Q1 2023 HCA Healthcare Inc Earnings Call

Introductions I would like to turn the call over to Vice President of Investor Relations. Mr. Frank Morgan. Please go ahead Sir.

Good morning, and welcome to everyone on today's call with me. This morning is our CEO, Sam Hazen and CFO Bill Rutherford, Sam and Bill will provide some prepared remarks.

And then we will take questions before I turn the call over to Sam Let me remind everyone that should today's call contain any forward looking statements. They are based on management's current expectations numerous risks and uncertainties and other factors may cause actual results to differ materially from those that might be expressed today more information on forward looking statements.

And these factors are listed in today's press release and in our various SEC filings.

On this morning's call we may reference measures such as adjusted EBITDA, which is a non-GAAP financial measure a table, providing supplemental information on adjusted EBITDA and reconciling net income attributable to HCA.

The healthcare Inc. Is included in today's press release. This mornings call is being recorded and a replay of the call will be available later today with that I'll now turn the call over to Sam Alright. Thank you Frank and good morning. Thank you for joining our call. The operational momentum we had at the end of the last year continued into the first quarter of 2023.

The company produced solid earnings that reflected strong demand for our services and improvements in our operating costs and particular contract labor expenses.

For the quarter diluted earnings per share excluding losses on sales of facilities.

Grew by almost 20% to $4 93.

Adjusted EBITDA grew close to 8% say.

Same facility volumes across the company were strong in the first quarter admissions grew four 4% year over year non COVID-19 admissions were up 12% our inpatient business continued to be supported by strong acuity and a favorable payer mix inpatient surgeries increased three <unk>.

6%.

Same facility equivalent admissions increased seven 5%. This was driven by emergency room visits, which grew 10% and outpatient surgeries, which grew 5% other.

Other outpatient categories also grew including outpatient cardiology procedures, which increased 7%.

The demand increase was broad based across most of the company's footprint and service lines contributing the same facility revenue growth of 5% as compared to the prior year.

With respect to our people agenda, we saw continued improvements across virtually all metrics the improvement in turnover rates accelerated from the fourth quarter and we ended the quarter close to pre pandemic levels Reggie.

Registered nurse hiring also improved in the quarter hiring.

<unk> increased almost 19% compared to the previous four quarter average these.

These positive results helped reduced contract labor costs, 21% compared to last year.

We continued to invest in our people through compensation programs increased training and innovative care models.

We believe these programs advanced our capabilities to provide high quality care to our patients.

Once again, our colleagues demonstrated a remarkable ability to adapt.

And deliver value across all stakeholder groups I want to thank them for their dedication their hard work and their overall effectiveness.

During the quarter, we continued to experience periodic capacity constraints that prevented us from fully operating our capacity at.

As compared to the fourth quarter incidences, where we could not accept patients from other hospitals declined 25% and represented one 5% of total admissions in the quarter, which was down from 2% in the fourth quarter.

While we are pleased with its improved trend it still remains above pre pandemic levels.

Close with this we remain encouraged by the backdrop of strong demand that we saw in our markets. We intend to maintain our disciplined approach to executing our strategic and capital allocation plans as we pushed through the rest of this year.

And lastly, we believe the investments we are making in our network our people and our technology will provide us with the necessary resources to improve our services and provide high quality care to our patients.

Given the strong results in the quarter and the favorable factors, we expect with demand you will see that we have increased our guidance for the year with that I'll turn the call to bill for more details.

Thank you Sam and good morning, everyone I will provide some additional comments on our performance for the quarter.

Adjusted EBITDA for the quarter was three $1 7 billion as compared to $2 94 billion in the prior year.

As noted in our release in the first quarter of this year, we recorded an increase in revenues of $145 million related to resolving certain disputed claims with a commercial payor that covered a six year period.

In the prior year quarter, we recorded an additional $244 million of revenues and $90 million of expenses that related to the Texas directed payment program for an earlier period.

I'll also note as it relates to prior year comparisons, we still we're experiencing high level of co with volumes in the first quarter of 2022 carbon emissions accounted for nine 7% of admissions last year compared to about 3% this year.

In addition in the prior year quarter, we recognized approximately $190 million of Covid related support payments versus about $30 million in this year's first quarter.

Sam highlighted a positive volume metrics in the quarter and this was coupled with good payer mix and case mix trends same facility managed care and other admissions grew four 2% during the quarter when compared to the prior year and non Covid managed care admissions and grew 11, 3% versus.

The prior year.

Non COVID-19 case mix improved just under 1% as compared to both prior year and sequentially from the fourth quarter.

This contributed to our non COVID-19 inpatient revenue per admission increasing two 2% as compared to the first quarter of last year.

We remain pleased with our team's management of operating costs, even with the backdrop of higher inflation.

Our consolidated adjusted EBITDA margin was 23% in the quarter.

Labor cost as a percentage of revenue improved both sequentially and when compared to the prior year and our supply costs continued to trend favorably as well.

We have discussed previously other operating expenses have been subject to some inflationary cost pressures and increased approximately 20 basis points as a percentage of revenue when compared to the prior year.

So let me speak to some cash flow and capital allocation metrics as they remain a key part of our long term growth and value creation strategies, our cash flow from operations increased $458 million in the quarter for 135 billion in the prior year to $1 8 billion.

This year.

Capital spending was just under $1 2 billion, we paid $175 million in dividends and repurchased just under $850 million of our stock during the quarter our.

Our debt to adjusted EBITDA leverage ratio remains near the low end of our stated leverage range of three to four times.

As noted in our release. This morning, we are updating our full year 2023 guidance as follows we.

We expect revenues to range between $62 5 billion and $64 5 billion.

We expect net income attributable to HCA healthcare to range between $4 75 billion and five $1 6 billion.

We expect full year adjusted EBITDA in a range between $12 1 billion and $12 7 billion.

And we expect full year diluted earnings per share to range between $17 25, and $18 55.

And lastly, we expect capital spending to approximate $4 6 billion during the year.

I will mention that our updated capital spending guidance is based on opportunities. We believe exist to continue to invest growth agenda and it also consider some land acquisitions, we are planning for future development and.

In addition, we are seeing some inflationary increases in construction costs that we have factored into our guidance as well.

Finally, I will mentioned in early April we closed on a transaction to increase our ownership interest in the velazco joint venture with envision.

We will consolidate this venture beginning in the second quarter and expect da Vinci will generate approximately $1 billion of annual revenues with no material impact to adjusted EBITDA.

So with that I'll turn the call over to Frank and we'll open it up for Q&A, we look forward to your questions.

Bill as a reminder, please limit yourself to one question. So that we may get as many as possible an opportunity in the queue to ask a question.

You may now give instructions to those who would like to ask a question.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

And your first question comes from the line of a J Rice from credit Suisse. Your line is open.

Hi, everybody, maybe obviously, there's a lot of positive trends this quarter, both on the volume side as well as what you are seeing particularly expenses with labor.

When you sit here and look at the rest of the year I know you updated guidance and updated it a little further than just the beat in the quarter.

What are what are the where are the variables that you see could swing either more positive or negative are there open questions with respect to how labor trends the rest of the year, we're at where how volume trends in the rest of the year or maybe some other metric that I'm not highlighting.

The Juicy as is.

Is putting you at different points within the range or offering variability can you maybe flush that out a little further.

Yes, a J. This is bill I'll start and then Sam can add in.

As we said in our comments, we believe there is momentum that we're seeing in the market. We saw that late 'twenty two but we were fortunate that continued into the first quarter. We continued to see good volume expectations in the market. You saw our same store admissions are non COVID-19 volume was pretty robust emergency room activity remains.

Busy so we feel reasonably positive on our volume outlook.

Given our revenue per unit, we're pleased with we're pleased with the payer mix trends and the acuity and case mix, they're stable and maintaining the levels that we anticipated and then on the cost side.

We believe the teams have managed costs very well, we knew that labor improved throughout 'twenty. Two obviously first quarter of last year was a high high watermark for us in labor. So we're pleased with where it is today, we hope Theres continued improvement to be made especially around the utilization of contract labor and so Jeremy.

We're feeling pretty good about the cost metrics. There is some inflationary cost trends, we're seeing as I mentioned and other operating it tends to show itself around professional fees and some of those fixed cost items that we don't have as much input over but generally speaking, we think our revised guidance and our outlook reflects our view for the balance.

For the year.

Okay.

Thanks Adrian.

And your next question comes from the line of Whit Mayo from S. V. B Securities. Your line is open.

Hey, Thanks, I was just wondering if you guys could.

Unpack some of the growth that youre seeing in outpatient surgeries between the <unk> and H O P D and maybe comment on any particular pockets of strength or weakness across some of those surgical service lines and it's kind of a corollary to that question too is just a supply cost look very good even with the surgical growth. So if you could maybe elaborate on that.

Dynamic bill that would be helpful. Thanks.

Well. This is Sam. Thank you for the question we had strong activity in both settings are surgical volumes at our hospital outpatient units were up actually slightly more than what was inside of our ambulatory surgery centers.

Across all service categories within both settings, we saw really solid volume growth. So it was broad based as I mentioned in my comments, we continue to invest in both we have a more significant investment in our ambulatory surgery Center development pipeline with a number of <unk>.

New developments as well as some possible acquisitions that are complementary to the networks.

That we have across the company.

So we're really pleased with our surgical activity activity. We're also very pleased with our inpatient surgical activity as we've seen growth in both our emergency surgeries as a result of our emergency room activity as well as elective surgeries across different disciplines. The only category that was down actually our C sections.

Where we didn't have as much obstetric volume as we did in other parts of our business and so if you normalize for that dynamic we were actually up more significantly than the more acute categories of our service lines, So very solid.

Our result for us from a surgical volume standpoint, our supply costs have continued to perform incredibly well, we have a great supply chain capability and our company and we utilize it to leverage best practices contracting logistics inventory management and so forth.

And we continue to maintain even with increased acuity increased surgical activity good metrics around our supply costs.

And your next question comes from the line of Justin Lake from Wolfe Research. Your line is open.

Thanks, Good morning wanted to follow up on the Labor side I think you said.

Labor costs were down 21% year over year.

Firm that for me and that just gave us.

A little color in terms of.

The percentage of hours.

Nursing hours that came from temp labor.

Labor as a percentage of.

So your leverage.

Barbara.

W D top dollar.

And anything else that I've been terms of trends that you were expecting.

And labor.

Labor through the year or the year.

That's implied in guidance, what do you expect to come out of the year on some of those metrics right.

Yeah. Thanks, Justin This is bill so, yes, I'll confirm our contract labor was down about 20% year over year.

And again, we're continued to be pleased with the trends in there it's really rooted in the fact that our recruitment is up and turnover is down so a lot of effort in that front.

For the quarter, our contract labor was about seven 1% of our SD <unk>.

That compares to about nine 5% last year, and we were running mid sevens through the last half of 'twenty two so so good trends.

Yes.

Our contract labor as a percent of ours was about 10, 3% were this time last year. We were at 11 five almost 11, 6%. So again continued improvement in that area really just ready to buy a lot of efforts we have in the recruitment and retention as we go through the year.

We will continue to see favorable trends in that hoping we can get in that six 5% to 7% by the time. We finished this year. So a lot of effort continues by the teams to focus on that.

Your next question comes from the line of Ben Hendrix from RBC capital markets. Your line is open.

Thank you could you comment a little further on the same facility revenue per admission and quip and equivalent admission comps it looks like maybe lower year over year rates in the outpatient volume offset inpatient rate growth, perhaps you could flesh out the dynamics there for the first quarter and how that could play out for the balance of the year. Thank you.

Yeah, I'll I'll make first stab I think first you have to recognize on the year over year comparisons. The COVID-19 activity has a significant influence on a year over year comparisons when our Covid admissions went from nine 7% last year to three and Covid revenue per admission runs much higher than our non core.

What is really influencing the as reported so why in my prepared remarks, I talked about our non COVID-19 revenue per admission was two 2% growth. We've seen sequential improvement in case mix I think overall I'd say, we're pleased with where the performance is on our on our acuity in our payer mix in the revenue.

We have when we look at.

Sequentially.

Specially on that so that was the main thing affecting the as reported was the Covid volume when we exclude Covid. We're really pleased with the revenue per unit trams outpatient growth was heavy during the quarter driven as we've talked about with the emergency rooms. So that is influencing the per equivalent admission statistics of all.

We broke down the per admission as well, but again very pleased with the outpatient growth.

Man that we're seeing as well as the inpatient. So so we're pleased with the top line metrics that we're seeing.

Just as a quick follow up can you parse out the degree to which your.

Speaker 1: exclude COVID. We're really pleased with the revenue per unit trends. Outpatient growth was heavy during the quarter driven as we talked about with the emergency room. So that is influencing the per equivalent emission statistics while we broke down the per admission as well. But again, very pleased with the outpatient growth.

Acuity that Youre seeing is just kind of normalization in terms of.

Of admission patterns versus some of the investments you've made to expand your network capabilities.

It's hard to parse it out I mean, it's all inclusive I mean, obviously with a good surgical volume that we had that helped fuel that we do continue to see recovery of demand in the marketplace, but we continue to invest in growing our service offerings and our higher acuity services. So it's hard to.

Speaker 1: demand that we're seeing as well as the inpatient. So we're pleased with the top line metrics that we're seeing.

Speaker 1: Just as a quick follow-up, can you parse out the degree to which the acuity that you are seeing is just kind of normalization in terms of admission patterns versus some of the investments you have made to expand your network capabilities? Thanks.

Parse out and attribute that from one or the other but both I think are factors in the trends, we're seeing yes I build.

<unk> I think it's important to understand that our.

Acuity of our case mix index. The composite view of that is holding strong at actually up over 2019. When you consider we've lost a really high case mix.

Speaker 1: It's hard to parse it out. I mean it's all inclusive. I mean obviously with a good surgical volume that we have that helped fuel that. We do continue to see recovery of demand in the marketplace but we continue to invest in growing our service offerings and our higher acuity services.

Component in total joint surgery, So I think that speaks to the underlying.

Acuity mix within our remaining inpatient portfolio. We also had total joint surgery growth when you look at inpatient and outpatient again in the quarter, but nonetheless, those cases are now in the outpatient setting and out of our inpatient mixed but yet we've been able to sustain.

Speaker 2: holding strong and actually up over 2019 when you consider we've lost a really high case mix component in total joint surgery. So I think that speaks to the underlying...

Really strong acuity mix in total and that's due to again program development as bill alluded to.

Specific efforts in certain markets and certain facilities to advance their their clinical capabilities.

Speaker 2: acuity mix within our remaining inpatient portfolio. We also had total joint surgery growth when you look at inpatient and outpatient again in the quarter, but nonetheless those cases are now in the outpatient setting and out of our inpatient mix, but yet we've been able to sustain.

It's yielding what we hoped.

Yeah.

Next question.

Our next question comes from the line of Gary Taylor from Cowen Your line is open.

Hi, good morning.

One of my favorite expressions as when Sam starts talking about EBITDA clearance rates I was disappointed to hear that catch phrase this morning, but otherwise really solid quarter.

Speaker 2: Really strong acuity mix in total and and that's due to again program development as bill alluded to Specific efforts in certain markets and certain facilities to advance their their clinical capabilities And it's it's yielding what we hoped

My question is about <unk>.

Commercial rate cycle.

I think with all the moving parts with Covid, even when we see the Q, it's going to be hard to sort of.

Speaker 1: Next question. Your next question comes from a line of Gary Taylor from Cowan. Your line is open.

Tease out what's happening there. So just wanted to see if you could just update us on how you're doing on your commercial rate renewals.

Speaker 3: Hi, good morning. One of my favorite expressions is when Sam starts talking about EBITDA clearance rates, so I was disappointed not to hear that catchphrase this morning, but otherwise really solid quarter. My question is about commercial rate cycle.

Is there any material activity on off cycle renewals.

Does the $145 million settlement say anything about the environment in terms of how you're positioned with the payers or is it just completely sort of.

That will run off.

Speaker 3: I think with all the moving parts with COVID, even when we see the queue, it's going to be hard to sort of.

So Gary not to disappoint, our EBITDA clearance in the quarter was 36%. So that's a really good metric for us.

Speaker 3: tease out what's happening there. So just wanted to see if you could just update us on how you're doing on your commercial rate renewals.

Now I think operating leverage in the face of really inflation. So it's.

It sort of proves the model when we can drive activity into our facilities, where we have embedded fixed cost we're able to turn that into earnings in a very productive way again, it speaks to our management team's ability.

Speaker 3: Is there any material activity on off-cycle renewals?

Speaker 3: Does this $145 million settlement say anything about the environment in terms of how you're positioned with the payers or is it just completely sort of a one-off?

To manage their operations effectively yes, we're pleased with what's going on in our payer contracting cycles as we said.

Speaker 2: So Gary, not to disappoint, our EBITDA clearance in the quarter was 36%. So that's a really good metric for us, recognizing operating leverage in the face of really inflation. So it sort of proves the model when we can drive activity into our facilities where we have.

We're targeting mid single digit increases and we are achieving that in most circumstances and I think the payers recognize again the pressures.

In the marketplace for providers and are allowing sort of responsible increases. So we are roughly contracted for 2023, 93% of the way there were about two thirds of the way through 2024 and about a quarter of the way through 2025 and at this particular.

Speaker 2: embedded fixed costs, we're able to turn that into earnings in a very productive way. Again, it speaks to our management team's ability to manage their operations effectively. We're pleased with what's going on in our payer contracting cycles, as we said.

Point in time, we're able to maintain the trend that we feel it's necessary and appropriate for today's circumstances. The one payer settlement that we talked about we have.

Speaker 2: We're targeting mid-single digit increases and we are achieving that in most circumstances and I think the payers recognize again the pressures in the marketplace for providers and are allowing sort of responsible increases. So we are roughly...

Processes in place and our parallel organization, which we believe is the best in class revenue cycle capability and through their efforts and through our support efforts of other components of our business. We were able to resolve some claims that we felt were underpaid in previous years.

And those payments were recognized in this particular quarter I don't know that it reflective of anything in the marketplace other than the specifics around that particular circumstance I will say that we are focused on making sure that we have the right controls in place the right relationships and.

Speaker 2: is necessary and appropriate for today's circumstances. The one-payer settlement that we talked about, we have processes in place in our Paralon organization, which we believe is the best in class revenue cycle capability, and through their efforts and through our support efforts of

Place and the right procedures around.

Ensuring that we get the reimbursement that we have earned and if there are underpayments or denials that we think are not appropriate then we will make sure that we.

Work, our way through those disputes to get to the answer that we think is appropriate for the company and I wouldn't say that's anything new necessarily.

Speaker 2: in the marketplace other than the specifics around that particular circumstance. I will say that we are focused on making sure that we have the right controls in place, the right relationships in place, and the right procedures around

But it continues to be an ongoing opportunity.

Okay.

Our next question comes from the line of Peter Chickering from Deutsche Bank. Your line is open.

Speaker 2: ensuring that we get the reimbursement that we have earned. And if there are underpayments or denials that we think are not appropriate, then we will make sure that we work our way through those disputes to get to the answer that we think is appropriate for the company. And I wouldn't say that's anything new necessarily.

Good morning, guys and thanks for taking my questions any color on how full time nurse wage inflation is tracking so far this year versus your expectations and are you seeing any competitors increase their wages again in 'twenty, one 'twenty three or is it pretty stable at this point and on the non nursing staff, where is that tracking and can you refresh us on what you assume for nursing and non nursing wage inflation for <unk>.

22003, and your guidance.

Speaker 2: but it continues to be an ongoing opportunity.

Yeah.

Speaker 2: Your next question comes from the line of Peter from Deutsche Bank. Your line is open.

This is Sam I think.

Our overall compensation per hour across all aspects of our.

Workforce are trending where we expected them to trend this year and we're pleased with the progress and Thats in the face of us, making some fairly significant increases over the latter part of 'twenty, two and we should continue to make modest increases in certain market circumstances in.

Speaker 2: And on the non-nursing staff, where is that tracking? And can you reflect just on what you assume for nursing and non-nursing wage inflation for 2023 in your guidance?

Speaker 4: Oh

'twenty three responding to new data or new understandings around what's happening from one market to the other.

Speaker 2: Peter, this is Sam. I think our overall compensation per hour across all aspects

As I mentioned on our call our turnover was down our nursing turnover was approaching our pre pandemic levels. We were running about 15 14, 5% to 15% in 2018 in 2019 were running about 17%. When you look at the last six months annual.

Speaker 2: workforce are trending where we expected them to trend this year. And we're pleased with the progress. And that's in the face of us making some fairly significant increases over the latter part of 22. And we continue to make modest increases in certain market circumstances in 23, responding to new data.

So a very good trend.

Happening and we think it's again a factor of the macro trend some of our specific actions around compensation program efforts to really increase resourcing and capabilities for our nurses and other caregivers. So we're really encouraged by the efforts of our teams.

The recruitment metrics that we're seeing and where we are competitively in the market will there be a market here or there that we have to adjust to as we move through the year. Yes. We believe that's factored into our guidance appropriately and we should be able to manage through those changes as the year progresses.

Speaker 2: 2019. We're running about 17% when you look at the last six months annualized. So a very good trend happening and we think it's again a factor of the macro trend some of our specific actions around compensation program.

Your next question comes from the line of Joshua Raskin from New Front research. Your line is open.

Speaker 2: efforts to really increase resourcing and capabilities for our nurses and other caregivers. So we're really encouraged by the efforts of our teams, the recruitment metrics that we're seeing, and where we are competitively in the market.

Hi, Thanks appreciate taking the question could you speak to the increase in Capex guidance for the year and I'm curious if you accelerated anything specifically in <unk> that came in a little bit above where we were thinking I'm specifically interested in the types of projects that are getting funded and especially the ones that have been there that werent contemplated maybe three months.

Speaker 2: Will there be a market here or there that we have to adjust to as we move through the year? Yes, we believe that's factored into our guidance appropriately, and we should be able to manage through those changes as the year progresses.

And then lastly, I heard a real estate purchases I'm, assuming those are for new inpatient hospital facilities over time.

Speaker 1: Your next question comes from a line of Joshua Raskin from New Front Research. Your line is open.

Yes. This is Sam thank you for the question.

Speaker 5: Hi, thanks appreciate taking the question. Could you speak to the increase in CapEx guidance for the year? And I'm curious if you accelerated anything specifically in one queue as that came in a little bit above where we were thinking I'm specifically interested in the types of projects that are getting funded and especially the ones that have been

We have a number of communities that we serve where we believe over time, we're going to need to add to our our hospital network. We're obviously, adding significantly to our outpatient network. We have approximately 2500 outpatient facilities that support our 180.

Speaker 5: that weren't contemplated maybe three months ago. And then lastly, I heard real estate purchases. I'm assuming those are for new inpatient hospital facilities over time.

So or so hospitals across our communities, but we believe that over time as our communities continue to grow and we believe that's one of the differentiating attributes of HCA that are we're in great markets that have great growth prospects in it of themselves before we get to share gain possibilities in those markets that it is.

Speaker 2: Yeah, so this is Sam. Thank you for the question. We have a number of communities that we serve where we believe over time we're going to need to add to our hospital network. We're obviously adding significantly to our outpatient network.

Going to require us to build.

Build out some new hospital facilities, we do have a new hospital opening and are under construction in San Antonio actually two in San Antonio as we speak but San Antonio is one of those markets, where we have uniquely high occupancy that market. For example, we run approximately 90% occupancy and we.

Speaker 2: we have approximately 2,500 outpatient facilities that support our 180 or so hospitals across our communities. But we believe that over time as our communities continue to grow, and we believe that's one of the differentiating attributes of HCA, that we're in great markets that have great growth prospects in and of themselves before we get to...

Think it's better for us to open up new hospitals as opposed to keep adding on in every circumstance in that particular community, but we do own land in Austin, Texas or new hospitals, we own land in Dallas for New hospitals. We just recently purchased in the first quarter land for new hospitals in Las Vegas, and Salt Lake City we.

Have land for new hospitals, and a number of Florida markets. So thats part of what Youre seeing in our capital spending is that we are acquiring land for future network development. In addition to that we have significantly advanced our outpatient facility development that doesn't put too much pressure.

Speaker 2: where we have uniquely high occupancy. That market, for example, we run approximately 90% occupancy, and we think it's better for us to open up new hospitals as opposed to keep adding on in every circumstance in that particular community. But we do own land in Austin, Texas. For new hospitals, we own land.

On our capital spending, but there are some elements of it that are in the increased guidance and then finally I think it's important for everybody to understand.

We are still in a situation where.

We have a lot of facilities that have high levels of occupancy in the first quarter the company.

Speaker 2: is that we are acquiring land for future network development. In addition to that, we have significantly advanced our outpatient facility development. That doesn't put too much pressure on our capital spending, but there are some elements of it that are in the increased guidance.

Ran approximately 73% to 74% occupancy and its inpatient facilities and we need to have sufficient capacity as we build up our staffing overtime, we need physical capacity to accommodate what we believe to be the demand for health care. So.

Speaker 2: And then finally, I think it's important for everybody to understand, we are still in a situation where

The projects are really mixed among those three things land acquisitions for future Hospital development outpatient network development, and then relieving capacity constraints on the existing platform of facilities that we have today and Josh. This is bill I'll add we obviously can accommodate that increase in capital.

Speaker 2: We have a lot of facilities that have high levels of occupancy. In the first quarter, the company ran approximately 73 to 74 percent occupancy in its inpatient facilities. And we need to have sufficient capacity as we build up our staffing over time. We need physical capacity.

Within the resources, we're generating and within our overall capital allocation.

Philosophies that we have and we also continue to see really strong returns on invested capital. So we have confidence that these investments will continue to generate growth for us into the future.

Your next question comes from the line of Brian <unk> from Jefferies. Your line is open.

Hey, Good morning, Bill maybe just a question on how we should be thinking about the moving pieces were considerations for the second quarter I know you called out the individual contribution to revenue and then maybe the New Orleans hospital, but anything that we should be thinking about the sequentially and year over year. Thank you.

Speaker 1: I'll add we obviously can accommodate that increase in capital within the resources we're generating and within our overall capital allocation philosophies that we have and we also continue to see really strong returns on invested capital so we have confidence that these investments will continue to generate growth force into the future.

Yes, Brian nothing material I mean, once we kind of anniversary the high Covid volume, which is principally first quarter second quarter of last year, we began to see the start of normalization.

Speaker 1: Your next question comes from a lineer, Brian Tankula from Jefferies. Your line is open.

We were coming off some continued high labor cost in the first quarter.

Speaker 2: Hey, good morning. Bill, maybe just a question on how we should be thinking about the moving pieces or considerations for the second quarter. I know you called out the Envision contribution to revenue and then maybe the New Orleans Hospital, but anything that we should be thinking about just sequentially in your area. Thank you. Yeah, Brian , nothing material. I mean, once we kind of anniversary the high COVID volume, which is principle, we're going to be looking at the new

Some improvement in the second quarter, and obviously improvement as we went through the balance of the year. So I can't say there is anything material I can call out, especially one quarter. The next week typically wouldnt do that but for the balance of the year now that we've gotten the majority of the high COVID-19 behind us in terms of year over year comparison.

St should begin to normalize for the most part.

Your next question comes from the line of Andrew Mok from UBS. Your line is open.

Hi, Good morning, you provided some breakeven metrics on Medicaid redetermination in the past, hoping you could provide an updated view on how you expect that to play out over the next 18 to 24 months and what sort of impact that could have on near and intermediate term operating results.

Speaker 1: say there's anything material I can call out especially one quarter of the next we typically wouldn't do that but for the balance of the year you know now that we've got the majority of the high COVID behind us in terms of the year-over-year comparisons things should begin to normalize for the most part. Your next question comes from a line.

Yes. Thanks, I mean, obviously this is an area we continue to pay attention to we've got a fairly formalized approach inside of the company, we haven't seen any impact yet as those re determinations are just beginning to occur, but we are keeping very close to state plans. We've also made outreach to.

Our Medicaid patients to help them look at alternative coverage in the event they find themselves displaced a Medicaid we continue to be encouraged with some of the third party studies that we read that.

Speaker 6: term operating results. Thanks.

Speaker 1: Yeah, thanks. I mean obviously this is an area we continue to pay attention to. We've got a fairly formalized approach inside of the company. We haven't seen any impact yet as those redeterminations are just beginning to occur, but we are keeping very close to state plans.

A relatively high percentage of those individuals potentially qualify for employer sponsored coverage or through enhanced subsidies coverage within the health insurance marketplace.

So we are staying very close to that we are increasing our efforts to help people identify coverage that are available to them trying to work with states and other community agencies, where necessary to help people land covered so too early to be able to quantify what the impact of that may be but ultimately I believe that people can.

Speaker 1: We've also made, you know, outreach to our Medicaid patients to help them look at alternative coverage in the event they find themselves displaced of Medicaid. We continue to be encouraged with some of the third-party studies that we read that, you know, a relatively high percentage of those individuals potentially qualify.

<unk> coverage in the exchanges or through their employer, we wouldn't really anticipate any material downside and hopefully there could be some upside benefit to that over the long run.

Okay.

Your next question comes from the line of Scott Fidel from Stephens. Your line is open.

Hi, Thanks interested if you could talk about how you were thinking about the sustainability of the surgical growth trends over the balance of the year, Bolton and inpatient and outpatient and interesting.

Speaker 1: and other community agencies were necessary to help people land coverage. So too early to be able to quantify what the impact of that may be, but ultimately I believe if people can find coverage in the exchanges or through their employer, we wouldn't really anticipate any material downside and hopefully there could be some upside benefit to that over the long run.

Is there any catch up just as as Covid really diminished in the first quarter.

<unk>.

These types of growth trends are sustainable over the course of the year.

Speaker 1: Your next question comes from a line of Scott Fidel from Stevens. Your line is open.

We're looking at.

One <unk>.

Speaker 5: Hi, thanks. I'm interested if you could talk about how you're thinking about the sustainability of the surgical growth trends over the balance of the year, both in an inpatient and outpatient and interested if, you know, was there any catch up? Just as COVID really diminished in the first quarter.

Pleased with the trends it's hard to.

Parse exactly the contribution of that I think overall, we're pleased with the demand and the activity we see in the market. We continue to see believes that we're going to return to normal historical volume patterns and if that does show itself. We should see continued growth in both inpatient and outpatient.

Speaker 1: or do you see those types of growth trends as sustainable over the course of the year? Thanks. We're looking at, one, you know, we're pleased with the trends. It's hard to parse exactly the contribution of that. I think, you know, overall we're pleased with the demand.

Surgical volume, we continue to invest in our outpatient footprint that should help drive.

Reasonable outpatient surgical growth our program development in the inpatient side should help continue to show good inpatient surgical growth as well. So we'll just have to see that and I think typically we would see 1% to 2% type of surgical growth in as the year goes on and hopefully we'll continue to see and just to add to that Bill I think as we continue to.

Increase our staffing capacity. It also affects our surgical capacity because we do have instances, we're not able to open all of our operating rooms as sufficiently as we would prefer also and so is our labor situation continues to get better.

Speaker 1: footprint that should help drive you know reasonable outpatient surgical growth. Our program development in the inpatient side should help continue to show good inpatient surgical growth as well. So we'll just have to see that I think typically we would see one to two percent type of surgical growth and as the year goes on hopefully we'll continue to see.

We think that will allow us to open up more surgical capacity and we believe that demand in the market is still there. So we're encouraged by where we are with our surgical volumes and we think we have some things that should profit up if you will as we move through the year with our staffing agenda and our human.

Speaker 2: And just to add to that bill I think as we continue to increase our staffing capacity, it also affects our surgical capacity because we do have instances where we're not able to open all of our operating rooms as sufficiently as we would prefer also. So there's our time

Our strategies.

Your next question comes from the line of Lance Wilkes from Bernstein. Your line is open.

Actually that's a perfect lead in.

My question could you talk a little bit about your outlook for staff growth in particular, obviously you had the shift from temporary to permanent where she'd been grades can you talk about how your staff has grown and maybe registered nurse staff or something like that over the last year and then as Youre looking forward are there any particular impediments to continued levels of growth.

Speaker 2: things that should prop it up, if you will, as we move through the year with our staffing agenda and our human resource strategies.

While our total head count was up.

Around 2% when you look at this first quarter again.

<unk> FERC quarter, and let me make assure a actually it's more like 3% when you factor out of the two lane divestiture so were up 3%.

Speaker 1: question. Could you talk a little bit about your outlook for staff growth and in particular, obviously, you had the shift from temporary to permanent, which has been great. Can you talk about how your staff has grown or maybe registered nurse staff or something like that over the last year? And then as you're looking forward, are there any particular impediments to continued levels of growth?

Quarter over quarter.

<unk> is obviously solid improvement.

In the market as we've mentioned in the third quarter and the fourth quarter of last year, we were starting to see some momentum with our hiring some momentum with our retention programs and so forth and that carried through into the first quarter really well I think our overall hiring was up 13%.

Speaker 2: Well, our total head count was up around 2% when you look at this first quarter against last first quarter. And let me make sure of that. Actually, it's more like 3% when you factor out the Tulane divestiture. So we're up 3% quarter over quarter.

Or something like that but in the quarter compared to the running average it was up 19% and that's mostly in nursing I don't know that it will run that hot as we move through the rest of the year, nor will we need it to run that hot as we move through the rest of the year. So our efforts with.

Speaker 2: which is obviously solid improvement in the market. As we mentioned in the third quarter and the fourth quarter of last year, we were starting to see some momentum with our hiring, some momentum with our retention programs and so forth, and that's carried through into the first quarter.

With our recruitment our efforts with retention will continue we're encouraged by other.

Programs that we have to support our our people and put them in the best position to succeed and deliver high quality care, we have a significant investment we're making in clinical education, Our Galen school of nursing continues to grow and we're really encouraged about what those pro.

Speaker 2: really well. I think our overall hiring was up 13% or something like that, but in the quarter compared to the running average it was up 19% and that's mostly in nursing. I don't know that it will run that hot as we move through the rest of the year nor will we need it to run that hot as we move.

Graham will do for our facilities and our people over time. So those things are all part and parcel to a very a comprehensive effort to make sure. We have the right amount of staff, they're supplied with the right technology and resources to deliver high quality care and they can be successful and grow in.

Speaker 2: our people and put them in the best position to succeed and deliver high quality care. We have a significant investment we're making in clinical education. Our Galen School of Nursing continues to grow and we're really encouraged about what those programs will do. Come Show!

Our company so were pretty encouraged by where we are.

Your next question comes from the line of Calvin <unk> from Jpmorgan. Your line is open.

Thanks for the question.

Speaker 2: for our facilities and our people over time. So those things are all part and parcel to a very comprehensive effort to make sure we have the right amount of staff, they're supplied with the right technology and resources to deliver high-quality care, and they can be successful and grow in our company.

You asked about capacity.

I know you said, one 5% for the quarter, but still above pre pandemic level and labor improving so.

What are some of the other key variables forgetting the declination rate back down to historical levels, and where do you think you can get to by year end. Thanks.

Paul.

Speaker 5: So we're pretty encouraged by where we are. Your next question comes from a line of Calvin Sternick from JP Morgan. Your line is open.

Hopefully, we get back to pre pandemic levels, we benchmark a lot of our metrics against where we were in 2019. So that we can have a comparison of sort of more normal normalized environment, but.

Speaker 1: Thanks for the question. I wanted to ask about capacity. I know you said one and a half percent for the quarter, but still above pre-pandemic levels and labor improving. So just want to get a sense, what are some of the other key variables for getting the declination rates back down to historical levels and where do you think you can get to by year end? Thanks.

Obviously, our labor agenda as I, just mentioned is very important to our ability to open up all of our bed capacity and surgical capacity and so forth even in our emergency room capacity sometimes.

Can be constrained because of staffing levels and such.

Speaker 2: Well, you know, hopefully we get back to pre-pandemic levels. We benchmark a lot of our metrics against where we were in 2019 so that we can have a comparison of sort of more normal, normalized environment. But obviously our labor agenda, as I just mentioned, is very important to our abilities to open up all of our...

I think it will continue to get better as we went through the first quarter March was better than January as an example, so that's a positive trend within the quarter. We're hopeful that that will sustain itself as we move through the balance of the year and as we look at some of our hiring and the timing of that hiring that should line up with.

Some continued improvement.

As we sequentially move through the year.

So those are the main thing some we have capital that will come online.

Over the course of the year as we always do that will help in certain circumstances, but I think the most important variable is staff and getting sufficient staff into our facilities, allowing us to open up our beds and so forth appropriately.

Speaker 2: We're hopeful that that will sustain itself as we move through the balance of the year. And as we look at some of our hiring and the timing of that hiring, that should line up with some continued improvements as we sequentially move through the year. So those are the main things. We have capital that will come online.

Your next question comes from the line of Steven Valiquette from Barclays. Your line is open.

Great. Thanks, good morning, everybody.

So really one main question here when looking at some of the hospital related volume commentary from medical device companies over the past week or two at least one of them suggests that from their view that hospital volumes were the strongest in January and February which then normalized in March.

Speaker 2: Over the course of the year, as we always do, that will help in certain circumstances. But I think the most important variable is staff and getting sufficient staff into our facilities, allowing us to open up our beds and so forth appropriately.

March.

I don't know one really likes questions on the monthly performance or really just more high level question is maybe you could just comment on whether or not the momentum in your overall operations was generally pretty consistent throughout the quarter.

Speaker 1: Your next question comes from the line of Stephen Valaket from Barclays. Your line is open.

Speaker 2: Your next question comes from the line of Stephen Valaket from Barclays. Your line is open. Great, thanks. Good morning, everybody.

And also as the full year 'twenty three guidance increase meant to reflect mainly just the upside witnessed in <unk> and the rest of the year outlooks are generally unchanged from your prior view or should we all expect strong momentum from the first quarter.

Speaker 7: So, really 1 main question here when looking at some of the hospital related volume commentary from medical device companies over the past week or 2. At least 1 of them suggested from their view that hospital volumes were the strongest in January and February , then normalized in March. I know no 1 really likes questions on the monthly performance. So really just my more high level question is. If you could just comment on whether or not the momentum in your overall operations was generally pretty consistent throughout the quarter.

They continue into <unk>, just kind of thoughts around all that for just the overall operations that would be helpful. Thanks.

Well again, I think we've seen momentum on there. So yes. The guidance is I think as referenced by a few others principally the the.

Performance in the first quarter.

That we saw but as we look to volume through the quarter I think it was pretty consistent on there and we're feeling positive with some of the trends we're seeing it's hard to call exactly what may happen and exactly what periods. They will but we continue to see good demand in the markets. We continue to add our capacity continue be able to serve serve that.

Speaker 7: And then also, is the full year 23 guidance increase meant to reflect mainly just the upside witnessed in one queue? And the rest of the year outlooks generally unchanged from your prior view? Or should we all expect strong momentum from the first quarter to continue into two queue? Just kind of any high level thoughts around all that for just the overall operations would be helpful. Thanks. Well, again, I think we've seen momentum on there. So yes, the guidance is, I think is.

We think we've incorporated all reasonable assumptions into the guidance going forward and that's where we stand right now we'll continue to monitor as the year goes on.

Your next question comes from the line of Jason Cazorla from Citigroup. Your line is open.

Great. Thanks.

Favorable payer mix in the quarter I was hoping you can give us a sense on commercial core commercial volume growth split between exchange rate and volumes and then just pure commercial and perhaps if you saw in <unk> or are currently seeing any commercial volume pull forward. Perhaps ahead of potential coverage changes later this year or do you think that commercial.

Speaker 1: markets, we continue to add our capacity, and you'll be able to serve that. So we think we've incorporated all reasonable assumptions into the guidance going forward, and that's where we stand right now. We'll continue to monitor as the year goes on. Your next question comes from the line of Jason Casola from Citigroup. Your line is open.

Volumes from it is just more broad based any color on that would be very helpful. Thanks.

Yes, I mean as I mentioned in my comments, our non Covid commercial volume was up a little over 11%. So obviously thats a stat. We're very pleased we're very pleased with the exchange enrollment we saw really good enrollment across our states.

Speaker 1: Great, thanks. You know the favorable pair mix in the corner. I was hoping you could give us a sense on commercial, a core commercial volume growth split out between exchange-related volumes and then just pure commercial. And perhaps if you saw in one cue or are currently seeing any commercial volume pull forward.

Some of the publicly released data that you've seen we've seen exchange enrollment in Florida up 18% taxes up close to 30%.

Speaker 1: perhaps ahead of potential coverage changes later this year, or if you think that commercial volume trend is just more broad based. Any color on that would be very helpful. Thanks.

Julian.

Where we would expect exchange volume to be our exchange volume just year over year was up about 19% or so for the quarter, it's hard to make some of those comparisons pure on the non exchanges because COVID-19 has such an impact on that but if I back up and look at the non COVID-19 growth of <unk>.

Speaker 1: Yeah, I mean as I mentioned in my comments, our non-COVID commercial volume was up a little over 11%. So obviously that's a stat we're very pleased. We're very pleased with the exchange enrollment. We saw really good enrollment across our states. You know, some of the publicly released data that you've seen, we've seen exchange enrollment in Florida up 18%, taxes up.

Managed care at 11 is still still pretty strong.

And even overall, we were up 4% so again, we're thinking that.

Good payer mix will continue.

Good demand, we still see basically full employment and most of our markets. So we'll see where that plays out but we are pleased with the health insurance exchange activity that we're seeing across the markets.

Your next question comes from the line of Sarah gains from Cantor Fitzgerald. Your line is open.

Speaker 1: on that, but if I back up and look at the non-COVID growth of managed care at 11, it's still still pretty strong and even overall we were up 4%. So again we're thinking that you know there's you know good payer mix will continue, good demand we still see basically full employment in most of our markets so we'll see where that plays out but we are pleased with that.

Thank you I'm trying to piece together a few of the comments that you made on contract labors, you talked about getting down to about six 5% to 7% exiting the year.

Is that in line with what <unk> been thinking before I thought you guys were a little bit lower.

And then how do you think about reinvesting the savings of that so how much is going to wage inflation versus actually increasing head count.

Speaker 1: health insurance exchange activity that we're seeing across the markets.

Speaker 8: Your next question comes from the line of Sarah Gaines from Cantor Fitzgerald. Your line is open.

Or is any of that falling to the bottom line as startup of margin relief.

Yeah.

Speaker 9: Thank you. I'm trying to piece together a few of the comments that you made on contract labor. You talked about getting down to about six and a half to seven percent exiting the year. Is that in line with what you've been thinking before? I thought you guys were a little bit lower.

Well I mean, theres a lot of moving parts in our labor side, and obviously, our focus has been reducing the utilization of our premium labor and that has allowed us to continue to invest in our employee workforce and we continued to invest in our existing employees, both through wage rates as well as higher.

Speaker 9: And then how do you think about reinvesting the savings of that? So how much is going to wage inflation versus actually increasing headcount? Or is any of it falling to the bottom line as sort of a margin relief?

And that was spoken about earlier on the call and so when we roll it all up we kind of look at the overall impact and yes, we're fortunate that as we've been able to reduce contract labor that's allowed us to make the investments into our employed workforce I think that will continue I think our commentary around our expectations has been.

Speaker 1: Well, I mean, there's a lot of moving parts in our labor side, and obviously our focus has been reducing the utilization of our premium labor, and that has allowed us to continue to invest in our employed workforce. And we continue to invest in our existing employees, both through wage rates as well as workers as well as employers.

Reasonably consistent if you looked at where we ran kind of pre COVID-19. It was probably in that 6% range. We think we can continue to make progress on that so its fairly consistent but again, we are investing much of the benefit of contract labor back into our existing employees.

Speaker 1: hiring that was spoken about earlier on the call. And so when we roll it all up, we kind of look at the overall impact. And yes, we're fortunate that as we've been able to reduce contract labor that's allowed us to make the investments into our employee workforce, I think that will continue. I think our commentary around our expectations has been reasonable.

Your next question comes from the line of Stephen Baxter from Wells Fargo. Your line is open.

Hi, Thanks, I just wanted to follow up on an earlier question you mentioned, having a pretty decent amount of visibility on 2024 contract at this point I mean can you just remind us how the two thirds compared to where you might have been in a more typical a pre COVID-19 environment. I think you also alluded that the commercial rate dynamic continuing to be acknowledged by payers at that same general magnitude just wanted to confirm if that was.

He meant by those comments.

I'm not sure I understood. The second part of that question, but the first part of the question.

Speaker 10: employees.

Speaker 8: Your next question comes from a line of Stephen Baxter from Wells Fargo. Your line is open.

We are like I said running mid single digits on our renewed contracts.

Speaker 6: Hi, thanks. I just want to follow up on another question. You mentioned having. A pretty decent amount of visibility on 2024 contract at this point. I mean, can you just remind us how the 2 thirds compared to where you might have been. In a more typical pre covert environment, and I think you also alluded that the. Commercial rate dynamic continuing to be acknowledged by payers at the same general magnitude.

We're running.

Three and a half or so.

Pre pandemic with our commercial contracting so it is up a little bit again its reflective of.

I think the overall inflationary environment that most organizations find themselves, but we think it's a responsible ask and its been received a reasonably well by the payors that we've renewed.

Speaker 2: I just want to confirm if that was what you meant by those comments. Thanks. I'm not sure I understood the second part of that question, but the first part of the question, we were, like I said, running mid single digits on our renewed contracts. We were running three and a half or so pre-

What was the second question I think the other one was around the percentage of our contracts that are completed for 'twenty. Four is it consistent with where it is historic all yes. It is and it is consistent with where we would have historically been.

Speaker 2: pandemic with our commercial contracting. So it is up a little bit again. It's reflective of, I think, the overall inflationary environment that most organizations find themselves. But we think it's a responsible ask, and it's been received reasonably well by the payers that we've renewed.

Your next question comes from the line of Jamie person Goldman Sachs. Your line is open.

Thank you good morning.

I wanted to ask a question about the procedure shift to outpatient first can you help us quantify what the headwind from that shift has been to revenue and EBITDA over the last couple of years.

Speaker 1: What was the second question? Well, I think the other one was around the percentage of our contracts that are completed. For 24, is it consistent with where it's historically been? Oh, yeah, it is. And it is consistent with where we would have historically been.

And then too.

Sure.

Categories like knees, and hips are little bit more homogenous, how do we think about the shift of categories. Like cardiology, you mentioned that was up 7% in that setting.

Speaker 8: Your next question comes from a line of Jamie Purce from Goldman Sachs. Your line is open. Thank you. Good morning. I wanted to ask a question about the procedure shift to outpatient. First, can you help us quantify what the headwind from that shift has been to revenue and even now over the last couple of years?

In the quarter.

Are there are there big categories in cardiology that are analogous to the total joints that you think are.

A big category.

Amenable to that shift to outpatient that we should be thinking about it impacting.

The transition in the near term thank you.

Speaker 8: And then to categories like knees and hips, a little bit more homogenous. How do we think about the shift of categories like cardiology? You mentioned that was up 7% in the setting in the quarter. Are there big categories in cardiology that are analogous to

We don't see any particular procedural category say facing the same type of pressure as total joints did I think our company is somewhere around 80% of our total joints today are done as an outpatient with 20% done as an in patient that.

Speaker 8: to total joints that you think are a big category that is do, you know, amenable to that shift to outpatient that we should be thinking about impacting the transition in the near term. Thank you.

That was reversed pre pandemic. So we've absorbed all of that and it was a headwind with respect to you know.

A P&L impact over this time period, the rest of the categories are not as discrete as total joints.

Speaker 2: We don't see any particular procedural category facing the same type of pressure as total joints did. I think our company is somewhere around 80% of our total joints today are done as an outpatient with 20% done as an inpatient. That was reversed.

Then cardiac particularly a large piece of our cardiac volumes today are already in the outpatient setting and so we don't anticipate anything.

In that particular category shifting like total joints have shifted we've seen some shifts over time.

Speaker 2: pre-pandemic. So we've absorbed all of that and it was a headwind with respect to you know a P&L impact over this time period. The rest of the categories are not as discreet as total joints and in cardiac particularly a large piece of our cardiac volumes today.

Spine and that's more incremental than it is holistic like total joints, we've seen some in cardiac over the years, we've seen some with our robotics platform. Those continue sort of on the margin. They are not structurally a repositioning like total joints did and so our company.

It has.

Effectively navigated that transition again, we have a multifaceted offering for patients and physicians both in our facilities outpatient within our facilities ambulatory surgery centers and so forth and that's one of those settings has the right setting for just about every patient and.

Speaker 2: that's more incremental than it is holistic like total joints. We've seen some in cardiac over the years. We've seen some with our robotics platform. Those continue sort of on the margin. They're not structurally repositioning like total joints did. And so our company has.

And I think our organization has been able to grow as a result of that multifaceted offering and our total joints like I said earlier are actually up year over year and they were up last year compared to the previous year. So we've seen good growth in our orthopedic programs and we continue to work with our surgeons and our service.

Speaker 2: effectively navigated that transition. Again, we have a multifaceted offering for patients and physicians both in our facilities, outpatient within our facilities, ambulatory surgery centers, and so forth. And that's one of those settings is the right setting for just about every patient. And I think our organization has been able to grow as a result.

<unk> leaders.

To advance our capabilities.

As well.

And there are no further questions at this time, Mr. Frank Morgan I turn the call back over to you for some final closing remarks.

Rob. Thank you for your help today and thanks for everyone joining the call and you'll get a great weekend I'm around this afternoon. If we can take additional questions you might have for these retail thank you.

This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker 2: capabilities as well.

Speaker 11: And there are no further questions at this time. Mr. Frank Morgan, I turn the call back over to you for some final closing remarks.

Speaker 2: Rob, thank you for your help today and thanks for everyone joining the call. We hope you have a great weekend. I'm around this afternoon. If we can answer any additional questions you might have, please reach out. Thank you.

Speaker 11: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker 4: Sing.