Q3 2023 CareMax Inc Earnings Call
Good morning, and welcome to the Carmax, Inc. Third quarter 2023 financial results and conference call.
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After the Speakers' remarks, there will be a question and answer session.
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Yeah.
I'd now like to turn today's call over to Roger Oh, Senior Vice President of Investor Relations. Please go ahead Sir.
Good morning, and welcome to care, not just third quarter 2023 earnings call.
I'm, Roger Oh, Senior Vice President of Investor Relations and I'm joined today by Carlos de Soto, Our Chief Executive Officer, and Kevin We're just our Chief Financial Officer.
During the call we will be discussing certain forward looking information.
These forward looking statements are based on assumptions and assessments made by care matches management in light of their experience and assessment of historical trends current conditions expected future developments and other factors they believed to be appropriate.
Any forward looking statements made during this call are made as of today and K Max undertakes no duty to update or revise such statements whether as a result of new information future events or otherwise.
Factors that could cause actual results develop and business decisions to differ materially from the forward looking statements are described in the company's filings with the SEC, including the section entitled Risk factors.
In today's remarks by management, we will be discussing certain non-GAAP financial metrics. A reconciliation of these non-GAAP financial metrics to the most comparable GAAP measures can be found in this morning's earnings press release.
I'd like to turn the call over to Carlos.
Yeah.
Thank you Roger good morning, everyone and thank you for joining our call.
Today I want to focus on a few key themes that reflect the value that we're delivering today and are poised to deliver in the years ahead.
First I'll provide an overview of our third quarter financial performance and our updated 2023 outlook.
I'll outline the steps we are planning to take to accelerate our path to positive free cash flow, including a comprehensive business review.
Third I'll share promising performance metrics and our national Msos that gives us confidence in taking increasing risk in our Medicare advantage book of business.
Additionally, we see indications of favorable MSP and ACO reach performance in 2023, supporting our expectation for meaningful cash generation towards the end of 2024.
Let's begin with our quarterly results Medicare advantage membership grew by 4500 in the third quarter to 107000.
Total revenue in the third quarter was 202 million keeping us on track for our full year guidance of $752 $800 million.
Adjusted EBITDA for the quarter was $2 million impacted by $6 million in de Novo Preopening costs.
And post opening losses and $13 million in unfavorable prior period developments related to the first half of 2023.
Although we remain encouraged by our underlying profitability, excluding the impacts of PPD, we think the amount of prior year and prior quarter developments experienced year to date warrants updating our full year adjusted EBITDA guidance to a range of 15 million to $25 million.
We believe our rapid growth in membership payer relationships and geographies has resulted in greater near term variability in our financial results. If you recall, we added Medicare risk lives across Broward County, Orlando and Tampa in 2021, and as a result conducted significant integration activities related to this membership throughout.
2022 and 2023.
Today, we operate our clinics along a single set of processes and are continuously working to improve our technology workflows.
Efforts are designed to reduce the magnitude of prior period development in the future and we are optimistic that performance patterns will normalize beyond this initial phase of our growth.
From a medical management perspective, we believe our clinical efforts are helping to keep cost well controlled.
The increase in outpatient surgical volumes observed last quarter has subsided and remained stable throughout Q3 and inpatient admissions also trended downward for another consecutive quarter.
We continue to leverage our specialty network to control a greater portion of external provider costs driving high quality preventative care for a dual heavy members over 50% of our specialist volume is now being handled in house at Cemex up from less than 30% a year ago, which we believe is contributing to higher.
Quality of care and better outcomes for our members.
In our government BBC business. We are pleased with the strong results achieved in performance year 2022 combined our MSP and ACO reach entities generated over $50 million and earned savings representing an approximately 5% growth savings rate.
This is a record percentage savings since our acos initial participation in MSP under prior ownership.
To put things in perspective, our largest ACO with close to 100000 beneficiaries.
Highest percentage of dual eligible patients and the highest percentage of seniors, aged 85 and above among the top 10 largest MSP acos.
We believe this growth savings rate validates the caliber of the provider network infrastructure and team members that we have since on boarded to our organization.
We are further encouraged by year to date data points, suggesting even greater shared savings in 2023, which Kevin will discuss later.
Next shifting to our second theme of accelerating our path towards sustainable positive free cash flow.
In light of the changes in rates of reimbursement utilization patterns and the capital markets environment, we have taken proactive steps to bolster our operational flexibility, while maintaining our track record of clinical excellence, we conducted a comprehensive business review during the quarter that covered several critical areas, including an assessment.
<unk> of our cost structure re prioritization of our medical management resources and refinement of our existing portfolio and upcoming pipeline of medical centers.
First we have conducted a detailed examination of our cost structure, including optimizing staffing levels in both our corporate and center operations. We expect net savings from these actions to materialize more floating.
Q1 of 2024.
We have reallocated resources to bolster our care management platform. This includes the expansion of our most successful care programs.
<unk> increased oversight from our physician leadership team.
With a more nimble clinical org structure, we've also become more agile at pivoting team members to evolving needs across our MSL in clinic populations targeting patients with the most complex conditions.
For example, during the quarter, we successfully expanded a pilot of our higher utilize the program to match dedicated care coordinators with the most acute 10% of patients overseeing their needs throughout their participation.
In that program, we achieved over 40% lower inpatient and ER utilization compared to an untreated control group. Another example, the disease specific program focuses on enhancing outcomes for patients that heavy use specific chronic conditions, helping to drive lower part <unk> utilization.
Third we are evaluating our portfolio of medical centers for efficiencies, including opportunities to moderate the pace of our de Novo development and consolidate existing sites.
As of the end of October we have opened five new clinics this year, including four along the space coast of Florida, and one in the Bronx, which marks our seventh location in New York.
At the same time absorb smaller older sites into larger newer ones nearby generating synergies from higher capacity utilization per location.
Looking towards the remainder of this year and into 2024, we continued to maintain a pipeline of sites under development.
However, we plan to carefully evaluate the timing of each of these sites on a case by case basis and aimed to balance capital allocation in this area with our other clinical and data priorities.
Fourth in our NSO, we are turning our focus toward optimizing performance and our current Medicare advantage contracts.
While we continue to believe in the growth opportunities ahead, we are becoming more partial toward membership we believe to be immediately accretive to EBITDA.
Payers with a high degree of strategic alignment and contract terms that don't encumber, our near term financial position.
For these reasons, we are now targeting the low end of our previous year and MA membership guidance range of 110 to 120000, which we believe still positions us for EBIT growth from our MSR MA contracts in 2024.
Moving onto the third theme of the day. We believe we are building positive momentum heading into 2024 since closing the acquisition of our National MSL. This time last year, we have embedded our leadership team across the footprint of our new markets. We are encouraged by the receptivity of our affiliated physicians and strive to have aligned long term.
Relationships with Pcp's across the network to.
To date, we have implemented our care optimize technology with 100% of these practices, providing two way data feeds for real time insights.
Furthermore, our quality team has now expanded coverage to 95% of the practices within our network assisting providers and promptly addressing care gaps.
As mentioned earlier, we believe our robust care management program serves as a differentiated advantage offering extensive care coordination support to both our patients and Pcp's. This type of comprehensive support equips, our MSL positions with the resources needed to excel in our various value based care models.
As we have discussed in the past are negotiated Medicare advantage contracts are designed to have a glide path towards increasing risk overtime. A typical arrangement allows us to assume limited to no downside risk for the first 12 to 24 months, while we implement our holistic care process.
As a reminder, in many cases, we may have the ability to pull forward full risk. If we believe doing so would be accretive to EBITDA.
As we enter the second year of our initial quarter of 70000 MSR members, we anticipate the investments made this year.
The potential to drive year over year improvements in medical margin and EBITA.
This in turn will position us to unlock further value within our platform in the coming years as we move to full risk.
In closing we are encouraged by the performance of multiple areas within our business and the focused direction of our organization. We have realigned the organization as we seek to improve the efficiency of our corporate and center operations.
Our government Acos are achieving robust results and we are building strong partnerships across our MSR position networks, providing a solid foundation for continued growth in 2024.
With that I'll now turn things over to Kevin to provide more details on our financial performance in the third quarter.
Thanks, Carlos and good morning.
As our third quarter results show, we are still in the early stages of executing our integrated value based care strategy.
Rapid growth in our Medicare advantage book of business has created some near term fluctuations.
We are working closely with our health plan partners to ensure completeness and timeliness of data and over time, we expect these efforts to translate into more predictable financial outcomes.
To reiterate Carlos his comments, we are being responsive to these developments and to market factors by focusing on streamlining our operations and reducing our net use of cash.
Now, let me discuss the third quarter results, which include an $80 million goodwill impairment charge, primarily related to the change in our stock price during the quarter.
You may refer to our earnings release and presentation for a reconciliation of GAAP to non-GAAP metrics like adjusted EBITDA.
I'll first go over the performance in our Medicare and Medicaid risk lines of business followed by progress we have made in our government BBC business.
Like prior quarters I will also discuss the impact of prior period developments of note substantially all of the PPD recognized in the third quarter relates to the first half of 2023.
As we experienced in material prior year development this quarter.
Total revenues were 202 million, bringing year to date revenues to nearly $600 million.
We believe this puts us on track to meet our previously raised full year guidance of $750 million to $800 million.
Medicare risk revenues were $134 million and impacted by approximately $11 million of unfavorable prior period developments related to revenue accruals.
As Carlos noted shortly after the business combination of Carmax and IFC in June 2021, we announced several acquisitions in Florida that drove over 50% growth in Medicare members in just six months.
We have worked with our health plan partners over the past two years to integrate these members by consolidating contract terms claims reporting and fund reconciliations.
Those integration activities are now largely complete.
We have consolidated our clinic operations into a single EMR and established standardized more robust documentation processes, which are designed to reduce the magnitude of PPD is in the future.
Finally, it's important to note that these acquired members who are already in full risk growing contracts.
Take a different approach to the newly contracted 70000, Medicare advantage <unk> patients by introducing them into our ecosystem with a glide path to full risk over time.
And Medicaid Q3 risk revenues were $24 million down from $30 million in Q2, including $2 million of unfavorable prior period development from retroactive removals of Medicaid patients in historical periods.
Membership declined by about 2000 from June slightly favorable compared to our projections.
We continue to expect further attrition through year end and normalization of Medicaid medical expense ratios towards pre COVID-19 levels.
Reported an external provider costs include approximately $9 million of unfavorable medical expense PPD related to the first half of 2023.
We believe the bvd was primarily driven by higher fee for service claims expenses and by lower reinsurance recoveries than previously accrued.
Among the developments were a couple of larger claims from earlier this year, which are also contributing to increased <unk> and Q3.
We estimate the combination of risk revenue, an external provider cost PPD drove a roughly 200 basis point increase in medical expense ratio to 88% reported in Q3 or 83% reported year to date.
As you can see on page 13, we believe that excluding prior year developments MSR member mix and the year over year increase in the 2023 benefit card utilization underlying centers in New York continued to perform within historical ranges.
Keep in mind that for this year to date view, we only considered the prior year developments disclosed in the past couple of quarters since the prior period developments recognized in Q3 are reflected in the 2023 numbers.
Flex card utilization in the third quarter saw a slight uptick compared to Q2.
As discussed on our prior quarter call. We continue to work with our health plan partners to strike a balance between maintaining a competitive service offering at our centers and supporting our members with supplemental benefits that have not historically been managed through traditional utilization management, our case management programs.
Based on our analysis of 2020 for benefit plans, we primarily expect a combination of increased benefits in some plans and reduced benefits and others to result, an external provider cost remaining at a consistent level in 2024, when compared to 2023.
Now onto government BBC.
Q3 government revenues were $28 million, bringing nine months revenues to $60 million.
As Carlos noted strong performance in 2022 and favorable expenditure trends year to date drove increased optimism and our projected 2023 shared savings for MSP and ACL reach.
So far in 2023, we believe the data suggests continued improvement and performance utilization.
The utilization metrics, including readmission rates and post acute facility days are trending downward and overall expenditures per beneficiary are tracking favorably against benchmarks.
In addition year to date enrollments of high risk patients and nearly all of our care management programs are ahead of plan given us greater confidence in generating incremental savings in the back half of this year.
For these reasons, our 2023 government BBC accruals now reflects an expectation of gross savings in the mid to high single digit percentage range from the mid single digit assumed previously.
Related to this increase we booked 8 million of favorable government revenue this quarter related to the first half of 2023, partially offsetting the Medicare and Medicaid risk PPD of $22 million. Please.
Please see page 12 in our slides for a summary table.
Let me provide an update on our endless aisle Medicare advantage population numbering approximately 70000.
In total, including full risk and partial risk numbers. We believe the MSL is performing at a slightly profitable medical margin year to date.
13 individual contracts representing about a third of those lives are currently an upside only arrangements.
Contractually begin to take some amount of downside risk in 2024, along with a higher share of upside risk.
Based on information, thus far from the health plans, we expect those contracts to be accretive to medical margin and adjusted EBITDA in 2024.
More generally we have been receiving financial reconciliation reports regularly from most health plans, we have greater visibility now into our MSR members rich characteristics compared to when we first gave 2023 guidance.
We believe we are on the right path towards giving more predictable guidance going forward.
Reported adjusted EBITDA for the quarter was 2 million inclusive of $13 million of net unfavorable PPD and $6 million of de Novo preopening cost and post opening losses.
As Carlos mentioned, we have conducted a comprehensive review of our operations in light of the recent ppd's, the higher cost environment and the integration of the NSO into our strategy.
In particular.
We implemented cost measures, including delaying de Novo investments and re prioritizing resources towards clinical management that we expect to result in cash savings in 2024 and improved medical performance among our full risk population.
Absent further material PPD headwinds, we believe the third quarter adjusted EBITDA suggests the potential to approximately reached the lower end of our prior full year guidance of $25 million to $35 million.
Additionally, we would still expect part D limits and patients hitting stop loss deductibles to be seasonal tailwind to medical margin in the fourth quarter.
However, we are considerate of the potential risks around Medicare final sweeps further unfavorable development in medical expenses and other COVID-19 uptake or early flu and uncertainty and yearend utilization of flex card benefits.
All of these reasons, we feel it is appropriate to lower our full year adjusted EBITDA range to 15% to $25 million, including expected de Novo preopening cost and post opening losses of $25 million.
Cash and equivalents were $32 million at the end of Q3.
Cash used in operating activities was $19 million narrowing from $22 million in Q2.
Following the end of the quarter, we repaid the $35 5 million facility with proceeds from our 2022 MSP payments.
Our $60 million <unk> remains undrawn and we expect to draw to fund operations through our next SSP attainment in Q4, 2024, after which we expect to be sustainably free cash flow positive.
Before going into Q&A I would like to leave you with some comments on how we're thinking about 2024.
First with normalization in our Medicare risk revenue accruals and a recalibration of our completion factors, we expect lower risk of unfavorable prior period developments going forward.
Second we believe the data already suggest year over year growth in government BBC shared savings in 2023, which we see further opportunity to enhance in 2024 third we believe our MSL and may contracts will continue to contribute positive medical margin and EBITDA in 2024.
And as our data capabilities improve so does our ability to clinically manage this population.
And fourth we are proactively right sizing our cost structure for the new risk adjustment and benefit environment running a more efficient business, while maintaining our high standards of care for our patients.
Operator, we will now take questions.
Thank you at this time I would like to remind everyone in order to ask a question. Please press star one.
Our first question comes from Jay lender, Zhang with <unk> Securities. Please go ahead.
Hi, guys. This is eduardo on for Jim Linda.
Maybe just to go back to the comment you made about your analysis of 2020 for benefit plans and.
Thanks, Don I'll provide a coffee and comparable in 24 versus 23 can you just flesh that out a bit is that.
Around the benefit cards or is that just like regular utilization that youre seeing.
That'd be helpful.
Hey, Eduardo.
It's Kevin.
We did take a look at all the benefits obviously focused on the concentration of those planned benefit packages, which we have the majority of our patients and what we're seeing is some of those plans are investing a little more than the benefit card. Some of them are actually retracting and certain plans and will benefit cards.
But what we saw as the ones that we're actually improving the benefits under those benefit cards are actually have other historical co pay mix that were let's say zero for like emergency room or ambulance now have co pays on a $75 50 $150 yourself.
So we're going through that list to understand.
How the benefits in totality.
Potentially looks for 2024 and based on our assessment, that's where we're coming up with similar to what we're seeing in 2023 from a overall total cost standpoint.
Gotcha, Okay, and it looks like the impact of the benefit cards, maybe worsened in Q3 versus what you guys had had in the first half was that just I guess truing up some first half experience or maybe just frame the benefit card impact in the quarter.
Maybe the expectation in Q4.
Yes, it's a good callout, yes, so as we.
Dive a little deeper and looking at it explicitly what's being included in benefit charges. There were certain health plans that are including OTC benefits.
And that card.
<unk> expenses and so we had to go back specifically for certain Pvp's.
To understand what the impact of OTC was we had to include OTC in the prior year and the current year to do that analysis, So I would say.
This is probably the underlying assumptions haven't changed too much the impact was relatively consistent year over year. We just needed to include that OTC component when we did the year over year comparison.
Alright, and then just the last one from me the <unk> 24 revenues, it's still a pretty wide range 150 to 200 and given that you are less than two months away from the end of the quarter. What takes you from the low end on revenues at the high end.
Yes, so there's a couple of things one we've talked about this before obviously <unk> on the Medicare book of business tend to trend down throughout the year as your more acute patients expire and youre, bringing on newer patients.
So the <unk> tend to go down. Additionally, we do expect Medicaid premiums to trend a little further down from what we have kind of in the run rate in the first the first three quarters of the year.
Just due to that the Redetermination components and then we mentioned this in our prepared remarks, but we're also cognizant of.
Potential on the Medicare final sweeps, we want to make sure that that we have that cushion. If you will kind of in our guidance numbers.
Okay. Thank you.
Our next question comes from Jessica <unk> with Piper Sandler. Please go ahead.
Hi, guys. Thanks for taking the questions. So I guess I wanted to start with just let me see you all comfortable raising the the accrual for 2023, MSP and ACO reach just given the downward $2 2 million.
Revision related to the final 2022 settlements.
In 2000 and frankly.
Yeah, So hey, Jessica it's Kevin Yeah. So, we obviously work with our external actuaries and were looking at trends that we're currently seeing in our data. There is a couple of data points. One is we looked at historical trends for the past couple of years.
Historically, there's been somewhat of an uptick that happened on those beneficiary costs from Q1 to Q2, we kind of saw the opposite actually happen. This year from Q1 to Q2 and.
In addition to that we've talked about our care management programs kind of being ahead of schedule from an enrollment standpoint for those high utilizes.
And we're tracking that very closely and seeing that the opportunities there that we anticipate to come to fruition or going to exist in the second half of the year.
Over what we've kind of experienced in the first half of the year. So it's a combination of a multitude of things.
It gives us confidence in that number.
Got it so can you maybe give us some color on kind of the maturity or the progression of savings rate.
In each program so year, one tier two tier three maybe and then just the level of visibility that you got from CMS in year versus.
In the subsequent year or two the performance yes.
Yes, I don't know.
Okay.
Sure.
Don't know if we have the year over year over year improvement what I would tell you is that this year is 2022 payment.
It was one of the best that we've seen.
<unk>.
The acos kind of started under prior ownership.
Have seen incremental improvement over the few years I want to say you know going from 2% to 5% and now returning.
Does that at this point.
And I'm sorry, Jessica what was your second question.
Yeah, just interested in kind of the level of visibility that you've got from CMS over the course of the year specifically in MSP and then in the subsequent year to that performance yourself, how does your visibility kind of trend in 2022 for example.
During the performance here and then what are you learning over the course of 2023.
Got it.
Another good question, yes, so the CMS data, we get similar to our health plan data has lagged.
So as we get visibility into that information that's really obviously, we have visibility into our our cohort of patients are beneficiaries. It's really the benchmark that we're really keeping an eye on.
I can say is that the third party actuary, who assist us with that is is relatively accurate from from those standpoint, obviously it changes.
And there is some fluctuation youre always going to have fluctuations when when youre dealing with the magnitude of data that we have coming in.
Got it and then my last question is just as we think about 2020 for kind of total Medicare advantage membership given some of your comments about being more I think.
Okay, maybe just or just about being disciplined in terms of expansion. So should we think about total Medicare advantage lives as being roughly flattish year over year with just the migration between partial and full risk.
Thanks.
Yeah. This is Carlos yes, I think it's a good point I think given the environment. What we are going to focus on for 'twenty 'twenty four is operation's efficiency.
And cash flow, so I think when.
When we think about giving guidance for 2024 and.
The incremental growth that was expected it's something that we're definitely going to take into account and we're probably what I can tell you now is that we're going to be a lot more focus.
On quality and making sure that we're integrating the membership that we currently have and that it's profitable business more than anything else and thats going to be prioritized over everything else in our business.
Got it thanks.
Again, if you would like to ask a question. Please press star one.
Our next question comes from Brian <unk> with Jefferies. Please go ahead.
Hey, good morning, guys. Thanks for taking my question its Jackson on for Brian.
Maybe if you wanted to touch back on the commentary on 2024.
NAR.
Just to make sure I'm understanding it correctly, so when youre, giving commentary that should be roughly flat to 23 benefit cards, maybe being one thing we can keep to the side here.
Pretty pretty good detail on that front that you gave but just understanding kiwi and what the assumptions are baked in there I guess.
Is the thought that the changes you've made operationally are going to minimize PID and thats. It is there more reserving thats gone in this year in the back half with the guidance change Thats going to help for next year, just some thoughts I guess on both Q4 <unk> and then how we should be thinking about that versus your.
Commentary.
Yes, I think that's right, where we're already ingesting 95% of our claims data through.
Through all of the MSR members that we have that we've brought on board.
A lot of work has been done on the care optimized platform.
That helps us assess.
And more and more accurately determine kind of what the accruals are going to be and we believe that that will.
Significantly minimize the PPD and <unk> D that we that we experienced this year.
If you remember and I talked a little bit about it earlier, we ingest it a lot of a lot of membership not just <unk>, but also in the Florida region over the last couple of years, so, bringing all of that and integrating that whole process being led to.
For several different reasons.
More QAD in PPD, and what we would anticipate but we have a much higher degree of confidence that.
So we've mitigated most of that I will turn it over to Kevin there just to add I.
You were saying something.
Yes.
Right.
As we look at our medical expenses I think probably the best way to look at it is from.
From an MBR standpoint, we don't anticipate.
Benefit cards going away anytime soon and so.
The reason we provided that slide is really.
To get a sense of the underlying historical performance versus the current performance on more of an apples to apples comparative from what the benefits look like however.
However, as we look into the future we.
We have to take that in consideration. So I would say <unk> is probably going to be.
Assuming at this point potentially relatively consistent obviously, excluding prior year type development.
When we closed the quarter, we're always looking at the best available data that we have.
Working with our actuaries and making sure that our assumptions are actuarially sound.
So we never anticipate PPD or PID, because as we close the quarter. We believe we are adequately reserved.
Got it that's helpful.
And then maybe touching back on the <unk>.
For 2024, I, just want to make sure I'm understanding your commentary correctly, so it sounds like perhaps.
The approach on the MA side is going to be really ramp the centers, you've built out already a little bit more measured approach on de novo openings are more selective perhaps and then as it relates to the <unk>. So it sounded like maybe not as much slipping on risk.
As maybe you've talked about previously, but a focus on.
Maybe upside only or payments for GAAP closure in some of the contracts to help the profitability is that the right way to think about it.
Yes, I think thats exactly right, we're going to be focused very much on.
Making sure that we have these were only focused on the de novo's that have a capital light structure, meaning capital light trucking.
Or aqua hires right and then as we think about the ingestion of membership either partial risk or full risk we're going to be very.
Pretty thoughtful about the members that we add on in 2024, I think just given the changes.
In the environment cost of capital et cetera, we want to make sure that we really pivot and focus the organization to producing cash flow.
And making sure that we're really thinking about the membership that we're adding.
It's going to be.
Theme of 2024 for the organization.
Got it Okay, and then last one for me just on the fourth quarter.
I guess.
Trying to pull the two pieces of parts it seems like the benefit impact or the sub card impact should be relatively the same on the other side of things.
The performance you've seen year to date.
And does it sort of track with historical trend in terms of what we should expect on stop loss kicking in in the fourth quarter. It seems to be implied in your guidance, but just any commentary there would be helpful.
Yes, that's right.
There is obviously seasonality in the business, we do expect some tailwind specifically around part D limitations and that the stop loss components look and I think we're just mindful of the fact that.
We've had PPD in the past we had it this quarter.
We want to make sure that we allow ourselves some a little bit of a cushion there.
Potentially for PPD in Q4 and Q4.
But I think I think youre thinking about it the right way I think if you take that and you try to annualize it probably gets you.
Pretty close to around the mid point, maybe even a little higher there is seasonality components, there that will make it a little more favorable and so.
I think we're just taking a prudent approach to guiding for the rest of the year.
Got it I appreciate all the color guys. Thanks.
There are no further questions at this time.
I'd now like to turn the call back over to Carlos to follow for any closing remarks.
Thank you just like to thank everybody on behalf of the <unk> team for joining our call today and we look forward to updating you on our progress have a great day everyone.
This concludes today's conference call you may now disconnect.
Please wait the conference will begin shortly.
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