Q2 2022 Ensign Group Inc Earnings Call
The conference will begin shortly to raise here.
Ladies and gentlemen, thank you for standing by and welcome to the Ensign Group, Inc. Second quarter fiscal year 2022 earnings Conference call. At this time, all participants are in a listen only mode. After the speaker pregnant.
So to answer it.
Ask a question during this session you will need to press star one one on your telephone.
Okay.
Mr Keetch.
Thank you and welcome everyone. Thanks for joining us today.
Five of our earnings press release yesterday and is available on the Investor Relations section of our website at Ensign group Dot net.
A replay of this call will also be available on our website until five P. M Pacific on Friday September 2nd 2022.
We want to remind any listeners that may be listening to a replay of this call that all the statements made are as of today August <unk> 2022, and these statements have not been nor will be updated subsequent to today's call.
Also any forward looking statements made today are based on management's current expectations assumptions and beliefs about our business and the environment in which we operate.
These statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on today's call listeners should not place undue reliance on forward looking statements and are encouraged to review our SEC filings for a more complete discussion of factors that could impact our results.
Except as required by federal Securities laws Ensign and its affiliates do not undertake to publicly update or revise any forward looking statements or changes arise as a result of new information future events changed circumstances or for any other reason.
In addition, the Ensign Group, Inc. Is a holding company with no direct operating assets employees or revenues.
Certain of our wholly owned independent subsidiaries collectively referred to as the service center provide accounting payroll human resources information technology legal risk management and other services to other operating subsidiaries and to standard bare healthcare REIT or real estate subsidiary through contractual relationship.
With these entities.
In addition, our wholly owned captive insurance subsidiary provides certain claims made coverage to our operating subsidiaries for general and professional liability as well as for workers' compensation insurance liabilities.
The words enzyme company, we our and US refer to the Ensign Group, Inc. And its consolidated subsidiaries all of our operating subsidiaries. The service Center standard bear and the captive insurance company are operated by separate wholly owned independent entities that have their own management employees and assets.
References herein to the consolidated company and its assets and activities as well as the use of words like we us our and similar terms are not meant to imply nor should it be construed as meaning at the Ensign group has direct operating assets employees or revenue or that any of the subsidiaries are operated by the end of <unk>.
Also we supplement our GAAP reporting with non-GAAP metrics when viewed together with our GAAP results. We believe that these measures can provide a more complete understanding of our business, but they should not be relied upon to the exclusion of our GAAP reports a GAAP to non-GAAP reconciliation is available in yesterday's press release and is available in our Form 10-Q.
And with that I'll turn the call over to Barry Port our CEO Barry <unk>.
Thank you Chad and thank you for joining us today.
Our local teams have once again posted impressive clinical and financial results and continue to build remarkable momentum in each market across our portfolio. Our success is entirely due to the efforts and commitment of those leadership teams and caregivers and our most important focus is to support those that care for our patients every.
Day.
By applying proven cultural and operational principles, our local leaders continue to retain and recruit high caliber individuals, which then go on to achieve tremendous success, even in the face of extraordinary external challenges.
As a result of those efforts we are pleased to continue to see the impressive improvement in staffing and turnover across almost every geography, we serve.
We are confident that by being true to our cultural values and proven operating principles.
The near term and long term future is brighter than ever.
During the quarter, we experienced continued improvement in Occupancies skilled revenue and managed care revenue and are proud to report that our operators achieved sequential growth in overall occupancy for the sixth consecutive quarter.
We are also pleased by the strong quarter over quarter growth in skilled mix days.
With same store and transitioning operations, combining for skilled mix days or 32% and same store, reaching a skilled mix days of 33%.
In addition, we saw improvements in Occupancies with same store and transitioning occupancy increasing by one 8% and six 4% respectively over the prior year quarter.
We are excited about this continued strength in our occupancies in skilled mix and remain confident that we are on a path that will lead to sustained long term growth. This is particularly impressive given that it is typical to experience a slowdown during the summer months.
As our operators strive to be the examples of excellence in every market. They serve they also recognize the opportunities to return to certain operating fundamentals, which have been challenging to maintain in the midst of the disruption in the labor markets and the continued lingering impact of the pandemic.
Each operation is constantly looking ahead and forming a detailed customized strategy to thrive even in the face of an evolving reimbursement environment staffing and challenges and inflationary pressures.
Our operating model allows for each operator to independently adjust to the needs of their local markets. While also drawing on metrics and insights gained through best practices made possible through our transparent culture, including methods for attracting new health care professionals into our workforce and retaining and developing existing staff.
Jeff.
We continue to benefit from improved Medicaid funding in several states recently, the federal government extended the state of emergency to October 2022, which keeps in place many of the regulatory and other forms of assistance helpful to patient care.
While we certainly can't know for sure what the Covid future looks like it is possible that this additional funding may not be extended again.
Given the strength, we see in Occupancies and the improvement we see in labor, we are raising our annual 2022 earnings guidance to $4 five.
Two $4 15 per diluted share and annual revenue guidance to $2 $96 billion to $3 billion. The new midpoint of this 2022 earnings guidance represents an increase of 13% over 2021 results and 31% higher than our 2020 results.
<unk>.
We again remind you that our model is built for times like these our 23 year track record has demonstrated the power of our locally driven leadership model, which has allowed us to produce consistent results through a variety of challenges, including the most recent pandemic.
Regardless of Covid trends government waivers or political climates, we are confident in our ability to make operational adjustments take advantage of attractive acquisition environment and lean on our experienced leadership both in our service center and in the field to continue our long term path of performance.
Our organization is extremely healthy.
And our local operational and clinical leadership continues to grow even stronger in spite of these challenges our culture and local approach gives us confidence that we can and will continue to innovate and grow this year and beyond.
It's important for us to reemphasize to our stakeholders. The real reason for our recent results amid labor market challenges and a global pandemic.
Certainly what has been accomplished is not coincidental.
Our leaders are committed to a core value that the organization calls customer second to.
Our leaders this means that they are constantly striving to put the needs of our caregivers ahead of any other priority they.
They do this because they understand that the best care for our patients is achieved when each operation creates an outstanding and fulfilling experience for our team members.
As one example of living this core value every year, our organization awards, a flag to operations that achieve an incredibly high standard of success across every conceivable area in a post acute operation, which includes over a dozen qualitative quantitative and cultural cat.
<unk> <unk>.
Recipients of this honor, but must be nearly perfect in every single category for an entire calendar year.
When achieved these operations are celebrated in a way that we believe is a unique expression of gratitude for the outstanding service, but more importantly.
The staff in these operations and only the staff not the administrators or other senior leaders.
Receive substantial financial rewards for their achievement.
It's an honor to visit these flag winters every year and attendee celebrations.
We are in at their level of achievement, particularly given the challenges that <unk> faced in recent months and years.
It is remarkable to be associated with team members, who take such pride and ownership and the work that they do and the results they achieved.
Next I will ask Chad to discuss our recent growth Chad.
Thank you Barry as we expected we had a very busy summer so far and are very excited about the 11, new operations, we added during the quarter incentives.
These operations include tunes to senior living operations in California, One senior living operation in Washington, six skilled nursing operations in Texas, one skilled nursing operation in Nevada, and one health care campus in Arizona.
While some of them are located in some of our most mature geographies like Arizona and Texas, others are in relatively new health care markets for us like Las Vegas.
In either case, we have been extra diligent to ensure that each new addition has the full support of healthy local operations are proven leadership plan and a clear pathway to strong clinical and financial performance, we can't wait to see each of these additions contribute to the success of their clusters in their markets as they implement proven ensign operation.
And clinical principles.
And total standard bare added six new real estate operations.
All of which will be leased to an enzyme affiliated tenant.
And enzyme affiliates entered into seven new long term leases with third party landlords.
As this activity illustrates the ratio between leased and owned will vary depending on the circumstances.
We are first and foremost focused on the operational health of acquisitions. So when it makes sense and pricing is right. We will opportunistically purchase of real estate at the same time when attractive long term leases come our way we will sign those too.
As we've shown over our 23 year history, there will be many opportunities to do both.
These acquisitions continue to showcase one of standard bearers primary strategies, which is to capture the upside created by ensign operators and properties that have historically been subject to a long term lease.
We value the relationships, we have shared with many of the owners of our facilities assets and are pleased to help them achieve their state planning goals, while simultaneously growing standard bearer.
We are always excited to purchase properties, we know so well and have operated for years and look forward to more deals like this in the future.
We are also excited about the growth we've seen in standard bare so far and also continue to evaluate new opportunities that would include operations that will there'll be run by an ensign affiliate and some that could be operated by third parties.
Looking forward, we have another busy fall and winter ahead of us and are preparing for even more growth in 2023.
As you might expect the pipeline for our typical turnaround opportunities, including real estate acquisitions and leases is growing.
We believe there are many many operations out there that are struggling and eventually will come to market.
And in the meantime, we have a handful of new App new additions that we are working towards closing in the coming months and continue to see new opportunities arise every week in some cases, particularly larger deals pricing is still out of whack, but as we demonstrated last quarter. There is still plenty of good opportunities to be had at right prices and the turn.
Around nature of most deals on the market.
We continue to provide additional disclosure on standard bear, which is now comprised of 101 properties owned by the company at least 73 affiliated skilled nursing and senior living operations and 29 senior living operations that are leased to the pennant group.
Each of these properties are subject to triple net long term leases and generated rental revenue of $17 6 million for the quarter.
Of which $13 9 million was derived from ensign affiliated operations.
Also for the quarter standard-bearer produced $12 1 million in <unk> and sits at an EBITDAR to rent coverage ratio of two four times as of the end of the quarter.
Lastly, during the quarter, we paid a quarterly cash dividend of $5 five per share.
Given our strength, we plan to continue our 20 year history of paying dividends into the future.
We also continue to Delever, our portfolio, achieving our lease adjusted net debt to EBITDA ratio of two point times.
Currently we have $593 million of available capacity under our line of credit, which when combined with the cash on our balance sheet gives us nearly $900 million in dry powder for future investments.
We also own 106 assets of which a 101 are held by standard bear in 82 of which are our own completely free of debt and are gaining significant value over time.
Which adds even more liquidity to help with our future growth.
And with that I'll hand, the call back over to Barry Barry.
Thanks, Chad.
Next I'd like to share two operational examples today first a new facility acquired earlier this year and second our same store operation that has been with the organization for over two decades.
Both facilities are achieving incredible results as they diligently focus on the daily fundamentals of taking care of their residents and staff and illustrate the organic upside potential inherent in both newly acquired and same store operations.
The first example, Australia health and rehabilitation is a 161 bed facility located in the Phoenix, Arizona Metro area.
It is led by Matt Lewellen, and who is our executive director and Tony <unk>, Our director of nursing and COO.
Just eight months ago, Australia was in desperate Straits.
Due to clinical and regulatory challenges that had been placed on the CMS special focus list and it fall until one star Medicare rating. The building was also plagued by low occupancy poor employee morale.
Very negative reputation in the healthcare community. However.
However, following our acquisition on January one they.
They took time to get to know the existing employees.
And discovered that many of them were amazing people, who are just simply being underutilized and underappreciated.
And many of philosophy into incredibly effective department leaders.
To support that Matt Tony have relied on surrounding cluster partner facilities to help support train and empower the Australia team while resources from our service Center have helped US facility implemented fine tuned best practices to improve outcomes and.
And efficiency in.
In the first two quarters of since acquisition, the Australia team has grown occupancy by 12% from 67% to 79% and revenues have also increased by nearly 40% as you would expect financial results are improving in Australia is already contributing to our EBIT.
At the same time the team has eliminated nursing registry and improved retention, which in turn has produced clinical gains is validated through internal clinical audits and external inspections.
Healthcare continuum partners have also noticed the improvements in every month, Australia build stronger and stronger relationships with community referral sources.
While much more work remains to be done the progress already made in Australia demonstrates the incredible.
Potential lately and many of the facilities, we are fortunate enough to acquire.
Well acquisitions continue to be an important part of our ongoing growth in coming quarters. Our second operational example, demonstrates the enormous organic potential for growth that exist in our same store legacy facilities.
<unk> gardens nursing rib rehabilitation is a 143 bed skilled nursing operation located near Los Angeles, California.
It was acquired in the year 2000, and since that time has been a great contributor to the organization and has earned a reputation not only for excellent care, but it's been a great place for caregivers looking for successful careers in health care.
For example, Alicia Humira the facility's executive director was working as the facility admission director when we purchase Panorama. She completed her AIG in 2004 and has been leading the facility since that time.
Culture of loyalty and commitment at Panorama extends far beyond just Alicia and her leadership team in fact, the entire facilities amongst the operations with the lowest turnover rates and our entire organization at just 14%.
And in a time, where the entire healthcare industry is struggling for staff Panorama gardens was able to maintain over 98% occupancy for the entire second quarter without using any nursing agency staff.
<unk> ability to care for its employees has allowed us facility to successfully care for its patients and the healthcare community has taken note. For example, total skilled days have increased by 28% and managed care days have increased by 50% compared to the prior year quarter.
The increased occupancy and skilled mix combined with the panorama team's relentless focus on eliminating waste and managing fundamentals led to an incredible 56% increase in EBIT over an already very successful Q2 in 2021.
It is because of facilities like Australia in Panorama that we feel such optimism about our future.
These facilities are at the opposite ends of the maturity spectrum, but both are succeeding by living our tried and true principles and both are finding ways to produce incredible results in the face of significant headwinds.
More importantly, these facilities and many others like them are sharing their ideas strategies and processes with their cluster partners and the rest of the organization, which allow these best practices to spread quickly and elevate performance everywhere.
We hope that these examples are helpful. Illustrating some of the many different levers our local operators are pulling in order to meet the needs of their healthcare continuum partners with that I'll turn the time over to Suzanne to provide more detail on the company's financial performance and our guidance and then we'll open it up for questions Suzanne.
Thank you Barry and good morning, everyone detailed financial statements for the quarter are contained in our 10-Q and press release filed yesterday. Some additional highlights for the quarter include the following GAAP and adjusted diluted earnings per share were $1.
And one.
An increase of 16, 1% and 13, 5% respectively.
<unk> GAAP and adjusted revenues for the quarter were $732 5 million with an increase of 14, 7%.
GAAP net income was $57 7 million an increase of 16, 7% and adjusted net income was $57 4 million an increase of 12, 9%.
As of June 30th include cash and cash equivalents of $285 6 million in cash flow from operations of $130 million.
We also wanted to address the current status at the state of emergency and related reimbursement matters.
<unk> HHS extended that public health emergency for another 90 days with this extension the federal government will continue to provide various flavors and enhance aetna funding up to October 13th 2022.
Additionally, as a reminder, the suspension of the 2% sequestration continue through April one 2022 at which time. This suspension amount was adjusted to 1% through June 32022.
Starting July one default, 2% sequestration will be back in place.
During the quarter ended June 32022, we have repurchased 271000 shares of common stock for approximately $20 million completing the February 2022 stock repurchase program.
Given the stock's recent performance, our liquidity and our confidence in near and long term results. We have established an additional share buyback program of $20 million and we believe it can be a very healthy piece of our capital as.
As we said before share buybacks are one of the many levers we have to deploy capital to benefit the shareholders.
As Barry mentioned, we are raising our 2020 to annual earnings guidance at $4 <unk>.
$4 15 per diluted share and annual revenue guidance.
$2 96 billion $3 billion.
We have evaluated multiple scenarios and based on the strength in our performance and positive momentum we have seen in occupancy and skilled mix, we have confidence that we can meet our earnings guidance.
Our 2022 guidance is based on diluted weighted average common shares outstanding of approximately $57 2 million a tax rate of 25%.
The inclusion of acquisitions closed to date.
Exclusion of losses associated with start up operations.
Which are not yet stabilized the inclusion of management expectations of Medicare and Medicaid reimbursement rates net of provider tax.
And with the primary exclusion coming from stock based compensation of one time.
Finding and the gain of sale of assets.
Additionally, other factors that could impact quarterly performance include variations in reimbursement systems delays and changes in state budgets seasonality in occupancy and skilled mix the influence of the general economy, and our census, and staffing the short term impact of our acquisition activity variations in insurance accruals searches and COVID-19 and.
Other factors.
With that I will turn the call back over to Barry.
Gary.
Thanks Suzanne.
We want to just reiterate how optimistic we are about the path ahead, it's certainly encouraging to see the recent news from CMS on the increased market basket adjustment in the two year runway on the parity adjustment but.
Most of our excitement comes from the strength, we see in our operational leadership in the field.
And the dedicated teams they lead.
Their heroic efforts along with those of our nurses therapists and other frontline care providers continue to provide industry. Leading example of life enriching service to our residents co workers and communities.
We're also appreciative to our colleagues in the service center, who are working tirelessly to support our operations and enabling us to succeed in spite of the challenges we faced.
Thank you for making us better every day.
And again, thank everyone for joining us today, and express appreciation to our shareholders and their confidence and support.
Yes.
I will now turn the turn the time over to the Q&A portion of our call. Andrew can you. Please instruct the audience on the Q&A procedure.
Certainly.
As a reminder to ask a question you will need to press star one one on your telephone.
Thats Star one one to ask a question. Please standby, while we compile the Q&A roster.
And our first question comes from the line of <unk> <unk> with Stifel.
Hey, good morning, everyone I wanted to ask you about guidance.
Based on the finalized Medicare we see an equal focus on xeljanz from the proposed 7% cut.
I asked me, that's about $6 million impact a quarter or maybe Ken.
On the EPS for the fourth quarter compared to the original deal.
The guidance only went up three cents.
At the midpoint, Danny offset I'm missing.
And infection.
<unk> here.
And just a reminder, with regards to what we did last quarter.
While we did not adjust our guidance downward last quarter or change our guidance last quarter and so really what that original guidance had included Annette.
The Queen.
Q on Q, and a 5% increase related to Medicare and so with the final rule coming out at two seven.
It's pretty close to what we originally estimated.
And that will.
Established guidance I think what we said last quarter as well.
It goes through the way it was looking like it might go through will be at the very low end of the guidance and then we thought we could get there because it's just one quarter and so with this additional.
And now to how it came out very very close to what we were originally projecting.
Get us to the midpoint.
Got you. Thanks for the clarification, just a follow up in terms of ethanol funding you received $27 million. This quarter, how much did you assume for the rest of the year in the guidance.
So we assume another full quarter of <unk>.
This quarter was a very very heavy quarter of additional amount is where we get between 15 and 17 a quarter. So we assumed another quarter of guidance and now a little bit of tripling from some of the states that we think will go well that further.
Remember.
Got you My last question is on the waivers I think Barry you talk about and as various emergency waivers.
We are still in place, but I think.
In the 10-Q you listed.
Page 16, Gary's emergency waivers that expired during the quarter.
<unk> <unk> <unk> and some others could you comment on the impact on your business during the quarter.
Additional waivers, where maybe just the median patient could you kind of set to expire at some point, whether or not those who post kind of meaningful operational cost headwinds in the second half.
Yes, so none of the waivers that have expired have really any material impact on our performance whatsoever. The only one that potentially could as the three day stay waiver thats really the only one we're focused on.
Does it is so helpful. The patient care, allowing us to skill patience in place when they are when they're diagnosed as positive for COVID-19.
And as we saw recently.
<unk> <unk>.
Surges in cases, we've relied on that to be helpful in providing continuity of care.
It isn't.
Material of an impact to our earnings as it once was.
Last year, but.
But we still lean on that waiver.
I wouldn't suspect that if it went away after third quarter. If it if it did that that we would have to make any adjustments to our outlook for the remainder of the year, but it might factor in for what things look like next year as we as we try to kind of guesstimate what impact Covid would have but.
It's not as big of an impact even still as easy as it used to be last year.
Thank you and congrats on the great quarter.
Thanks Alastair.
Thank you and our next question comes from the line of Scott Fidel with Stephens.
Hi, Thanks, and hi, everybody.
First question I guess, just starting continuing on some of the puts and takes around the updated outlook.
Maybe just walk us through with the 11 deals that you've acquired in the second quarter and since.
I think they have they mostly have more of the turnaround type oil profile to them, where you would be initially taking on the lower margins with that with a lot of opportunity for accretion and performance improvement over time.
Maybe Chad if you could just sort of confirm that that type of profile to those deals and that that handful of deals that youre looking at.
You can close relatively soon.
Whether that's a similar profile to those deals as well being more of those sort of turnaround opportunities.
Yeah. Thanks, Scott. This is Chad definitely all of them, we would we would consider kind of typical enzyme turnaround opportunities and so with that.
Typically there.
Some time to to really start becoming accretive.
Sometimes that several months, sometimes that can even.
Get closer to a year just depends on the transaction.
But all 11 this last quarter.
Would fit that criteria and then the ones that we're looking at for.
For next year or the next quarter would also be considered turnarounds.
Clearly.
We do expect some some benefit on the revenue side, but.
And are very excited long term these will be.
We were extremely selective in picking these these 11.
Even more than usual I would say and so.
We always expect there to be a little bit of a short term.
Certainly excited about them and so when you lift thank god in what we call. It is really up that revenue amount.
So.
And then just for my part.
On Park question talking about a little teeny that increase for that spread between that two 5% that we were projecting.
Seven.
But knowing that that will continue to have pressure on.
So there is no macro questions will have pressure on the margins, but then being able to offset that by continuing to do better and agent Sam Rayburn other areas for the second half of the year.
I'll just add to Scott. These amendments for like margin on par question talking about a little teeny that inquiries for that sporadically.
Spread between that two 5% that we are projecting $2 seven got it in the baccarat, but knowing that it will continue to have pressure on it.
And those new acquisitions will have pressure on the margins, but then being able to offset that by continuing to do better.
Sam Rayburn other areas for the second half of the year.
And I'll just add to Scott.
As you as you might imagine most of these operations are in worse shape than even a typical turnaround given.
The labor pressures the use of agency labor and the impact of Covid on census, so so as you think about the.
These operations that as Chad mentioned being typical ensign turnarounds they very much are.
Historically some of these might have.
We might have been able to turn the dial a little faster and get them to be accretive sooner I think we look at most of these now that we're acquiring as ones that will meet that.
Normal.
Timeframe of several quarters to turn and become accretive to our earnings.
Okay got it.
And then.
Second question.
CMS has been pretty active over the last let's call. It three to six months and dropping these these different.
Sort of proposals are considerations around implementing new mandates around staffing and operational requirements for skilled nursing facilities frankly seemed.
Seem to be so much of this paper stocks even reading.
A lot of it so just interesting from that perspective I'm sure you guys have been reading all of it.
And I think CMS is still soliciting feedback right on a number of these proposals are not yet implementing bam, but if CMS decides to move forward maybe talk about what type of impact that may have to ensign and then to the broader industry.
It's a great question and then.
We are thankful to have a in our healthcare advocacy organization an acre that is very active and very connected with CMS.
On these initiatives and we participate fully in the various committees that provide feedback to CMS through through this group.
And as you might expect Scott there isn't a lot of clarity.
A lot of talk at this point and while the.
The initiative is kind of in place to look at a.
Staffing minimum.
It's not something we lose a lot of sleep over mostly because one we're a fairly high acuity organization that is.
I'd say fairly atypical of the rest of the industry.
And we staff at a pretty aggressive level already.
But number two I think.
In the end CMS.
Tends to generally be pretty reasonable and accepting the feedback that is being provided and I think I think given the track record of success.
That.
<unk> has had even as seen in this recent change to the market basket increase and also the.
The two year runway on the parity adjustment that will be.
We continue to be successful in making sure that whatever mandate is going to affect a reasonable.
The industry in an acceptable to to the whole so.
Yes.
It's not completely answering your question I know Scott, but we.
We're not too terribly worried about what that will end up.
Looking like in the end, mostly because we feel like we've got a seat at the table.
Understood and then just my last question.
So it certainly sounds like your tone around labor as sort of really reached a bit of an inflection point here in terms of feeling like some of the headwinds have probably peaked in now.
Now there is more opportunity ahead for improvement.
Is there any chance that you'd be willing to share with us maybe around.
Contract labor.
Or sort of hiring and turnover.
<unk> sequentially that just sort of exemplify what youre seeing in that and then how are you sort of thinking about continued improvement into the back half of the year and that's it for me. Thanks.
Yes, yes.
Yes, I mean, certainly it's kind of hard to predict.
How.
The labor will.
The challenges will continue or at least how long they will last but.
We try to we obviously track dozens and dozens of statistics around.
Labor, we certainly look at what wages are doing but more importantly, as we try to focus on on measures that are helpful to us and engaging both our success, but also showing us levers that we can pull now to be successful in managing.
Managing labor.
Two in particular that I would point to are one agency staffing, which is obviously very expensive and and detrimental.
To patient care, we have seen another month of improvement in <unk>.
Agency usage going down.
And that's I think five months in a row or so that we've seen that happen.
Between the first quarter and second quarter and when you are talking about agency spend in terms of whole dollars, we saw a 4% decline in utilization.
<unk>, which is which is great.
The other the other metric we focus on obviously and we don't really.
<unk>.
Kind of consolidated numbers on this but but our turnover and I'll speak generally to that our turnover for.
The industry is already lower than our peers by a ways, but but what's most important in an environment, where we're seeing.
As published recently in a recent report that I think <unk> put out there of 25% increase in turnover.
<unk> this year compared to last year, we've actually seen an improvement in turnover when we look at our annualized run rate compared to what are our turnover was last year. So.
Those two metrics Scott to us gives us a lot of hope for where we're headed certainly wages are higher and that's expected, but as reimbursement adjusts around that.
When we look at what we can control, we feel pretty optimistic about the path ahead.
Couple of data points. Thank you.
Okay.
Thank you.
And our next question comes from the line of Ben Hendrix with RBC capital markets.
Hey, Thanks, guys a couple of quick questions one on the bed count.
<unk> for the skilled nursing beds in your Q it looks like.
The net adds for about 36 beds from first quarter second quarter. Despite.
Some pretty strong acquisition activity I just wanted to know if there were some consolidations in there or if it was a timing issue or what what.
What kind of reconciles that kind of a 36 bed net increase from first quarter to second quarter.
So really unless the acquisitions happened in July and August and <unk>.
Possible acquisitions.
Went to the quarter itself when you heard the numbers in the prepared remarks, and those were acquisitions that was July and August .
Got you that makes sense and then lastly, with regard to seasonality.
Given that your occupancy and skilled strength have been outperforming your typical seasonal trends heading into the summer months are there any thoughts you can offer on how we should think about cadence through the second half.
Any difference from typical patterns that we should know.
Well look I think if we can hold our our rate of growth through the summer obviously I think.
Fall and winter are typically our strongest months in term of occupancy so so.
We would hope to only build from where we ended up through through the end of this third quarter. If we can maintain our growth rate.
So.
Again, I think like we've mentioned before we almost always see.
Occupancy slow in the second quarter in fact, I can't remember a quarter, where that didn't happen for us Besides last summer.
And thankfully this summer the trend was the same as last year. So.
So I think that just points to Ben the optimism, we see in our kind of rebuilding back to our pre COVID-19 occupancy, which which doesn't seem too far off at this point.
Thank you very much.
Thank you I'm showing no further questions at this time, so with that I'll hand, the call back over to CEO , Barry Port for any closing remarks.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
<unk>.
Sure.
Yes.
Yes.
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