Q3 2023 Viemed Healthcare Inc Earnings Call
Greetings and welcome to be match three Q2023 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 anyone should require operator assistance during the conference. Please press star.
<unk> zero on your telephone keypad as a reminder, this conference is being recorded it is now my pleasure to introduce you to your host Todd Zehnder C. O O. Thank you Todd you may begin.
Hi, Thank you 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 or events and are subject to certain risks and uncertainties, which could cause actual results or events to <unk>.
From those indicated in forward looking statements examples of such risks and uncertainties are discussed in our disclosure documents filed with the SEC or.
For the security regulatory authorities in certain provinces of Canada.
These risks and uncertainties investors should not place undue reliance on forward looking statements and.
The 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 third quarter financial news news release, including the related financial statements are available on the Sec's website.
Now I'll turn it over to Casey to get things started.
Okay. Thank you Todd and good morning, everyone welcome to our third quarter 2023 earnings call.
Today, we will explore the financial achievements market trends and strategic insights that have contributed to our continued success. We will provide details on how by Matt is not only driving but also actively shaping the landscape of at home respiratory care.
We are executing at a very high level on our strategic initiatives driving growth to financial results and remarkable growth are seems a seamless integration of the H M. P acquisition has accelerated our expansion of the core complex respiratory business and is rapidly diversifying our respiratory offerings.
This significant stride is a testament to our steadfast focus on reaching more patients enhancing their lives and improving outcomes.
Before we delve further into our results I want to take a moment to thank our team for their hard work and dedication.
Our success is built on the shoulders of an incredible team of dedicated health care professionals for my respiratory therapist, and behavioral health specialist to our staffing professionals and administrative support staff.
The driving force behind <unk> exceptional results and continued record setting growth.
As at the end of the second quarter or by met family has expanded to include 988 employees each playing an important role in our collective success.
Let me begin by commenting on our core organic business model.
As a reminder, 58% of our business is generated by our complex respiratory service model, which is driven by ventilation.
<unk> patients are typically on our care for a 17 mile length of stay at the end of their life and.
In terms of payer demographics, 45% of our patients are covered by traditional Medicare and 12% are enrolled in some form of Medicare advantage or managed Medicaid program.
It's worth emphasizing that historically the Medicare patient population served by an industry as a whole constitutes just 6% of COPD patients.
Eligible for noninvasive ventilation treatment.
We estimate that the privately insurance population reflects similar numbers.
This ongoing underserved patient segment is a key driver of I persistent growth.
Our governor to growth is not about finding available patients to treat but more about finding clinicians and salespeople available to communicate our offering to the physicians and hospital case managers.
Our staffing division the V. H S played a pivotal role in developing recruitment protocols that rapidly identify and onboard talented individuals'.
As a result, we are continuing to expand our training and management structure to support the growth of our personnel.
This relatively new ability to source salespeople efficiently will certainly be the driving force behind our future geographic expansion.
Additionally, we've observed substantial growth in our oxygen services, which constitute approximately 10% of our product mix and treats earlier stages of COPD.
Given the terminal nature of COPD, it's common for patients to progress to a point, where they require are complex respiratory ventilation services in later stages of their charters.
Notably by the end of the quarter approximately 18% of our oxygen patients also had been a later usage. It's estimated that there are 12.5 million eligible oxygen patients in the country with only a 12% market penetration nationwide.
Representing yet another significantly underserved population in need of our help and opportunity for continued growth.
With H M. P. Our most recent acquisition being a heavy sleep business, we've driven our sleep business up to 17% of our product mix.
Higher margin segment within sleep isn't the recurring mask tubing filter sector, whereas we call it the resupply business.
With the addition of H M. P. I resupply business is now making up 47% of our overall sleep business.
With an estimated 150 million people suffering from sleep apnea, only 30 million diagnosed roughly five 8% of the folks on service.
We are once again, taking care of an underserved population.
Many health care companies are confronting speculation around the adoption of G. L. P. One diabetes and weight loss drugs.
<unk> core complex respiratory business differentiates us from the other home medical equipment companies, making us less susceptible to competition from G. O P. One weight loss drugs.
We have seen no measurable negative impact of these drugs being on the market.
Perhaps the best way to prove that it's just to reflect on our third quarter numbers are.
Organic biomed business experienced 11% sequential sleep growth from Q2 and have grown our sleep business every and we have grown our sleep business every quarter for the past year and a half.
During the G O P. One drugs, while they've been on the market.
Furthermore, our manufacturers of sleep equipment are also reporting zero findings of any decline related to G. L. P. One drugs, we fully expect to realize growth in our sleep business for 'twenty 'twenty four and beyond.
The successful integration of H M P into the Biomet health care family has a has marked a significant milestone in our strategic road trajectory.
We were delighted to report that our first full quarter with H P was immediately accretive to our net income and earnings per share demonstrating the soundness of our investment.
What's equally crucial is that this acquisition hasn't hindered our organic growth instead, it has acted as a catalyst igniting new possibilities.
Our commitment to enhancing our cost structure, while simultaneously setting the groundwork for revenue synergies has been at the heart of this integration.
We've worked tirelessly to ensure a seamless transition converting software and systems to align with our established processes and technology.
Furthermore, H N P employees have undergone comprehensive training.
Not only to adapt to the new systems, but to fully embrace our technology unique service offerings and the <unk> value proposition.
One of the keys to our successful integration has been the remarkable cultural fit between <unk> and <unk>.
Alignment of values mission and work ethic has fostered a cooperative and harmonious environment, where we can leverage the strengths of both organizations effectively.
Looking ahead, we consider this acquisition as a strategic springboard prior organic growth model in several respects.
Geographically, we're expanding into new areas capitalizing on strengths synergies brought by <unk> to penetrate markets that were previously untapped. We're also growing complementary products and services that align with our core offerings and creating value for our patients and stakeholders. In addition, a broader network of payers is offering us exciting new.
Avenues for growth, enabling us to maximize the reach and impact of our specialized home respiratory care.
Yeah.
While our M&A pipeline is active it's important to note that it remains supplemental to our primary growth driver the organic engine.
In a landscape where interest rates are rising and deal volumes are declining we are fortunate to not be reliant on acquisitions to fuel our growth.
We've consistently demonstrated that we were in a position to grow independently leveraging our existing capabilities infrastructure and expertise are.
But steadfast focus on organic growth allows us to maintain a strong and sustainable trajectory, making strategic acquisitions of nice complement rather than a necessity to our business model.
In the third quarter, we continued to allocate resources towards technology.
Our proprietary engage platform and data analytics play a pivotal role in our achievements.
<unk> data to predict patient needs and tailor treatment plans, we have not only improved patient outcomes, but have differentiated ourselves from our peers in the eyes of by referral sources and Payors.
We recently introduced version 2.0, which we call engaged care manager.
The enhancements within this tool facilitate greater cross functional integration with multiple equipment manufacturers, enabling a device agnostic approach to patient care.
The broader use of equipment on engage care manager allows our manufacturing partners to have their devices to be a part of the driving improved compliance and patient adoption within their devices.
Ultimately these advancements further solidify our position as a relevant player in an evolving value based care landscape, demonstrating our commitment to innovation and excellence in patient care.
On the regulatory front, we are experiencing a notable degree of stability with little recent movement.
There have been no indications of the return of competitive bidding and we anticipate further improvements in reimbursement due to consumer price index CPI to be implemented soon.
There is a national push from our industry Association a home care to support continued common sense measures undertaken during the pandemic, particularly the 70 525 blended rates for CPAP and oxygen.
While these relief measures are crucial to ensure patients have necessarily access to care. It's important to note that their financial impact on biomed is relatively modest as a result of our unique product mix and concentration in rural markets in the event that the blended rate relief expires at year's end, we estimate that our rates tied to the CMS fee schedule.
Would still on average increased between a half and 2% when we combine the CPI adjustment.
This rule change, while not significantly impacting biomet directly may hold more significance rather competitors across the country.
In addition, we are eagerly anticipating the implementation of the final rule for Medicare advantage plans set for 2020 for.
This rule introduces additional health plan utilization management oversight to processes, including mandatory annual reviews of M. A planned clinical policies and coverage denial reviews conducted by health care professionals with relevant expertise.
This rule will ultimately improve access to care for lifesaving devices, such as ventilators for patients struggling with a terminal disease.
Our view is that the accountability for Medicare will be a positive tailwind for buying that in 2024 M. B a.
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.
Alright, Thank you Casey and reviewing the financial results all figures are in U S dollars and the full results had been made available on the SEC website as well as SEDAR.
Our core business generated net revenue of $49 4 million during the third quarter of 2023 as compared to net revenues of $35 8 million in the third quarter of 2022, which equates to a 38% increase our sequential growth for the core business was 14% as we had A&P for the entire third quarter.
Organic growth was once again strong.
Without factoring in the acquisition our growth rate over last year's third quarter was approximately 19% and approximately 4% sequentially.
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 third quarter revenue from Vance was approximately 58% of core revenue as compared to <unk> 67 in the third quarter of 2022.
Our gross and EBITDA margin percentages are still strong and improving as we are focused on both margin and diversification.
We've been very successful in managing our cost structure. This year and it is showing in both gross and EBITDA contribution.
We continue to see our margin percentage be influenced by our product mix, but once again point out the rapid notional growths.
Our gross and EBITDA margins during the quarter came in at 61.9, and 24, 5% respectively.
Our third quarter gross and EBITDA amounts came in at 36, and $12 1 million respectively.
A couple of highlights are that this is the highest gross margin percentage that we have posted in two years and our third quarter 2023, EBITDA is approximately 73% higher than third quarter 2020 to EBITDA, which is a result of the continued organic growth aggressive cost management and the closing.
Of the H M P acquisition during June.
Our SG&A for the quarter totaled approximately $23 7 million as compared to $17 7 million in the third quarter of 2022.
We have managed our G&A during the current year, effectively which is evidenced by our EBITDA margins expanding by a wider margin and our gross margin percentages.
We are benefiting from some scaling of our operations around the country as well as our home office.
We will continue to invest in our patient and employee experiences and once again expect to grow revenues at a faster pace than expenses.
For the quarter, we invested approximately $7 4 million on Capex and once again, the highest amounts have been spent on Vince and oxygen equipment.
The Capex has been spent through a diversified supplier network and we are seeing additional supplier networks that have come or will be coming to market.
We funded all of our Capex with discretionary cash flow during the quarter and our core business had a record of free cash flow after capex we.
We are very proud of the pristine balance sheet, we maintained where we ended the quarter with a cash balance of $10 million. Additionally, we ended the quarter with an overall working capital of $4 million.
We have paid down $4 million on our revolver facility during the quarter and have lowered our long term debt at September 30th two approximately $8 million.
We will opportunistically pay down or use the revolver portion depending on needs of cash, resulting from additional organic growth or future inorganic opportunities.
When we step back and look at the ongoing financial performance of the business our growth and diversification are really showing in the free cash flow that we're generating.
We have grown the amount of revenue that is transactional overtime and therefore, it does not come with the same capex burden as our rental equipment grids.
We are very confident in our ability to continue to grow our free cash flow even in light of our capex needs as we grow our active rental patients.
This free cash flow generation will give us flexibility as we continue to monitor our capital allocation.
As we review our capital allocation opportunities, we once again will reiterate that our organic growth is the highest priority.
This quarter, we took the opportunity to pay down debt as we integrate the HMP transaction and we will likely to continue to do that until another acquisition opportunity arises.
Lastly, we will actively monitor our share price and other factors to determine if another share buyback would make sense to be implemented.
Moving onto the fourth quarter, we have provided net revenue guidance in the $49 $8 million to $51 million range related to our core business the.
The midpoint of our net revenue guidance is up 34% over the core revenue in the fourth quarter of 2022.
Lastly, we remain active in our discussions with existing and potentially new investors. We participated in a couple of institutional investor conferences during the third quarter and plan on attending another one during this quarter.
We remain excited about telling our story of growth and see the current market as an opportunity to attract new investors.
At this time I'll turn it back over to Casey to wrap things up okay.
Okay. Thank you Todd.
Our unwavering commitment to pioneering advancements in the home respiratory care industry is evident with our impressive results we've achieved this quarter.
We couldnt be more proud of our management team and staff for their continued execution on every level.
Reflecting on our business. After the first three quarters were extremely bullish that our share price does not represent the value of our organization.
We are going to every line of our business organically and are ahead of schedule on optimizing the HMP acquisition.
The regulatory landscape is not only stable, but favorable tire unique and specific business model.
While we have a pipeline of acquisition targets ready we have proven that we don't have to rely on buying companies when the conditions arent right.
Our view is that our company is reasonably recession proof with the ever increasing need to taken care of agent of an aging population yearning for more comfortable and quality care in the home.
We are proud to highlight our historical results to investors demonstrating <unk> proven track record of execution.
Health Care's dedication to delivering high quality specialized services and a relentless pursuit of innovative solutions continue to drive our success and set us apart as leaders in the field.
As we move forward, we remain steadfast in our mission to provide the best care for our patients and to lead the industry.
Commitment to excellence innovation, and unwavering dedication to improving patient outcomes.
Our focus remains on treating the underserved population and.
And we are well positioned to shape the home respiratory care industry for the better.
Ultimately benefiting our patients and stakeholders alike.
This concludes our prepared remarks, thank you and we'll now open up for further questions.
Thank you we will now be conducting a question and answer session. If you would 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 would 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 while we poll for questions.
Thank you. Our first question comes from Brooks O'neil with Lake Street Capital. Please proceed with your question.
Thank you very much good morning, guys terrific quarter.
Yeah.
You just keep executing and.
Fantastic. So let me ask you one or two quick.
Quick questions. The first one is.
I know that sleep is a relatively small part of the business.
But ive heard anecdotally that there has been some softness.
In the fleet market could you just comment on whether youre seeing that in.
Whether you think you can do something to offset softness in the business in the industry or whether it's something that's gonna be a headwind for a period of time.
First off we couldn't disagree more that it would be a headwind for our business I mean, we're experiencing 11% sequential growth in the sleep market.
We have not seen any lack of adherence to tap equipment, whether it be on the front end as finding our patients are on the backend the resupply of folks giving up on therapy.
I'm, commenting on the market for a reason and my comment there Brooks just to let everyone know how how large of a field we have a patient I mean, we've got 150 million patients over there in.
In the country and we only have a 5% to 8% market penetration on those guys. We got a lot of work to do but we have seen no effect from these <unk> drugs they've been around for what a year and a half two years now and we've been in growth mode sequentially in sleep through that whole entire period.
Yeah, even furthermore.
If you pay attention to some of our sleep manufacturers you can draw a similar trend in storylines as well yeah, they're commenting that theyre not seeing any lack of adherence to sleep or any stunts to their growth. So oh look I get it you know its something its storyline, and then everybody needs to beat it up and.
And be skeptical for sure for from Investor standpoint, but but look it's we're we're very hear me loud and clear we are not experiencing any decline in sleep, it's only growth and we expect to see more of that in the future.
Yeah.
Let me ask you one other question so I have some sense that.
One of your equipment suppliers Philips has had some issues with the government in.
Can you comment on if that affected you in any way and if so.
Maybe how you respond.
Yeah, I mean, obviously Brooks this has been going on for a few years now the recall affected the sleep apnea devices as well as the ventilators. The ventilators never were to be taken off the market because the lifesaving device component of it as we understand the majority if not all of the <unk>.
Sleep replacement devices have been taken care of if it has not completed its very close so we anticipate that they probably come back to market with sleep apnea devices at some point.
Call it relatively soon not sure when that happens obviously, there's others in the market that are filled that need on the ventilator side.
They are in process of.
Working with the government on some sort of remediation.
Once again that has not really impacted our business too much there's operational logistic type things that we've dealt with we have been dealing with those for three years, but we have no looming issue that we are aware of.
Our anticipation is that that remediation gets done at some point over the next few months, but until then it's just business as usual.
Great.
Just one last question so.
I hear from some people who think.
Why med is alike.
Some other companies in the marketplace.
I think those other D&B companies are characterized by a growth by acquisition.
I like to call them trucks and muscle.
They pretty much have a bunch of trucks in the muscle guys drive them to the patient drop off the equipment and keep moving.
Could you just give us the.
The Reader's Digest version of why that is not by Mad and why you think your model creates tremendous opportunity in the marketplace.
Yeah, I mean, it goes back to our complex respiratory business, which makes up 58% of what we do you know that's the foundation of our scaling around the country. We never had the model of being a wheelchair Walker bed commode type of business that was that'd be your one <unk>.
Top shop, all things everything DMA and so you know that lends itself to where do you where do you grow we don't have to buy people in order to grow we are we just need another person that we a clinician that we can train how to walk and talk the biomed way, we get in front of the sales process work and shoulder to shoulder.
With that Pulmonologists inside of the facility and we become an extension of their care and <unk>.
<unk> resource to the hospital case managers, who are who are paired up equipment providers with the patients and so at the end of the day, it's two different separate business models and you are right.
The important thing to focus on is it's a it goes back to our spin out the reason that we spun out back in 2017 is that we had two different models for growth in two different needs of capital from the folks that purchased by May.
They needed to go out and buy other companies in order to grow we did not need that we needed to go out and find people and put personnel and so those that that is still dominant here today and is a trend in our growth plan and model and it really is the differentiator from us in the <unk>.
Petitor.
Both models are successful so I'm not I'm not throw in any of our peers or competitors under the bus. These guys have their own ways of growing we have our own way to go in there. They are very different in our opinion and we shouldnt be lumped into the same category.
Absolutely thanks for the KC and Todd and thanks for all the good information to have a nice day.
Hi, Brooks thanks.
Thank you. Our next question comes from the line of Doug Cooper with Beacon Securities. Please proceed with your question.
Yeah.
Yeah.
Oh, Oh, you're up.
Doug I don't know, if you're on mute or not but we can hear you.
Okay.
Can you hear me.
I can hear you now.
Okay.
First some first of all great quarter, and I would say the market is not a you know really.
So it's taking the numbers in the consideration so let me circle back on <unk> comment on first of all on the G. O P. One drug as you start getting into the fact that the market thinks it seems to think that the respiratory illness is going away in sleep apnea is going away.
I think it's worth remembering that.
As you said, 17% of your business is sleep in other words, 83% is not impacted by these G. L. P. One drugs can you just first of all make a comment about COPD and.
The GOP drugs I'm, assuming there is zero impact on that but I just wanted confirmation from them.
Yeah, that's correct I mean, you know the COPD patient.
It is totally different than a sleep apnea patient we are so so I guess complex respiratory as we define it is inclusive of percussion vest inclusive of oxygen and then ventilation and so that business has really not affected our you know I guess targeted.
By G L P. One drugs.
There's actually some studies out there that say that the skinny or the patient is the more susceptible. They are two deaths in the C. O P. D realm at the end stages of their life, but.
We're where we're trying to I'm glad you brought it up because we do want to differentiate the fact that yes sleep, which is a bullseye for the G. L. P ones and in a lot of People's eyes is only 17% of our business and the rest is not affected by it.
So, let's just focus on that 17% for a second as to them and you know when resume reported the results of I guess earlier in the week.
They on their conference call they talked about that.
They are actively tracking a cohort of many thousands of patients patients who are on G. O P. One medications as well as Redman resumes the Pap therapy and they are not seen any significant change in pap adherence.
Or any reduced participation in resupply programs versus the control group so.
In their opinion it seems to be that even if the case, where some patients that are on the GOP drug those patients maybe we're in the sort of morbidity obese category and were outside of the.
The health of the mainstream healthcare system anyway.
Bringing those back into the fold actually could help stimulate their business because sleep apnea devices are part and parcel with.
Our road to wellness any thoughts on that.
Yes.
The team is is that everyone's trying to figure out what the effects are are going to be on their business. I mean, it's interesting that resumes seem to be conducting their own studies and and I like the sound of that the fact that you have boats with a BMI body mass index of 30 30.
235 that are not going into the primary care system, but hey, if you want a G. L. P. One drug you're going to have to go see your doctor and so.
Sure <unk>, what might be a part of it but I guarantee you sleep apnea is gonna be needed as well. So their theory is that if we get more patients going to see the doctor.
I helped grow the sleep apnea business, because we don't see this as a cure to sleep apnea. It could be something that's helpful. In the treatment of the overall patient experience, but it's not going to cure sleep apnea and so.
That's an interesting thought but again these are all good ideas at this point from folks trying to communicate what might be ahead for the business and I support what resume staying right. There I'm just going to reiterate what we said in our prepared remarks, and maybe what Hawaii.
Applied to Brooks on is that I think the G. L. P. T drugs had been around for probably a year and a half two years in kind of wide mass and we have grown our sleep business not even including <unk>, we have grown our sleep business every quarter from that point to now and really the growth I'm not sure it's ever been as high as it was three <unk>, which was 11%.
So kind of at.
The height of the scare of the sleep business going away our sleep business is growing as much as it ever has so we're not exactly sure. If what <unk> is saying is that more people are going to the physician and this is a potential treatment, but whatever has happened and we're not seeing a decline.
That is just fast.
Can I tell you this focus over the next comment a question just on the resupply business.
I think Casey you mentioned that you know sleep.
Sleep is 17, 17% of business of overall revenue and the resupply.
45%.
Of that 17% is a resupply business what you know what can we expect from that resupply business in other words.
You know as you grow your patient.
Count what what can the resupply business grow too.
And I'm, assuming that's a pretty profitable.
Business, because theres no real G&A associated with is essentially a reorder business some fairly high gross margin business. So is that one of the keys as well that we saw in your in your EBITDA margin expansion from 22%.
Last quarter, 19% a year ago to the 24, 5% this quarter.
Yeah, I'm going to try to unpack most of that Doug It's 47% of current year current quarter sleep revenue was driven by re supply and our margins are somewhere in the mid forty's on that piece of the business as Youll remember going back to our kind of national rollout, obviously over the last few years. It is clearly the piece of the business that you won.
To get to the rental part of it you can make money off but you gotta get them comply and you've got to get the resupply order to come in and then it becomes more of your annuity kind of low G&A more technology and drop shipping.
What we would say is every month that we stack on another set of active patients in Pap and we're doing that every month going forward, it's only going to grow the future re supply market and therefore, unless we just wildly accelerate our rental patients the percentage of revenue coming from <unk>.
All I ought to just keep growing quarter after quarter.
I don't know what kind of terminal percentage of that looks like for people who've been doing this for call. It 10 years, but my guess is probably somewhere up two thirds of your revenue could be driven by re supply and that ultimately is going to really be good for that division and the overall EBITDA flash gross margin for biomed.
And yes that that expansion helped along with pretty aggressive cost management that we've been doing around the country and just scaling of the business, bringing in an H M. P was obviously helpful to margins as we've centralized some of their processes and got via the economies of scale of <unk> within that organization, we've been able.
To drive their EBITDA margin, which is impacting so.
A lot of different things, but clearly our focus on resupply in the sleep business and bringing in <unk> re supply has been very beneficial to our bottom line.
Okay excellent and then just my last my last question is just around the the core vent business, 12% year over year growth in patient count which is solid.
But it seems to me that you know given you are a major player in this and in the U S. A top five player.
The market seems still a little slow to be taken off to what we may expect given the efficacy of the therapy. So you know what is the bottleneck in terms of the physicians looking to prescribe the therapy.
Yeah, I don't think it's a I mean.
It's still going back to research and data that which has always been something that I've harped on Doug.
It's amazing when we go into new areas, how we're still educating pulmonologists on the fact that the available.
This ventilation services available in the home for these patients and so.
So that tells us that we've got to embrace the research and studies that we have certainly put out.
The other thing that Youre, seeing which we consider a green pasture here is that Medicare advantage is increasing okay and while they only make up I think they are increasing with us too. So we went from 11% to 12% this quarter on the payer mix, but they're growing they're representing 50% of Medicare right.
Now.
That's why we're so fired up about the 2024 roll because right now they tend to deny expensive care just without clinical reason and so you know they can we've gone through some denials with those guys on <unk> ALS patients for example that are on their deathbed.
They've had event and then we go on for prior off in a Medicare advantage plan will will deny the real and so that's a sad situation, but that's one that is broken and the opportunity to fix it remains a great opportunity a great challenge and opportunity for us as well to grow in the coming years.
So as that rule the way that works is it 2020 for Medicare advantage has to follow Medicare clinical guidelines and so if they're not we'll now have a forum to be transparent with Medicare on who the bad actors are out there that are denying this lifesaving care and so.
Those are I'm being very blunt about those are some of the struggles that we deal with on a day to day basis, but it's very it's a big opportunity for growth for us once once we get those guys lined up with us and.
And I think it'll happen okay.
Okay. That's it for me guys. Thanks very much.
Oh it does.
Thank you. Our next question comes from the line of Michael Freeman with Raymond James. Please proceed with your question.
Hey, Casey and Todd. Thanks, so much for taking our questions and congrats on the quarter and the smooth integration of the <unk>.
Just one quick one for me today.
And it leaves us.
The last question very nicely.
How I'm.
I'm looking at your diverse player base and this is just as strong in itself and I'm looking I'm wondering.
How are you might optimize just payer mix moving forward, which which of these payers.
Is most accretive to <unk> and like how do you see this moving in the future. Thanks.
I mean, you know you've heard me talk about Humana and United in the past Michael those those guys are not in network with US I mean, some of that is our choice over over there is just with with United It's rate driven and it doesn't it does does it make sense for us to do it at the rates that they pitch with humana.
They've made a decision to try to go with a national sole provider with road Tech and Apria, we are where we are.
Pretty bullish and confident that we're going to have to wait and see how successful that is to support the Humana network. We we predict there's going to be patient access to care issues.
But we'll have to wait and see there.
So.
Those are the two biggest pay.
Payers that we would love to be a network, whereas we'd love to be taken care of those folks, but frankly, we've never been in network with them. So that's like historically, it's not something that.
It is in our numbers that we lost out on it's like we've always been struggling with those two payers and its an opportunity once again a challenge for us that is a great opportunity for us to fix down the road and look when you save in money. The more you put this noninvasive ventilation piece of equipment out on the patient at the right time the more.
Money, you'll save once they wake up to that it's a win win for everyone. So we will get there at some point, it's just taken time.
Oh.
That's super helpful I guess.
Going one level up and looking at the different segments of payers for instance on your on your Pie chart, your Medicare Medicaid commercial Medicare advantage and private.
Slices of that pie would would find would be looking to expand and would be most accretive going forward.
I think the short answer is we're looking to expand all of them quite candidly because there is an underserved population and all of our products across all of our payers, we think probably from a which piece of the pie will grow from a percentage standpoint by Casey was saying the Medicare advantage likely is the one that wins out.
Because there's just more and more patients moving into that program and historically it has not made up as much of our payer base at.
At the end of the day, we don't take much bad business around here and so from an accretion standpoint pretty much any dollar that comes into that Pie chart is really making a bottom.
Bottom line money for us. So we're not we don't have a strategic objective to say, we really want to grow this piece of it.
Okay, Alright, Thats really helpful. Congrats on the quarter and let's hope the market catches up.
Thank you Michael.
Thank you there are no further questions at this time I would now like to turn the floor back over to management for closing remarks.
Yeah, we just want to thank everybody for their time today follow up with US if you have any questions and.
Thanks, again to all of our employees out there producing these wonderful results that we're happy to share with the market. Thank you.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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