 2% and net revenue with patient volumes, increasing one 3%.
Our occupancy remained consistent with prior year at 84%.
Revenue per patient day increased $90 from 1853 to 1943.
The EBITDA margin for the inpatient rehab was 19, 2% for Q1 compared to 24, 3% in the prior year.
The decline in EBITDA margin was attributed to elevated agency costs, along with an increase in nursing incentive bonuses for employee staff.
The overall salary wage and benefit to revenue ratio for the inpatient rehab hospitals.
<unk> by 8%.
Prior year Q1.
Proved by 1% from Q4 of 2021.
Nursing agency rates and usage levels also increased significantly from prior year.
But our agency rates did improve from Q4 2021 and this trend has continued in April.
The increase in agency within our inpatient rehab division was predominantly in California, and New Jersey, and North Jersey in Q1 weeks.
We expanded our west gables inpatient rehab hospitals in Miami by 30, private beds and opened our third hospital with banner health system in Phoenix, Arizona in April .
CMS also posted their proposed inpatient rehab rule in April if adopted we would see an increase of 266% in standard federal rate and an increase in the high cost outlier threshold.
These rules are expected to be finalized in August after the required common period.
Turning now to Concentrix.
Concentrix had an exceptional quarter experienced a slight increase in net revenue from Q1, while EBITDA increased significantly by $7 $5 million.
Center patient volume increased by 11, 5%, but was offset by an expected decline in the need for COVID-19 related testing and evaluations.
In centers, where comps net revenue per visit increased 3% and reimbursement of our employer services increased 4%.
Centrist overall net revenue per visit of $125 remained consistent with prior year.
As our employer services mix increase which has a lower level of reimbursement and work comp.
The EBITDA margin for consensual was 21, 1% for Q1 compared to 19, 4% in the prior year.
Concentrix experienced an improvement of 3% of their S. That'd be M. Bader revenue ratio from prior year, Q1, and a 5% improvement from Q1 2021.
Improvement in labor was attributed to improved clinical and back office efficiencies.
As visits continued to increase within our centers.
In Q1, consensual acquired one new center in Gary, Indiana, and have executed leases for two de Novo clinics.
There was a very attractive pipeline of potential de novo's and smaller acquisitions and we continue to expect strong volumes in this segment.
Turning to our outpatient division.
Outpatient division experienced an increase of seven 9% in net revenues with patient volumes increasing by 10%.
The improvement in patient business was slightly offset by a decrease in net revenue per visit from $104 in Q1 of last year to $102 this quarter.
The decline in net revenue per visit was primarily driven by a 3% decrease in Medicare reimbursement.
In addition, we also experienced a slight increase in our payer mix toward payers with lower reimbursement such as Medicare as our volume growth.
EBITDA slightly increased compared to prior year with the decrease in margin to nine 8% from 10, 4% in prior year same quarter.
The decline in EBITDA margin is due to an increase in our salary wages and benefits to revenue ratio.
In the first quarter, the outpatient division experienced a 1.5% increase in <unk>.
Salary wages and benefits to revenue ratio.
Compared to the prior year Q1, but improved by 1% from Q4 2021, we.
We have seen significant improvement as the quarter progressed, and our outpatient salary wages and benefits to revenue ratio as you know.
Micron Varian dissipated and our volume continue to climb.
In Q1.
We expanded our clinic count by 20 via acquisitions and de Novo growth.
We look forward to the remainder of the year and have signed agreements to acquire an additional seven clinics.
Along with leases that have been executed for 42 de novo clinics.
Yeah.
Earnings per fully diluted share were 37 cents for the first quarter compared to 82 cents per share in the same quarter prior year.
As previously stated and noted in our press release, our board of Directors has declared a quarterly dividend of <unk> 12, and a half cents per share.
This concludes my remarks, I'll turn it over to Marty Jackson for some additional financial details before we open the call up for questions.
Thanks, Bob and good morning, everyone.
In Q1 equity in earnings of unconsolidated subsidiaries.
$5 $4 million. This compares to $9 $9 million in the same quarter prior year.
The decrease is a result of lower earnings in our minority owned inpatient rehabilitation hospitals due to elevated nurse agency costs and the recognition of the cares Grant income recorded in Q1 over prior year.
Its holiday to G fees.
Net income attributable to Noncontrolling interest was $6 8 million. This compares to $26 $7 million in the same quarter. Prior year. The decrease is partially due to the repurchasing of membership interest in Concentrix in Q4, 2021, which we now own 100% of the voting.
Interest. In addition, we experienced lower earnings view and a few of our large joint venture hospitals again, primarily as a result of elevated nurse agency costs.
Interest expense was $35 $5 million in the first quarter. This compares to $34 4 million in the same quarter prior year.
Yeah.
At the end of the quarter, we had $3 $8 billion of debt outstanding and $139 million of cash on the balance sheet, our debt balance at the end of the quarter included $2 $1 billion in term loans.
$340 million in revolving loans $1 $2 billion in six and a quarter senior notes.
$94 million of other miscellaneous debt.
We ended the quarter with net leverage for our senior secured credit agreement of 434 times.
As of March 31, we had $253 million remaining availability on our revolving loans.
For the first quarter operating activities provided $69 $2 million in cash flow.
$62 $9 million was recouped in the quarter related to the repayment of Medicare advances.
End of April there was only $12 $5 million remaining of Medicare advantage is to be repaid since April of last year, we returned over $312 million of the Medicare advances.
Our days sales outstanding or DSO was 53 days at the end of the quarter. This compares to 52 days at the end of 2021 and 56 days at the end of the first quarter last year.
Investing activities used $55 $3 million of cash in the first quarter. This includes $46 8 million in purchases of property and equipment.
$8 5 million in acquisition and investment activity during the quarter.
Financing activities provided $105 $6 million of cash for the first quarter. This includes $180 million in net borrowings on our revolving line of credit offset in part by common share repurchases totaling $51 $7 million this amounts to about.
A little bit north of $2 1 million shares purchased and dividends of our common stock of $16 $7 million.
We have the capacity to purchase an additional $533 million worth of shares under this program, which remains in effect until December 31 2023.
We are reaffirming our revenue outlook for the year and expect revenue to be in the range of $6 2 billion to $6 $4 billion in 'twenty 'twenty. Two we are reaffirming our previously issued three year compounded annual growth rate target for revenue to be in the range of 4% to 6%.
We still expect capital expenditures to be in the range of $180 million to $200 million for the year.
As stated last quarter, we will readdress our business outlook.
Growth rates for adjusted EBITDA and earnings per common share when we believe the labor market has stabilized.
Victor.
This concludes our prepared remarks and at this time, we'd like to turn it back over to the operator to open up the call for questions.
Thank you.
As a reminder, today's conference to ask a question you will need to press star one on your telephone again that is star one to ask a question.
Your first question comes from line of Justin Bowers from Deutsche Bank. Your line is now open.
Hi, good morning, everyone and really appreciate the new format and all that.
The details just wanted to make sure I understood some of the a lot of development activity.
Core L tax it sounds like there's two two more hospitals is expected to be.
Acquired this quarter and then four.
Developed by <unk>.
Fortunately those by the end of this year or into 2023. So six total I think you called out and then.
On.
On Concentrix or sorry, outpatient then.
40 more de novo's.
Through year end and can you give us a sense of how do you expect those two to phase in the slides if I understood all that correctly.
Yeah, Justin it's Bob on the on.
On the critical illness side, I think what Youre seeing is something that we talked about a couple of quarters ago. When you go through through the pandemic I think there was an increasing recognition of the value that our long term acute care hospitals are our critical illness recovery hospitals play in the continuum of care.
Of Decompressing IC is and I think.
The recognition of that and.
A little bit of delay has seen more requests and developments as a couple of things that I think are noteworthy about the critical illness development is.
They are in the main hospital within a hospital and then unlike the history of the company, where we are.
It really did most all of our joint ventures on the inpatient rehab side.
A critical illness.
Projects in the main our now joint venture as well. So I think that is what we've been saying as a recognition of the importance of that segment and the overall continuum. So those are those hospitals are being developed in our H I H is we do have two two hospital acquisition in one of our markets with Mark.
Kits, which is Youngstown, Ohio, and we did sign that and expect that to close and one of those NHI H and one is at a freestanding and we are already have a presence in that market. So that's a further consolidation of that market on the inpatient rehab side.
We will continue to selectively do large primarily freestanding hospitals, usually from the ground up with large partners and.
We recently had one open with the with the banner Hospital and we'll continue to do those probably at the same cadence and pace as you've seen over the last couple of years.
Turning to the outpatient.
Rehab Division I think again, a couple of quarters ago, Marty and I talked about our renewed focus on growing that division and we said that we would do it selectively in small acquisitions and de Novo is one we are in a lot of markets. We have over 800 clinics so that.
40.
40.
De Novo clinics really represents us expanding primarily in markets that we're already in where we know the market very well. It is a better use of capital to sign a lease and opened a new outpatient center then to acquire something and then where we can do smaller sized outpatient acquisitions and we'll we'll do that.
And then finally on Concentrix, while they have a.
We only showed we only commented on one de Novo and I think an acquisition.
Their pipeline is really robust and while that will be lumpy in terms of the announced de novo or acquisitions I think by the time year end, you'll see that they've grown significantly three through acquisitions de novo. So I hope that gives you.
Kind of a good sense and Marty I dunno, if there's anything you want to add to that no I think Bobby will go very well.
Yeah.
Yes, a very robust update there and then just a follow up on consensus. That's I think that's just continued to exceed everyone's expectations throughout the pandemic and now and is there anything to call out specifically, there and new service offerings or is it just you know the economy taking share.
Well can central will always do better in a strong market for employers and employee hiring and good.
And a good economy, but having said that and having consolidated the team that can sector, having consolidated can sentra and U S. Healthworks.
They just continue to do an amazing job of focusing on deepening their relationship with employers and donor.
So in a really good job on delivering short term.
Results, but also some really good strategic thinking.
Whose efforts have led to just stronger and stronger market share in the long term so <unk>.
Concentrix as we've said in the past, we will always be under pressure in a recessionary environment. When employers are not hiring but they're a combination of their clinics and their on site employer services and what they're doing I I continue to believe that the concession division will continue.
Can you to outperform.
Most people's expectations.
I appreciate all the updates I'll hop back in queue.
Your next question comes from the line of men him <unk> from RBC capital markets. Your line is now open.
Hey, guys. This is Michael Murray on for Ben.
Obviously your results came in.
Better than consensus yet your comments indicated that agency utilization was essentially flat through the quarter.
Which quarter was also flat for Q, just could you give us a sense of how this is trending in April are there any indications that.
The utilization is beginning to ease for you guys.
Our retention metrics, improving given incentive compensation.
Any color would be helpful. Thanks.
Yeah, Michael This is Marty Jackson.
We are seeing as we indicated in our statements today, we are seeing some positive trends.
We're seeing some reductions in the overall agency are in rates.
We saw that start to occur post January .
February and March rates, where were lower.
April continues to decline.
We continue to see those declines.
Really two components, we need to take a look at one is the overall rates in the second one is utilization.
Utilization.
Through.
The first quarter has remained relatively constant.
That has remained relatively high in April , but we're starting to see that decline and we expect to see that decline over the next couple of months.
Okay. That's helpful. And then just another quick one.
How much did testing and back to work revenue contribute to Concentrix Q1 revenue.
What contribution do you expect moving forward.
When you see testing Michael are you talking about the testing for Covid, which is really was really predominantly in the first quarter of 'twenty, one, but there was really nothing.
My record.
It was really nothing.
Q1 'twenty two.
So it was really a function of the the.
What we saw was basically replacement of that testing by the 11, 5% growth rate in volume in Q1 'twenty two.
Yeah.
Okay, Yeah that's.
That's helpful Alright, Thank you.
Okay.
Your next question comes from the lineup a J rice from credit Suisse. Your line is now open.
Hi, everybody.
To pursue a little further.
The question about labor in this.
The L tax.
What are you seeing with your core staffing is turnover rate stabilizing at this point or is it the elevated your open positions and what about updates on wages with your permanent staff how's that trending.
Yes.
We.
For the first time, we've seen some positive.
Trends in Q1 as far as hires versus.
People, leaving as far as Rins are concerned so that we did have a positive number in the first quarter and we see that trending well, we saw that trending well into April .
Okay.
Go ahead I'm sorry.
Your second your second part of the question was.
Hi, I was just going to say it.
You're starting to see improvement there.
Shouldn't that bode well for last night your demand for the temporary staff or.
Is that doesn't sound like you're necessarily forecast that over the near term.
Yeah, Youre, absolutely right AJ, we should see a decline in utilization of agency nursing, but remember as we're onboarding the nurses.
There's training that takes place for typically in that four to six week timeframe. So we will continue to utilize agency during that period of time, so and that's why I was suggesting that.
In the probably in May and June we're going to start to see utilization of agencies or SKU now.
Right and and then the other question I was going to ask you is about.
Joint venture and.
From the acute our health system partners potentially both I guess in rehab and in the L tax side is.
They're facing their own labor issues that resulting in them.
More open more willing to talk to you about JBT as a way to manage some of the labor issues. They have but are you seeing discussions post pandemic pick up.
Well the answer to your second questions is discussions have picked up but I would say that it doesn't have anything.
To deal with.
But that's that's really not part of the conversation I think that the the joint ventures on the critical illness side are a function of a recognition. After the last couple of years that a lot of very large systems feel that they need to have this part of the continuum in there.
In their markets and recognizing that it's not perhaps their core competency so operating in select that that really is.
I think the acknowledged leader in this segment of care and being able to to have proven to be able to take care of very high acuity patients that come out of the ICU that that's that's important but I would say that it staffing is.
Irrelevant to those conversations.
Okay. Thanks, a lot.
Sure a J.
Yeah.
Your next question comes from the line of Bill Sutherland from debate into My company. Your line is now open.
Thanks, Good morning, everybody just to take a whack at the dead horse on labor.
A little bit one more time.
What was the utilization ratio.
Prior to the pandemic the agency or in total.
And your total workforce.
Yes, so we really haven't provided that that nominal number what we can say is that prior to the pandemic.
If you compare those what we're seeing today is at least 100% greater than what we had historically.
Okay.
Do you think.
There's sort of like a different.
New normal as to where it can return to or is there any reason not to think you can have.
Pre pandemic kind of a ratio.
In the future.
Yeah, I wish we had a crystal ball to tell you what.
But it would be.
I think we would anticipate that is probably going to be maybe 100 basis points higher.
Maybe Chris Yeah, I can't imagine that it would be I can't imagine that in this environment in this general labor environment that we could say that would return to levels.
Pre pandemic, but on the other hand, I think we would say is we don't need it to to return to pre pandemic I mean, what we need is just to be able to move away from these.
These agency levels that are just unsustainable and I think that.
That's the message that you've heard from other companies that have released it is the same thing so yes.
Rates are up even even comp is up comp is up for our mature staff its up for new hires which as you know.
Understandable and and we can handle that in a on a go forward basis.
It's just a the extreme of that agency Reits that I don't think that Theres. Many people in health care services that believes that those agency rates are sustainable and they we're seeing them come down and so did they return completely to trend on agency I think they could.
But you're still going to have increasing minimum wages up across the entire United States.
You know salaries are up yes.
The wage Bill I think the way you should think about this is it.
Is really take a look at.
SW would be as a percentage of revenue.
There is really.
Three large levers that we take a look at we take a look at rate we take a look at utilization, but in addition to that we're also taking a look at what are the increases do we can get on the revenue side.
We don't expect to see 2% to 3% increases in our rates, we expect to see higher in particular on the commercial side.
So that could play a role also.
So that's how you kind of recapture that EBITDA margin, even though you have permanently a M.
Structurally obviously everyone's got a higher labor.
Hum.
<unk> cost structure.
Okay.
That's very helpful.
And.
On Concentrix remind us Uh huh.
How much the COVID-19 comps are.
Factor for the for the growth comp.
Balance of this year.
Yeah.
Yeah with regards to Covid comps you know what.
If you take a look at Q1 of 'twenty, two I mean, theres almost no COVID-19 isn't it.
The rate increase I actually didn't I didn't ask the question correctly, Marty I'm, sorry to interrupt you I I meant to say that.
Growth.
It was only held back by the fact that you had.
The testing and so forth activity.
I mean, it didn't hurt your EBITDA, but just kind of curious on the revenue comps.
Yeah, I think the way to think about it is think about it in terms of the 11.
As Bob mentioned, the operator has done a great job, bringing in incremental business at existing locations. So that 11, 5% volume increase in.
In existing locations the incremental EBITDA margin is substantially higher on those dollars and that basically replaced the COVID-19 benefits that we had last year.
Okay. Thanks.
Yeah, Yeah, okay.
Got it thanks, everybody have a good day.
You too.
Your next question comes from the line of Kevin Fischbeck from Bank of America. Your line is now open.
Okay.
What we want to go back to the.
Comment you made about one of the levers the offsetting labor being the pricing.
How do you think about your overall ability to get the price increases that you need how long does it take to for that to flow through the system. It seems crazy, there's a little bit of a lag on the government side.
That'd be equation.
Yes, Kevin that's a very good point I mean, when we take a look at Medicare Medicare is typically an 18 to 24 months lag with regards to seeing that incremental costs come through.
Commercial is obviously going to be.
Quicker than that but.
It's going to be.
As I said probably.
We probably wont see that for 18 months.
Medicare.
Yeah, I guess a lot of the companies talk about their commercial contracts being two or three year type contracts are yours more annual so you can you can get the commercial over quicker.
Well in most of our contracts we have cola adjustments.
Okay.
So you see you see a relatively right away.
And then it was helpful to kind of hear the.
The.
Impact on the Medicare your expectation of a rate update.
Are you do you think is gonna be a higher number by the time that we get the final rule is seen with people before data coming in or is this more or less what we should be expecting for the final rule.
Kevin.
You never know.
Comment period.
I mean, you've been around this business for a long time. So I mean, your guess is as good as ours.
There'll be a lot of input.
There'll be a lot of people to give input to that to those proposed rules so that they they they never change dramatically.
But they sometimes is on the margin they change and it can be meaningful which is why we tend to not comment on the proposed because they they do change.
Yeah, No that's that's helpful.
And then I guess, maybe maybe the last question.
It wasn't 100% clear what you were saying about the <unk> occupancy obviously like Covid itself was higher or are you. Just are you just basically saying that COVID-19 acuity wasn't high so there's just less ICU occupancy during this spiked during <unk>.
Prior spikes in I guess in the past you've kind of indicated that a lot of your old Tech.
Occupancy strength was not really COVID-19 related so just trying to understand that trend was better in Q1.
Yeah.
A lot of our L tax volume during the height of the pandemic was was COVID-19 and we did treat probably well over 10000 COVID-19 patients in our in our critical illness, but in the main the L tax we're used to decompress very busy IC use in the acute care hospitals.
So what we saw now in some of our markets and I, it's hard to make a blanket statement across over 100 hospitals, but.
With all of the extreme pressure on acute care hospitals, and as the pandemic and the incidence of Covid and the hospitalizations for Covid has gone down relatively dramatically. Some of those hospitals are still gearing up on there what I would call return to traditional profile.
Their business.
Cuz there their IC use have been stress like all ourself, the elective surgeries or are less and maybe have less volume in their ICU translate into less volume for us.
But I would say that was what I think we mentioned a 44% of D. C. I mean that that is not going to continue there is a lot of pent up demand for our acute services.
IC use our.
They probably the single most under bedded.
Segment of health care, and so theres going to be a lot of demand for IC use on a go forward basis and as that demand in those ICU fill up there'll be more demand for our services and our critical illness recovery hospitals, and so that that will happen. We were just trying to give.
A little bit of color on in a reduction of the ADC now I would still say that.
There was a time when we would have said, 71% occupancy was pretty good we had 75% a year ago, which does reflect a little bit of COVID-19. So I can't say that I'm disappointed with a 71% D C on a critical illness side.
But it's been 75 and it can probably go it can probably go higher from here as we see more demand.
Kevin I think the other thing that's important to note here is that pre pandemic.
Case mix index was substantially lower than it is today.
As the pandemic actually accelerated.
Acute care hospital, sending these critically complex patients to us and one of the things that were.
Very pleased to see us.
As the pandemic goes away our case mix index continues to remain high so we're continuing to get those higher acuity patients.
Alright thats helpful. Thanks.
There are no further questions at this time I would now like to turn the call back over to Mr. Robert Ortenzio.
Thanks, operator, thanks, everyone for joining us.
This concludes today's conference call. Thank you for participating and have a wonderful day you may all disconnect.
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