Q2 2023 ModivCare Inc Earnings Call

Good morning, and welcome to motive Care's second quarter 2023 financial results Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If you would like to ask a question you May press star one on your telephone keypad.

Speaker 1: Good morning and welcome to Motivacare's second quarter, 2023 Financial Results Conference call. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. If you would like to ask a question, you may press star one on your telephone keypad.

Speaker 1: to get into the question queue. Please note that this conference is being recorded. I will now turn the call over to Kevin Ellich, head of Investory Relations. Thank you. Please go ahead.

To get into the question queue. Please note that this conference is being recorded I will now turn the call over to Kevin Alice <unk> head of Investor Relations. Thank you. Please go ahead. Good morning, and thank you for joining mode of care second quarter 2023 earnings conference call and webcast. Joining me today is Heath Sampson motor carriers President.

Speaker 2: Good morning, and thank you for joining MotiveCare's second quarter 2023 Earnings Conference call and webcast.

Speaker 2: Joining me today is Heath Sampson, MotiveCare's President and Chief Executive Officer, and Ken Sheppard, Head of Finance.

And Chief Executive Officer, and Ken Shepherd head of finance.

Speaker 2: Before we get started, I want to remind everyone that during today's call management will make forward looking statements under the private securities litigation reform act. These statements involve risks, uncertainties, and other factors that may cause actual results or events to differ materially from expectations.

Before we get started I wanted to remind everyone that during today's call management will make forward looking statements under the private Securities Litigation Reform Act.

These statements involve risks uncertainties and other factors that may cause actual results or events to differ materially from expectations.

Speaker 2: Information regarding these factors is contained in today's press release and in the company's filings with the SEC.

Information regarding these factors is contained in today's press release and in the company's filings with the SEC.

Speaker 2: We will also discuss non- GAAP financial measures to provide additional information to investors. A definition of these non- GAAP financial measures and to the extent applicable, a reconciliation to their most directly comparable GAAP financial measures is included in our press release and form 8K filed with the SEC.

We will also discuss non-GAAP financial measures provide additional information to investors a definition of these non-GAAP financial measures and to the extent applicable Ah record reconciliation to their most directly comparable GAAP financial measures is included in our press release and form 8-K filed with the SEC.

Speaker 2: A replay of this conference call will be available approximately one hour after today's call concludes and will be posted on our website, motivecare.com.

A replay of this conference call will be available approximately one hour. After today's call concludes and will be posted on their website motives care dot com.

Speaker 2: This morning, Hugh Sampson will begin with opening remarks. Ken Sheppard will review our financial results. Then we'll open the call for questions. With that, I'll turn it over to Hugh Sampson.

This morning, he Samson will begin with opening remarks, Ken Shepherded will review our financial results. Then we'll open the call for your questions with that I'll turn the call over to Heath.

Speaker 3: Thank you, Kevin. I appreciate everyone joining us for our second quarter 2023 earnings call.

Thank you Kevin I appreciate everyone joining us for our second quarter 2023 earnings call.

Speaker 3: After the market closed yesterday, we reported second quarter revenue of $699 million and adjusted to EBITDA of $52 million. The increase in revenue was largely driven by strong performance in our home division, which includes our personal care and remote patient monitoring sites.

After the market closed yesterday, we reported second quarter revenue of $699 million and adjusted EBITDA of $52 million the.

The increase in revenue was largely driven by strong performance in our home Division, which includes our personal care and remote patient monitoring segments.

As well as an increase in transportation trips and provider cost, which partially pass through in the form of higher revenue in our <unk> segment.

Speaker 3: as well as an increase in transportation trips and provider costs, which partially pass through in the form of higher revenue in our NEM T-Seg.

Our home Division revenue growth contributed positively to adjusted EBITDA.

Speaker 3: Our home division's revenue growth contributed positively to adjusted EBITDA. As for NEMT, the increased revenue we obtained from passing through costs in our shared risk contracts helped offset a portion of the increased service expense. However, this pass-through benefit was more than offset by a negative impact to adjusted EBITDA from our full risk contracts, which represent 20% of our NEMT revenue.

That's for any M T. The increase revenue, we obtain from passing through costs in our shared risk contracts helped offset a portion of the increased surface expense. However, this pass through benefit was more than offset by a negative impact to adjusted EBITDA from our full risk contracts, which represent 20 <unk>.

<unk> of our <unk> revenue.

Speaker 3: Similar to other companies in the healthcare industry, we are seeing a rise in utilization of our services as we see progress in the nation's recovery from the pandemic. Even though this increase has a negative impact in a portion of our NEMT contracts, it has generally been a positive for our personal care and remote patient monitoring segments, which we are seeing strong.

Similar to other companies in the health care industry, we are seeing a rise in utilization of our services as we see progress in the nation's recovery from the pandemic, even though this increase has a negative impact and a portion of our any empty contracts. It has generally been a positive for our personal care.

Remote patient monitoring segment.

Which we are seeing strong demand for our services.

Speaker 3: I remain optimistic about ModifCare's long-term positioning and strategy. Our unique position in the healthcare industry enables us to cater to our customers' diverse needs in a continuously evolving market to manage a rapidly aging and chronically ill population. Amongst rising costs and a complex regulatory

I remain optimistic about motive scares long term positioning and strategy our unique position in the healthcare industry enables us to cater to our customers' diverse needs in a continuously evolving market to manage a rapidly aging and chronically ill population amongst rising cost in a complex regulatory environment.

Speaker 3: While the intricacies of the NEMT segment are complex, particularly with significant fluctuations that arose during the pandemic and current uncertainties surrounding Medicaid redetermination, access to transportation is a vital component to ensuring access to clinical interventions and improving health.

While the intricacies of the any empty segment are complex, particularly with significant fluctuations that arose during the pandemic and current uncertainties surrounding Medicaid redetermination access to transportation is a vital component to ensuring access to clinical interventions and improving health.

There are several key updates to discuss this quarter first we increased our 2023 revenue guidance to a range of $2 75 to $2 $8 billion from $2 $5 75 to $2 6 billion.

Speaker 3: There are several key updates to discuss this quarter. First, we increased our 2023 revenue guidance to a range of $2.75 to $2.8 billion from $2.575 to $2.6 billion.

Speaker 3: This increase is primarily due to incremental shared risk contract revenue related to higher than expected NEMT revenue from trip volume and provider costs.

This increase is primarily due to incremental shared risk contract revenue related to higher than expected and emt revenue from trip volume and provider costs.

Speaker 3: Despite the increase in revenue, we have lowered our 2023 adjusted EBITDA guidance to $200 to $210 million from $225 to $235 million.

Despite the increase in revenue, we have lowered our 2023, adjusted EBITDA guidance to $202 million to $10 million from $2 25 to $2 $35 million.

Speaker 3: This reduction is primarily related to items affecting our segment, including higher trip volume and higher trip related costs, particularly in our full risk contracts. And timing of new contract implementations being delayed to early 2024, which were previously expected to offset contract attrition from prior years.

This reduction is primarily related to items affecting our <unk> segment, including our trip volume and higher trip related cost, particularly in our full risk contracts and timing of new contract implementations being delayed to early 'twenty 'twenty, four which were previously expected to offset contract attrition.

From prior years.

Speaker 3: Next, I'd like to address our second quarter cash flow from operations, which was negative $108 million mainly due to a $96 million decrease in our net contract payables, less receivable balance during the quarter, along with a one-time $9.6 million arbitration settlement with a former employee.

Next I'd like to address our second quarter cash flow from operations, which was negative $108 million, mainly due to a 96 million decrease in our net contract payable less receivable balance during the quarter, along with a one time $9 $6 million arbitration settlement.

With a former employee.

Speaker 3: Post the pandemic, coupled with a shift to more shared risk NEMT contracts, we experienced a temporary timing mismatch between payments and collections.

Post the pandemic, coupled with a shift to more shared risk any M. T contracts, we experienced a temporary timing mismatch between payments and collections.

Speaker 3: which created a large payable balance that we've been reducing over the past year.

Which created a large payable balance that we we've been reducing over the past year.

Speaker 3: The second quarter of 2023 marks a notable shift in our working cap.

The second quarter of 2023 marks a notable shift in our working capital we've resolved pandemic era balance sheet disparities transitioning into a net receivable position, where our contract receivables surpass our contract payables.

Speaker 3: we've resolved pandemic-era balance sheet disparities.

Speaker 3: Transitioning into a net receivable position where our contract receivables surpass our contract payables.

Speaker 3: This occurred earlier than anticipated, largely due to accelerate payments from a few largeanian corporations, without any Egyptian forced payment rate.

This occurred earlier than anticipated largely due to accelerate payments from a few large state clients.

Speaker 2: Furthermore, these clients now have established clear timelines for reconciliation, adding additional layer of predictability to our cash flow.

Furthermore, these clients now have established cure clear timelines for reconciliation.

Adding additional layer of predictability to our cash flow.

Speaker 2: We anticipate the collection of these receivables to balance out, if not surpassed payable repayments for the rest of the year, positively impacting our cash flow in the second half of 2020.

We anticipate the collection of these receivables to balance out if not surpass payable repayments for the rest of the year positively impacting our cash flow in the second half of 2023.

Speaker 2: Our effort to realign contracts with our customers' needs is yielding positive results.

Our effort to realign contracts with their customers needs is yielding positive results.

Speaker 2: We've safeguarded our margins, trading some pandemic-era upside for long-term stability.

We have safeguarded, our mark margins trading some pandemic era upside for long term stability.

Speaker 2: Now, our cash flow mirrors our P&L more closely, indicating improved financial management and a balance between profitability and customer satisfaction.

Now our cash flow mirrors, our P&L more closely indicating improved financial management, and a balance between profitability and customer satisfaction.

Speaker 2: During the second quarter, we borrowed $111.5 million on our revolving credit facility to support repayments on contract pay-ups.

During the second quarter, we borrowed $111 $5 million on our revolving credit facility to support repayment on contract payables.

Speaker 2: As of June 30, 2023, our net leverage ratio was 4.7.

As of June 32023, our net leverage ratio was four seven times.

Speaker 2: we knew we were going to be at this leverage point. However, as noted earlier, we anticipated paying off a couple key customers in line with prior history.

We knew we were going to be at this leverage point. However, as noted earlier, we anticipated paying off a couple of key customers in line with prior history.

Speaker 2: Prioritizing long-term customer relationships, we agreed to accelerate related contract payables of approximately $65 million into Q2.

Prioritizing long term customer relationships, we agreed to accelerate related contract payables of approximately $65 million into Q2.

Speaker 2: Moving forward, we anticipate generating substantial cash flow, which we intend to utilize for revolver pay-down.

Moving forward, we anticipate generating substantial cash flow, which we intend to utilize for revolver Paydowns. This uplift will be fueled by normalized working capital the strong core cash flow from our low capital intensive businesses.

Speaker 2: This uplift will be fueled by normalized working capital, the strong core cash flow from our low capital intensive businesses.

Speaker 2: Our quarterly supplemental presentation on our IR website provides a detailed cash flow overview and a view of the expectations for the second half of 2020.

Our quarterly supplemental presentation on our IR website provide the detailed cash flow or view and the view of the expectations for the second half of 2023.

Speaker 2: To conclude the balance sheet points, our annual goodwill assessment resulted in a non-cash goodwill impairment charge of $183 million within our personal care and remote patient monitoring sector.

To conclude the balance sheet points, our annual goodwill assessment resulted in a noncash goodwill impairment charge of $183 million within our personal care and remote patient monitoring segments. It is important to note that this is a noncash expense and does not impact our operation cash flows our ongoing activities.

Speaker 2: It is important to note that this is a non-cash expense and does not impact our operation cash flows or ongoing activities.

Speaker 2: instead aligns the segment's carrying value with their current fair market value.

Ted aligns the segment's carrying value with their current fair market value.

Despite this noncash charge these segments are performing well and what's more we see that personal care and remote patient monitoring segments as key tenants of our strategy to unlock value based care arrangements with supportive care evidenced by new contracts.

Speaker 2: Despite this non-cash charge, these segments are performing well. And once more, we see that personal care and remote patient monitoring segments has key tenets of our strategy to unlock value-based care arrangements with supportive care, evidenced by new contracts.

Speaker 2: This makes us more enthusiastic about the long-term prospects and we anticipate that performance will surpass our initial expectations at the time of the acquisition.

This makes us more enthusiastic about the long term prospects and we anticipate their performance will surpass our initial expectations at the time of the acquisition.

We remain focused on driving strategic measures to ensure their performance and deliver long term shareholder value.

Speaker 2: we remain focused on driving strategic measures to ensure their performance and deliver long-term shareholders.

Next I want to address the topic, that's the top of mind of all of our investors Medicaid Redetermination.

Speaker 2: Next, I want to address the topic that's the top of mind of all of our investors, Medicaid redetermination.

Speaker 2: There has been a lot of industry information about redetermination, and some states have taken an aggressive approach to redetermination, but others are being more thoughtful to ensure eligible Medicaid members' access to care is not disrupted, by evidence by 12 states pausing procedural terminations and 35 other states having received approval for mitigation plans to address a number of issues.

There's been a lot of industry information about Redetermination and some states have taken an aggressive approach to redetermination, but others are being more thoughtful to ensure eligible Medicaid members access to care is not disrupted by evidenced by 12 states pausing procedural terminations in 35 other states having received approval for.

Our mitigation plans to address a number of issues.

Speaker 2: That said, today we have seen minimal impact from Medicaid regeterminations, and our membership continues to track in line with our forecast expectations.

That said to date, we have seen minimal impact from Medicaid Redetermination and our membership continues to track in line with our forecast expectations.

I would also like to point out.

Speaker 2: that of our 34.3 million members, 27.1 million are Medicaid, and 7.2 million are Medicare Advantage, which are not affected.

Of our $34 3 million members, $27 1 million or Medicaid and $7 2 million or Medicare advantage.

Which are not affected by Redetermination.

Speaker 2: Our MA membership has grown from 6 million or 20 percent since June 30, 2022. Primarily due to new contract wins and existing contract membership growth.

Our MA membership has grown from $6 million or 20% since June 32022, primarily due to new contract wins and existing contract membership growth.

Speaker 2: While redetermination may lead to some Medicaid disarrollment, we expect regular growth in Medicaid and M8 programs, providing a counterbalance to redetermination impacts.

Well Redetermination may lead to some Medicaid just a roadmap we expect regular growth in Medicaid and MH programs, providing a counter balance to redetermination impacts.

Speaker 2: For the second half of 2023, we estimate Medicaid redetermination could create an adjusted EBITDA headwind of approximately $5 to $10 million, which is embedded in our guide.

For the second half of 2023, we estimate Medicaid redetermination could create an adjusted EBITDA headwind of approximately $5 million to $10 million, which is embedded in our guidance.

Speaker 2: Looking towards 2024, we are currently forecasting a potential growth impact to adjusted EBITDA of 20 to $40 million from re-determination. Yet, as I was discussed later, our strategic initiatives are expected to drive growth savings of $30 to $50 million over the next 12 to 18 months.

Looking towards 2024, we are currently forecasting a potential growth impact to adjusted EBITDA of $20 million to $40 million from Redetermination.

As I just as I will discuss later, our strategic initiatives are expected to drive gross savings of $30 million to $50 million over the next 12 to 18 months.

Speaker 2: Rest assured, our data models, industry insights, and customer feedback indicate our projects aligned with what we are seeing in the market. And re-determination will be manageable. We'll provide more updates as things progress.

Rest assured our data models industry insights and customer feedback indicate our projects aligned with what we're seeing in the market and Redetermination will be manageable, we'll provide more updates as things progress.

Speaker 2: Before I review some of our operational highlights, I'm eager to provide some substantial updates to our team.

Before I review some of our operational highlights I'm eager to provide some substantial updates to our team.

Speaker 2: We've recently brought on Jessica Crawl as our new chief information up.

We recently brought on Jessica for all as our new Chief Information Officer.

Jessica came to us from United Healthcare and she has an extensive background in healthcare it leaderships and brings a wealth of experience and expertise to our team.

Speaker 2: Jessica came to us from United Healthcare and she has an extensive background in healthcare IT leadership and brings a wealth of experience and expertise towards

Speaker 2: Further bolsting our team, we hired a new chief people officer, and we will announce his name once he fulfills his prior company commitment.

Further bolstering our team we hired a new chief people officer, and we will announce his name once he fulfilled his prior company commitments. This individual has proven experience nurturing organizations with significant field employees, and we will and he will be instrumental in further supporting our 20000 team members and fostering our companies.

Speaker 2: This individual has proven experience nurturing organizations with significant field employees and he will be instrumental in further supporting our 20,000 team members and fostering our company's group.

Growth.

I'm also thrilled to announce that we've also received agreement from an experienced and talented individual as our next chief Financial Officer, who will join US in early September and once we are able to officially announce her name we will issue a press release and form on form 8-K.

Speaker 2: I'm also thrilled to announce that we've also received agreement from an experienced and talented individual as our next Chief Financial Officer who will join us in early September and once we are able to officially announce her name, we will issue a press release in Form 8K. What I can tell you is she has multi-industry experience and a deep healthcare understanding with a multi-decade career which will play a pivotal role in shaping our future direction.

But I can tell you she has multi industry experience and a deep health care understanding with the multi decade career, which will play a pivotal role in shaping our future direction.

Speaker 2: With these recent additions, our executive team will continue to reflect our unwavering commitment to attract exceptional individuals in their respective fields. As we often say, it's all about the people. And I'm confident that once all of these individuals on board, we will have the right team in place to drive our transformation and strategy forward.

With these recent additions our executive team will continue to reflect our unwavering commitment to attract exceptional individuals in their respective fields.

As we often say, it's all about the people and I'm confident that once all of these individuals onboard we will have the right team in place to drive our transformation and strategy for.

Speaker 2: Lastly, I want to extend a heartfelt gratitude to our extraordinary team for their steadfast support while I balance the dual roles of CEO and CFO . On a lighter note, I can affirm that I'm excited about finally not having to juggle to just.

Lastly, I want to extend a heartfelt gratitude to our extraordinary team for their steadfast support while I balance the dual roles of CEO and CFO on a lighter note I can affirm that I'm excited about finally, not having to juggle to jobs.

Speaker 2: Now let's discuss the market, our strategy and segment execution.

Now, let's discuss the market our strategy and segment execution.

Speaker 2: starting with an important change in the market. As we navigate the rapidly evolving healthcare landscape, it's clear that the industry is being revolutionized by new CMS strategic men.

Starting with an important change in the market as we navigate the rapidly evolving health care landscape. It is clear that the industry has been revolutionized by new CMS strategic mandates, which has accelerated the shift to fee for value from fee for service.

Speaker 2: which is accelerating the shift to fee for value from fee for service.

Speaker 2: This is also driving a paradigm shift towards more holistic member care. It is anticipated that by 2030, 100% of Medicare advantage and traditional Medicare and approximately 50% of Medicaid will transition towards value-based alternative payments.

This is also driving a paradigm shift towards more holistic member care. It is anticipated that by 2030 or 100% of Medicare advantage and traditional Medicare and approximately 50% of Medicaid will transition towards value based alternative payment models.

Speaker 2: As payers and providers grappled with increased and chronically ill populations, higher costs, and tighter reimbursement rates, coupled with an evolving complex regulatory landscape, the quest for an integrated healthcare experience that combined quality, affordability, and interconnected services is paramount.

As payers and provider providers grappled with increased and chronically ill population higher costs and tighter reimbursement rates.

With an evolving complex regulatory landscape the quest for an integrated health care experience that combine quality affordability and interconnected services is paramount.

Speaker 2: At Motive Care we've enhanced our strategy and separated into the three parts in response to these pressing markets.

At motive care, we've enhanced our strategy and separated into three parts in response to these pressing market needs.

Speaker 2: 1. Develop a scalable platform through operational excellence in automation. 2.

One develop a scalable platform through operational excellence and automation too.

Speaker 2: build a customer-centric sales and growth platform.

Build a customer centric sales and growth platform.

Speaker 2: Three, enhance digital and clinical capabilities to participate in value-based arrangement models.

Three enhance digital digital and clinical capabilities to participate in value based arrangement models.

Speaker 2: Our strategy is powered by digital transformation, which is crucial in our fast-paced, data-driven, artificial intelligence era. The first phase of our strategy revolves around operational excellence, which we are proud of the improvements we've made over the past year. And further automation sets a solid foundation for our scaled platform of solutions.

Our strategy is powered by digital transformation, which is crucial crucial in our fast paced data driven artificial intelligence era. The first phase of our strategy revolves around operational excellence, which we are proud of the improvements we've made over the past year and further automation sets a solid foundation for our scale.

Platform of solutions.

Over the past year, we've made considerable strides in upgrading our talent and culture transitioning from a decentralized and disparate model to a shared service in central operations model.

Speaker 2: Over the past year, we've made considerable strides in upgrading our talent and culture.

Speaker 2: transitioning from a decentralized and disparate model to a shared service and central operations model.

Speaker 2: To better understand the scope of this transformation, approximately $65 million of annual salary has been transitioned.

To better and understand the scope of this transformation approximately $65 million of annual salary has been transition.

Speaker 2: and we expect to upgrade and reallocate back approximately 30 mil.

And we expect to upgrade and reallocate back approximately $30 million.

Phase II running parallel to phase one involves fostering an organization that prioritizes growth through a coordinated model of relationship management referral execution and hunting new opportunities all backed by marketing and centralized sales operations.

Speaker 2: Finally, Phase 3 will participate in value-based arrangements in addition to fee-for-service. We will harness our newly developed digital and clinical connected capabilities to augment our supportive care services by providing longitudinal data collection for our customers, members, and design engagement models enabling virtual connections to care.

Finally phase three will participate in value based arrangements. In addition to fee for service, we will harness our newly developed digital and clinical connected capabilities to augment our supportive care services by providing longitudinal data collection for our customers members and design engagement models.

And virtual connections to care.

Speaker 2: Far from being conflicting strategies, these three phases are designed to complement each other, strengthen each other together. Let's now delve into our progress for each of our sessions.

Far from being conflicting strategies. These three phases are designed to complement each other strengthening each other together, let's now delve into our progress for each of our segments.

Speaker 2: Our focus on centralization and operational excellence facilitated by technology has considerably improved our NEMT sir.

Our focus on centralization and operational excellence facilitated by technology has considerably improved our any M. T services, we're meeting or exceeding all of our customers quality and service level requirements as seen in our key performance indicators such as on time performance and reduce miss trips.

Speaker 2: We're meeting or exceeding all our customers' quality and service level requirements, as seen in our key performance indicators such as on-time performance and reduced missed trips.

Speaker 2: Our multimodal transportation partnership strategy has led to increased customer satisfaction and reduced costs.

Our multi modal transportation partnership strategy has led to increased customer satisfaction and reduce costs.

Speaker 2: We are transitioning from traditional call centers to Omni Channel options, improving member engagement.

We are transitioning from traditional call centers to Omnichannel options, improving member engagement at lower cost.

Speaker 2: Further automation of the transportation processes through unified tech-enabled dispatch is a key priority as well.

Further automation of the transportation processes through unified Tech enabled dispatch is a key priority as well.

Speaker 2: We anticipate savings between $30 to $15 million over the next 12 to 18 months through these continued centralization, operational excellence, and automation.

We anticipate savings between $30 million to $15 million over the next 12 months to 18 months through these continued centralization operational excellence and automation efforts.

Speaker 2: We expect these initiatives will mitigate the headwinds of Medicaid re-determination and higher utilization.

We expect these initiatives to mitigate the headwinds of Medicaid redetermination and higher utilization.

Speaker 2: Our sales strategy within the NAMT segment has shown promising results. I'll be at slower than we want.

Our sales strategy within the Indian and Emt segment has shown promising results, albeit slower than we wanted.

Speaker 2: Year to date through June 30, we've secured new MCO businesses with a total contract value of $110 million. Nearly all of which will commence in 2025.

Year to date through June 30, we've secured new MTO businesses with a total contract value of $110 million nearly all of which will commence in 2024.

Speaker 2: including the contract renewals and expansions, the total contract value won this year amounts to over $500 million, over $3 to $5 million.

Including the contract renewals and expansions the total contract value one this year amounts to over $500 million over three to five year contract terms over the next five years, we foresee around one $3 billion worth of state any empty contracts up for RFP.

Speaker 2: Over the next five years, we foresee around $1.3 billion worth of state and EMT contracts up for RFP, of which we currently serve approximately 700 mil.

Of which we currently see serve approximately $700 million.

Speaker 2: Our team has been successful in retaining business and we are delivering higher service levels than historically. We are confident in retaining the majority of the contracts we have and we aim to win and convert additional market share.

Our team has been successful in retaining business and we are delivering higher service levels than historically, we are confident in retaining the majority of the contracts, we have and we aim to win and convert additional market share.

Speaker 2: Additionally, we will continue to pursue approximately $700 million of new opportunities in our NCO pipe.

Additionally, we will continue to pursue approximately $700 million of new opportunities in our NGL pipeline.

Speaker 2: Which is more receptive and frankly demanding that we offer more holistic solutions beyond just transportation.

Which is more receptive and frankly demanding that we offer more holistic solutions beyond just transportation.

Speaker 2: In personal care, our focus on centralization and operational excellence has streamlined our services enabling better regulatory compliance. We've embarked on a full transformation of this segment.

In personal care, our focus on centralization and operational excellence has streamlined our services, enabling better regulatory compliance we've embarked on a full transformation of this segment.

Speaker 2: Shifting from disparate local model to a more unified regional model. This has also allowed us to reallocate resources to growth.

Shifting from despair local model to a more unified regional model. This has also allowed us to reallocate resources to growth.

Speaker 2: Our increase is 3.4% in the second quarter, as we continue to gain momentum towards additional growth projected in the second half of the year.

Hours increased three 4% in the second quarter as we continued to gain momentum towards additional growth projected in the second half of the year.

Speaker 2: Quickly commenting on CMS's HCBS proposed rule.

Quickly commenting on CMS is H C. B S proposed rule.

Speaker 2: We've aligned our feedback with industry stakeholders.

We've aligned our feedback with industry stakeholders.

Speaker 2: Support above the role, however, expressing concerns about the 80-20 wage provision, noting that it will further exasperate the supply and demand imbalance for personal care service.

Supportive of the rule, however, expressing concerns about the 80 20 wage provision, noting that it will further exasperate the supply and demand imbalance for personal care services.

It is important to note that we are optimistic that the rule will drive further professionalism passion and once the final rule is issued it will not be implemented until four years from now.

Speaker 2: It is important to note that we are optimistic that the rule will drive further professionalization. And once the final rule is issued, it will not be implemented until four years from now.

In the RPM segment, our operational excellent strategies have improved efficiency, allowing us to provide elevated care levels. While also integrating the guardian medical monitoring acquisition from last May.

Speaker 2: In the RPM segment, our operational excellent strategies have improved efficiency, allowing us to provide elevated care levels while also integrating the Guardian Medical monitoring acquisition from last May.

Speaker 2: We've leveraged technology to boost efficiency, enable vital data collection and fostering goals.

We've leveraged technology to boost efficiency enable vital data collection and fostering growth.

Within <unk>, we are seeing market share gains and maintaining strong pipeline. For example, activations were up 10% year over year and enrollments increased 81% compared to the first quarter.

Speaker 2: Within Perse, we are seeing market share gains and maintaining strong pipelines. For example, activations were up 10% year-to-year, and enrollments increased 81% compared to the first quarter.

Speaker 2: We are also adding capabilities to enhance our vitals and medication management offerings and expect meaningful expansion starting this year.

We are also adding capabilities to enhance our vitals and medication management offerings and expect meaningful expansion starting this year.

Under the careful management of our newly dedicated strategy product and innovation team led by Jeff Bennett previously the CEO of Hickey health care solutions.

Speaker 2: Under the careful management of our newly dedicated strategy, product and innovation team led by Jeff Bennett, previously the CEO of Higgy Healthcare Solutions, our strategy integrates cutting-edge technology and data management with our newly developed operational excellence and clinical capability.

Our strategy integrates cutting edge technology and data management with our newly developed operational excellence and clinical capabilities.

Speaker 2: This strategy empowers us to capture longitudinal data from our customers members, enabling the development of virtual engagement models and facilitating value-based arrangements.

This strategy empowers us to capture longitudinal data from our customers members, enabling the development of virtual engagement models and facilitating value based arrangements in 2023, we expect to generate meaningful dollar dollars from innovation and value based payments, we have over 20 active program.

Speaker 2: In 2023, we expect to generate meaningful dollars from innovation and value-based payments. We have over 20 active programs focused on member insights and opportunities to move into value-based arrangements that give us a confidence that our innovation approach is lying to our customers.

<unk> focused on member insights and opportunities to move into value based arrangements that give us confidence that our innovation approach is aligned to our customers' needs.

I'd like to provide a brief update on our equity investment in matrix medical which we believe hold significant value for motive care matrix saw continued momentum in the second quarter and delivered another strong quarter driven by assessment growth of 30% for context, adjusted EBITDA range of 50.

Speaker 2: I'd like to provide a brief update on our equity investment in matrix medical, which we believe holds significant value for motive care. Matrix saw continue momentum in the second quarter and delivered another strong quarter driven by assessment growth of 30%. For context, adjusted EBITDA range of 50 million to 100 million is still the correct results to anchor value.

Millions to a $100 million is still the correct results two anchor value from.

Speaker 2: We are confident that matrix is on the right trajectory to create significant value and remain aligned with Frazier in monetizing our 44% minority interest at the right.

We are confident that matrix is on the right trajectory to create significant value and we remain aligned with Frazier and monetizing our 44% minority interest at the right time.

In closing I'd like to thank our entire team for their hard work and dedication.

Speaker 2: In closing, I would like to thank our entire team for their hard work and dedication. The last year has been a period of significant change in the world.

The last year has been a period of significant change for us.

We remain committed to providing the highest quality of service as we have done amazing things to help transform this business.

Speaker 2: We've remained committed to providing the highest quality of service as we have done amazing things to help transform this business.

Speaker 2: We continue to build on our culture where compassion meets profitability and we'll continue to guide us as we move forward. I'm incredibly proud of what we have achieved.

We continue to build on our culture, where compassion meets profitability and will continue to guide us as we move forward I'm incredibly proud of what we've achieved.

Speaker 2: and the transformation we've undergone. We are clearly on the right trajectory, and I see this continuing as remain committed to growing our supportive care services focused on the social determinants of health.

And the transformation, we have undergone we're clearly on the right trajectory and I see this continuing as remain committed to growing our supportive care services focused on the social determinant of health.

Speaker 2: Now I'd like to pass the call to Ken Sheppard, our head of finance, who will provide an overview of our second quarter financial performance. Ken? Thanks, Ken.

Now I'd like to pass the call to Ken Shepherd, our head of finance, who will provide an overview of our second quarter financial performance Ken.

Thank you Heath and good morning, everyone.

Speaker 3: Second quarter, 2023 revenue increased 11% year over year to $699 million, driven by approximately 11% growth in mobility and 11% growth in our home division.

Second quarter, 2023 revenue increased 11% year over year to $699 million driven by approximately 11% growth in mobility and 11% growth in our home Division.

Speaker 2: Net loss was $191 million, which included a non-cash goodwill impairment of $183 million. And second quarter, adjusted EBITDA was $52 million, which was 13% lower than second quarter 2022, and modestly lowered than our ex.

Net loss was $191 million, which included a noncash goodwill impairment of $183 million and second quarter. Adjusted EBITDA was $52 million, which was 13% lower than second quarter, 2022, and modestly lower than our expectations and emt circa.

Speaker 2: NEMT second quarter revenue of $497 million was driven by a 1.5% year-over-year increase in average monthly members to $34.3 million and a 9% increase in revenue per member per month due to repricing and partial pass-through of costs associated with our higher utilization.

Quarter revenue of $497 million was driven by a one 5% year over year increase in average monthly members to $34 3 million and a 9% increase in revenue per member per month, due to repricing and partial pass through of cost associated with our higher utilization.

Trip volume in the second quarter increased six 5% sequentially, while monthly utilization per member increased eight 5% compared to eight 1% in the first quarter.

Speaker 2: Trip volume in the second quarter increased 6.5% sequentially, while monthly utilization per member increased to 8.5% compared to 8.1% in the first quarter.

Speaker 2: Purchase services per trip increase 2.8% sequentially due to increased utilization resulting in more volume and related service expense.

Purchased services per trip increased two 8% sequentially due to increased utilization, resulting in more volume and related service expense.

This was partially offset by a three 9% reduction in payroll and other expense her trip due to early success, we are seeing reducing our call to trip ratio in 2023.

Speaker 2: This was partially offset by a 3.9% reduction in payroll and other expense. Per trip due to early success we are seeing reducing our call to trip ratio in 2023.

Speaker 2: During the quarter, we saw minimal impacts from redetermination, which was in line with our expectation.

During the quarter, we saw a minimal impact from Redetermination, which was in line with our expectations.

Sure.

Speaker 2: NEMT adjusted EBITDA for the second quarter was approximately $29 million. Down 38% year over year due to increased service expense per trip on a higher than expected trip volume, as well as last year benefiting by $7 million from an out of period repricing benefit.

Any empty adjusted EBITDA for the second quarter was approximately $29 million down 38% year over year due to increased service expense per trip on a higher than expected trip volume as well as last year benefiting by $7 million from an out of period repricing benefit.

Speaker 2: Adjusted GNA expense decreased 8.5% year over year and was 1% lower sequentially as we continue to control costs in this segment.

Adjusted G&A expense decreased eight 5% year over year and was 1% lower sequentially as we continued to control cost in this segment.

Speaker 2: We remain focused on our mobility initiatives to reduce cost and drive efficiencies, which will improve performance and increase member satisfaction. And we expect to recognize the benefits from these initiatives going forward.

We remain focused on our mobility initiatives to reduce cost and drive efficiencies, which will improve performance and increase member satisfaction and we expect to recognize the benefits from these initiatives going forward.

Turning to our home division second quarter personal care revenue increased 11% year over year to $180 million driven by three 4% growth in hours and a 7% increase in revenue per hour, including a reserve reversal from last quarter of $2 $6 million.

Speaker 2: Turning to our home division, second quarter personal care revenue increased 11% year over year to $180 million driven by 3.4% growth in hours and a 7% increase in revenue per hour, including a reserve reversal from last quarter of $2.6 million which is included in our run rate going forward.

Which is included in our run rate going forward.

Speaker 2: For the full year, we continue to expect revenue per hour and service expense per hour growth will remain in the mid-single-digit ring.

For the full year, we continue to expect revenue per hour and service expense per hour growth.

The main in the mid single digit range.

Speaker 2: Personal care adjusted even up for the second quarter was 24 million or 13.4% of revenue.

Personal care adjusted EBITDA for the second quarter was 24 million or 13, 4% of revenue.

Speaker 2: excluding the reserve reversal from last quarter related to revenue collections, personal care adjusted EBITDA margin would have been 1.5% lower than the 13.4% we reported this quarter.

Excluding the reserve reversal from last quarter related to revenue collections personal care adjusted EBITDA margin would have been one 5% lower than the 13, 4% we reported this quarter.

Speaker 2: We expect continued upward wage pressure could result in margins in the second half of 2023, moving back towards the lower end on our long-term target range of 10 to 12%. A head of potential reimbursement rate increases in 2024.

We expect continued upward wage pressure could result in margins in the second half of 2023 moving back towards the lower end on our long term target range of 10% to 12%.

Head of potential reimbursement rate increases in 2024.

Speaker 2: However, we remain focused on accelerating our personnel care growth. In remote patient bodyribe

However, we remain focused on accelerating our personal care growth.

And remote patient monitoring or RPM segment.

Speaker 2: Revenue increased 15% year over year to $19 million, driven by stronger referral sales as the combination of our RPM business with the Guardian Medical Monitoring Acquisition, which annualized in May is performing well.

Revenue increased 15% year over year to $19 million driven by.

Strong referral sales as the combination of our RPM business with the Guardian medical monitoring acquisition, which annualized in May is performing well.

Speaker 2: RPM adjusted EBITO was $7.2 million for $37.5% margin, which is at the high end of our long term.

RPM adjusted EBITDA was $7 $2 million for 37, 5% margin.

Which is at the high end of our long term margin target.

Speaker 2: Again, our monitoring team is executing in performing well. We are seeing operating efficiencies and leverage from the Guardian acquisition and expect continued growth as we expand and add programs in new and existing states.

Again, our monitoring team is executing and performing well, we are seeing operating efficiencies and leverage from the Guardian acquisition and expect continued growth as we expand and add programs at new and existing states.

Speaker 2: Turning to our cash flow and balance sheet, consolidated cash flow from operations in the second quarter of 2023, was a use of approximately $108 million. The large cash use is attributable to a $79 million decrease in contract payable.

Turning to our cash flow and balance sheet consolidated cash flow from operations in the second quarter of 2023 was a use of approximately $108 million. The large cash use is attributable to a $79 million decrease in contract payables.

Speaker 2: A $17 million increase in contract receivables and a $9.6 million arbitration settle.

$19 million increase in contract receivables and a $9 6 million arbitration settlement.

As a result of the accelerated contract payable settlements. We are now in a net contract receivable position at quarter end, which gives us the ability to offset contract payable payments with receivable collections and a more normalized and manageable way going forward.

Speaker 2: As a result of the accelerated contract payable settlements, we are now in a net contract receivable position at quarter end, which gives us the ability to offset contract payable payments with receivable collections in a more normalized and manageable way going forward.

Speaker 2: I'd also like to point out that contract receivable collections increased to approximately $60 million in Q2 from $6 million in the first quarter, and we expect collections will continue to improve.

I'd also like to point out that contract receivables collections increased to approximately $16 million in Q2 from $6 million in the first quarter and we expect collections will continue to improve.

Speaker 2: Capital expenditures in the second quarter were $8 million, which was 1.1% of revenue.

Capital expenditures in the second quarter were $8 million, which was one 1% of revenue.

Speaker 2: We think that capital expenditures in the range of 1 to 1.5% of revenue is a good run rate going forward.

We think that capital expenditures in the range of one to one 5% of revenue is a good run rate going forward.

Speaker 2: We ended the second quarter with approximately $7 million in cash and had $126.5 million drawn on our $325 million revolver.

We ended the second quarter with approximately $7 million in cash and had $126 $5 million drawn on our $325 million revolver.

Speaker 2: Our $1 billion of long-term debt was flat sequentially and remains all unsecured debt at fixed rates.

Our $1 billion of long term debt was flat sequentially and remains all unsecured debt at fixed rates.

Speaker 2: Our consolidated proform and net leverage was 4.7 times as of June 30th, 2023.

Our consolidated pro forma net leverage was four seven times as of June 32023.

Speaker 2: With our contract receivables now exceeding contract payables, we expect the impact on our cash flow from these accounts in the second half of the year. We'll be more balanced and expect to be able to utilize this improved cash flow profile to repay $30 to $50 million of our revolving credit facility during the second half of 2020.

With our contract receivables now exceeding contract payables, we expect the impact on our cash flow from these accounts in the second half of the year will be more balanced and expect to be able to utilize this improved cash flow profile to repay $30 million to $50 million of our revolving credit facility during the second half of 2023.

During the second quarter, we successfully amended our credit facility to increase our leverage covenant and ensure ample access to liquidity, while the reduction in our net contract payables accelerated.

Speaker 2: During the second quarter, we successfully amended our credit facility to increase our leverage covenant and ensure ample access to liquidity while the reduction in our net contract payables accelerated.

Speaker 2: We were pleased by the strong support that we received from our entire bank group. Led by JP Morgan, cheers.

We were pleased by the strong support that we received from our entire bank group.

Led by J P. Morgan during the amendment process.

Speaker 2: In November , the call price for our senior unsecured 5 and 7, 8 percent notes steps down and we will be closely monitoring the capital markets over the next several quarters as we evaluate refinancing options for these notes.

In November the call price for our senior unsecured five and seven 8% notes steps down and we will be closely monitoring the capital markets over the next several quarters as we evaluate refinancing options for these notes.

We continue to target net leverage of three times, which we expect to achieve through a combination of debt reduction and EBITDA growth.

Speaker 2: We continue to target net leverage of three times, which we expect to achieve through a combination of debt reduction and EBITDA growth, along with potential proceeds from monetizing our investment in matrix.

Along with potential proceeds from monetizing our investment at matrix.

Speaker 2: Our primary expected use of cash going forward will be to pay down our revolver and de-lever our balance sheet as we remain committed to a disciplined and balanced capital allocation strategy.

Our primary expected use of cash going forward will be to pay down our revolver and delever our balance sheet as we remain committed to a disciplined and balanced capital allocation strategy.

Shifting to guidance, we raised our revenue guidance to a range of $2 75 to $2 8 billion and.

Speaker 2: Shifting the guidance, we raised our revenue guidance to a range of $2.75 to $2.8 billion. And we lowered our adjusted EBITDA guidance to a range of 200 to 210 million.

And we lowered our adjusted EBITDA guidance to a range of $200 million to $210 million.

The increased revenue guidance was primarily due to higher any empty utilization and transportation cost driving more revenue from our shared risk contracts.

Speaker 2: The increased revenue guidance was primarily due to higher NEMT utilization and transportation costs driving more revenue from our shared risk contract.

We lowered our adjusted EBIT guidance due to the higher any empty utilization and associated costs and a delay in the start of some of our new contract wins, which will start in early 2024.

Speaker 2: We lowered our adjusted ebit of guidance due to the higher NMP utilization and associated

Speaker 2: and a delay in the start of some of our new contract wins, which will start in early 2020.

To sum things up our second quarter results were mixed compared to our expectations as revenue with better than expected due to shared risk cost protection in our <unk> business and adjusted EBITDA was slightly below plan due to higher utilization.

Speaker 2: To sum things up, our second quarter results were mixed compared to our expectations. As revenue was better than expected due to shared risk, cost protection in our NEMT business, and adjusted EBITDA with slightly below planned due to higher utilization.

Despite these results and our guidance reset we remain confident about our mission and long term growth strategy.

Speaker 2: Despite these results and our guidance reset, we remain confident about our mission and long-term growth strategy, along with the expected benefits from the initiatives to drive efficiencies and create operating levers.

Along with the expected benefits from the initiatives to drive efficiencies and create operating leverage.

Speaker 2: Our team is working diligently to win new business and improve cash flow. And I want to thank everyone at MotiveCare for their hard work and dedication in providing high quality care and delivering the best experience for our members.

Our team is working diligently to win new business and improved cash flow and I want to thank everyone at motive care for their hard work and dedication in providing high quality care and delivering the best experience for our members.

Speaker 2: This concludes our prepared remarks. Operator, please open the call for questions.

This concludes our prepared remarks, operator, please open the call for questions.

Thank you the floor is now open for questions. If you would like to ask a question. Please press star one on your telephone keypad at this time.

Speaker 1: Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star key. Once again, that's star one to register a question at this time.

Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing the star key.

Once again Thats Star one to register a question at this time.

The first question today is coming from Bob <unk> of CJS Securities. Please go ahead.

Speaker 1: The first question today is coming from Bob Leibick of C.J.S. Security. Please go ahead.

Speaker 4: Good morning and thank you for all of that information. A lot to absorb and digest, but I think it's very helpful for the ... ...

Good morning, and thank you for all of that information a lot a lot to absorb and digest what do they think it's very helpful for the.

Thesis here so thank you.

Good morning, Bob.

Speaker 4: And I want to kind of just pick up where you left off in terms of cash flow and make sure given all the information you just gave, you know, I have a good handle on this and investors do as well.

And I want to kind of just pick up where you left off in terms of cash flow and it makes sure given all the information I. Just gave you know I have a good handle on this and investors do as well.

You talked about.

Speaker 4: basically I guess netting out the payables and receivables balance with 85 million before and now we're at a negative position. So I think that's behind us and you talked about 30 to 50 million dollars of free cash flow in the second half to repay the revolver.

Basically I guess.

Netting out the payables and receivables balance, which was $85 million before an hour you know in a negative position. So I think that's behind US and you talked about $30 million to $50 million of free cash flow in the second half to repay the revolver.

Speaker 4: Or does this mean we're kind of at a normalized level overall? The question is how should we think about working capital swings and free cash flow in 2024? And that ability to re-fi the November 25 debt and cash flows through that. Or I'm not asking for like

Does this mean, we're kind of at a normalized level. Overall. The question is how should we think about working capital swings and free cash flow in 2024, and you know that ability to refi the November twenty-five debt and cash flows through that or I'm not asking for a specific number.

But more of them how does working capital effect free cash flow in 2024, and if we have our own EBITA assumption, we can kind of build our way to that free cash flow number yeah. Yeah. No. It's a good question well first off as you know in our.

Speaker 5: Yeah, yeah, no, it took to get question. Well, first off, as you know,

Speaker 5: in our home business those strong adjustity but it has flow through because they're very capex light. So you understand that, that works. So really where, and then the other things, the levers that happen in free cash flow, which you could see is these continuing investments in technology and platforms, which you see as well. So all that is strong cash flow, the right amount of investment that works. So we get down to,

In our home business them strong adjusted Ebitdas flow through because they're very capex light. So you understand that that works, so really where and then the other thing the levers that happened in free cash flow, which you can see these continued investments in technology and platforms, which you see as well so all of that is.

Strong cash flow the right amount of investment that works. So it gets down to is where we are in the mobility business and then specifically within the working capital related to those payables and receivables.

Speaker 5: is where we are in the mobility business and then specifically within the working capital related to those pale.

Speaker 5: And the one point that you hit on again, which is really important, it's really critical, especially if some of these new coming into here, looking at that delta between the contract payables and contracts.

And the one point that you hit on again, which is which is really important it's really critical especially as some of these new coming into here looking at that delta between the payables contract payable and contracts receivables I'm just repeating what you said again. This is the first time that it's flipped to receivable. So then your question or more broadly or how does this work basically are contra.

Speaker 5: repeating what you said again. This is the first time that it's flipped to...

Speaker 5: So then you're questioning more broadly, how does this work? Basically, our contracts are working post-COVID.

<unk> are working post COVID-19.

Speaker 5: So the contracts that we restructured primarily around really implementing these shared risk contracts have been very helpful for us and help protect our long-term market.

So the contracts that we've restructured primarily around really implementing these shared risk contracts have been very helpful for us and help protect our kind of long term margin. So that you will see fluctuations as we move through the years going going in quarters, those will still fluctuate.

Speaker 5: So that's, you will see fluctuations as we move through the years going in quarters, those will still fluctuate. So the good thing now though, because of the COVID,

So the good thing now, though because of the the Covid benefit.

Speaker 5: Now the contracts are going to work, and I think they'll bump around. But the good thing is, is we have the receivables and the payables. And because we have so many contracts, we expect that to be a kind of a normalized working capital fluctuations in and out not these big swings like we've seen over the last couple quarters. And then the other item.

Now the contract is going to work are they are and I think they'll bump around but the good thing is as we have the receivables and the payables and because we have so many contracts, we expect that to be kind of a normalized working capital fluctuations in and out not the big swings like we've seen over the last couple of quarters.

And then the other item coming out of Covid now all the states or <unk>, we have more predictable and rigid timeframe for when we paid it back. So it really is kind of a three to six month timeframe. So this predictability and normalization.

Speaker 5: coming out of COVID now, all the states or MCOs, we have more predictable and rigid time frames for when we pay this back. So it really is kind of a three to two.

Speaker 5: So this predictability and normalization coming out of COVID allows us to have a more predictable cash flow. And then a more normalized working capital. So, which is why we have a lot of confidence in the back part of this year that we will generate cash flow in accordance with how our PNL-

Coming out of out of Covid.

Allows us to have a more predictable cash flow and then and then a more normalized working capital So which is why we have a lot of confidence in the back part of this year that we will generate cash flow in accordance with how our P&L works and I expect that to continue throughout the quarters into 2020.

Speaker 5: And I expect that to continue throughout the quarter into 2024. Okay, super. And then I think you guys just touched on...

Sure.

Okay Super and then.

I think you guys just touched on the potential deleveraging target of three times.

Leverage in 'twenty four.

Absent.

I guess, what's the probability of a matrix.

Speaker 5: Yeah, in that. So you know where we are now. And to get to three, we need a monetization of matrix. That is absolutely our long-term target.

Yeah.

Yeah in that so you know where we are now in the base to get to three we need a monetization of matrix that is absolutely our long term target and that's that's.

Speaker 5: That's the point of that. But we will continue to deal, I were like we talked about before, but to do the big jump down that quickly, there need to be some modernization within Matrix. And as you heard on the call, Matrix, that team has done an incredible job improving the business, shedding assets that didn't work, and then really the performance is

That's the point of that but we will continue to delever like we talked about before it but to do the big jump down that quickly there needs to be some monetization within matrix, then and as you heard on the call matrix that team has done an incredible job improving the business shedding assets that didn't didn't work and then.

Really the the performance.

This is in line with.

Speaker 5: what it was years ago and really kind of best in class. So that's showing up in the numbers. So we couldn't be more happy with that performance. And then yeah, what's the timing on that? We're very aligned with Frazier.

But it was years ago, and really kind of best in class. So that's showing up in the numbers.

So we couldnt be more happy with that performance and then what's the timing on that we're in a very aligned with with Frazier.

Speaker 5: So the good way to think about it is getting closer because they're performing. So that's why we put it in there just in 2024, which is a reasonable timeframe. I don't want to box it in because the most important thing that it continues to perform and we get the most value. But because of where they are, it could happen in 2024 and that would be a meaningful way for us to deliver and get to that.

So the good way to think about it it's getting closer because they are performing so that's why we put it in there just to 2024, which is a very is a reasonable timeframe I don't want to box. It in because the most important thing that it continues to perform and we get the most value, but because of where they are it could happen in 2010.

Four and that would be a meaningful way for us to delever and get to that target of three times.

Speaker 4: Yeah, that would be great. Thank you. And then last question, I'll jump back in queue. You know, obviously you'd discuss the faster recovery and utilization in mobile.

Sure Yeah that would be great. Thank you and then last question I'll jump back in queue.

You know, obviously you discussed the faster recovery in utilization and in mobility.

And I guess.

First is that just kind of.

Speaker 4: Is that just kind of faster pandemic normalization? Or is there anything unique to motor care? And then the real question is, where do you see utilization settling out? And how does that impact any MT margins in 2024? And the

Pandemic normalization or is there anything unique to motive care and then the real question is where do you see utilization settling out how does that impact any empty margins in 2024 and beyond.

Speaker 5: Yeah, also in the quote, utilization, healthcare utilization across the board is interesting and we are seeing as well. Faster than we thought in Q1 and Q2.

Yes.

Also in the quote utilization health care utilization across the board is interesting and we we are seeing as well faster than we thought in Q1 and Q2. However.

Speaker 5: However, actually, if you look at seasonality, Q2 is also the high point as well. So, and what we're seeing right now is that we're seeing that the traditional kind of pull down from the high point of Q2. So I expect...

However, actually if you look at seasonality Q2 is also the high point as well.

And what we're seeing right now is that we're seeing the traditional kind of pull down from the high point of Q2.

So I expect utilization to be at.

Speaker 5: utilization to be at the levels that they are now and continue to grow at a more moderate

The levels that they are now and continue to grow at a more moderate play.

Speaker 5: and then get to that standpoint of between 9 and 10% kind of middle of 2020.

And then get to that standpoint of between 9% and 10% kind of middle of 2024.

So very manageable.

Speaker 5: So very manageable and in line with the forecast that we gave in 2023. And then you couple that with us giving clarity around re-determination. That includes...

And in line with those.

The forecast that we gave in 2023, and then you couple that with us giving clarity around redetermination that includes.

Speaker 5: the utilization. So we feel good about that. And again, the other item, the way our contracts work, whether that's cost or utilization, a lot of that...

The utilization so.

We feel good about that and again the other item the way our contracts work, whether that's cost or utilization.

A lot of that front end, it's pass through so the full risk contracts is where we have the exposure and we have.

Speaker 5: So the full risk contract is where we have the exposure. And we have.

Speaker 5: Good management of those specific states and those specific um

Good management of those specific states and those specific.

Networks that are in there. So so it is an impact and it is going to be a drag on us including Redetermination. We do believe we'll be able to manage through that.

Speaker 5: Networks that were in there, so it is an impact and it is going to be a drag on us, including re-determination. We do believe we'll be able to manage through that and then go into 2024. Which is why, also, and this may be, is probably your next question. The size and scope of our business is the strength. The opportunity for us.

And then going into 2024, which is why also and this maybe is probably your next question.

The size and scope of our business is the strength the opportunity for us.

As to automate a lot of the processes that we have and that will further ensure that we get rigid margins going forward and not have to be this kind of fluctuation in utilization released the main impact so and those initiatives wrong right. We've been in the middle of this transformation for the last year, we have a strong team.

Speaker 5: And that will further ensure that we get rigid margin.

Speaker 5: Going forward and not have to be this kind of fluctuation and utilization release the main impact. So, and those initiatives are on. We've been in the middle of this transformation for the last year. We have a strong team in place and strong clarity in what we need to do, whether that's supported by tech.

<unk> in place and strong clarity on what we need to do whether that and supported by tech.

Speaker 5: So we need to execute on these initiatives and I expect every quarter will give you updates like we are now, for example, our trip to call ratio, continue to improve, and that's just one example on how we're able to automate this business and get the right cost structure in place so that we get back to the ranges that we've given on our EBIT margins.

So we need to execute on these initiatives and I expect every quarter. We'll give you updates like we are now for example are our trip to call ratio continued to improve and that's just one example on how we're able to kind of automate this business and get the right cost structure in place. So that we get back to the ranges that we've given on our.

Our EBITDA margins in 2024.

Okay Super Thank you for all the extra detail I'll jump back in queue, and let others ask some questions. Thanks Bob.

Thank you. The next question is coming from Brian <unk> of Jefferies. Please go ahead.

Speaker 1: Thank you. The next question is coming from Brian Twincolid of Jeffries. Please go ahead.

Speaker 6: Hey, good morning. I guess he made me my first question as we think about, you know, just your visibility and confidence in your guidance that we'll see positive cash flow in the back half of the year. And then any color you can share on debt covenants and debt availability. And maybe even if you can share with us, where debt levels are, maybe at the end of July .

Hey, Good morning, I guess, maybe my first question as we think about it.

Just your visibility and confidence in your guidance that we'll see a positive cash flow in the back half of the year and then any color you can share on debt covenants and debt availability and maybe even if you can share with us where debt levels are maybe as of the end of July .

Speaker 5: Yeah, so we've been paying down. We've been paying down about $30 million in July . It can be expected fluctuations to happen. So it's just a data point, which aligns to why we feel good about the ranges that 10 gave in our free cash flow of $30 to $50 million, generating throughout the...

Yeah. So so.

So.

We've been paying down we paid down about $30 million in July .

The fluctuations to happen. So it's just a data point, which aligns to why we feel good about the ranges that Ken gave in our free cash flow of $30 million to $50 million generating throughout the.

Speaker 5: throughout the year, so feel really good about that. And keep coming back to that, and it's okay to keep saying this. And what you should look at, and why we're comfortable with that, is the receivables and payables dealt.

Throughout the year, so feel really good about that.

I'll keep coming back to that it's okay to keep saying this and what you should look at and why we're comfortable with that.

Receivables and payables Delta.

That gives us a lot of confidence of being through that Covid COVID-19 repayment back. So and then to continue on that from a from a debt covenant perspective.

Speaker 5: that gives us a lot of confidence of being through that COVID repayment back. So, and then to continue on that from a from a debt covenant perspective, you know, we did all our banking partners who are great partners who have looked at us gave us that increase in leverage coverage and we have in the debt how that actually works.

Good.

All of our banking partners, who are who are great partners, who have looked at us.

Gave us that increase in leverage coverage than we have in the deck how that actually works.

Speaker 5: So you can see that we have a 4.7 leverage. So that gives us lots of room to within that covenant. So we're really comfortable with where we are from a bank loan perspective.

So you can see that we have.

A $4 seven leverage so that gives us lots of room to within that covenant.

So we're really comfortable with where we are from a.

Our bank loan perspective.

Speaker 5: continue to do the lever. So we're really comfortable with our current capital structure and our covenant that we just got in place. And then. So.

We continue to Delever, so we're really comfortable with our current capital structure and our covenant Covenant that we just got in place.

And then your.

Was your first question.

Speaker 5: Oh, just a confidence and ability to generate positive free cash in the back half of the year. Yeah, yeah. So then it goes to the other items which I said a little bit with Bob. You look at the other sides of the business, right? The home business was at that 11 to 12% margins, RPM in the mid-serties.

Oh, just the confidence and ability to generate positive free cash in the back half of it yeah. Yeah. So then it goes to the other items, which is which I said a little bit with Bob you look at the other sides of the business right in the home business at.

With that let alone 11%, 12% margins RPM in the mid Thirty's.

Speaker 5: strong performance and growth there. So you put all that together and then being out of the COVID payments that we accelerated into Q2. We're executing and we'll generate.

Strong performance and growth there. So you put all that together.

And then being out of the Covid payments that we accelerated into Q2.

We're executing and we will generate cash so I feel really confident about that.

I understand Okay, and then maybe you gave some color on redetermination it sounds like number one you're still.

Speaker 3: Understand. Okay. And then maybe you gave some color and read determinations. It sounds like number one You're still you know, you still believe that it's a 10 to 15% reduction in the number of Medicaid lives

I believe that its a 10% to 15% reduction in the number of Medicaid lives covered are enrolled but also if I add this year the impact 5% down 20 to 40 next year.

Speaker 3: covered or enrolled, but also, you know, if I add this year's impact, 5 to 10, 20 to 40 next year. So you're looking at 25 to 50 million gross.

$25 million to $50 million gross.

Speaker 3: Maybe if you can walk us through that math and how you're getting that level of confidence in both the number of lives and the revenue amount or even the amount that we should be thinking about. Yeah, yeah.

Maybe if you can walk us through that math, and how you're getting that level of confidence in both the number of lives and the revenue amount.

Our EBITDA amount that we should be thinking about.

Yes, and also if your if anybody wants to look at it on page 15 of the Investor deck that is posted actually goes through that math is it team and US did a very good job on being transparent around this and what we think it means one we're all learning as an industry right.

Speaker 5: Anybody wants to look at it on page 15 of the investor deck that is posted. Actually goes through that math and the team announced it.

Speaker 5: Very good job on being transparent around this and what we think it means. One, we're all learning as an industry right and we know our customers where it is. So we want to...

And we know our customers where it is so we want to be transparent on what it means primarily what it means for into 2024 as we said in 2023, the impact is around $5 million to $10 million and that's in our current guidance. It really is now about what's going to happen in 2024, So we laid out the math there.

Speaker 5: be transparent on what it means primarily, what it means into 2024. As we said in 2023,

Speaker 3: The impact is around five to 10 million dollars and that's in our current guidance. It really is now about what's going to happen in 2024. So we laid out the math there.

Speaker 3: on how we are getting to the range of $25 to $50 million.

On how we are getting to the range of $25 million to $50 million and it really is taking the data that is out there publicly.

Speaker 3: And it really is taking the data that is out there publicly.

Speaker 3: And then we layer that on to our current country.

And then we layer that on to our current contract.

Speaker 3: And then why is not maybe a large number, like maybe other people are expecting is because we have a state mix that is different than the overall kind of Medicaid population. And that's where the exposure lies for us.

And then why not maybe a large number like maybe other people are expecting is because we have a state mix that is different than the overall kind of Medicaid population and that where the exposure lies for us is in the full risk contracts and 20%.

Speaker 3: in those full risk contracts, again, 20% of our revenues within that. And we know where those states are and we know what's happening. So when we put it through that, that's how we get to that $25 to $50 million. And then we also gave it a luscious example on how you could do your...

<unk> of our revenue is within that and we know where those states are and we know what's happening and when we put it through that that's how we get to that $25 million to $50 million and then we also gave an illustrative example on how you can do your own math.

Speaker 3: the the I think the real way to think about it a lot of the data is out there Specifically from Kaiser which I think is doing a great job. They do that 10 to even 20% across the US and grow

The I think the real way to think about it a lot of the data is out there specifically from Kaiser, which I think is doing a great job. They do that tend to even 20% across the U S and growth.

Speaker 3: They don't take into account the increased Medicaid growth that is also...

Don't take into account the increased Medicaid growth that is also happening.

Speaker 3: CMS just last month actually I think has the best information that came out there. They did a net.

<unk> just last month actually I think has the best information that came out there. They did a net number and their net number was in 2024, they expect 8 million lives to come off.

Speaker 3: And their net number was in 2024, they expect 8 million lives.

That is in line when we look at our contract that is very in line with what we think is going to happen and if that's the case it would be on the lower end.

Speaker 3: That is in line when we look at our contracts, that is very in line with what we think is going to happen. And if that's the case, it would be on the lower end. So we really wanted to be transparent around this. I think the numbers that we have are really solid. And then the other item on that, that gives us the ability to say, okay, that's the 20 to 50 million. What are you going to do about?

No.

We really wanted to be transparent around it I think the numbers that we have are really solid and then the other item on that that gives us the ability to say, okay. That's the $20 million to $50 million.

What are you going to do about it guys.

Speaker 3: And that's where we also are being more transparent around the initiatives that we have in place around the cost. So that goes to page 13 of the deck. And we were again transparent around this automation. Why we wanted to be that way is because we wanted to show the opportunity that we have.

And that's where we we also are being more transparent around the initiatives that we have in place around the cost. So that goes to pay I think page 13 of the deck and we were again transparent around this automation why we why we wanted to be that way because we wanted to show the opportunity that we have.

Speaker 3: and the base that we have to work off of there. And that's around automation within our contact center. That's automation within just transportation ops. There's the initiatives underway, and we still have a lot of our opportunity to do that. And when you look at that, the total target that we have,

And the base that we have to work off of there and that's around automation within our contact center, that's automation with interest transportation ops.

There's the initiatives underway and we still have a lot of opportunity to do that and when you look at that.

The total target that we have.

Speaker 3: 60 to 80 million, but for us over these next 12 months, we think we can get 30 to...

$60 million to $80 million, but for us over these next 12 months, we think we can get 30 to 50.

Speaker 3: So that 30 to 50 cross redetermination and utilization of 25 to 50, it shows that we can execute and get back to our margins.

So that 30 to 50 cross Redetermination and utilization of 25 to 50. It shows that we can execute and get back to our margins.

Speaker 3: of is that kind of 9 to 10% 11% range in 2024.

Is that that kind of 9% to 10% 11% range in the in 2024.

Awesome. Thank you.

Thank you. The next question is coming from Scott Fidel with Stephens. Please go ahead.

Speaker 1: Thank you. The next question is coming from Scotts, Sidel, of Stevens. Please go ahead.

Speaker 7: Hi, thanks. Good morning. First question. What's hoping maybe just on the NNF East side? I think it might be helpful if you can sort of

Hi, Thanks.

First question.

I was hoping maybe just.

On the AT&T side, I think it might be helpful. If you can sort of.

Speaker 7: break out how the margins, I'm not sure if you have the data prepared this way, but it would be really helpful if you could break out how the margin.

Breakout how the margins I'm not sure if your.

Have the data prepared this way, but it would be really helpful. If you could breakout how the margins are looking in the full risk category, let's call. It by 20% that are in full risk versus the 80% that have now moved towards towards shared risk.

Speaker 7: are looking in the full risk category. Let's call it that 20% that are in full risk.

Speaker 7: uh, versus the 80% that have now moved, uh, towards, towards shared risk. Um, and then, you know, when you look at the full risk, which, which clearly seems to be more pressured right now than the shared risk.

And then when you look at the full risk, which clearly seems to be more pressured right now than the shared risk walk us through.

Speaker 7: Walk us through, I guess, the past to marginalization for those full risk contracts in terms of, you know, visibility at the price increases, or PMPM increases that you have there, or is this where you're gonna be, you know, also utilizing some of these cost saving initiatives to try to normalize the full risk mark.

I guess the path to margin normalization for those full risk contracts in terms of visibility at the price increases.

<unk> increase that you have there or is this where you're going to be.

So utilizing some of these cost saving initiatives to.

To try to normalize the full risk margins.

Speaker 3: Yeah, so, so, you know, we don't kind of, we don't give margin by individual category and the reason for that is an entire portfolio. But with full risk.

Yeah. So so.

We don't we don't give margin by individual category and the reason for that is an entire portfolio and but with full risk.

Speaker 3: and actually share grids or fee for service and pass through. These constructs are based on how we have a win-win relationship with our customers.

And actually shared risk or fee for service and pass through these constructs are based on how we have a win win relationship with our customers. Some people want shared risk.

Speaker 3: Some people want shared risk, some people want full risk. Full risk by definition is us taking on more risk. So those margins are higher. But that doesn't mean they will go lower. The way the industry has settled out in NEMT, regardless of what contract, we're kind of set on that. So the expectations to the customers that use full risk is that our margins are higher.

Some people want full risk full risk by definition is us taking on more risk. So those margins are higher but that doesn't mean, they will go lower the way the way the industry has settled out and any empty regardless of what contracts, we're kind of set on that so the.

<unk> to the customers that use full risk is that our margins are higher so right now there are pressures from a timing on utilization, but those arent going to continue to decline with a full risk margins get even at or below our shared risk margins that's not the way it works.

Speaker 3: So right now there are pressures from a timing on utilization, but those aren't going to continue to decline where the full risk margins get even at or below our shared risk margins. That's not the way it works. So I wouldn't look at it as...

So so I wouldn't look at it as.

A big risk or change within full risk as being.

Speaker 3: big risk or change within full risk is being...

Speaker 3: the downside, it really is for us being transparent of where the exposure is from our margin perspective right now.

The downside it really is for us being transparent.

Where the exposure is from our margin perspective, right now so so.

Speaker 3: They are higher, they are being under pressure, but as I talked about earlier, where we think utilization is gonna go and where cost is gonna go, because more than 80% the other 80% are actually passed through, we feel good as a portfolio in our margins, and especially where the levers are.

They are higher they are being under pressure, but as I talked about earlier, where we think utilization is going to go and where costs are going to go because more than 80%. The other 80% are actually pass through we feel good as a portfolio in our margins and especially where the levers are.

Speaker 3: are in our costs that are internal to us. That's where the levers are and that allows us to get back up. The pricing mix.

Our in in our costs that are internal to us that's where the levers are and that allows us to get back up there.

Pricing Mig.

Speaker 3: The margin components of what we get from our customers and what we pair transportation providers in general, I've really leveled off and I expect those to stay consistent for many quarters.

Margin components of what we get from our customers and what we pay our transportation providers in general I've really leveled off and I expect those to stay consistent for many quarters and years to come.

Speaker 7: Okay, guys. So actually bottom line, the full risk contracts, you still actually generate higher margins in those, but with a lot more variability, and then with the share risk, essentially you're willing to trade a little bit a lower margin for some more predictability and the margin structures that you'll have over time at share risk, right? You could exactly, sort of think about that. That's exactly because that's what the customers want as well. you. Right?

Okay got it so actually bottom line, the full risk contracts and you're still actually generate higher margins in those.

But with a lot more variability and then with the shared risk essentially youre willing to trade a little bit lower margin for some more predictability and.

The margin structures that youll have over time and shared risk right.

And that's sort of think about that.

That's exactly because that's what the customers want as well so.

Speaker 3: And the people that want full risk want that because...

And the people that want full risk want that because it allows them to do it more simply and they will remain higher than anything else. So.

Speaker 3: It allows them to do it more simply, and they will remain higher than anything else. So you said it correct, it's got. Okay, and then...

You said it correct Scott Okay.

Then just final question just sticking on the any empty margins in <unk>.

Speaker 7: sticking on the NEMT margins. And obviously I think for a lot of us externally too, that's just the visibility into the NEMT businesses.

Obviously, I think for a lot of us externally to that's it's just the visibility into the MP businesses is lower right. Then your some of your other businesses like personal care, where we have a lot more other external ways to monitor trends in other public peers for example.

Speaker 7: is lower right than your somebody other business like personal care where we have a lot more other external ways to monitor trends and other public peers, for example. So, you know, in that context, so you did the 5.8% adjusted the dub margin in the second quarter. You've revised the outlook for the full year. You're still, you know, targeting a 10% margin in that business.

So in that context so.

You did the five 8% adjusted EBITDA margin in the second quarter.

We've revised the outlook for the full year you are still.

Targeting a 10% margin in that business.

Speaker 7: in the intermediate term sort of outlet that you gave in the deck. Can you maybe just give us some more visibility in terms of specifically how you're thinking about that sort of NEMP margin ramp?

In the intermediate term sort of outlook that you gave him the Jack could you maybe just give us some more visibility in terms of specifically, how youre thinking about that sort of any emptied margin ramp.

Speaker 7: you know, both in the third quarter and the fourth quarter. And then also just into 24, you know, how you're thinking about that sort of ramping. Just given that you're gonna have, obviously the impact from re-determinations playing out, and then you're gonna have the offset from the cost savings, where you have a lot more understanding of how those cost savings will ultimately accrue than obviously we do externally. Now here we go.

Bolt in the third quarter and the fourth quarter.

That also just into 'twenty for how youre thinking about that sort of ramping just given that youre going to have obviously the impact from Redetermination is playing out and then youre going to have the offset from the cost savings where you have a lot more understanding of how those cost savings will ultimately accrue that then obviously, we do externally.

Speaker 3: Well, so this is just just hopefully start going to box things in. If we do nothing...

So this is just hope hopefully start going to box things and if we do nothing.

Speaker 3: these margins that we're at right now, that 6% range would be holding.

The margins that we're at right now that 6% range would be holding like that again, that's a good thing from the contract structure as you can see and I'll just touch on this you can see in the data when you look at.

Speaker 3: Okay, and that's a good thing from the contract structure. As you can see, and I'll just touch on this, you can see in the data when you...

Speaker 3: purchase services to revenue in NEMT, you see that the increase in cost, whether that's unit cost or utilization, 80% of that is passed through. So good, contracts are working.

Purchase services to revenue and any empty you see that the increase in cost for the unit cost or utilization.

80% of that is passed through so good contracts are working on it but that 6% margin long term is not what we expect so what are the levers to pull so there's there's two big levers default first already talked about the cost savings around automation and the second item is growth.

Speaker 3: But that 6% margin long term is not what we expect. So what are the levers to pull? So there's two big levers to pull. First are they talked about the cost savings around automation and the second item is growth.

Speaker 3: And we talked about a lot of the good things that have happened with our rebuilding our sales and go to market.

And we and we talked about a lot of the good things that have happened with our rebuilding our.

Our sales and go to market.

Speaker 3: It's having traction. I wish it was earlier and I wish this was before, but now this team is executing, and I expect that to start coming online and we'll get scale out of that. So those two are...

It's having traction.

I wish it was earlier and I wish this was before but now this team is executing that and I expect that to start coming online and we'll get scale out of that.

So those two items together.

We will have us the ability to have those margins creep up likely that's going to be that will be in 2024. So the right way to think about these next couple of quarters.

Speaker 3: will have the ability to have those margins creep out. Likely, that's going to be, that will be in 2024. So the right way to think about these next couple quarters.

Speaker 3: is kind of in line with these current margins that we have.

Is it kind of in line with the current margins that we have right now on an empty and then the uptick as volume comes on and as the cost additions to take place.

Speaker 3: And then the uptick is volume come down, and as the cost additions take place.

Speaker 3: get to those levels that we talked about.

We'll get to those we'll start we'll start get into those levels that we've talked about before.

Speaker 7: Okay, and then just one last question for me, maybe just over on the personal care side. First, I did hear can sort of call out some expected wage increases for caregivers in the back after the year. Can you maybe just actually sort of disclose what expected type of wage increases you are expecting to get to the caregivers? And then also just interested in one more targeted question on your

Okay and then just one last question for me, maybe just over on the personal care side.

First I did here Ken.

Sort of call out some expected wage increases for caregivers in the back half of the year could you maybe just.

Actually.

Sort of disclose what expected type of wage increases you are expecting to get to the caregivers.

Then also just interested if one more targeted question on New York.

Speaker 7: One of your peers had talked about CDPath having gotten a bit of a retroactive rate increase and reimbursement there looking more reasonable now. Just wondering how that's flowing through to your business as well. Thanks.

One of your peers have talked about CD path, having gotten a bit of a retroactive rate increase and reimbursement there looking looking more reasonable now I'm just wondering how that's flowing through to your business as well. Yes. This is <unk>. So I think the wage increase commentary is really more about normal market.

Speaker 5: Yeah, this is Zach. So I think the wage increase commentary is really more about normal market rate increase, wage increases that we see happening. There were a couple of minimum wage increases that we, like Connecticut, passed through a minimum wage increase in...

In crew wage increases.

We see happening there were a couple of minimum wage increases.

But we like Connecticut pass through minimum wage increase.

Speaker 3: June , July and but going forward we think yeah we're going to be passing through wage increases to be competitive in the marketplace.

June July and but going forward, we think we're going to be passing through wage increases to be competitive in the marketplace.

Speaker 3: In terms of reimbursement rate environment, we're seeing some good support from the state still, not as much as maybe we were year and a half ago, but

In terms of the reimbursement rate environment.

We're seeing.

Some good good support from the state is still not as much as maybe we were year and a half ago, but.

Speaker 3: I would say that in terms of like CD-PAP, yeah, like we're seeing the same dynamics there as that and New York has been a...

I would say that in terms of like CDP I like where we are.

Seeing the same dynamics there is that in New York has been a.

Speaker 2: a pretty supportive reimbursement rate environment, but it's also another high wage environment. And so for us, like we're really focused on how can we make personal care a more value ad service than just going in and making it a single point solution. And so as we think about having this holistic view of the member, that's where we're gonna drive the most value in personal care. And so where yeah, we still need to operate in the competitive environment.

A pretty supportive reimbursement rate environment, but its also a another high wage environment and so for US like we're really focused on how can we make personal care or more value add service than just going in and making at a single point solution and so as we think about having.

This holistic view of the member that's where we're going to drive the most value in personal care and so we're yes, we still need to operate in the competitive environment.

Speaker 2: and you know, it's a...

And.

It's a.

Very regulated industry. We're also bringing something that we feel like is differentiated in the marketplace and I think that's the main focus for us going forward.

Speaker 2: very regulated industry. We're also bringing something that we feel like is differentiated in the marketplace. And I think that's the main focus for us going.

Speaker 3: Yeah, and just a little bit more on that. You think about New Jersey, Pennsylvania, New York, all historically supportive of increased reimbursement rates to mass.

Yes, just a little bit more on that you can take both new Jersey.

Pennsylvania, and New York.

Historically supportive of increased reimbursement rates to match the needs of paying caregivers higher that has happened that is happening now and we expect that to continue for us we want to continue to pay caregivers more.

Speaker 3: the needs of paying caregivers higher. That has happened, that has happening now. And we expect that to continue. For us, we want to continue to pay caregivers more. It really...

It really is about growth for us. So that's why we stick to that 10% to 12% margin.

Speaker 3: So that's why we stick to that 10 to 12% margin. It really is about how do we get more caregivers to grow. And you're seeing that hours are up, grows is up. So we're really happy with the business. We have a, we know there's a lot of opportunity, you know what, when Anne Bailey's been here now, a few months, which she and the team are doing is great. So we even see more upside on what they're doing to really fuel growth. So that's a little...

It really is about how do we get more caregivers to grow and you're seeing that hours are up growth is up so.

We're really happy with the business, we have we know theres a lot of opportunity with an bally has been here now a few months, which she and the team are doing is great. So we even see more upside on what they're doing to really fueled growth. So.

That's a little more on what's actually said.

Okay alright, thank you.

Speaker 1: Excuse me. Thank you. The next question is coming from Brooks O'Neill of Lake Street Capital Markets. Please go ahead.

Excuse me. Thank you. The next question is coming from Brooks O'neil of Lake Street Capital markets. Please go ahead.

Hey, good morning, everyone. This is Aaron walking around the line for Brooks.

Speaker 8: Hey, good morning, everyone. This is Aaron. Welcome around the line for Brooks. So, you know, personal care and remote patient monitoring performed well. And, you know, it seems that you guys have a lot of opportunities in that area and are seeing some very strong demand there. So what would you say your main focus in your long term strategy and enhanced data capability is? And, you know, what specific and significant factors should be, should we be more focused on going forward here?

So personal care and remote patient monitoring performed well and you know it seems that you guys have a lot of opportunities in that area and are seeing some very strong demand there so what.

What would you say your main focus and your long term strategy and enhanced data capability is and you know what specific and significant factor should be should we be more focused on going forward here.

Speaker 3: Yeah, thanks for that. So, the home business, why we call it a home business, having personal care and remote patient monitoring together, is a critical component to our future. And really, across the United States, everybody knows that care is going into the home.

Yeah, no thanks for that so.

The home business, why we call it a home business seven personal care and remote patient monitoring together is a critical component to our future and really across the United States everybody knows that care is going into the home.

Speaker 3: then especially over these last couple of years, really appreciating what personal

And then especially over these last couple of years really appreciating what personal care is doing those everyday life activities are critical to the health of many people so that dynamic of growth and need is going to continue to accelerate so we couldnt be more.

Speaker 3: Those everyday life activities are critical to the health of many people. So that dynamic of growth and need is going to continue to accelerate. So we couldn't be more happy with those and the growth capabilities on that. From a strategy perspective for us, it really is kind of twofold.

We're happy with those and the growth capabilities on that from a from a strategy perspective for us It really is kind of twofold.

Speaker 3: and the one that we've been executing on for the last 12 months.

The one that we've been executing on for the last kind of 12 months.

Speaker 3: Centralization, standardization, and automation. Like implementing...

Realizations standardization and automation like implementing a common platform.

And then ensuring that we have repeatable processes the value on that is one we get we get the ability to reallocate capital back to our caregivers to grow even more but it also gives us a platform to grow grow organically just through adding people through de novo's and sometime down the road when appropriate Act.

Speaker 3: and then ensuring that we have repeatable processes. The value on that is one, we get the ability to reallocate capital back to our caregivers to grow even more, but it also gives us a platform to grow. Grow organically just through adding people, through donovos, and sometime down the road when appropriate acquisitions. So having that centralized standard automated platform to plug and play grow is great. So where you are going, the next part is, it really is around the date.

So having that centralized standard automated platform to plug and play growth is great. So where you are going the next part is it really is around the data and right now the services that our caregivers provide where we're in the home anywhere from a couple of hours to 24 hours is a critical ability for us to start collecting.

Speaker 2: And right now the services that our character was provide, where we're in the home, anywhere from a couple hours to 24 hours, is a critical ability for us to start collecting data on that member. And then, as importantly, and more importantly, doing something about it. So those investments that we've made to ensure we can do that are happening in in place, and that's really where the future strategy goes. How do we...

<unk> data on that number and then as importantly, or more importantly, doing something about it.

So those investments that we've made to ensure we can do that are happening and in place and that's really where the future strategy goes how do we choose.

Speaker 2: Change outcomes that really help our customers and mess.

Change outcomes that really help our customers and members that's where the focus is as well to ensure that one we.

Speaker 2: That's where the focus is as well, to ensure that one, we are more sticky and congrubered, but two, how we get different payment models, which is more in line with value-based care. And think about it as us changing outcomes and getting bonus payments for whether that's changing some risk on falling to actually intervening before somebody gets really sick. So that's the future, and I'll hit this again. This is different. So our customers.

We are more sticky and can grow but to how we get different payment models, which is more in line with value based care and think about it as us changing outcomes and getting bonus payments for whether that's changing some risk on falling to actually intervening before somebody gets really sick. So that's the future.

And I'll hit this again this is different so our customers.

Speaker 2: want us to have access. They don't have access like we have all the time. So it's a really unique entry point with people and then you layer on data that allows us to do it virtually and that gets to the why we have remote patient monitoring of the technology of a device.

Wants us to have access they don't have access like we have all the time. So it's a really unique entry point with people and then you layer on data that allows us to do it virtually and that gets to the why we have remote patient monitoring off the technology of a device.

Speaker 2: Compliments or supplements the human allows to scale. There's a lot more that we can talk about Later, but bringing those together data and the human touch is a differentiator for us and in line with what our customers want

Complement or supplement the human allow us to scale, there's a lot more that we can talk about later, but bringing those together data and the human touch is a differentiator for us and in line with what our customers want.

Great Yeah, that's very helpful. Thanks for taking the question.

Okay.

Thank you. The next question is coming from Peter Chickering with Deutsche Bank. Please go ahead.

Speaker 1: Thank you. The next question is coming from Pito Checkering, the Deutsche Bank. Please go ahead. Hey guys, we'll put the modeling question here. Can you give us a number of why they provided under the shared-risk model versus the full-acapted model and one can acute you to self understand those with remarks?

Guys.

A quick modeling question here can you give us a number of lives. He provided under the shared risk model versus a full captive model <unk> you just help understand those moving parts.

Yes.

Yeah. So.

Speaker 2: Yeah, so it is pretty congruent in line with our revenue. So we've disclosed 20% of revenue in our full risk, and that is in line with the transportation trips. That's the-

It is pretty can grow in line with our revenue. So we disclosed 20% of revenue and our full risk and that is in line with with the transportation trips.

That's the that's the right way to think about it.

Speaker 9: okay and then on the share of the rest economics on for page 30 you you say that there's zero impact sort of depending on on overall utilization of the 80% of the contracts if there's sort of no risk here why are we not doing a fee for service model kind of why are we doing this this type of structure yeah I get back to the question that came earlier right it really is what do our customers want and the shift

Okay, and then on the share of the risk economics on page 30, you see that there is zero impact sort of depending on overall utilization was 80% of the contracts.

Is there a sort of no risk here.

Why are we not doing a fee for service models kind of why are we doing this.

Yeah. It gets back to the question that came earlier right. It really is what do our customers want and.

The shift no question has been to this shared risk model and I expect that to continue its primarily related to the managed side. So the MTO side, because it's more than just the trip taking they want to expand more broadly. So I expect that shift to continue we are now at 65.

Speaker 2: No question has been to this shared risk model. And I expect that to continue. It's primarily related to the managed side, so the MCO side, because it's more than just the trip taking. They want to expand more broadly. So I expect that shift to continue. We are now at 65.

I know.

Speaker 2: No, MCO side versus a couple years ago or the other way. So I expect that to happen. However, there's a few of our primarily states that like the full risk contract. And getting back to that, though we're seeing pressure right now, those margins will remain higher.

So MTO side versus a.

A couple of years ago, where the other way so I expect that to happen. However, there is a few of our primarily state that like the full risk contracts and getting back to that though we're seeing pressure right now those margins will remain higher.

Speaker 2: So, we like those contracts. They're in line with our customers. And the overall portfolio of our contracts are working, and I expect that to stay in place and allow, I'll get back to you. What really is gonna change our margin profile to be back to that.

No.

Well, we like those contracts that are in line with our customers.

The overall portfolio of our contracts are working and I expect that to stay in place.

I'll get back to what really is going to change our margin profile to be back to that.

Speaker 2: 9 to 10%, 11% range is the cost and automation capabilities. So it's a huge success.

9% to 10%, 11% range is the cost and automation capabilities.

Okay.

That's the main lever.

Speaker 9: All right, Frank, and then on page 12, you know, that you guys gave us the bridge for each of the margins, which include, you know, net winds, bridge formation, relation cost, and the initiatives. Using that same construct, can you help us think about, sort of, the 5.0% margin we saw in this quarter, and how we get to 7.3% in the back half of the year? And what do you assume on utilization in the back half?

Alright fair enough and then on page 12.

You guys gave us the bridge for EBITDA margins, which include net wins reservation installation caution like initiatives using that same construct can you help us think about sort of five 8% margin. We saw in this quarter and how we get to some point to 3% in the back half of the year and what do you assume on utilization in the back half of the year.

So utilization to us because of the seasonality in general it usually comes down in Q3 and Q4.

Speaker 2: So utilization to us because of the seasonality in general it usually comes down Q3 and Q4. We're keeping this high point of utilization in line with that current trend. And what's my confidence around that?

We're keeping this high point of utilization in line with that current trend and what's my confidence around that I'm seeing it right now.

Speaker 2: So, and then the other components of what the uptick is, we know where that is and we know what caused it. So, we feel good about our predictability in the back half of the year around the utilization.

No.

And then the other components of what the uptick is we know where that is and we know what caused it. So we feel good about our predictability in the back half of the year around the utilization.

Speaker 2: And then the from a margin perspective right now, and we talked about this a lot, I expect that margin to be similar for the next couple quarters. And then as we add more wins, and you can see that there, add more wins that we have sold today.

And then from a from a margin perspective, right now and we've talked about this a lot.

I expect that margin to be similar for the next couple of quarters, and then add as we add more wins and you can see that their AD more wins that we have sold today.

Speaker 2: that come on in 2024, coupled with the cost initiative, it's gonna bring those margins up, steady through 20.

Come on in 2024, coupled with the cost initiatives is going to bring those margins up.

Betty through 2024.

Okay, and then last one here for me at the bonds have been under a lot of pressure, which is putting pressure on the equities.

Speaker 9: Okay, and then last one here for me, at the bonds have been under a lot of pressure, which is putting pressure on the equities, sort of the issue of, from the, the symptom guys is obviously leverage, EBITDA, pressure is in cash with generation, with the negative $110 million in the first half of the year. Yours for guiding at $315 million in cash with generation for this year. Can you just give us a number of what three-third quarter cash with operations should be? Thanks so much. So we gave the full year.

Issue from the symptom guys is obviously leverage EBITDA pressures in capital generation with a negative $2 million of first half of the year just regarding the $350 million of cash generation for this year can you just give us a number of what three third quarter cash flow from operations should be.

Thanks, So much yes, so we gave the full year.

Speaker 2: Second half of the year, sorry, the second half of the year, and in 10 said this, that's 30 to 50 million dollars. So.

In the second half of the year, sorry, the second half of the year and Ken said, this that $30 million to $50 million.

So.

Speaker 2: That's what is considering the fluctuations we have, it makes sense to get the full year. So we feel really good, like I said earlier, we are paying back right now. So I expect each quarter to generate cash for us, and then in totality be between that $30 and $50 million. Great, thanks so much.

That's what it is.

Considering the fluctuations we have it makes sense to get the full year. So we feel really good like I said earlier, we are paying back right now so I expect each quarter to generate cash for us and then in totality be between that 30% to $50 million.

Great. Thanks, so much.

Thank you. The next question is coming from Mike <unk> of Barrington Research. Please go ahead.

Speaker 1: Thank you. The next question is coming from Mike Petusky of Barrington Research. Please go ahead. Good morning, guys. So I just want to make sure I understand what's

Good morning, guys.

I just want to make sure I understand what's going on with the revolver.

The revolver the revolver the short term borrowings were like $126 5 million.

On the June balance sheet and did you did you say that you had paid down $30 million in July did I hear that right or yeah, Yeah, I did I didn't say that yes.

Speaker 10: did you say that you paid down thirty million in July did i hear that right or yeah i i i did i did that yes i think so it so the revolver's below below a hundred and and and and then i just want to make sure i understand when you're saying hey we're gonna work we're essentially gonna pay down the revolver thirty to fifty in the second half that really implies zero to twenty incremental

I think so so the revolvers below below 100, and and and then I just want to make sure I understand when you're saying Hey, we're going to work, we're essentially going to pay down the revolver 30 to 50 in the second half that really implies zero to 20 <unk>.

Incremental from here correct, yeah, Yeah. So this gets back to I think Tito's question as well, we will still have the fluctuations that happen each year, which is why I mean, each month each day.

Speaker 2: Yeah, yeah, so this gets back to I think Pito's question as well. We will still have the fluctuations that happen each year, which is why I mean, each month, each day. The purpose of disclosing what happened in July's one, I guess the question too, is that it's not continuing on that trend, I get back before that we're actually not generating free cash flow. That's, so we expect to be at that $30 to $50 million. And we're consistent with that. We then Monday.

The purpose of disclosing what happened in July is when I got asked the question too is that it's not continuing on that trend and I'll get back before that we're actually not generating free cash flow. That's so we expect to be at that $30 million to $50 million and we're consistent with that.

We feel good about it.

Speaker 10: right but but essentially if you if you say hey we're going to pay down the revolver 30 to 50 in the second half but you paid you've already paid the third

But essentially if you say hey, we're going to pay down the.

Revolver 30 to 50 in the second half, but you pay that you've already paid 30.

Speaker 10: possible for the next five months you don't pay the revolver down any additional amount. Yeah, so you're looking at the right way. I think the right way to also is the bridge that we have on page seven of the deck. We pay interest.

It is possible for the next five months you don't pay the revolver down any additional amount yeah. So you are.

Youre looking at the right way I think the right way to also is the bridge that we have on page seven of the deck, we pay interest as the second half of the year too right. So there's other puts and takes.

Speaker 2: the second half of the year too, right? So there's other puts and takes that happen on the fluctuations, but you're right on your map.

That happened on the fluctuation, but youre right on your math.

Speaker 10: and i i i thought i i think that may be out in the back out on the back right in front of me it was the what you what do you pay on the revolver

And I'm, sorry, I just may be on in the deck I don't have a DUC right in front of me.

What are you paying on the revolver right now.

Nine 3% I believe is the right. That's in the 10-Q you can look in the 10-Q for that.

Speaker 3: 9.3% I believe is the rate that's in the 10Q. You can look in the 10Q for it.

Speaker 3: That's based on SOFR, plus some more...

Based on sulfur plus a margin yeah, yeah, Okay, and then and then moving over to Oh. The other favorite topic of this call Redetermination I think I saw a piece. This morning, possibly the Texas had already taken 500000 folks off their Medicaid rolls in a month.

Speaker 10: And then moving over to the other favorite topic of this call, redetermination, I think I saw a

Speaker 10: The Texas had already taken 500,000 folks off there.

Yeah.

Speaker 10: I mean given that I mean does 8 million lives does that really

I mean, given that I mean does 8 million lives does that really stand up I mean in 30 days. If that's right is that stories right. One state took 500000 a benefit.

Beneficiaries off their roles.

It is 8 million really the number or is that.

Speaker 10: Is 8 million really the number or is that a hopeful number?

Or is that a hope for number.

Speaker 2: No, so a lot what you're seeing now, especially over these last couple quarters.

So a lot of what Youre seeing now, especially over these last couple of quarters.

Speaker 2: Most of the people that are rolling off across the states are going to be re-back-rolled. The challenges states are having is that people are rolling off that actually should not be rolled off, which is why a lot of people have paused that and are taking the time. So I think the CMS requirements and the CMS...

Most of the people that are rolling off across the states are going to be re back roll. The challenge as states are having there is there are people that are rolling off that actually should not be rolled off which is why a lot of people to pause that and are taking the time. So I think the CMS requirements in the CMS.

Pausing of things is the right thing to do because many of those members and I expect many of those members that are 500000 within Texas are actually eligible to be back on as much as $50 to 80% Oh Wow. So when you look at that that's the Lumpiness that's happening now.

Speaker 2: Pausing of things is the right thing to do because many of those members, and I expect many of those members that are 500,000 within Texas, are actually eligible to be back on. It's much as 50 to 80.

Speaker 2: So when you look at that, that's the lumpiness that's happening now, which is why states are taking longer and pausing. So when it all nets out, that 8 million net that CMS has.

Which is why states are taking longer and pausing. So when it all nets out that $8 million net that CMS has.

Speaker 2: If you look, we grew in membership in certain states because of just the general growth. And that after the re-determination that we know came off. So our customers, what you see in the news, what's happening, I do feel really good about the information that we gave on page 15. Though broad, is slightly past allocation of new comes from the final grade which involves that. The final grade is the final grade which involves that.

If you look we grew.

In membership in certain states because of just the general growth that after the Redetermination that we know came off so our customers what you see in the news whats happening I do feel really good about the information that we gave on page 15 the abroad.

<unk> 25 to 50.

Speaker 2: I think CMS is estimate on eight is a good kind of middle of the road target based on what's happening right now. The data shows that 50 to 80 percent maybe more are going to be re-enrolled and I think Texas is in the same boat.

I think CMS is estimate on eight is a good kind of middle of the road target based on what's happening right now the data shows that.

50% to 80%, maybe more are going to be re enrolled.

And I think Texas is in the same boat.

Okay and just the last question you guys have sort of alluded to this but clearly.

Speaker 10: Clearly, 90 days ago, you guys didn't have a great sense of sort of the timing, the cadence of when...

90 days ago, you guys didn't have a great sense of.

Sort of the.

Timing the cadence of when some of these payables would need to be dealt.

Dealt with at.

At least in order to sort of keep relationships.

You know with your customers and it seems like you're saying now Hey look we've we've given.

Speaker 10: We've given what we've experienced. We've dialed, we've really drilled down on this and we truly have a sense that we're not gonna get hit with some big $20 million.

Given what we've we've experienced we've dialed, we've really drill down on this and we truly have a sense that we're not going to get hit with some big <unk>.

$20 million payable due in the next two weeks.

Speaker 10: that you're not expecting. Essentially you have a very, at this point, unlike maybe 90 days ago, you have a very good sense.

That youre not expecting essentially you have a very at this point. Unlike maybe 90 days ago, you have a very good sense of the cadence of how this will come in is that fair to say no that is exactly.

Speaker 2: Fair to say. No, that is exactly it. During COVID it was.

During COVID-19 it was.

The timelines rollover to place and as recently as 90 days ago and this is why it was explicit I wanted to give a.

Speaker 2: timelines were all over the place and is recently as 90 days ago and this is why I was explicit. I wanted to give

Speaker 2: Data around really it was two large customers that had the black of

Data around really was too large customers that have this lack of.

Timeline that is cleared up we have the timeline were out of Covid and we're aligned with them and now we have a lot of predictability.

Speaker 2: timeline that it heard up we have the timeline we're out of COVID and we're aligned with them and now we have a lot of predictability. Okay, all right. Sure.

Okay, Alright, very good thanks, guys I appreciate it.

Thank you.

Yes.

Speaker 1: Thank you the next question is coming from Miles Highsmith of Dirtcher Bank. Please go ahead.

Thank you. The next question is coming from miles Highsmith of Deutsche Bank. Please go ahead.

Speaker 11: Hey guys, thanks for taking all the questions. I want to just follow up on the last question on the read determination. I guess I think look at the Kaiser data and maybe you'll see little apples and oranges in some ways, but you see really high initial rates on a small sample, like 38% of this enrollment, but 74% are procedural terminations. And I think you just made the point, you know, you expect, and if I back into like your kind of 10 to 15% guidance, that's kind of embedded in that guidance.

Hey, guys. Thanks for taking all the questions I wanted to just to follow up on that last question on the Redetermination I guess that you know I think I look at the Kaiser data and it's maybe a little apples and oranges in some ways, but you see really high initial rates on a small sample like 38% this enrollment, but like 74% of procedural terminations.

Thank you just made the point you know you expect and if at all.

Back into like your kind of 10% to 15% guidance, that's kind of embedded in that guidance.

Speaker 11: applying the bulk of those procedural terminations are going to get reversed out.

You know the bulk of those procedural terminations are gonna get reversed out.

Speaker 11: I think you just mentioned a number of 50 to 80%. Do you have an early data experience about these procedural terminations getting reversed? Is that the 50 to 80? How much hard data do you have or any anecdotes that might kind of back up that expectation? And I have a couple of short follow-ups.

Thank you just mentioned a number of 50% to 80% do you have an early data experience about these procedural terminations getting reversed is that the 60 to 80.

How much like hard data do you have or any anecdotes that might.

Kind of backup that expectation and then I have a couple of short follow ups. Thanks.

Yes, so for us in the states that we have in this.

Speaker 2: Yeah, so for us in the states that we have and it's

The.

Speaker 2: We've had redetermination, but this main state that we have most of those have been pushed off. So we're seeing the...

We've had redetermination, but this main states that we have most of those have been pushed off so where you're seeing the.

Speaker 2: the acceleration on people rolling off and then need to come back on those are primarily in Republican-related states and where we don't have a lot of exposure. So we are seeing it, we are seeing it happen and it's in line with what the market is saying around those are procedural and the come back on. Just the impact hasn't been that large for us because most of us, most of our contracts are in, represent her business that the market is said to

The acceleration on people, who are rolling off and then need to come back on those are primarily in Republican related states and.

Where we don't have a lot of exposure. So we are seeing it we're seeing it happen and it's in line with what the market is saying around those or procedural and we'll come back on just the impact hasn't been that large for us because most of US most of our contracts are in.

Alright.

Democratic States and that hasn't happened yet.

Speaker 12: I can do it!

Got it okay. Thanks, and then just on accounting if I've got a patient who once they get this enrolled June 1st goes in July one to get their script realize that they've done. This enrolled has three months from that June 1st period to get re enrolled keep their coverage retroactive and uninterrupted, let's say they do that in August as they occur.

Speaker 11: Okay, thanks. And then just on accounting, if I've got a patient who...

Speaker 11: let's say gets disenrolled June first goes in July first to get their script realize that they've been disenrolled has three months from that June first period to get reenrolled keep their coverage retroactive and uninterrupted let's say they do that in August

Speaker 11: Is the accounting for you? Do you lose that life effective June 1st and that they get that coverage back? Do you get kind of a recouped payment per member per month? Once that's reinstated again or just want to make sure understand the accounting pieces of it? Yeah, no. So if that... Yeah.

Routing for you do you lose that lives effective June 1st and that they get that coverage back do you get kind of a recouped payment per member per month.

Once that's reinstated again or just want to make sure I understand the accounting pieces of it yeah no. So.

If that person rolled off for three months as an example, we would not get paid for that person and then three months later when they came on we start getting paid and it would be just getting paid going forward, we wouldn't be recoup for that the only the only <unk>.

Speaker 2: For three months, as an example, we would not get paid for that person. And then three months later when they came on, we'd start getting paid. And it would be just getting paid going forward. We wouldn't be recouped for that. The only difference for that, if they're a utilizer.

Difference for that it's there.

Utilized or we would we could we would reconcile with them. So we get files every day and every month. So there is a reconciliation process, but if they were to utilize or we're not going to get paid if they were or utilize or that would flow out in our reconciliation processes is getting paid.

Speaker 2: We would reconcile with them. So we get files every day and every month. So there is a reconciliation process, but if they were a utilizer, we're not gonna get paid. If they were a utilizer, that would flow out in our reconciliation processes.

Speaker 11: Okay, great. And last one for me, just maybe at a more basic level, you know, see on your slide, the cost structure optimizations on automation next 12 to 18 months, and the savings associated with those. And I'm reading, you know,

Okay, Great and last one for me just maybe at a at a more basic level you see on your slide.

Uh huh.

The cost structure optimizations on automation next 12 to 18 months and the savings associated with those and I'm reading you know.

Speaker 11: Rises calls eliminated reservations calls eliminated can maybe can you just give us a short kind of real-world example of like how it gets done now and like how it looks when somebody tries to schedule a you know You know a ride as it is a text now kind of what is it what's the change in what does it look like those are kind of big numbers. Thanks. That's all. Yeah. So from a from

Ryan This call's eliminated reservations calls eliminated can maybe can you just give us a short kind of a real World example of like how it gets done now and like how it looks when somebody tries to schedule Uh huh.

Uh huh.

Right.

Is it a text now kind of what what is it what's the change and what does it look like because those are kind of big numbers. Thanks, That's all yeah.

So from a from a.

Speaker 2: Hall Center perspective, which is on that page 13 is the top part and we said this before. We do right now about 28 million calls. 20 million calls.

Call Center perspective, which is on that on that page 13 is the top part and we said this before we do right now about 28 million calls.

20 million calls at a cost of $4.

Speaker 2: So those 28 million calls are the majority of the interactions that we have with...

So those 28 million calls are the majority of the interactions that we have with our members.

Speaker 2: So the opportunities that we put down here...

So the opportunities that we put down here.

Speaker 2: It is very reasonable based on our population, the type of technology they use with common technology like a text.

It is our very reasonable based on our population the type of technology. They use with common technology like like a text message the big opportunity is around when someone need information and assistance for rod.

Speaker 2: The big opportunity is around when someone needs information and assistance where

Speaker 2: So with the automation and then even the improved kind of performance on transportation, that is very reasonable that we can get 75% of those out where they get a text message and say your car is five minutes away.

So with the automation.

And then even the improved kind of performance on transportation at a very reasonable that we can get to 75% of those out where they get a text vessels in your car is five minutes away.

Speaker 2: or instead of calling us, they call the transportation provider directly because now we've done a better job at aligning that member to the TPP. So there's just that, so that's text messaging, calling the TPP themselves, using the app.

Or.

Instead of calling us they called the transportation provider directly because now we have done a better job at aligning that member to the GP. So there is just so that text messaging, calling the TP themselves using the app using their website.

Speaker 2: using the website, all those are common technologies that are starting, but we're still really, though we understand what it is, the rollout of that and the usage of that.

All of those are common technologies that are starting but were still really though we understand what it is the rollout of that and the execution.

The usage of that is still in early innings.

Speaker 2: which is why we expect the full cost they've been to start coming in in 2024. P?. Two.

Which is why.

We expect the full cost savings to start coming down in 2024.

Got it that's very helpful. Thank you guys.

Speaker 1: Thank you at this time. I'd like to turn the floor back over to Mr. Samson for closing comments.

Thank you at this time I'd like to turn the floor back over to Mr. Sampson for closing comments.

Speaker 13: Great, so thank you for participating in our call this morning for your interest in MotivCare, our updated investor presentation and Corley supplemental deck are posted on our IAR website.

Great. So thank you for participating in our call. This morning for your interest in motive care, our updated investor presentation and quarterly supplemental deck are posted on our IR website.

Speaker 5: If you want to schedule a follow-up call, please call Kevin Allich or head of Invest Relation.

If you want to schedule a follow up call. Please call, Kevin Alex <unk>, our head of Investor Relations.

Speaker 5: We look forward to speaking to many of you over the coming days, weeks and months before report our third quarter results in November . So thank you again, have a great day and operator. This concludes our call.

We look forward to speaking to many of you over the coming days weeks and months before we report our third quarter results in November . So thank you again have a great day and operator this concludes our call.

Speaker 1: Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your line to log off the webcast at this time and enjoy the rest of your day.

Ladies and gentlemen, thank you for your participation. This concludes today's event you may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.

Speaker 14: The.

[music].

Okay.