Q2 2023 LifeStance Health Group Inc Earnings Call
Ladies and gentlemen, thank you for standing by my name is necessary and I will be your conference operator today at this time.
I would like to welcome everyone to the life and health second quarter 2023 earnings call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session.
If you would like to ask you or to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question again press Star one.
I would now like to turn the conference over to Monty copper Gartzke Vice President of Investor Relations. Please go ahead.
Good morning, everyone and welcome to the lifestyle health second quarter 2023.
Please call.
I'm Monica Borkowski, Vice President of Investor Relations join.
Joining me today are Ken Burdick, Chief Executive Officer, Jane Fortin, Chief Financial Officer and.
Hershey Chief operating officer.
We issued the earnings release and presentation before the market opened this morning.
They're available on the Investor Relations section of our website investor I don't like it.
In addition, a replay of this conference call will be available following the call.
Before turning the call over to management for their prepared remarks. Please direct your attention to the disclaimer about forward looking statements included in the earnings press release and SEC filings.
Today's remarks contain forward looking statements, including statements about our financial performance outlook business model and strategy.
Statements involve risks uncertainties and other factors as noted in our periodic filings with the SEC that could cause actual results to differ materially.
In addition, please note that we report results using non-GAAP financial measures, which we believe provide additional information for investors to help facilitate comparison of current and past performance.
Reconciliation to the most directly comparable GAAP measures is included in the earnings press release tables and the presentation appendix.
Unless otherwise noted all results are compared to the comparable period in the prior year.
This time I'll turn the call over to Ken Burdick CEO of lifestyle Ken.
Thanks, Monica and thank you all for joining us today.
Halfway through the year.
We're continuing to steadily strengthen our operational performance.
In addition, we continue to see strong visit volume and condition growth.
Importantly, this is the first quarter were 100% of our growth was organic.
Nearly 90% of the U S population has access to our multi disciplinary team of clinicians to.
To a hybrid model of virtual and in personal care covered by commercial insurance.
These dedicated clinicians deliver everyday life stances mission to provide access to trusted.
Portable and personalize mental health care.
Our team is passionate about optimizing patient outcomes.
I want to begin by highlighting recent advances on this front.
To better support our clinicians and measuring how their patients care is progressing well.
We launched a new outcomes that formed care program.
As part of this program.
Outcomes assessments will be sent to all new patients.
And after follow up appointments as deemed clinically appropriate.
Overtime.
This new capability will allow us to develop an unprecedented level of clinical efficacy data.
This data will be invaluable for improving patient care lifespan.
And we'll highlight our differentiated ability to deliver quality outcomes.
It will also support our continued advancement towards value based care arrangements with our payer partners.
We are uniquely positioned.
The leverage line stances size and scale to measure quality and outcomes in a disciplined way.
That we believe can help drive improvements in mental health care across the country.
We are excited about this step on our path.
So using data and analytics to better inform care and enhanced mental health treatment.
While we are still early in rolling out our new outcomes initiatives.
We are very pleased with the results of other patient experience data that we've been tracking over time.
We currently earn a patient net promoter score of over at.
Our average reviews for lifestyle centers across Google searches.
Our currently at four six out of five stars.
The ratings represents the tremendous experience.
And care.
That our patients receive from <unk> clinicians.
We are proud of the compassionate and customized care that we deliver every day.
But recognize that we have opportunities to enhance the patient experience.
As we constantly strive for continuous improvement.
We're proud of the team's progress and commitment as we move closer to serving nearly 1 million patients annually.
Regarding operational execution, we continue to make progress on initiatives to streamline the business and improve our performance.
We announced on our last earnings call that we are in the process of setting termination notifications.
Approximately 30% of our payer contracts with.
Which we completed as of July one.
These will have little to no impact on visit volume.
But will allow our internal teams to operate more efficiently.
While this initial phase is complete we will continue to evaluate our payer contracts.
And focus on aligning with payer partners, who share our vision of expanding access to mental health care.
And invest in that vision with rates and terms.
With the value that lifespan clinicians provide.
Additionally.
As of July one we.
We now have all of our centers aligned on one single EHR system.
One phone system and.
One E mail system.
This is a truly significant steps forward towards simplifying the complexity created from nearly 100 acquisitions during the past six years.
As the administrative burden of multiple systems will be significantly reduced.
Streamlining our processes and systems will also enable us to swiftly and effectively implement new company wide initiatives.
Turning to our financial results in the second quarter we.
We delivered revenue of $260 million.
And our margin of $73 million and adjusted EBITDA of $14 million all of which met.
It exceeded our expectations.
This is the third consecutive quarter that our team has met or exceeded expectations.
With continued disciplined execution.
We feel well positioned to achieve our full year commitments.
With that I will turn it over to Dave to provide additional commentary on our financial performance and outlook.
Dave.
Thank you Ken.
I would like to Echo Kent's comments regarding the team's solid performance.
First half of this year, both operationally and in our financial results.
In the second quarter, we produced strong top line results with revenue up $260 million representing growth of 24% year over year.
This outperformance was primarily driven by increased visit volumes.
The result of higher than expected productivity.
Visit volumes of 1.705 million increased 21% year over year, primarily driven by higher clinician count and higher productivity.
Total revenue per visit increased 3% year over year to $152.
Primarily driven by modest payor rate increases.
The outperformance on revenue flowed through to center margin.
Center margin of $73 million in the quarter increased by 22% year over year.
Adjusted EBITDA of $14 million was consistent with our expectations.
Turning to liquidity.
In the second quarter free cash flow was negative $12 million, a 6 million dollar improvement year over year, which was in line with our expectations.
As we stated previously we expect it to improve cash flow from the first quarter, which was impacted by compensation costs, such as bonus payments and higher payroll taxes.
In the second quarter DSO increased sequentially from 42 days to 43 days.
This was above our prior expectations as we made the decision to hold claims for a large payer due to a retroactive rate increase.
We expect a similar dynamic in the third quarter as we hold claims for several other payers due to updates from rate negotiations.
DSO should meaningfully improve during the fourth quarter.
We exited the quarter with cash of $80 million and net long term debt of $249 million.
As of the end of Q2, we had additional debt capacity from a delayed draw term loan a $41 million as well as a $50 million revolving debt facility providing.
Providing us with sufficient financial flexibility to run the business as we head towards positive free cash flow for the full year 2025.
In terms of our outlook for 2023, we are raising our full year revenue range by $20 million to $1 billion $10 billion to $1 billion of $40 million and raising our full year center margin range to $280 million to $300 million.
We are reiterating the adjusted EBITDA guidance range of $50 million to $62 million to maintain flexibility for further investing in the business.
We expect the higher productivity that we experienced in Q1 and Q2 to continue into the second half of the year, which is driving the increase in our revenue guidance.
For the third quarter.
We expect revenue of $250 million to $260 million.
Senator margin of 69% to $76 million and adjusted EBITDA of $11 million to $17 million.
As a reminder, there is season.
Seasonality reflected in our third quarter guidance as a result of the summer vacation season, which results in lower clinician capacity.
Before I transition to Donnish I'd like to make it clear that as we drive revenue favorability, we are continuing to accelerate investments in 2023.
As stated previously we expect to exit 2025 with double digit margins.
However, our progression from 2023 to 2025, we will not be linear.
We fully expect to see margin expansion in 2024, but anticipate greater margin expansion in 2025, as we will have the benefit of a full year of returns on our foundational investments.
With that I'll turn it over to Don for additional color with respect to operations.
Thank you Dave.
We continue to align our teams around to growth priorities that.
Net clinician adds and clinician productivity.
In terms of net clinician adds we grew by 171 in the second quarter, bringing our total to 6132 conditions and.
An increase of 17% year over year.
Importantly, and consistent with our prior messaging this quarter's growth was 100% organic.
Turning to clinician productivity.
Capacity or the time clinicians make available to see patients trended in line with our expectations.
In terms of utilization or our ability to appropriately fill our clinician schedules.
We continue to deliver improvement, which has been sustained for three quarters.
We believe it is now appropriate to increase our go forward productivity assumptions to reflect the performance in the first half of the year, which was factored into our higher revenue expectations for the second half of the year.
We are driving these improvements in utilization through operational discipline at the top middle and bottom of the patient funnel.
At the top of the funnel, we continue to attract new patients in line with the overall growth of our clinicians and their related capacity.
Our boots on the ground primary care referral team is doing a tremendous job expanding and solidifying local relationships and delivering growth and referrals, which is the key contributor to ramping new clinicians.
Additionally, our marketing team's ability to drive continued growth in online organic patient traffic in combination with increasing levels of brand awareness continues to have a positive effect at the top of the funnel.
Second at the middle of the funnel.
We are improving our scheduling of patients our intake teams are focused on enhancing the overall conversion and matching experience for patients who prefer to schedule their appointments over the phone.
We also continue to leverage our digital capabilities to optimize patient matching via our online booking and intake experience Obi.
We are excited to announce that Obi has been fully implemented nationwide as of the second quarter, completing an 18 month project.
These online and offline efforts have led to further progress at the middle of the funnel.
Finally at the bottom of the funnel and.
In terms of scheduled appointments converting to completed visits or.
Our cancellation rates improved by another two points this quarter down to 10%.
That represents a four point improvement since the end of 2022.
And that has had a significant impact on utilization and the ability of our clinicians to use their patient facing time productively.
Our strong execution at the top middle and bottom funnel contributed to better than expected productivity in the second quarter.
Turning to real estate we.
We are making good progress on the real estate optimization project that we initially announced on our Q4 earnings call.
As a reminder, we were planning to consolidate 30 to 40 centers this year.
By the end of the second quarter, we consolidated 36 centers with little to no disruption to our patients and clinicians.
As we work through this review of our real estate, we identified additional centers that we're targeting for consolidation late in 2023, and we will provide an update by next quarter's earnings call.
Additionally, we are continuing to intentionally moderate our pace of de novo openings.
We are now expecting to open no more than 36% in 2023 down from our original guidance of 40% to 45.
Going forward, we will continue to regularly evaluate our real estate footprint to ensure it meets the needs of our hybrid model, while supporting our goals of efficiency and operating leverage.
And we expect fewer de novo openings in 2024, as we continued to optimize use of our existing space.
In closing I am proud of the team's continued dedication to driving operational improvements across the foundation of our business.
We have dramatically reduce complexity and streamline many areas of the company.
We've gone from a 100 phone systems to won dozens of EHR to one and rolled out a national online booking system.
We've also aligned the teams around the single set of Kpis that move us forward in a common direction.
While we still have a lot of work to do and are just two quarters into a two year transformation process.
Energy and enthusiasm of the team are palpable and inspiring.
With that I'll turn it back over to Ken for his closing remarks.
Thank you Josh.
I would like to thank all of our dedicated clinicians and team members.
<unk> outstanding work in the first half of 2023.
It's been nearly one year since I joined lifespan.
At that time, we.
We have focused on standardizing and simplifying our processes.
Systems.
Payer contracts real estate and other areas of the business as referenced by Josh.
As leaders in the outpatient mental health care space. We are also beginning to leverage our unique scale to use data and analytics to better inform care and enhanced mental health treatment.
While I recognize.
This area is a great deal of work ahead of us.
I am more confident than ever.
We continue to focus on our top priority.
Execute with discipline.
And make the necessary investments to strengthen our foundation.
We will achieve both our short and long term for that.
We will now take your questions operator.
The floor is now open for your questions to ask a question at this time. Please press Star then the number one on your telephone keypad.
We will pause for just a moment to compile the Q&A roster.
Your first question comes from Craig heading back with Morgan Stanley . Your line is open.
Thanks, Ken based on the clinician growth and productivity gains. It seems you are firmly on track for kind of the mid teens revenue growth.
The next couple of years can you just talk about what do you think about some puts and takes around some things that could drive revenue growth higher or any potential risks to that mid teens as you see it.
Sure. Thanks for the question Craig I'll give you my two cents and then let donnish weigh in and add his.
His comments.
Yeah.
The first thing that occurs to me is that.
As we've mentioned in the script the growth that we've had.
Most recently as a 100% organic so one of the upsides.
Is that at a point, where we can fund acquisitions from our free cash we will be back into more of an acquisitive mode. So that represents sort of pure upside and in terms of the downside we have to stay vigilant and focusing on the things that Dennis talks about.
In each earnings call and frankly that he focuses on every day, which is around productivity.
And utilization.
<unk> rates.
Cancellation rates et cetera. So.
I'm.
Overall optimistic, but we've got to stay on top of it.
Yes, I concur with that answer is we really look out to the future with its being a organic focused approach now.
Our ability to continue to deliver on Nick clinician add through our recruiting engine, which we continue to view as best in class.
And we continue to be able to scale in conjunction with our improvements that we've already delivered on the utilization front as it affects productivity.
With the new lever being how do we start to turn our attention to the other side of the productivity equation, which is capacity.
Historically that has been an area that we are very purposefully.
<unk> put our attention to with our primary focus being.
Driving the improvements on utilization and delivering on our commitments our clinicians that when they make time available to us we are going to fill that appropriately now that we have made so many strides on that front, we will start to turn our attention.
Again to the other side of the equation, which is capacity and see how we affect that going forward.
Got it and then I have a follow up for Dave It's nice to have revenue upside that you can reinvest more into the business.
On those investments is it just things that you were already doing and you're able to spend a little bit more are there any other initiatives like how would you frame some of the investments youre, making this year.
Yes, good morning.
As far as the investments themselves I would say more of the same I would not point to any new particular initiatives. We just could we continue to invest in areas across many aspects of the business that allow us to drive performance as well as scale effectively.
So that we can.
Drive margin improvement in 'twenty, four and exit 2025 with double digit margins.
Got it thank you.
Our next question comes from Lisa Gill with Jpmorgan. Your line is open.
Great. Thanks, very much and thanks for taking my question.
I wanted to start with the current environment around managed care contracting.
I know, Dave you made the comment that your Dsos were up because youre holding claims due to rate increases one.
Is it an annual negotiation with managed care when we think about rates to can you give us any color around what you're seeing in the rate environment.
With that its care and then thirdly around that is managed care looking to do any type of.
Contracting around either value based care initiatives or <unk>.
Capitation et cetera like is there any changes when we think about those.
Contracts that you have with managed care.
Hey, Lisa its Dave.
Take that one so there was a few pieces there so first of all as far as negotiations that go with the payers.
We are doing them, we are having regular interaction with with our payers from an engagement perspective.
Some of them are annual contracts some of them are in annual plus one from <unk>.
Escalator perspective, so it depends on the situation, but more than anything else, we want to have frequent interactions with our payers.
NBA engaging with them.
As far as the value based care.
We do have some value based care arrangements already I would I would point you to more of them being around access and quality, rather than capitation or risk bearing things like that and I would also say its early stages and mental health around value based care that is not prevalent across.
Our entire book.
Okay, Great and then just a quick follow up on virtual versus in person can you, maybe just give us what the percentages this quarter and your expectation for the rest of the year.
Sure. This is Don if I can answer that so from a <unk>.
Virtual perspective.
Virtual business represented about 73% of our total visits in Q2.
As compared with 70, 75% in Q1, so we continue to see an increased.
Trends in patient demand for in person visits and.
A slow return to.
In that direction that being said because of our hybrid model and the way that we deliver care, we remain agnostic as to where it trends how fast it trends and ultimately where it sells out.
Which is a key differentiator for us what it affects more than anything is how we continue to think about our optimization strategy around real estate and the footprint that we want to maintain.
Great. Thanks for the comments.
Okay.
Next question comes from Ryan Daniels with William Blair. Your line is open.
Yeah, Hey, guys. This is Jack on for Ryan Daniels Congrats on the quarter. Thanks for taking my question. So I appreciate the comments on the launch of the new outcomes informed care program for clinicians.
But can you dive just a little deeper into this program on the clinician front, specifically, maybe like what measures are included or how it differs from the older process for clinician and then as a second part with this is this rolled out nationwide already or is this only rolled out to a select group. Thanks.
Thanks for the question Jack actually.
It is rolled out nationwide and that's the power of this program, it's not as if we haven't been doing assessments, but as we transition from.
Lots of acquisitions.
Doing things the way they had always done them to a single approach at life stance. That's nationally consistent it's going to allow us to harness that data more effectively.
To date, we have already.
Down 180000 of these patient assessments and we're still in the very early stages, but.
It's just a more structured disciplined way of making sure that we are analyzing the clinical efficacy of the work and then.
Helping to inform.
Our clinicians.
And hopefully helping to inform the industry about.
Best practices and protocols.
Understood, Thanks, and as a quick follow up too on the center consolidation front you noted the additional centers that are good consolidation candidates.
I'm curious if those are within the same markets.
There are others that I'm sorry.
As others that are consolidating Oh, my God, sorry curious if those are within the same markets as others that you are consolidating or if those are new markets that you identified.
So this is Don so I'll take that so some of them are within the same states or markets that the initial 36 may have had.
We may have had closure than others or in new markets.
The the way that we looked at this was with the initial 36 that was sort of what I'd characterize as the obvious closures. They were all acquired locations that were suboptimal in either of the footprint to lay out the quality of the build in most importantly, the in person utilization of the space.
With this next go around it's looking more broadly to say these centers may not checked every single box, but there is a compelling reason the largest one being.
In person utilization and proximity to other centers, where we can.
We can consolidate some of that visit volume and both patient traffic and condition workspace.
So.
It's a mixed bag.
Answer your specific question, which is in some cases, they may be brand new markets that were not part of the initial 36 in other cases.
The may occur in the same market.
Great. Thanks, guys.
Next question comes from Kevin Caliendo with UBS. Your line is open.
Thanks, Thanks for taking my question.
Yes.
You mentioned you are sort of two quarters into a two year.
Plan here in terms of updating improving operations I know a lot of the heavy lifting is done but maybe can you talk about some of the initiatives you have going forward are those.
Again to be margin enhancements operational enhancements revenue enhancements all of the above just love to hear a little bit more detail on what you could share at least with sort of the next 18 months of of this plan.
Sure Kevin This is Ken.
I wanted to be really clear, while we are pleased with the progress.
We literally are only a quarter of the way through this two year investment phase where we.
We have every intention of fortifying the foundation, so that we can continue to build and grow.
A strong company.
None of us at life stance would decide would declared that the heavy lifting is done.
We are theres plenty of heavy lifting that remains over the next 18 months.
Having said that.
I view, the progress is solid and steady.
But we are far from declaring victory to the second part of your question. It really is all of the above the work that we're doing is going to.
Improve our operational performance.
That will drive improved administrative costs operating leverage if you will.
We're also doing things that will improve revenue. So it's it's across the board and that's why we talk about it as transformational because we're taking an incredibly high growth business and.
And we're taking it just a bit of a pause to invest for two years.
We have a rock solid foundation upon which to grow going forward.
I appreciate that.
Quick follow up if I, if I might.
Are you in terms of demand for services or patient traffic or the like are you finding that just being in network is enough to failure schedules or is there any additional outreach that needs to be done on advertising and the like.
Just sort of trying to understand the dynamics of where demand is currently and where you think it is heading.
Yeah, Hey, Kevin This is Don if I can take that so in.
In general as a starting point from an industry perspective patient demand outstrips supply.
So irregardless of lifespans in general we are all positioned well just based on the overwhelming demand for mental health services across the country.
That being said.
Making sure that that enough of that demand is appropriately coming our direction to fill the top of the funnel.
Obviously.
All of the.
Operational execution that takes place to convert that to.
Two completed visits through the middle and the bottom of the funnel.
We're really.
<unk>.
But right now with our marketing and business development efforts, which include our local relationships with primary care offices.
As well as our increasing levels of organic online presence and brand awareness, we feel that our top of the funnel or the overall patient demand as compared to the clinicians capacity we have to fill is appropriately.
Right sized.
I know you guys don't ever talk about your CAC, it's a <unk>.
That others in the industry talk about a lot, but when you when you think about it.
Where do you expect the trends on that to go for you going forward, meaning where we are now I understand the demand supply setup as favorable do you think it remains that way do you think.
Gets easier as your brand awareness gets better as your market penetration gets better I'd just love to think about how you guys.
Think about allocating resources in that direction going forward.
Yes so.
We have always been from the beginning of the company very.
Organic focus as it pertains to.
Patient acquisition so.
CAC or CPA is not something that we regularly discuss the only because it is such a minimal amount of our total spend so if you look at it in aggregate.
Like we've discussed on.
Kind of previous in previous public statements in totality, we spend less than 2% of revenue on <unk>.
Everything related to marketing and so that is not just paid which is a fraction of that 2% that is.
Actual teams the head count and the related activities that they have so we have an extremely efficient model as it pertains to patient acquisition because of the demand and that continues to move in a favorable direction as we focus on both organic.
Nick and increasing levels of brand awareness as the primary drivers of.
Filling our top of the funnel.
Super helpful. Thanks, Thanks, guys.
Next question comes from Jamie <unk> with Goldman Sachs. Your line is open.
Hey, Thank you good morning.
Sticking with you here to start just on the productivity front and your ability to fill capacity. That's obviously been a key driver of the outperformance in the first half how much more room is there to improve that first piece the ability to fill time through conversions and lower cancellations and then you mentioned the other piece.
Which is maybe incentivizing clinicians to give you more of their time, what levers do you have to pull to.
<unk>.
Any thoughts on just the wage environment or compensation packages.
As you are making for for clinicians.
Yes, so thanks for the question.
You are right in.
I started as CFO .
The very first focus.
For us was making sure that we're delivering on our commitments our clinicians by filling in the time that they were giving us.
Appropriate Lee wins.
With a full case load of patients and so that cuts to the heart of everything we've talked about on the utilization side of the productivity equation. We've made very significant strides in that front with the specific example that we have given.
Being cutting our cancellation rates down by about a third.
Since we put a concerted effort against it so though we continue to have further areas for improvement on the utilization front, we feel like we're in a spot where now is the right time to start to turn our attention to the other side of the equation, which is capacity.
There are a number of levers and incentives that we can pull there that we are starting to discuss with our leadership teams and the clinicians themselves to understand what we could do but it's early enough in that.
In our kind of thought process there that will come back later once we've made more of a developed more of a conservative strategy around it.
Things like our <unk> program was an initial.
Past that starting to create long term incentives around.
Those clinicians that want to give us more of their capacity and more of their time and want to focus on filling that.
Productively and so it will continue to evaluate other other similar opportunities as we go forward and we'll come back to you all when we.
Clarity there.
Okay. Thanks for that and then.
Maybe just a financial philosophy question.
Youre increasing revenue guidance.
EBITDA.
It's been maintained.
It sounds like there's not specific investments youre contemplating that or incremental you mentioned just maintaining flexibility. So is the philosophy just that when you have stronger top line.
You'll reallocate that or invest incrementally in <unk>.
And accelerating the operations or just or.
Is there potential to kind of let that flow through just any thoughts on how you think about that would be great. Thank you.
Yes, Jamie it's Dave.
I'll take that one.
Basically it's what you just described which is for 2023.
As we generate flexibility we are investing we have an investment we have an investment list that will that we're working through.
There is not any new big initiatives there it's it's.
More smaller investments in multiple areas.
And that I expect that to continue through 2023, if and when we we generate financial flexibility as we move into 2024.
We will see operating leverage and margin improvement, but we still will be also making investments in 'twenty four as Ken has stayed at 23 and 24 are foundational and investment years.
Okay perfect. Thank you.
Okay.
And we do have our last question comes from Brian . Thank you with Jefferies. Your line is open.
Hey, Good morning, Ken maybe just a question on how you're thinking about the bite and administrations bus to force more.
And network coverage for behavioral health I mean, how do you think that affects lifestyles.
It's an opportunity or does that open the door for increased competition.
Well.
Entirely supportive I think what president Biden is doing is highlighting what we've all observed it existed before the pandemic, but the pandemic sort of elevated it exacerbated the disconnect.
Between the demand for mental health treatment and the supply so.
Whether we're talking about fully realizing.
<unk>.
Or we're talking about responding to the changing condition frankly.
The American Society.
I think it will be positive as we sort of try to translate and navigate through a period, where we're seeing unprecedented demand and theres no indication that demand is going to subside.
No.
If it brings on more competition and people continue to find.
Better ways to expand access to mental health that's a positive.
Don't think we are a good company because we lack competition. We think we're a good company because of the model that we've built and the way that we execute.
No I appreciate that and then maybe as we think about the fact that you are calling contracting I think you'd called out 30%.
Have been eliminated are you seeing any flow through to the other side of the remaining clients or contracts with payers, who are willing to give you the rate increases that you need to justify keeping them on the panel.
Yes.
That's an ongoing.
Discussion and ongoing initiatives as we said in our prepared remarks.
Increasing our level of engagement with payers is really important.
Certainly the rates are important but it's also the terms and it's the way in which we partner for mutual benefit. So we want to be a good partner, we want to be able to.
Minimise the.
The stress and strain for our patients and their members.
As they access Metro health treatment, which is a courageous decision and of itself, so removing barriers and everything from.
The credentialing process.
The payment process, including reimbursement is just going to be an ongoing dialogue with our payer partners.
The.
The reduction in payer contracts.
He has done for many reasons.
First reason is because we were looking to simplify our administrative burden and so this first tranche.
As Dan has said in his remarks literally had.
De minimis impact on patient visits and revenue because these were contracts, where we're seeing very very little visit activity.
As we go further.
Continue to review this and make sure that.
The payer relationships that we have going forward fit.
Art sort of our best interests in the best interest of our patients. So we'll be looking at at rates, we'll be looking at volume will be looking at the terms.
The relationship.
And then maybe David just one quick follow up.
You drew 25 of the credit facility is that just a timing thing how should we be thinking about that.
Yes that was that was a timing thing that was related to funding.
Our acquisitions that were early early in the year.
Yes, there are <unk> the delayed draw term loan facility and that was again just to maximize flexibility. So we put more cash on the balance sheet.
Understood. Thank you.
There are no further questions at this time. This concludes the question and answer session.
Gentlemen, This concludes today's conference call you may now disconnect.
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Sure.
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