Q2 2023 Viemed Healthcare Inc Earnings Call
Greetings and welcome to the <unk> second quarter 2023 earnings call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation if.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
Now my pleasure to introduce your host <unk> Chief operating officer. Thank you Tom you may begin.
Thank you and good morning, everyone. Please note that our remarks in this conference call May include forward looking statements under the U S. Federal securities laws or forward looking information under applicable Canadian Securities legislation, which we collectively referred to as forward looking statements such statements reflect the company's current views and intentions with respect to future results.
And are subject to certain risks and uncertainties, which could cause actual results or events to vary from those indicated in forward looking statements exam.
Examples of such risks and uncertainties are discussed in our disclosure documents filed with the SEC or the security regulatory authorities in certain provinces of Canada.
Because of these risks and uncertainties investors should not place undue reliance on forward looking statements.
Forward looking statements made in this conference call are made as of today and the company undertakes no obligation to update or revise any forward looking statements except as required by law.
The second quarter financial results news release, including the related financial statements are available on the SEC's website.
I'll now turn it over to Casey to get things started.
Alright, Thank you Todd and good morning, everyone welcome to our second quarter 2023 earnings call.
We are excited to share a comprehensive overview of our robust business performance along with a positive forward looking outlook for the industry.
Our organization is positioned exceptionally well to expand our reach and strategically capitalized on prevailing tailwind in our operating environment.
During this period, we had we've achieved significant organic growth a testament to our management team and their commitment to continuing to our proven growth proven growth model and we simultaneously initiated our long awaited M&A strategy.
We are pleased to announce the successful completion of the H M. P acquisition on June 1st, which further accelerates our growth engine and broadens our capabilities geographically.
This acquisition reinforces our dedication to delivering exceptional patient care, while building a larger buy med team with expanded resources.
Before we delve further I want to take a moment tech knowledge and express our gratitude to our dedicated team of respiratory therapist behavioral health specialist staffing professionals and administrative support staff.
Our continuous commitment to delivering best in class care to the patients. We serve is the driving force behind our outstanding quarter and continued growth providing that.
As at the end of the second quarter I met family Group, two 974 employees, including a 172, new onboard it employees for the H M. P. T. We.
We are fortunate and excited to welcome the H M P team entire families.
The second quarter of 2023, exhibiting the strength of our business model.
Our revenue results again landed at the top end of our guided range confirming that even as a larger company. We continue to experience strong growth.
Our success is built on a robust and resilient strategy, which has consistently demonstrated its ability to overcome challenges and drive sustainable growth.
We are pushing our growth strategy to new heights by executing on strategic and accretive acquisitions that build upon our existing capabilities. These acquisitions serve as powerful catalyst accelerating the expansion of our comprehensive respiratory offerings and geographic coverage gaps throughout the country.
Our back office team is continuously refining our processes for training and culture, which is which helps drive both organic and synergize inorganic growth.
Through the acquisition and integration of H M. P. We're demonstrating the value of our well developed immature based organization and training programs. We are already seeing tremendous success by sharing our mature complex respiratory model with a strong team at H M. P.
In the first month of post close operations, the noninvasive ventilation setups from HMP have experienced significant growth over historic levels.
Additionally, we will be training HMP clinicians on the use of our proprietary care delivery technologies such as engage.
This high Tech high touch delivery model, we will continue to improve patient outcomes, while driving efficiencies for all stakeholders.
Our commitment to data driven decision, making allows us to continuously measure and improve our business performance and patient satisfaction.
Our equipment supply chain remains stronger than ever with many new manufacturers competing for our business. We have diversified our sources and forged partnerships with multiple reputable manufacturers safeguarding us against potential disruptions, it's enhanced stability in the supply chain allows us to meet the ever increasing.
Many of our patients regardless of fluctuations in the market.
This increased competition is stabilizing equipment cost and ensuring that we have adequate supply to meet the needs of our patients.
Moreover, the recent H M. P acquisition has delivered significant volume pricing favorability amplifying the advantages we gained due to our scale and the competitive equipment landscape.
Our commitment to diversification has yielded substantial success in the integration of H M. P has played a pivotal role in contributing to these efforts. We are now reaching patients earlier in their disease state expanding our patient base like never before as of June 30th we're treating over 96000 unique patients a significant increase from the same time.
Last year.
Our growing portfolio provides a robust continuum of care solution for patients and Pulmonologists and our early intervention capabilities allows us to treat underlying conditions at the right time.
As coordinated care efforts gained prominence or adoption of sophisticated care services, such as behavioral health addressing social determinants of care going beyond respiratory this positions us as a leader in patient centric.
Leading patient centric provider in the industry.
The adoption of innovative technologies, such as portable oxygen concentrator and remote setup, a pap devices has enabled us to expand our portfolio's rapidly and in a cost effective manner.
He's been a later adjacent offerings not only increase the length of our patient relationships, but also allow us to provide timely care for patients as their disease progresses.
Integral to our strategy is our focus on people.
I met health care staffing is playing a pivotal role in our organization acting as a driving force behind the identification and recruitment of top tier talent across all economic cycles.
Our commitment to finding the best professionals continue to drive remarkable results as evidenced by the significant improvements in both the quality and volume of internal hires. This success not only enhances our workforce, but also reflects our dedication to always developing a thriving and talented team.
As our staffing division continues to mature it has earned the trust and respect of our valued partners and customers.
Organizations, such as the VA and large regional hospital networks have come to rely on our staffing solutions recognizing the value, we bring and meeting their workforce needs a reputation as a dependable and valuable staffing partner has continued to grow further strengthening our position in the health care industry.
By continuously refining our recruitment strategies and investing in advanced data and analytical tools, we are better equipped to identify and engage with top candidates in the market and we are consistently prepare to make informed decisions that keeps us ahead of the competition is.
This data driven approach empowers us to match the right professionals with the right physicians ultimately ultimately leading to improved patient care and organizational performance.
We.
To see encouraging progress ongoing an ongoing collaboration between regulators legislators and the home medical equipment industry.
Together, we are working to find practical solutions that ensure providers can deliver care to patients effectively.
Regarding competitive bidding, although CMS has not announced plans related to future rounds, we have observed that the timeline for a potential round in 'twenty 'twenty four for competitive bidding as effectively lapsed.
The prevailing signals also strongly suggests that the prospect of a 2025 round is dwindling.
We remain confident in the current indicators of a strong reimbursement environment for the coming years and our business is well positioned in the face of potential macroeconomic challenges such as the recession and long term inflation pressures.
Additionally, the issuance of the final rule by CMS on April 5th 2023 marks a significant milestone in the health care landscape, particularly in the round to the Medicare advantage and Medicare part D prescription drug benefits.
This rule ushers in a host of changes impacting several key aspects of the programs and signaling a positive direction for the industry as a whole.
Included in the provisions are improvements impacting prior authorization marketing communications health equity provider directories coverage criteria network adequacy and other areas importantly, the final rule emphasizes the need to ensure that individuals with Medicare advantage received access to the same medically.
Necessary care available in traditional Medicare.
Parity in care is a crucial step towards achieving health care equity and ensuring that beneficiaries have equitable access to essential medical services irrespective of their chosen Medicare programs.
As the health care reimbursement environment evolves, driven by Medicare advantage trends in value based arrangements, we maintain an optimistic outlook for the demand of our high quality and cost effective service offerings.
Our unwavering commitment to investing in advanced technology, and the robust protocols allows us to streamline administrative processes capture a central data and demonstrate tangible benefits to patients physicians and payers alike.
At this juncture I will now hand, the call over to Chief operating Officer, Todd Zehnder to provide additional insights regarding our financial results and capital activities. Todd the floor is yours, alright, Thanks, Casey and reviewing the financial results. All figures are in U S dollars and the full results have been made available on the SEC's website as well as SEDAR.
Our core business generated net revenue of $43 3 million during the second quarter of 2023 as compared to net revenues of $33 1 million during the second quarter of 2022, which equates to a 31% increase.
This revenue amount includes approximately two and a half a million dollars of revenue related to our acquisition of H M. P. During June .
Excluding that impact our organic growth over the second quarter of 2022 was an impressive 23%.
Our sequential growth for the core business was 9% and we see that continuing to increase as we will have H M. P for the entire third quarter and our organic growth remains very strong.
We continue to stay optimistic that we will be able to continue our high organic growth rates as well as continue our evaluation of inorganic opportunities.
Our gross and EBITDA margin percentages are once again strong as we are focused on both margin and diversification.
We remain committed to our dual <unk> dual pronged strategy of continuing to diversify our revenue stream.
All while looking to expand our bottom line margins, we continue to see our margin percentages be influenced by our product mix and continue to be pleased by the notional growths.
Our gross and EBITDA margins during the quarter came in at 63, and 22, 6% respectively.
Our second quarter Ocean EBITA melts came in at 26.1, and $9 8 million respectively.
Our second quarter 2023, EBITDA is approximately 52% higher than second quarter 2022 EBITDA.
Which is a testament to our overall focus for the last 12 months.
Our second quarter revenue from this was approximately 60% of our core revenue as compared to 69% in the second quarter of 2022.
Our SG&A for the quarter totaled approximately $25 million as compared to $17 5 million in the second quarter of 2022.
We are continuing the efforts of managing costs across the board and are pleased in a quarter that had revenues grow 31% G&A grew 17%.
We will continue to invest in our patient and employee experiences.
We continue to expect to grow revenues at a faster rate than expenses, even in light of the ongoing inflationary environment.
For the quarter, we invested approximately $6 million on capital expenditures. The Capex has been spent through a diversified supplier network, which has given us an ability to leverage relationships, whereby we have minimized inflationary impacts as much as possible.
As was the case over the recent periods, our vent and oxygen products had the most capex spent during the period.
We have once again funded all of our Capex with discretionary cash flow during a quarter of extreme grows and we were able to use our balance sheet to fund the H M. P acquisition.
We are very proud of the pristine balance sheet, where we ended the quarter with a cash balance of $10 million.
Additionally, we ended the quarter with an overall working capital balance of $4 4 million.
We drew on our credit facility in order to close the acquisition. It had $12 1 million of long term debt at June 30th.
We will opportunistically pay down or use the revolver portion depending on needs of cash, resulting from additional organic growth or future inorganic opportunities.
We are extremely excited and the integration efforts related to our acquisition of H M. P.
As previously stated we are being extremely diligent in assuring the company has folded into by that to assure efficiencies are attained.
The H M. P. Culture is one that is being easily integrated and we are seeing revenue synergies come through early which was always the number one reason for us to acquire this great company.
We are diligently working with retained management to make sure. This is the proverbial win win.
We have now begun executing on our capital allocation strategy that we defined at the end of 2022.
Our first priority remains on Capex to service new patients are organic growth through new patient service has and will likely always be our first priority.
We continue to see major organic growth opportunities for both legacy biomet as well as H M P.
Now that we've completed our first deal. It is evident that M&A has moved in our number two priority on the capital allocation.
We continue to patiently evaluate other deals as we were optimizing our first one.
As we previously mentioned, we might consider paying down on the raw Bolivar until another deal comes up and needs capital.
But the flexibility of our credit facility allows for those decisions to be made routinely and quickly.
We also expect to renew our existing shelf registration statement, which is scheduled to expire next month.
This renewal maintain our ongoing capacity to rapidly fund an acquisition or CS opportunistic transactions.
Moving on to the third quarter, we have provided net revenue guidance in the $49 million to $52 million range related to our core business.
The midpoint of our net revenue guidance is up 39% over the core revenue in the third quarter of 2022.
Yes.
We remain active in our discussions with existing and potentially new investors. We are planning to attend a couple of institutional conferences during the third quarter, whereby we will hopefully expand our investor base.
We are excited to tell our story, but we're even more excited to continue to build out our footprint to new patients through our organic and now inorganic growth strategies.
At this time I'll turn it back over to case, you to wrap things up alright.
Alright, Thanks Todd.
In the midst of these exciting developments in the quarter. We are most pleased with the fact that our commitment to organic growth remains unwavering.
Team has done some incredible orchestration for this next chapter of our growth story and Theyre careful work on the integration of the HCP acquisition has not slowed us down in any way on.
On the contrary, we're firing on all cylinders continuously improving growing and expanding our operations. We remain focused on maintaining our position as the leader in the industry never taking our eye off the ball as.
As we move forward with the help of the stable regulatory environment, we remain aggressive on creating more preferred partnerships with our hospital partners driving innovation and ongoing improvements to our clinical model will continue to be a major part of our strategy. We are confident in our ability to navigate the evolving health care landscape and deliver sustainable value to our state.
Holders.
Once again, thank you all for joining us today, and we look forward to sharing the exciting developments ahead provide med health care.
This concludes our prepared remarks, we'll now open up the poor or the questions. Thank you.
Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
One moment please poll for questions.
Thank you. Our first question is from Brooks O'neil with Lake Street Capital markets. Please proceed with your question.
Thank you and good morning, guys congratulations.
Congratulations on the terrific results.
Good morning, Thank you.
Yeah, so yeah.
I have a couple of questions here the first I guess is it.
If I remember correctly the business mix.
<unk> was modestly I mean, it overlaps with yours, but it's a maybe more skewed to the sleep side can you just talk a little bit about initial efforts to cross sell in their geographies and maybe take advantage of some of the strength you have on the <unk> side of the business.
Yes good.
Good point the H M. P mix was I guess very heavy on the sleep side call. It what the 50% I would say 10% was ventilation. So that was one of the things that really excited us about the acquisition. When we were analyze it on the front end. So I mean June 1st we closed the deal Brooks we at our.
Our team up at.
Their offices, the following weekend and training their folks on how to walk and talk the buying that way from selling our complex respiratory model, which is ventilation.
And they hit record numbers and Mark one for Vince. So we we really got jazzed about that we were excited about the ability to for them to receive the training and really adopt it and and we were impressed with how much incremental growth was out and about and their respective.
Markets. So you know theyre going to continue to double down on on sleep as well they have.
They've got a strong sleep program with many locations throughout the Tennessee, Mississippi, and Alabama markets. They May service labs stay are there there are some opportunities to grow their sleep business through.
Initializing, some home sleep programs in rural markets outside of where they currently service. So we're excited about being able to help them with that because that's something that we're really good at two is developing a home sleep program. So yeah. All of the revenue synergy things are the things that we've been focused on right out of the gate anywhere obviously uncovering other opportunities to tightened screws down on.
On some costs here and there, but right now we've got a major opportunity with just growing sales and that's what we're focused on.
Great I appreciate all that color so.
I'm curious you know you would Todd both talked about.
Continuing the mine the pipeline of acquisition opportunities would.
Would you say this first acquisition has been a.
A slam dunk.
Template for what you're going to do going forward or have you learned some things from this one that might make you even better Bacon acquisition down the road.
I think the answer is yes to both of them. This was the.
I think this was an ideal transaction for a lot of reasons, just because we know all the business units that they're in but at the same time as the diversification of the revenue streams. It's in an area that we weren't very strong and lastly, but probably most importantly is culturally it was a very good fit.
But at the same time.
It would be disappointed if we didnt learn things during our first pretty significant acquisition and we are learning things but.
It's kind of like Casey said, we haven't uncovered anything that spooks us. It's all been good it's a new way of growing for our company.
But the main thing is to do it right get it integrated get the revenue synergies all while making sure our organic growth doesn't get impacted and that's the that's the main thing we've been able to do so we're looking forward to the next one when it comes we will see where not necessarily pressing to do another one immediately but if enel.
One come soon we will be ready for it. So it's all good on this first one.
Great. Let me just ask one last one and it's sort of revisiting an old friend, if you will any progress with the VA in terms of opening the doors.
For the oxygen program.
<unk> across that opportunity set.
Yeah.
The pilot program is not dead, it's still ongoing impressive forward.
Where we're dealing with some employees that are coming and going out were developing the program, which slowed things down again. The main success that we're having inside of the VA is coming through staffing where are we become a you know we've got a lot of experience now we got that background of being a quality provider for the VA and so.
That has boded well for us landing time staffing contracts, which has been some of the some of the bigger wins, but it doesn't mean that our IRS complex respiratory pushes over her dad, where I mean, it's just it's still.
Waiting on the VA and the status quo as from quarter to quarter as we always talk about it.
Okay cool thanks for the color.
I'm excited for the future.
Alright, Thanks, Brian .
Okay.
Our next question is from Doug Cooper with Beacon Securities. Please proceed with your question.
Hey, good morning, guys and their terrific work on the quarter.
Just a couple.
Quick ones for me just I, just want to confirm pro forma because you only had the.
The acquisition and for one month would pro forma would have been if you had it for the full quarter roughly 48, $48 5 billion in revenue and 11 million of EBITDA is that sort of in the ballpark.
The 48 million is a good approximate we don't have an estimate of EBITDA, but I don't think it's going to change the composition very much Doug okay.
It's not an event.
You are over 10000 vent patients now a nice milestone.
That looked like it had the strongest growth certainly sequentially is up 7% sequentially.
For some time, how much of that was due to <unk> you mentioned they were out of the gate selling and how much of it is just.
I don't know maybe the physicians finally, realizing that this is a good therapy.
I think H M. P. I don't have the exact number Doug, but I think <unk> made up about 340 to 350 Vince of the growth. The rest was our traditional sequential growth, which I'll want us I don't have the exact number in front of me. It was probably about 300 for the quarter.
Yes that makes sense because we grew at about 700, so our own efforts made up about half of it. So the organic piece is clicking for sure.
But then folding their their group and obviously gave us a really good Bob another little Nugget, Doug as.
We set an internal goal to kind of in the year with 115 quality sales reps, we're sitting at 112 right now so our recruiting efforts are really.
Clicking and it's we put up at a lot of good people into the system and it's just a matter of getting them trained and making sure that we have the backend infrastructure to support not only the new guys that we've been finding but also the new H M. P team as well so a lot of our focus is building up sales training and sales managers and so on and so forth.
Yeah.
Okay. So just to be clear you added 300 over three months and they added $340 a month.
Well no I mean that gets all added at once it that's part of the acquisition. So that was their active <unk> got.
Got it got it got it got it okay. Okay.
And then just on the.
On the non <unk> business, just call up the sleep and oxygen and so forth even excluding the contribution from <unk>. It looks like it grew 50% is that because that actually is that did I read.
Right.
You're talking about our ancillary services.
Just the non <unk> revenue.
Yeah, that's gonna be accomplished by a lot of growth in oxygen in a lot of growth in sleep and then you know you've got staffing up and run and just our sales revenues are higher at this point. So that's probably about right adult I don't see the number exactly what you're talking about I want to make sure that <unk> is not included in that but I think <unk>.
I guess I've added $2 5 million of that either non vent revenue. Obviously your <unk> revenue up I think it was over 100% so if I back it.
It would be about yes, that's right.
That's right be incredible growth so how.
Obviously, making great inroads into the sleep and oxygen space can you just how many you have.
Can you keep that kind of growth rate going.
Well, yeah, it kind of goes back to our our age old like how long can we keep rolling I mean, our intent is to always grow this thing organically in these high rates that we've been posting you know call it 25%, 30% it gets harder when the numbers get bigger.
But inherently as our sleep business growth that means the resupply piece starts growing with it and that's sort of the annuity if you will and as we have more sales reps around the country they're out there.
Pushing everything which includes Vince best oxygen sleep and so I'll tell you that that is the intention to keep growing those numbers dramatically there theres a smaller base. So they have an advantage over beds to keep those high percentage growth rates.
But we just want to see everything growth. That's that's what it comes down to it yes. It was interesting for me.
Guess Owens <unk> minor with Apria that organic growth rate year over year of 10, 5% I think.
The adopt health was nine or 10%. So I mean, the sleep side of the business continues to have.
Pretty strong fundamentals I would suspect.
Yes. It does I mean sleep apnea is a growing disease state for sure and once again, we're still benefiting from only rolling that out nationally kind of during the Covid time. So it is still.
So you get a new sales rep or two or three that hit their stride as being able to offer. It. In addition to everything else. So we're benefiting from having that and then you know what.
It's again benefiting from bringing in <unk> going forward, that's only going to bolster our non vent revenue growth going forward right and I'm, assuming the supply chain issues regiments really picked up the pace and there's no issue about getting an equipment.
We have no issue on any product at this point.
Yeah. So everything is good there.
Okay, Okay, great guys congratulations.
Thanks, Doug.
Thank you. Our next question is from Andrew Lim with <unk> Partners. Please proceed with your question.
Hey, gentlemen, great quarter, Congrats to your team you guys are doing a great job executing.
Thank you. Thank you back to H M P.
What was their kind of organic growth profile prior to the acquisition.
Or at the time of acquisition.
Well, if you look at it over kind of a three year period I want to say the CAGR would be somewhere in the kind of high teens low 20, the last year wasn't as high they had they had just slowed down to probably upper single digits.
So we're hopeful that when we bring our skill set of growing the complex respiratory we will get it back to kind of our organic growth rates, which is in that mid 20 type range.
Yes.
Okay and then.
Is that kind of factoring in the opportunities around.
Ventilation.
Sounds like that wasn't really.
Necessarily a strength for them, but it is for you.
Yes, that's the goal. That's the goal is to have them continue to grow their ventilation business at a much higher rate than they were historically and then you know are our sort of benchmark for them is if we can keep them growing at our growth rate when we're doing a pretty good job.
Okay, and then can you just.
Maybe a question on a little bit more your comment about or just help me understand better when you say a good cultural fit between these two are between you and <unk> just define that a little bit.
The best way to define it is that their patient centric. They put the patient first which is something that is extremely important to us. They they're there. They're just good people that are looking to do the right thing.
And that's that's what we're looking for we can work with that whenever we have the passion and the bleeding heart clinicians at our side and that's what our that's what we saw with HMT. So we're kind of just springboard and that that passion into their communities.
And then on <unk>.
Operating expenses can you maybe talk about second half of the year and as you go into two.
Four and kind of beyond ability to kind of leverage.
Maybe more just kind of the SG&A expense.
Expense, obviously, you had completion pressure last year, you're getting some of that.
Caught up with.
The improvement in reimbursement, but.
Those are things that you guys can do operationally to kind of leverage those expenses.
Yeah, I mean, we were very proud of that in my prepared remarks that G&A was only up 17% this quarter and revenue was up 31. So it's happening we're continuing to push on it and scale helps that just generally.
We're able to leverage kind of C level expenses versus a growing revenue base.
The the key is we're not necessarily going to try to slow down the G&A growth because that's what yields. These impressive organic growth rates. We are always out there trying to hire new salespeople try new innovative ideas and we've always said and we're proud of it that we invest in the future of this business and.
It yields above average.
Organic growth rates, we do expect to grow margins to say that we're gonna be able to grow them in 'twenty four as high as we are as much as we've grown and this year, we're kind of trending towards a 200 basis point.
Bottom line increase.
That would be difficult to replicate next year, but we fully intend on attempting to do that and we do see the ability to continue to grow them. It's just at what rate, we're not up we're not exactly sure yet.
<unk> kind of is that assuming.
The out your I understand your comments about.
About this year on the out year. There is some component that's dependent on reimbursement and then a portion would be on your internal activities. So.
Looking to improve next year clearly not at peace.
Much of that do you control on the improvement.
Well.
There's probably three factors you hit on two of them. One is the reimbursement and looking at midyear CPI that was running I think three three and a half. So we got a figure that we're probably going to see about an average of 2% next year.
So that's not extremely meaningful the majority will be what we do the one thing that we always caution people on is ventilation has a higher EBITDA margin. So where we are diversifying their product base as I said in my prepared remarks, we went from 69% last year to 60%.
A lot of the business that we're getting into is feeders into higher margin later in kind of their product lifecycle.
So the composition of the revenue the CPI adjustment and then those are those are sort of up to us, but the composition sort of up to us, but we let that naturally happen. The real thing that we can control is the cost.
And once again, we know that we will see some corporate leverage as a result of you know.
You don't need to charge and to Casey's when you double a company. So those are the types of things that we can do.
But at the same time, we're always investing in the future. So we are it's very important to us I think the most impressive number for this conference call was that our EBITDA was up 52% year over year up for the quarter basis.
And you know that's.
That's our intent is to keep growing that number.
Alright, Thanks, Scott Thanks, a lot.
And again congrats to your team.
Thanks, Andrew.
Thank you. Our next question is from Eric Coldwell with Baird. Please proceed with your question.
Hey, thanks, very much and good morning.
I think three questions. The first one I'd like to hear a bit about your traction with payers I know, it's still very early with HMP, but as you.
Broadening your scale and your geographies.
Capabilities I'm curious what your recent conversations with payers have been and if <unk> been able to expand in the network access or do you have any opportunities that you could.
Highlight for US as you look over the next 12 months.
Yeah.
We have done a hell of a job with payers. This year our network development team has been very active they've they've added 5 million lives entire networks at year to date, they've got another another $5 million under contract headed our way.
So we're very pleased with the efforts of that.
That those guys are doing we still have payers struggles that are typically with the big guys, you know United and Humana or are tough cookies for us we do some out of network.
Worked for them, but we have great opportunities to get those big guys on board, but as far as everybody else I mean, where the payer conversation is really healthy they understand that when when when we present data that shows that we can save money on our complex respiratory model. If we get these patients on at the right time.
They understand that we are we bring a unique offering to the table and treating a very sick typically expensive batch of their patients. So yeah.
That's the reason and the driving force behind how we added 5 million lives in and we'll continue to double down on that message with <unk> through the lens of data.
Since you brought up a humana specifically.
It was one of our representative of a large <unk>.
Maybe a harder conversation right now.
I suspect it's not an issue for you given perhaps under waiting there historically as well as geographic issues, but.
They're they're recent deal with Rotateq in adapt on certain products being exclusive does that does that have any impact on your thoughts I know not all categories were covered either but I am I am curious if you have any thoughts on that that type of well.
We've seen yes.
For our company specifically it didn't really affect us because we're not you know we werent doing much business with United and Aetna are I mean, I my purse perspective on that deal is kudos to two Apria and road tech for forgetting that.
It's yet to be seen whether or not they'll be able to handle the entire network of humana, which could be United and Humana now so that is.
In my mind, it's just I don't I'm not you know the jury is still out on whether they can continue to support the coverage area and it doesn't give us much angst, just because we really werent even service in those patients in the first place, but but.
But yeah, we will just have to wait and see how that works out.
Fair and then on the commentary on the.
The organic growth rates, which are clearly a pretty remarkable I'm curious how much of that if you had to if you had to guess or if you have maybe even have the information.
Uh Huh with you how how much of that organic growth was there an inflection in.
In market volumes patients are getting on for script or really is this just a continuation of the expansion of the sales network the payer network and in some market share gains on top.
I'm trying to get a sense on the underlying market dynamics and what you've seen.
In your in your core categories.
Are you Eric are you, specifically talking about existing areas versus new areas with that question.
It seems if you will seem store apples to apples growth rates in your core areas or are you seeing a change in overall patient volume national script trends you didn't know new new a new access because of regulatory changes or statutory changes over the last couple of years or is that a pretty.
<unk> market and and really the growth is just you know, but for perhaps the recovery in sleep, which is obvious after the recall but.
But for that is this is really this growth.
Underlying growth that is clearly well above market is it is it all share gain or is it is it something is there something more underneath it.
It's really just I mean, okay. So first of all we generally generally run between kind of 85%, 90% and I don't have the exact quarterly amount, but I can tell you it's going to be in that range for same store sales.
Generally what happens is it takes a little wildfire new reps to hit their stride and when they do they just progressively get larger larger larger inherently.
Inherently our strongest reps continue to bear the load of the majority of the growth. So that's the that's the general answer but there is nothing unique to this quarter I mean, if you go back and look there is it ebbs and flows a little bit, but we always have these type growth rates.
It's the way we do things, we're we're very sales driven organization, where we were aggressive with our recruiting and training and retaining.
New sales reps to get into new areas that ultimately become same store sales.
I think over the last few years offering additional products for these.
Seasoned reps to sell be it sleep oxygen percussion vest has given the ability to sustain the high growth rates all while knowing that the complex respiratory population, primarily COPD and neuromuscular is a very underserved market and continues to be so the.
Green pasture is still there that's why we're confident that we can continue to grow it.
The job is ours to continue to find new people to help spread the good news and get more people on therapy.
Last one for me if I have time.
With the Phe ending last quarter, you got a partial impact under your belt. This will be a full quarter any any notable callouts there in terms of changes in market dynamics of reimbursement regulatory changes.
Audit changes what youre seeing.
On that side of the market or there are there any notable callouts that people should be paying attention to in a post phe environment.
No not really I mean, obviously you hit on everything, but we Fortunately I guess or I guess unfortunately during the relief we didn't get too large of a revenue uplift from the blended rate and so forth it impacted us.
But it was it was still inconsequential that we never had to really call it out or even think about it from a modeling perspective, they've got blended in pretty easily when we look at things so.
Nothing that nothing that has been a knee jerk reaction that we've seen that says Oh man. This is this is back to some problem.
We are so it's kind of business as usual and no no issues on that and one other thing I'll add is there is a a movement. If you will I guess inspired by the Phe, where we didn't have to get <unk> to the standard I see him in certificate of medical necessity for oxygen.
And that would reduce audit pressure on the oxygen business. So I think that's a positive that really came out of it like what can we adopt going forward that really worked during the phe. So we'll wait and see if CMS gets on that train, but they should it should it should be a win win for us and for them.
In terms of just audit pressure yes.
Perfect.
Again, congrats on a nice nice results here and look forward to.
Look forward to senior guys next month, thanks, so much.
Thanks, Eric Alright, Thank you Eric.
Thank you there are no questions at this time I'd like to hand, the floor back over to management for any closing comments.
All right, we want to thank everybody for participating once again on the call and we look forward to visiting with anyone that has follow up questions in the near future have a good day.
Okay.
This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.
Yeah.