Q4 2023 U.S. Physical Therapy Inc Earnings Call
Operator: The conference is about to begin. If you need assistance during your conference call today, please press star zero. Good day, and thank you for standing by. Welcome to the U.S. Physical Therapy fourth quarter 2023 and full year earnings conference call. At this time, all participants are in a listen only mode.
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[music].
Good day, and thank you for standing by and welcome to the U S. Physical therapy fourth quarter 2023, and full year earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Operator: After the speaker's presentation, there will be a question and answer session. In order to ask a question during the session, please press the star key followed by the number one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star, then zero. I'd now like to turn the call over to Chris Redding, President and CEO. Please go ahead, sir.
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I'd now like to turn the call over to Chris Reading President and CEO. Please go ahead Sir.
Christopher J. Reading: Thanks, Shelby. Good morning and welcome, everyone, to U.S. Physical Therapy's earnings call this morning. With me on the call today are Carey Hendrickson, our CFO; Eric Williams, our Chief Operating Officer; Rick Binstein, our Senior Vice President, General Counsel; and Jake Martinez, our Senior Vice President of Finance and Accounting. Graham Reeve happens to be on a plane this morning and won't be joining us.
Thanks, Shelby good morning, and welcome everyone to U S. Physical therapist earnings call. This morning with me on the call today include Gary Hendrickson, Our CFO, Eric Williams, our Chief operating Officer, Rick <unk>, Our senior Vice President General Counsel Jay.
Martinez, our senior Vice President of Finance and accounting Graham Reeve happens to be on a plane. This morning wont be joining us before we begin with some prepared remarks.
Jake Martinez: Before we begin with some prepared remarks, I'll ask Jake to make a brief disclosure statement. Jake, if you would, please. Thank you, Chris. This presentation contains forward-looking statements that involve certain risks and uncertainty. These forward-looking statements are based on the company's current views and assumptions. The company's actual results may vary materially from those anticipated. Please see the company's filings with the Securities and Exchange Commission for more information.
I'll stick to cover a brief disclosure statement Jacob if you would please thank.
Thank you Chris.
This presentation contains forward looking statements, which involve certain risks and uncertainties. These forward looking statements are based on the companys current views and assumptions.
The company's actual results may vary materially from those anticipated.
Please see the company's filings with the Securities and Exchange Commission for more information.
Christopher J. Reading: I'm going to go ahead and start this morning with particular thanks to our clinical teams, led by our capable partners around the country, for their efforts in delivering exceptional care and returning a record number of patients to the things that they enjoyed the most. And to our prevention partners for weathering what we expected to be a more challenging year in 23, with great continued success in keeping thousands of workers and companies that we serve healthy and injury-free. They finished the year in really strong fashion with 9.7 percent revenue growth in our final quarter and a 330 basis point improvement margin in what has been a seasonally slower quarter for this subset of our business, all of which sets the table for a good growth year ahead in 2024.
Thanks, Jake I'm going to go ahead and start this morning.
With particular, thanks to our clinical teams led by our capable partners around the country for their efforts in delivering exceptional care returning a record number of patients to the things that they enjoy the most.
Prevention partners for weathering, what we expect it to be a more challenging year in 'twenty three.
Great continued success in keeping thousands of workers companies that we serve healthy and injury free.
They finished the year and really strong fashion with nine 7% revenue growth in our final quarter and a 330 basis point improvement in margin and what has been a seasonally slower quarter for this subset of our business all of which sets the table for good growth year ahead in 2024.
Christopher J. Reading: The past year was one of persistently high demand for our physical therapy service. Each quarter in 2023 produced a record for volume across a growing network of clinics finishing the year for the first time in our history. 30 visits per clinic per day. Visits grew to more than 5 million for the year, up 11.6% in 2023. Demand remained strong throughout the year.
Past year was wanted to persistently high demand for our physical therapy services each quarter in 2023 produced a record for volume across our growing networks.
Clinics, finishing the year for the first time in our history.
At 30 visits per clinic per day.
It grew to more than $5 million for the year up 11, 6% in 2023.
Man remained strong throughout the year.
Christopher J. Reading: Helping to meet this demand, our clinical teams did an exemplary job caring for our patients, which in turn created additional demand from happy customers who refer their colleagues, friends, and neighbors to us. Despite a rather tight labor market, we were able to attract and hire therapists to enable us to achieve this record volume. Our team, led by our locally strong partners around the country, helped to limit turnover at a time when demand has remained at record levels, and our clinical cost efficiency improved in 2023 despite significant inflationary pressure. I'm particularly proud of our Operations team and their efforts to keep these many factors and forces in balance throughout the year, all while juggling numerous initiatives, including opening or closing 35 clinics and working to integrate an additional group via acquisitions in both PT Additionally, we work to overcome the Medicare cuts which have made our lives more difficult these past few years, despite physical therapy saving the system significant costs when compared to more expensive, invasive, and often unnecessary musculoskeletal procedures.
Helping to meet this demand our clinical teams did an exemplary job caring for our patients which in turn creates additional demand from happy customers, who are further colleagues friends and neighbors to us.
Despite a rather tight labor market, we were able to attract and hire therapists.
To enable us to achieve these record volumes.
Our team led by US locally strong partners around the country helped to limit turnover at a time when demand has remained at record levels.
Our clinical cost efficiency improves in 2023, despite significant inflationary pressures.
I'm, particularly proud of our ops team and their efforts keep these many factors and forces and balance throughout the year, all while juggling numerous initiatives.
<unk> opening or tucking in 35 clinics and working to integrate an additional group via acquisitions in both PT as well as injury prevention.
Additionally, we work to overcome the Medicare cuts, which made our lives more difficult. These past few years, despite physical therapy saving the system significant cost when compared to more expensive invasive and often unnecessary musculoskeletal procedures.
Christopher J. Reading: Our team renegotiated a significant number of payer contracts in 2023, which is bearing fruit for us in and across our commercial contract base. We have a good work plan for 2024 to carry on that work and to impact rates further. Finally, you saw in the release that we announced a small dividend increase for the start of this year, with the majority of our attention focused on deploying capital through carefully vetted acquisitions in the quarter and in years to come. The partners we added in 2023 are ahead of plan and doing terrific, including the Industrial Injury Prevention Partnership that brought us our first software product, which is getting strong reviews and, to rate the overall year in injury prevention. On the PT side of things, we are busy at varying stages of diligence and completion, several opportunities that we've included in the guidance we provided in our release, or the environment isn't easy by any stretch.
Our team renegotiated a significant number of payor contracts in 2023, which is bearing fruit for us and then across our commercial contract base.
Have a good work plan for 2024 to carry on that work and to impact rates further.
Finally, you saw on the release, we announced a small dividend increase was started this year with the majority of our attention and focus on deploying capital through carefully vetted acquisitions in the quarter and years to come.
The partners. We added in 2023 are ahead of plan.
Terrific, including the industrial injury prevention partnership that brought us our first software product, which is getting strong reviews.
Great overall year and injury prevention.
On the PT side of things, we are busy at varying stages of diligence and completion several opportunities that we have included in the guidance we provided in our release.
While the environment is an easy by any stretch.
Christopher J. Reading: It is headed by a fantastic team whom I love and respect, and I can assure you everyone is working very hard to produce a good year ahead. We have a lot of detail to cover. Carey always does a great job with that, so I'm going to turn it over to him to dive in before we open it up for questions. Great. Thank you, Chris, and good morning, everyone.
And then by a fantastic team, whom I love and respect and I can assure you everyone is working very hard to produce a good year ahead.
We have a lot of detail to cover Carryall, which does a great job of that so I'm going to turn it over to him.
To dive in before we open it up for questions.
Great. Thank you, Chris and good morning, everyone.
Carey P. Hendrickson: Despite challenges as we entered 2023, including the 2 percent Medicare rate reduction that we've talked about in a tight labor environment, our team produced strong results in 2023. As Chris noted, we recorded the highest patient volumes in the company's history in 2023 at 30 patients per clinic per day. Our physical therapy revenues increased more than $50 million in 2024, which was a 10 percent increase, or 10.6 percent increase over the prior year. Additionally, our physical therapy operating costs decreased by 55 cents per visit for the full year.
<unk> challenges as we entered 2023, including the 2% Medicare rate reduction that we've talked about in a tight labor environment. Our team produced strong results in 2023.
As Chris noted, we recorded the highest patient volumes in the company's history in 2023 at 30 patients per clinic per day, our physical therapy revenues increased more than $50 million in 2024, which was a 10% increase 10, 6% increase over the prior year, our physical therapy operating costs decreased by 55 cents per visit.
For the full year, our industrial injury prevention business strengthened as the year progressed with fourth quarter revenue was up nine 7% over the prior year fourth quarter and IP fourth quarter operating income up almost 30% over the prior year and we achieved year over year growth in both adjusted EBITDA and operating results, we added 46 clinics.
Carey P. Hendrickson: Our industrial injury prevention business strengthened as the year progressed, with fourth quarter revenues up 9.7 percent over the prior year, fourth quarter revenues, and IIP fourth quarter operating income up almost 30 percent over the prior year. And we achieved year-over-year growth in both adjusted EBITDA and operating income. We added 46 clinics via acquisitions and de novos in 23, 31 on a net basis after closures, and we added to our IIP business as well Further, we strengthened our capital structure with a secondary offering in May 2023, which was done on an accretive basis, providing us with cash to deploy in the growth opportunity. So, despite the challenges as we began the year, our team produced some very good results, and there was a lot of good work done in 2023 that positions us well as we go forward. We reported adjusted EBITDA for the fourth quarter of $19 million, an increase of $1.1 million over the fourth quarter of the prior year.
The acquisitions and de Novo's in 'twenty 331 on a net basis center closures and we added to our IP business as well.
Further we strengthened our capital structure with a secondary offering in May 2023, which was down on an accretive basis, providing us with cash to deploy in growth opportunities. So despite the challenges is as we began the year. Our team produced some very good results and there was a lot of good work done in 2023 that positions us well as we go forward.
We reported adjusted EBITDA for the fourth quarter of $19 million, an increase of $1 $1 million over the fourth quarter of the prior year. Our operating results were <unk> 59 per share in the fourth quarter of 2023, which is an increase over the 58 reported in the fourth quarter of last year.
Carey P. Hendrickson: Our operating results were $0.59 per share in the fourth quarter of 2023, which is an increase over the $0.58 reported in the fourth quarter of last year. Our total company revenues increased 9.6% in the fourth quarter, growing from $141.2 million in the fourth quarter of last year to $154.8 million in the fourth quarter of 2023. And our total company gross profit increased $2.7 million, or 9.6%, from $27.8 million in the fourth quarter of 2022 and the fourth quarter of 23. Our average visits per clinic per day in the fourth quarter were 29.9, which is the highest volume in the company's history for a fourth quarter. October was at 29.9, November was at 30.3, and December was at 29.5.
Our total company revenues increased nine 6% in the fourth quarter growing from $141 $2 million in the fourth quarter.
Two $154 8 million in the fourth quarter of 'twenty three.
Our total company gross profit increased $2 7 million or nine 6% from $27 8 million in the fourth quarter of 'twenty two.
In the fourth quarter of 'twenty three.
Our average visits per clinic per day in the fourth quarter were $29 nine which is the highest volume in the company's history for our fourth quarter.
October was at $29 nine November was at 33 and December was at 29, 5% all three months were higher than the same month in the previous year.
Carey P. Hendrickson: All three months were higher than the same month in the previous year. Our net rate was $103.68 in the fourth quarter of 2023, which was a meaningful sequential increase from 102.37 that we reported in the third quarter of 2023 due to the cumulative impact of progress in our rate negotiations and some operational efforts we've been working on all year. All other payer categories increased 2.1 percent on a combined basis over the prior year.
Our net rate.
$103 68 in the fourth quarter of 2023, which was a meaningful sequential increase from 137 that we reported in the third quarter of 23 due to the cumulative impact of progress in our rate negotiations and some operational efforts we've been working at all year.
And the $104 28 reported in the fourth quarter of 2022 due to the reductions in Medicare rates, which represent about one third of our payer mix all other payer categories increased two 1% on a combined basis over the prior year.
Carey P. Hendrickson: Our physical therapy revenues were $134.6 million in the fourth quarter of 2023, which was an increase of $11.8 million, or 9.6%, from the fourth quarter of 2022. The increase was driven by having 45 more clinics on average in the 4th quarter of 2023 than in the 4th quarter of 2022, coupled with record 4th quarter average patient visits per clinic per day, which was partially offset by the decrease in that rate. Our physical therapy operating costs were $108.4 million, which is an increase of 10.3% over the 4th quarter of the prior year, also due to having 45 more clinics on average than in the 4th quarter of 2022. On a per-visit basis, our total operating costs were $84.09 in the fourth quarter, which is basically flat with the $84.05 that we had in the fourth quarter of 22.
Our physical therapy revenues were $134 6 million in the fourth quarter of 'twenty, three which was an increase of $11 8 million or nine 6% from the fourth quarter of 2000 to the.
The increase was driven by having 45 more clinics on average in the fourth quarter of 'twenty three than in the fourth quarter of 'twenty, two coupled with record fourth quarter average patient visits per clinic per day, which was partially offset by the decrease in net rate.
Our physical therapy operating cost were $108 $4 million, which is an increase of 10, 3% over the fourth quarter of the prior year also due to having 45 more clinics on average than in the fourth quarter of 'twenty two.
On a per visit basis, our total operating costs were $84 nine in the fourth quarter, which is basically flat with the $84 five that we had in the fourth quarter of 22.
Carey P. Hendrickson: For the full year of 2023, our operating costs were $82, excuse me, $83.34 in full year 22, and they moved down to $82.79 per visit for the full year of 2023. Our salaries and related costs decreased to $59.72 in the fourth quarter, down from $60.04 in the fourth quarter of 2022. For the full year, salaries and related costs were down $0.33 per visit versus the previous year.
For the full year of 2023, our operating costs were $82 excuse me $83 34.
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In full year 'twenty, two and they moved down to $82 79 per visit in the for the full year 2023.
Our salaries and related costs decreased to $759 72 in the fourth quarter down from $60 $60.04 in the fourth quarter of 2022.
For the full year salaries and related costs were down 33 per visit versus the previous year.
Carey P. Hendrickson: Our physical therapy margin was 19.5 percent in the 4th quarter of 2023. That was down slightly from the 20 percent we had in the 4th quarter of 2022, with the change due to a decrease in our net rate versus the prior year. Even with the decline in our net rate versus last year, our P.T. gross profit increased 7% in the fourth quarter.
Our physical therapy margin was 19, 5% in the fourth quarter of 2023 that was down slightly from the 20% we had in the fourth quarter of 'twenty two with the change due to the decrease in our net rate versus the prior year.
Even with the decline in our net rate versus last year, our PT gross profit increased 7% in the fourth quarter.
As I mentioned earlier IP business saw nice growth in the fourth quarter IP net revenues were up $1 $8 million or nine 7%.
Carey P. Hendrickson: As I mentioned earlier, our IP business saw nice growth in the 4th quarter; our IP net revenues were up 1.8 million dollars, or 9.7 percent, and our expenses were up only 800,000 dollars, or 5.3 percent. So that resulted in a 1 million dollar increase in IP income in the 4th quarter of 2023, which was an almost 30 percent increase over the prior year. Our IIP margin increased from 17.9 percent in the fourth quarter of 22 to 21.2 percent in the fourth quarter of 23. Our balance sheet remains in an excellent position.
And our expenses were up only $800000 or five 3%. So that resulted in a $1 million increase in the IP income in the fourth quarter of 'twenty, three which was an almost 30% increase over the prior year.
Our IP margin increased from 17, 9% in the fourth quarter of 'twenty two to 'twenty, one 2% in the fourth quarter of 'twenty three.
Our balance sheet remains in an excellent position, we have $144 million of debt on our term loan with a five year swap agreement in place that places the rate on our debt at four 7% and we expect it to remain at that rate going forward as.
Carey P. Hendrickson: We have $144 million of debt on our term loan. With a five-year swap agreement in place, it places the rate on our debt at 4.7 percent, and we expect it to remain at that rate going forward. As you know, that's a very favorable rate in today's market and well below the current Fed funds rate. In the fourth quarter of 2023 alone, the swap agreement saved us $900,000 in interest expense, with cumulative savings of $3.3 million for the full year of 2023. Our interest expense was $2 million in the fourth quarter of 23.
As you know Thats, a very favorable rate in today's market and well below the current fed funds rate.
In the fourth quarter of 2023 alone the swap agreement saved as $900000 in interest expense with cumulative savings of $3 $3 million for the full year of 2023.
Our interest expense was $2 million in the fourth quarter of 23 and.
In addition to the term loan we also have a $175 million revolving credit facility that had nothing drawn on it during the fourth quarter and we have approximately $120 million of excess cash over and above what we need for working capital ready for deployment in the growth initiatives.
We also noted in the release that our board raised our quarterly dividend rate by <unk> <unk> per quarter in 2024 at the new <unk> at the new rate our full year dividend paid would be about would be $1 76 per share, which is a dividend yield of approximately one 7% based on our recent stock price.
Carey P. Hendrickson: In addition to the term loan, we also have a $175 million revolving credit facility that had nothing drawn on it during the fourth quarter. And we have approximately $120 million of excess cash over and above what we need for working capital ready for deployment into growth and development. We also noted in the release that our board raised our quarterly dividend rate by one cent per quarter in 2024. At the new rate, our full-year dividend paid would be about $1.76 per share, which is a dividend yield of approximately 1.7 percent based on our recent stock. As we noted in our release, we expect our EBITDA for full year 2024 to be in the range of $80 to $85 million. The 3.5% Medicare rate reduction that went into effect on January 1 resulted in a $6 million reduction in revenue and a $5.3 million reduction in EBITDA net of minority income.
As we noted in our release, we expect our EBITDA for full year 2024 to be in the range of $80 million to $85 million. The three 5% Medicare rate reduction that went into effect on January one, resulting in a $6 million reduction in revenue and a $5 $3 million reduction in EBITDA net of minority interest so the $77 million $77 seven.
$1 million EBITDA that we reported in 'twenty three.
Becomes $72 $4 million as we begin 2024 due to the Medicare rate reduction.
The 2024 EBITDA range is an increase of roughly 10% to 17% from this starting point.
We have tremendous confidence in our team to produce EBITDA growth in 2024 will benefit in 'twenty four from the full year impact of rate negotiations that we completed in 'twenty three and then the partial year impact of negotiation work that we do during 2024.
Carey P. Hendrickson: So the $77 million, $77.7 million that we reported in 23, becomes $72.4 million as we begin 2024 due to the Medicare rate reduction. The 2024 EBITDA range is an increase of roughly 10-17% from this starting point. We have tremendous confidence in our team to produce EBITDA growth in 2024. We'll benefit in 2024 from the full year impact of rate negotiations that we completed in 23, and then the partial year impact of negotiation work that we do during 2024. We also expect to continue to increase volumes at our existing clinics in 24, and we'll maintain our discipline and expenses. We'll also benefit in 24 from the full-year contribution from acquisitions that we completed during 2023. In addition, we have several acquisitions that we expect to close in the near term by roughly the middle of 2024. Therefore, we've included the expected EBITDA contribution from those acquisitions in our 2024 guidance. The acquisitions we're including are similar in size to those we've completed in the normal course, between one and three million dollars of total enterprise EBITDA, with us purchasing between 50 and 90 percent of those companies.
We also expect to continue to increase volumes at our existing clinics in 'twenty four and will remain we'll maintain our discipline and expense control will also been benefit in 'twenty four from the full year contribution of our acquisitions that we completed during 2023. In addition, we have several acquisitions that we expect to close in the near term by roughly the middle of 2020.
Sure. So we've included the expected EBITDA contribution from those acquisitions in our 2024 guidance. The acquisitions were including are similar in size to those we've completed in the normal course between one and $3 million of total enterprise EBITDA with us purchasing between 50 and 90% of those companies.
We expect our 2024 EBITDA by quarter to lay out a little differently than it did last year. As a reminder, we had no significant weather events in the first quarter of 2023, which resulted in the best first quarter volumes, we've ever had by a sizable margin in January of this year. We did have some significant weather events, which was more in line with our historic experience.
So we would expect our year to get off to a little slower start than it did last year and then the gain momentum as we layer in rate increases volume growth and acquisitions as the year progresses against the backdrop of our normal seasonal patterns.
As a reminder, we expect our outstanding shares to be a little over 15 million shares in each quarter of 2024 and for full year 2024, which is where it has been since we issued the $1 9 billion shares with our secondary offering in late May of 2023.
That will impact our comparisons for our per share metrics in the first couple of quarters of 2024 and.
In closing we feel very.
The growth in 2024, and we look forward to producing strong results for all of our stakeholders in 2024 with that I'll turn the call back to Chris. Thanks, Carrie Great job operator, let's go ahead and open it up for questions.
Carey P. Hendrickson: We expect our 2024 EBITDA by quarter to lay out a little differently than it did last year. As a reminder, we had no significant weather events in the first quarter of 2023, which resulted in the best first quarter volumes we've ever had by a sizable margin. In January of this year, we did have some significant weather events, which was more in line with our historic experience.
At this time, if you would like to ask a question. Please press the star and one on your Touchtone phone.
You may remove yourself from the queue at any time by pressing star two.
Once again that is star one to ask a question, we'll pause for a moment to allow questions to queue.
And we'll take our first question from Brian <unk> with Jefferies. Your line is open.
Carey P. Hendrickson: So we'd expect our year to get off to a slightly slower start than it did last year and then to gain momentum as we layer in rate increases, volume growth, and acquisitions as the year progresses against the backdrop of our normal seasonal pattern. As a reminder, we expect our outstanding shares to be a little over 15 million shares in each quarter of 2024 and for the full year 2024, which is where it has been since we issued the 1.9 million shares with our secondary offering in late May of 2023. That will impact our comparisons for our per share metrics in the first couple of quarters of 2020. In closing, we feel very confident about growth in 2024, and we look forward to producing strong results for all of our stakeholders. With that, I'll turn the call back to Chris.
Thank you, Brian and good morning, Congrats on the strong quarter.
Thank you for your FERC, both Chris and Gerry as I think about the fact that you included some M&A.
We expect that M&A contributions into guidance just curious in terms of your visibility into the timing of the deals that you embedded in the guide and then maybe Chris more broadly speaking how are you thinking about the M&A.
Inscape this year in terms of what Youre seeing in the market in terms of competition for deals and also like the deal flow that youre seeing within your own pipeline.
Yes.
In terms of the timing I think we've tried to speak to that.
I mean, one of the reasons we.
We added it into our guidance this year.
The relative proximity to when we were going to do this announcement this release.
Christopher J. Reading: Thanks, Carey. Great job. Operator, let's go ahead and open it up for questions. At this time, if you would like to ask a question, please press the star and 1 on your touch-tone phone. You may remove yourself from the queue at any time by pressing star 2.
So I would say between now on because these sometimes arent certain between now and July.
Kind of what we're looking at for the ones that are.
That are kind of in Q right now in terms of the broader landscape.
Okay.
Operator: Once again, that is Star and one to ask a question. We will pause for a moment to allow questions to queue, and we'll take our first question from Brian Tanquilut with Jeffreys. Your line is open. Good morning, guys. Good morning.
As busy as we've ever been.
Competition is.
Changed or changing.
Tom.
Because some folks are more sidelines than they have been for quite some time.
Christopher J. Reading: Congratulations on a strong quarter. Maybe for both Chris and Carey, as I think about the fact that you included some M&A, expected M&A contributions in the guide, just curious, you know, in terms of your visibility into the timing of the deals that you embedded in the guide. And then maybe, Chris, more broadly speaking, how are you thinking about the M&A landscape this year in terms of what you're seeing in the market in terms of competition for M&A? In terms of competition for deals and also, like, the deal flow that you're seeing within your own pipeline. Yeah,
Because of leverage in.
The rates that some of these companies are having to carry and so.
It's a good opportunity for us that said, we continue to be selective and we continue to look for our kinds of partners and attributes and so that part isn't changing we will continue to be disciplined but it's good opportunity right now we expect to be busy this year.
No it's awesome and then many.
As I think about the gross margin side you highlighted your success there.
That obviously is very impressive. So just curious in terms of what you see is that remaining opportunity either to hold the gross margin line as steady as you grow volumes. This year or is there a remaining opportunities to drive some margin expansion.
Christopher J. Reading: In terms of the timing, I think we've tried to speak to that. I mean, one of the reasons we added it to our guidance this year is just due to the relative proximity of when we were going to make this announcement, this release. So, you know, I would say between now and because these sometimes aren't certain between now and July, you know, it's kind of what we're looking at for the ones that are, that are kind of in queue right now. In terms of the broader landscape.
Yes, I think it's going to depend on how much we can do on the rate side. This year, we expect to do well there.
I think we'll be able to at least maintain our margins where they have been if not grow them slightly in 2024.
Yeah, but it's going to really going be a function of how much we can push on the net rate side and then that to the extent, we're able to keep our cost in line. So it's either flat on a per visit basis are slightly better than that.
Christopher J. Reading: We're as busy as we've ever been. Competition is changing, or changing some because some folks are more sidelined than they have been for quite some time just because of leverage and, you know, the rates that some of these companies are having to carry, and so it's a good opportunity for us. That said, we continue to be selective, and we continue to look for our kinds of partners and attributes, and so that part isn't changing. We'll continue to be disciplined, but it's a good opportunity right now. We expect to be busy this year. Now, it's awesome.
And if we do that we can push both of those really well I think we can.
We can see a little margin improvement.
Maybe for.
Chris actually as I think about just that last by the carry made.
On the ability to drive rate growth from commercial payers.
How are you thinking about that in terms of what the discussions are.
And kind of like what inning are we in terms of trying to get more rate growth across the portfolio of contracts that you have.
Carey P. Hendrickson: And then maybe, Carey, as I think about the gross margin side, you highlighted your success there, and it's obviously very impressive. So just curious in terms of what you see as the remaining opportunity either to hold the gross margin line steady as you grow volumes this year, or if there are remaining opportunities to drive some margin expansion. Yeah, you know, I think it's going to depend on how much we can do on the rate side this year. We expect to do well there.
The different markets again.
Alright.
So.
We've had really good success in these in these discussions I'd say they are they are based around.
Outcomes and Theyre based around the value of that debt.
That physical therapy provides and the fact that it's.
It is.
Wait to actually decreased cost of the overall patient patients.
Care.
And we've been successful and those conversations.
We have a team that.
Christopher J. Reading: I think we'll be able to at least maintain our margins where they have been, if not grow them slightly in 2024. Yeah, but it's really going to be a function of how much we can push on the net rate side and then to the extent we're able to keep our costs in line, either flat on a per visit basis or slightly better than that. And if we do that, if we push both of those really well, I think we can. We can see a little margin of error. Maybe, Carey, for Chris, actually, as I think about just the last point that Carey made on the ability to drive rate growth from commercial payers, how are you thinking about that in terms of what the discussions are and kind of like what we are getting in terms of trying to.
And.
We are.
We're working on are most the ones that we concentrate on the most are the are the five largest carriers and at our top partnerships.
And we're going to keep at that work during 2020, so what inning would you say inning I would say we are.
We're probably in maybe the fifth inning or so we've made some good progress so far and in the last 18 months I would say and but we still have some more we can do we still have we definitely have work. We can do the good thing is Brian we built in step increases as we've as we've renegotiated. These contracts we've been trying to build in one too.
The three year step increases so that we're not having to revisit all these contracts each year, because we have as you know 700, plus contracts that that were always having to come back to and renegotiate. So the three year step increases have really helped because we get that automatically as we as the one year lapses. So that's been good.
Christopher J. Reading: Get more rate growth across the portfolio of contracts that you have, http://TheBusinessProfessor.com Yeah, so we've had really good success in these discussions. I'd say they're based around outcomes and they're based around the value that physical therapy provides and the fact that it's a way to actually decrease the cost of the overall patient's care, and we've been successful in those conversations. We have a team that is, And, you know, we're working on our most important – the ones that we concentrate on the most are the five largest carriers and our top partnerships, and we're going to keep at that work during 2024. But what inning would you say?
Susan.
When we get to the ninth inning, we're not done we're going to just put a new game sales right.
We're going to start or so.
This is going to be a perpetual thing and I think over time.
We get paid.
It changes and maybe we have a little bit more of a latitude to focus on results and not count minutes like we do right now, it's just crazy way to do it.
I think we've got continued opportunity.
That's awesome alright, congrats again, thanks guys.
Thank you.
And we will take our next question from Larry Solow with CJS Securities. Your line is open good morning.
Christopher J. Reading: In the inning, I would say we're probably in maybe the fifth inning or so. We've made some good progress so far in the last 18 months, I'd say, but we still have some more we can do. We still have – we definitely have work we can do. The good thing is, Brian, we built in step increases. We've been trying to build in one, two – I mean, three-year step increases so that we're not having to revisit all these contracts each year because we have, as you know, 1,700-plus contracts that we're always having to come back to and renegotiate. So the three-year step increases have really helped because we get that automatically as the one-year lapses. So that's been good. When we get to the 9th inning, we're not done.
Great guys Paul Good morning, Good morning, both of you.
I guess just continuing on that line of question just on the commercial side, you mentioned, a 92% increase this quarter or 2%.
CMS impact.
Do you have what it was for the full year on you've cycled similar sort of improve.
Improvement or maybe even a little bit better.
And 'twenty four as yet.
I think you've got baseball analogy of we're in the top of the filter you get some stuff from the bottom of the fourth that wasn't necessarily in 2013.
Yes for sure yes, right so.
For 2023.
You take all the categories, except for Medicare and combine them on a combined basis. They were up about one 5% in 2023, so obviously accelerated in the fourth quarter being up two 1%. So it's been accelerating as years gone along.
Christopher J. Reading: We're going to just play a new game, so we're going to start over. So this is going to be a perpetual thing, and I think over time, how we get paid, maybe it changes, and maybe we have a little bit more latitude to focus on results and not count minutes like we do right now. It's just a crazy way to do it, but I think we've got continued opportunity. That's awesome. All right. Congratulations again.
And I think I am.
I'm sorry.
Go ahead Larry.
Yes, yes, and I think as we look to 'twenty four you asked about that.
Think we can.
If we do somewhere between just from a math perspective, right if Medicare it's going to be down three 5%. If we do one 5% to 2% of an increase in these in these other categories combined that would make a rate next year flat and I think we can do that or maybe even a little better.
Operator: Thanks, guys. Thanks, Mark. And we'll take our next question from Larry Solow with CJS Securities. Your line is open. Good morning, Larry.
Got it okay.
On the CMS rate cut I guess.
It sounds like there'll be no relief on that Congress, probably not going to get together in a couple of weeks more but Christian just can you just remind us I know these cuts.
Operator: Great, guys. Thanks. Good morning. Good morning.
Operator: Both of you. I guess just continuing on, just on that line of questioning, just on the commercial side, you mentioned a nice 2% increase this quarter, or 2% of the CMS impact. Do you have what it was for the full year, and do you expect a similar, you know, sort of... I think using that baseball analogy, if we're in the top of the fifth, you get some stuff from the bottom of the fourth that wasn't necessarily in 2030 and maybe a little more. For sure. Yeah, right.
Great.
Please schedule and.
Sort of what's the general practitioner, while maintaining sort of budget neutrality, but what's the outlook going forward or are we pretty much at the end of that.
Do you expect more cuts potentially in 'twenty five or how do you guys do that.
Yes.
I don't know Larry I mean trying to predict what CMS does with the federal government does little bit of a hard job, but I think we're at the end.
Carey P. Hendrickson: So for 2023, if you take all the categories except for Medicare and combine them on a combined basis, they were up about 1.5 percent in 2023. So it obviously accelerated in the fourth quarter being up 2.1 percent. So it's been accelerating as the years have gone along. And I think – I'm sorry. Go ahead, Larry.
I think we will get back into a more normal pattern as we go forward with small increases.
<unk> every year.
I think people understand that they are picking on the wrong guys.
Isn't sustainable to have three sequential years of cuts.
And that's what I believe so.
We'll see what happens.
Got it okay, great I appreciate the thoughts thanks.
Operator: No, no. Yeah. And I think as we looked at 24, you asked about that. I mean, I think we can.
Thanks, Larry.
And we'll take our next question from Joanna <unk> with Bank of America. Your line is open.
Christopher J. Reading: If we do somewhere between, just from a math perspective, right, if Medicare is going to be down 3.5 percent, if we do 1.5 to 2 percent of an increase in these other categories combined, that would make our rate next year flat, and I think we can do that or maybe even a little better. On the CMS rate cut, I guess 3.6 percent, it sounds like there will be no relief on that. Congress is probably not going to get together in a couple of weeks to do anything there, but Chris, can you just remind us, I know these cuts are related to the physician fee schedule and shifts sort of more to the general practitioner while maintaining sort of budget neutrality, but what's the outlook going forward? Are we pretty much at the end of that? Yeah, I don't know, Larry.
Hi, good morning. Thank you so much for taking our questions here.
Okay. So I guess a couple of things.
When it comes to these assets as you outlined so you listed.
Contribution from our announced deals does that do you expect to close.
Later, this year or this year through the first half.
Sure.
I listed as one of the items, but it's one of the last items on that list.
Should we be waiting for that.
Imply that.
The assets Youre talking about here versus the $5 $2 million or no.
I guess, how would you have to overcome year over year.
That would be a contribution from those features include kind of.
Mueller items. So are you willing to quantify that or quantify some of these other things you listed there.
Christopher J. Reading: I mean, trying to predict what CMS does or the federal government does is a little bit of a hard job, but I think we're at the end. And, you know, I think we'll get back into a more normal pattern as we go forward with, you know, small increases every year. I think people understand that they're picking on the wrong guys and that this isn't sustainable to have three consecutive years of cuts. And that's what I believe. So, you know, we'll see what happens. I got it.
Great.
Yes, Joanne as you can appreciate there's a lot of puts and takes and we did we didn't provide specifics about any of the items.
And their dollar amounts and impact just to know that there are things and some will get more on than we would anticipate and then others. We may not be quite as much on so we didn't why didn't want us specifically.
Operator: Okay. Great. I appreciate it. Thank you. And we'll take our next question from Joanna Gajuk with Bank of America. Your line is open. Hi, good morning.
Talk about dollars Rite aid each one of those items I will say on the acquisitions I talked a little bit about that in here just that there. These are ones that are and then that kind of our normal course, if you will between one and $3 million EBITDA for a total enterprise basis, and then we are going to have our ownership percentage of those.
Operator: Thank you so much for taking the questions here. Hey, so I guess a couple of things. When it comes to these assets that you outlined, you listed the contributions from unannounced deals, those that you expect to close, you know, later this year or this year through the first half, maybe July. I listed this as one of the items, but it's one of the last items on that list. So should we weigh this as implying the kind of the assets you're talking about here versus the 5.3 million, you know, like So are you willing to quantify that or quantify some of these other things you listed there as assets?
Which typically is somewhere around 60 70, 80%.
Then.
And so I think you can kind of get some feel for what the amounts are related to that but.
We will have.
We believe we will have one is beyond what we have put in the guidance beyond the first half of the year that will close later in the year and those can have impact that impact won't be as significant though because of later in the year you go.
<unk> the less impact those have in 'twenty four.
Alright, that's helpful and.
I guess on.
The guidance I guess, how should we think about what are you guys. Some essentially four for volumes here. So I. Appreciate you you highlighted that Q1 will have a tough comp.
Carey P. Hendrickson: Yeah, Joanna, as you can appreciate, there's a lot of put and takes, and we didn't provide specifics about any of the items and their dollar amounts and impact, just to know that there are things, and some we'll get more on than we would anticipate, and then others we may not be quite as much on, so we didn't want to specifically talk about dollars related to each one of those items. I will say on the acquisitions, I talked a little bit about that here, just that these are ones that are in kind of our normal course, if you will, between $1 and $3 million on a total enterprise basis, and then we are going to have our ownership percentage of those, which typically is somewhere around 60, 70, or 80 percent. And then, you know, and so I think you can kind of get some feel for what the amounts are there related to that.
But I guess.
Same store volume growth for 2018, the full year and then how do you think about volumes same store volume is growing.
For the full year 2004.
Yes, I mean, we think we could we hope to have strong volumes really that's going to be that is one of those factors that we.
We have an amount in the plan and we.
It's a nice.
Mid single digit kind of growth number 3% to 5% probably growth for same store for our existing clinics.
And we think thats achievable in 2024.
Okay. Thank you and last one on a follow up on that discussion around pricing and good to see the commercial traction there can you talk about workers' comp.
Carey P. Hendrickson: But we'll have other, we believe we'll have ones beyond what we have put in the guidance, you know, beyond the first half of the year that will close later in the year. And those can have an impact. But their impact won't be as significant, though, because the later in the year you go, you know, the later, the less impact those have. All right, that's helpful.
I guess two things.
Could you see getting there and also the mix.
In closing, our increasing their workers' comp mix and I guess that will be helping that the average train as well right.
Carey P. Hendrickson: And I guess on, you know, the guidance, and how should we think about, you know, what do you get some attention for, for volumes here? So I appreciate you. You highlighted that Q1 will have a tough comp. But I guess where, you know, what was the same store's volume growth for 23, the full year, and then how do you think about volumes, you know, same store volumes, I guess, growing for the full year 24? Yeah, I mean, we think we could, we hope to have strong volumes. Really, that's going to be, that's one of those factors that, you know, we have them out in the plan, and we. It's a nice mid-single-digit kind of growth number, three to five percent, probably growth for our existing clinic, and we think that's achievable in 2024. Okay, thank you.
Yes, the mix has stayed pretty consistent the good news is we're growing the other categories.
Well T. So workers' comp is growing it has had really nice increases so is commercial so as Medicare. We've had just a lot of patient volume growth across the mix of categories. So mix hasn't changed that much.
And the workers comp rate, though has continued to improve its higher.
Higher than 23 than it was in 'twenty to an end.
We're hoping it will continue to be like that as we go forward.
We're negotiating right on workers' comp just like we arent others now as well so.
Hey, if I may just squeeze one last one sorry about that thank you for taking my question.
The comment on the margin. So these were gross margin you talked about keeping that level, maybe even expanding any comment.
Carey P. Hendrickson: And last one, following up on the discussion around pricing and good to see, you know, the commercial traction there. Can you talk about workers' comp? You know, I guess two things, you know, what rate increases you're getting there and also the mix. Are you improving or increasing the workers' comp mix? And I guess that will be helping the average rate as well, right? Yeah, you know, the mix has stayed pretty consistent.
Around at the corporate level costs.
How should we think about.
Is that number going forward I guess.
<unk> picked up a little bit in Q4 I guess.
$13 9 million corporate costs. So how should we think about that number going forward. Thank you yeah I think the.
Consistently we've been between eight 5% and 9% of total net revenue on that corporate.
Cost number for several years and I think that's how to think about it is as a percent of net revenue because we do have to add some additional cost.
Carey P. Hendrickson: The good news is we're growing the other categories really well, too. So workers' comp is growing. It's had really nice increases, but so has commercial, and so has Medicare. We've had just a lot of patient volume growth across the mix of categories. The mix hasn't changed that much.
Additional clinics that we add as we go forward. So I think thinking of it that eight 5% to 9% of net revenue totaled total revenue number.
Great.
Joanna.
And we'll take our next question from Jared Haas with William Blair.
Carey P. Hendrickson: And the workers' comp rate, though, is continuing to improve. It's higher than 23 than it was in 22, and we're hoping it'll continue to be like that as we go forward. We're negotiating rates on workers' comp just like we are on others now as well, so. And if I might just squeeze the very last one in, sorry about that, and thank you for taking the question.
Your line is open.
Hi, Jared.
Thanks for taking the questions just firstly from us and maybe just sticking with sort of levers from a margin perspective, and maybe thinking over the next couple of years.
Was curious to think about just how you're sort of the trends from a hiring and staffing perspective, I think in recent quarters, you've kind of talked about a little bit of a shift in mix to PT assistance.
Carey P. Hendrickson: The comments around margins, so these were cross-margin when you talk about, you know, keeping the FLAVO, maybe even expanding it. Any comments around corporate level costs? You know, how should we think about, you know, the number going forward? I guess, you know, it picked up a little bit in Q4. I guess maybe there's some seasonality in the $13.9 million corporate office costs. So how should we think about that number going forward? Thank you.
So I'm just kind of curious to kind of hear how you're thinking about that maxon.
The availability from a staffing and labor perspective, any trends there to call out from that from an operating cost perspective.
Yes, I would just say this the market continues to be.
But we can call forgiving.
Recruiting team here combined with our partners locally.
Our ops folks everybody is working together to do good job ticket new clinicians into the company.
Operator: Yeah, I think consistently we've been between 8.5% and 9% of total net revenue on that corporate cost number for several years. And I think that's how you should think about it as a percent of net revenue because we do have to add some additional costs. Additional clinics that we add as we go forward. So I think of it in that eight and a half to nine percent of net revenue, the total revenue number. Joanna Gajuk, U.S.
We're not we've always been a PT centered company more licensed therapists considerably more than PT assistance, Charles So license position.
But look if we have a good.
<unk> opportunity with a great PT assistant we're not we're not going to probably pass on either so.
The relationships have been reasonably steady between PT and PPA the last year.
Operator: Physical Therapy Inc., and we'll take our next question from Jared Haase with William Blair. Your line is open. Jared, from a margin perspective and maybe thinking over the next couple of years, you know, I was curious to think about just how you, you know, sort of the trends from a hiring and a staffing perspective. I think in recent quarters you kind of talked about a little bit of a shift in mix to PT assistance. So I'm just kind of curious to kind of hear how you're thinking about that next and sort of the availability from a staffing and labor perspective, any trends there to call out from an operating cost perspective. Yeah, I would just say this: the market continues to be tight, but I wouldn't call it unforgiving. The recruiting team here, combined with our partners locally, our operations folks, everybody's working together to do a good job to get You know, we're not, we've always been a PT-centric company, with more licensed therapists, considerably more than PT assistants, which are also a licensed position. But look, if we have a good opportunity with a great PT assistant, we're not going to, we're not going to pass on it either.
<unk>.
If we can improve those a little bit really where we just have to be sensitive to it is on the schedule more than anything.
With respect to federal patients but markets.
It's a competitive market, but we're doing okay. Eric anything you want to add to that no. I think you summed it up pretty well continue to invest in additional resources as the company grows to help us from a recruiting perspective and a clinical turnover number. This year was the lowest number we've had in five years.
And it was one five percentage points better than 2022, which also helped us from a business perspective. So we continue to get better from a retention perspective, and we continue to get better in terms of our ability to source license staff across the organization.
Helpful and then.
Kind of sticking with this theme of levers for margin expansion. Another area was hoping to hear an update on was <unk>.
So you kind of talked about rolling out group purchasing across the platform just was hoping to hear a little bit more color in terms of just how penetrated that is across your footprint or clinics and then to what extent you see any kind of incremental leverage opportunities from continuing to consolidate purchasing.
Christopher J. Reading: So, you know, the relationships have been reasonably steady between PT and PTA for the last year. You know, if we can improve those a little bit, really, where we just have to be sensitive to it being on the schedule more than anything with respect to federal patients. But Marcus.
Yes.
You have to unfortunately diverging factors you have the rollout of group purchasing which we've done and it's pretty complete and then you have overlaid on that just general inflation.
Eric Joseph Williams: It's a competitive market, but we're doing okay. Eric, anything you want to add to that? No, I think it's summed up pretty well.
So I think it was the right thing to do I think it was smart to do.
We didn't get it done.
Eric Joseph Williams: We continue to invest in additional resources as the company grows to help us from a recruiting perspective, and our clinical turnover number this year was the lowest number we've had in five years. And it was one and a half percentage points better than 2022, which also helped us from a business per day perspective. So we continue to get better from a retention perspective, and we continue to get better in terms of our ability to source licensed staff across the organization. And then you're kind of sticking with this theme of levers for margin expansion.
One last year, so it rolled out across the year. So we'll see that carry forward you saw some of that probably a small small part of that show up in our total cost per visit last year.
But look we're inflation, it's been a little challenging to and so I'm sure that what we got we gave some of that back in inflation. So that's not a big lever our big focus is driving additional volume through our facilities, which give us a little overhead coverage and help us be a little bit more.
Christopher J. Reading: Another area I was hoping to hear an update on was, in the past, you kind of talked about rolling out group purchasing across the platform. I just wanted to hear, you know, a little bit more color in terms of just how penetrated that is across your footprint of clinics, and then to what extent you see any kind of incremental leverage opportunities from continuing to consolidate. Yeah. Well, I mean, you have two, unfortunately, divergent factors.
More efficient.
Really what it comes down to more than anything else and Jerry just to add on that I will say that you do gain operating leverage as you increase your volumes at your existing clinics because the fixed cost remained relatively the same right. So Dan criminal incremental margin on those extra visits.
It's higher than your overall margins so that should help us as we go forward. If we can keep those costs in line or maybe even a little bit better.
Christopher J. Reading: You have the rollout of group purchasing, which we've done, and it's pretty complete. And then you have overlaid on that just general inflation. And so I think it was the right thing to do. I think it was a smart thing to do.
On a per visit basis. So as we go forward, which I think we can do.
Again very helpful color.
And then maybe we've kind of talked around some of the puts and takes to the outlook.
Christopher J. Reading: We didn't get it done, you know, on day one last year, so it rolled out across the year. So we'll see that carry forward. You saw some of that, probably a small, small part of that show up in our total cost per visit last year. But look, we were, you know; inflation's been a little challenging too. And so I'm sure that what we got, we gave some of that back in inflation. So that's not a big lever.
2020 for I guess, maybe just to put a fine point on when we think about kind of the low to high end of the range for adjusted EBITDA guidance. In 2024 is the biggest swing factor in your opinion, just sort of timing related to when you complete the M&A deals that are assumed in that outlook is it potentially some variance in your.
Assumptions around the rate trends for the year, just would love to unpack a little bit about that in terms of just what kind of drives that variance from the wells at the high end.
Yes, let me give carrier break.
Christopher J. Reading: Our big focus is driving additional volume through our facilities, which gives us a little overhead coverage and helps us be a little bit more efficient. And that's really what it comes down to more than anything else. Yeah. And Jared, just to add to that, I will say that you do gain operating leverage as you increase your volumes at your existing clinics because the fixed costs remain relatively the same, right? So the incremental margin on those extra visits is higher than your overall margin, so that should help us as we go forward if we can keep those costs in line or maybe even a little bit better and on a per visit basis as we go forward, which I think we can do. Welcome everyone. This is awesome. And again, a very helpful color.
I'm going to take.
Hey, guys. When you run a company there are things every day that happened then you try to control as many things as you can when you try to have a great crystal ball.
When you are running close to 700 facilities and Youre delivering care I mean.
It's not all one plus one equals two every day and so we have a series of things that we're very familiar with that we have to do well we have to drive additional volume volume that we're projecting for July and August and September of the year ahead.
Have to get contracts.
David and renewed and carry those contracts forward and bring in relatively the same mix.
Lately better mix of patients than we've had none of that has certain all of that requires an ordinate amount of work on everybody's part clinically locally and operationally.
Christopher J. Reading: And then maybe we've kind of talked about some of the puts and takes on the Outlook in 2024. I guess maybe just to put a fine point on, when we think about kind of the low to high end of the range for adjusted EBITDA guidance in 2024, is the biggest swing factor, in your opinion, just sort of timing related to when you complete the M&A deals that are assumed in that Outlook? Is there potentially some variance in your assumptions around the rate trends for the year? Just would love to unpack a little bit about that in terms of just what kind of drives that variance from the low to the high.
And then we have the timing of acquisitions, which as you pointed out has some effect you roll that all together and we.
Giving you the guidance that we've given you.
We think we can do better than the bottom.
And we think we'll be somewhere in that range and we'll update as the year goes on according to how things are going if we feel like.
We've guided the market in a particular direction so.
Christopher J. Reading: Yeah, let me give Carey a break. And I'm going to take that. I mean, guys, when you run a company, there are things every day that happen, and you try to control as many things as you can.
That's really all I can tell you right now we're early in the year.
<unk>.
We're off to a reasonably good start.
A little weather in January but I think we can overcome that we plan to overcome it as year goes on.
Christopher J. Reading: And you try to have a great crystal ball. And, you know, when you're running close to 700 facilities, and you're delivering care, I mean, you know, it's, it's, it's not all one plus one equals two every day. And so we have a series of things that we're very familiar with that we have to do well. We have to drive additional volume, volume that we're projecting for July and August and September of the year ahead, we have to get contracts updated and renewed, and carry those contracts forward and bring in relatively the same mix, are a slightly better mix of patients than we've had. None of that is certain.
<unk>.
I wish I could.
Tell you more about bucket, but it doesn't really work that way.
When youre in real life.
And I appreciate all the details.
And once again, if you would like to ask a question. Please press star one.
We'll take our next question from Mike <unk>.
<unk> with Barrington Research your line is open.
Mike.
Okay.
Good morning.
Can I actually get the I don't think you guys mentioned that the <unk>.
Payer mix for the quarter.
Sure Yeah for the quarter.
Christopher J. Reading: All that requires an enormous amount of work on everybody's part, clinically, locally, and operationally. And then we have the timing of acquisitions, which, as you point out, has some effect. You roll that all together, and we've given you the guidance that we've given you. We think we can do better than the bottom, and we think we'll be somewhere in that range, and we'll update as the year goes on according to how things are going, if we feel like we need to guide the market in a particular direction. So that's really all I can tell you right now. We're early in the year. We're off to a reasonably good start, albeit some weather in January, but I think we can overcome that. We plan to overcome it as the year goes on. You know, I wish I could tell you more about Bucket, but it doesn't really work that way when, you know, when you're in real life and appreciate all the details.
Okay.
For the quarter it was pretty similar we had about 48% commercial 32%.
5% Workers' comp and then.
The other three.
Medicare personal injury self pay make up the rest.
Alright, Carey I'm sorry at.
At least on my end you broke up on workers' comp how much was workers' comp.
This comp was nine 5% and then.
So 48% commercial 32% Medicare nine 5% for workers comp and then the other categories make up the rest.
Okay, and then I guess, maybe maybe for Chris or somebody else in the room on workers comp I know you guys have express maybe over the last two to four quarter some.
Optimism around possibly changing the trajectory there and getting that back up into sort of the low double digit range is that optimism still there or is that just tough needle to move because at one time, you did have that probably 12% to 14% of overall revenue.
Christopher J. Reading: And once again, if you would like to ask a question, please press star 1. We'll take our next question from Mike Petusky with Barrington Research. Your line is open. Hey, Mike. Good morning.
Operator: Can I actually get the – I don't think you guys mentioned it, the actual payer mix for the quarter? Sure. Yeah, for the quarter. For the quarter, it was pretty similar.
Yes.
Carey P. Hendrickson: We had about 48% commercial, 32%, half percent workers comp, and then the other three, Medicare, personal injury, and self-pay, made up the rest. All right, Carey, I'm sorry, at least on my end, you broke up on workers comp. How much was workers comp?
It's not dead, yet Mike, but it's.
It's a tough question when youre growing and we've been able to grow the whole business.
It's tough to outgrow just one category, but we've done a lot of training.
We've signed a lot of new contracts that should drive additional volume our partners are focused on Eric do you want to weigh in.
Carey P. Hendrickson: Workers' Comp was 9.5 percent, and then – so 48 percent commercial, 32 percent Medicare, 9.5 percent for Workers' Comp, and then the other categories make up the rest. Okay. And then I guess maybe for Chris or somebody else in the room, on workers' comp, I know you guys have expressed maybe over the last two to four quarters some optimism around, you know, possibly changing the trajectory there and getting that back up into, you know, sort of the low double-digit range. Is that optimism still there, or is that just a tough needle to move? Because at one time, you probably had that 12, 14 percent of overall revenue. Yeah. It's not dead yet, Mike, but it's a tough list.
There were a lot of new agreements that were signed and a lot of those.
Place at the tail end.
Late Q3, and Q4, so we actually did see a pickup in Q4 last year in Q4 were comp was nine 2% of our mix so up slightly from where we were and I think the work and the things that we executed on late 'twenty three are going to pay dividends to us in 2024, and there is a handful of additional agreements that are in process.
Yes.
It will also get executed as we go through the first quarter in the second quarter that will pay dividends for us we believe in the back part of the year. So this is an area that we continue to really focus hard on not just from a volume perspective, but from a rate perspective, as well and we did get a nice pickup in rate year over year for our work comp business, so opportunity there but.
Christopher J. Reading: And when you're growing, and we've been able to grow the whole business, it's tough to outgrow just one category. But we've done a lot of training. We've signed a lot of new contracts that should drive additional volume. Our partners are focused on it. Eric, do you want to weigh in? Yeah. There were a lot of new agreements that were signed, and a lot of those took place at the tail end, you know, late Q3 and Q4. So we actually did see a pickup in Q4. Last year in Q4, work comp was 9.2% of our mix, so up slightly from where we were. And I think the work and the things that we executed on late in 23 are going to pay dividends to us in 2024. And there are a handful of additional agreements that are in the process that will also get executed as we go through the first quarter and into the second quarter that will pay dividends for us, we believe, in the latter part of the year.
As Chris pointed out in the whole business is growing.
It's really hard to check those other categories on a significant basis, but we are making progress here.
We expect better things in 2024.
Okay, Alright, great and then just a quick question I guess on the lack of action in Washington, and just the CMS cut this year.
Yes.
I know, Chris that Youre very.
And a leader in the industry I mean is there sort of an argument to go back to CMS, you will get 25% and essentially saying look we've really sort of taken it.
For the last few years here.
Essentially make the argument that there was no relief in 'twenty four in that.
Yes.
The Street should end at this point I mean has there been any talk I guess within the industry.
Eric Joseph Williams: So this is an area that we continue to really focus hard on, not just from a volume perspective, but from a rate perspective as well. And we did get a nice pickup in rate year over year for our work comp business. So, opportunity there. But as Chris pointed out, when the whole business is growing, it's really, you know, hard to outkick those other categories on a significant basis.
Got it.
And to this.
Yes.
There's a lot of talk in the industry.
I will tell you CMS as a fresh having place.
We seem to have.
More empathy.
Congress, we're actually going to be M. D C.
Operator: But we are making progress here, and we expect better things in 2024. All right, great. And then just a quick question, I guess, on the lack of action in Washington and just the CMS cut this year. You know, in terms of, and I know, Chris, that you're very connected and a leader in the industry. I mean, is there sort of an argument to go back to CMS, if you look at 25 and essentially say, look, we've really sort of taken it for the last few years here, you know, and essentially make the argument that there was no relief in 24 and that, http://TheBusinessProfessor.com, Yeah, there's a lot of talk in the industry. I will tell you, CMS is a frustrating place. You know, we seem to have a lot more empathy in Congress.
Nick who.
Services, our executive director for <unk>.
Also works with us.
And a lot of our member companies Ceos will be in Washington.
In another month, or so and we will meet with med pack.
Talk about some of the scoring and their lack of ability to.
Score true savers in the system like for instance, fall prevention is the same for we know that if you can prevent a fall we know measurably, what the downstream savings look like.
They are spectacular level of savings.
Based on the rules again, we're talking about the federal government down Everything's got a million roles associated with based on the rules mid Pac is unable to score save or save or they have to score that the costs are.
Christopher J. Reading: We're actually going to be in D.C. Nick and I, Nick, who serves as our executive director for APTQI, who also works with us, and a lot of our member company CEOs will be in Washington in another month or so. And we'll meet with MedPAC to talk about some of their scoring and their lack of ability to score true savers in the system, like, for instance, fall prevention is a saver. We know that if you can prevent a fall, we know measurably what the downstream savings look like, and they're a spectacular level of savings. Based on the rules, again, we're talking about the federal government now, and everything's got a million rules associated with it. Based on the rules, MedPAC isn't able to score a saver as a saver. They have to score it as a coster.
It's a new AD.
Okay, then the prevention of a massive downstream expense doesn't make sense and so there's a lot of coordination that needs to occur.
Tweaking the lawmaking side in the rulemaking side.
Government and CMS.
So yes, we're going to continue to beat the drum.
We're going to continue to work with.
Q I and all of the constituents in all the good people that I get to work with in those two organizations to push hard.
Think we will come out the other side and be okay.
To say, it's not frustrating would be an under.
Statement.
It's been a frustrating period.
Christopher J. Reading: It's like it's a new ad, and then the prevention of a massive downstream expense doesn't make sense. And so, there's a lot of coordination that needs to occur between the lawmaking side and the rulemaking side of government and CMS. And, you know, so, yeah, we're going to continue to beat the drum. We're going to continue to work with the APTA and APTQI and all the constituents and all the good people that I get to work with in those two organizations to push hard. And I think we will come out on the other side and be okay. To say it's not frustrating would be an understatement. I mean, it's been a frustrating period. But I think in everyone's heart, they know that physical therapy and, statistically, and according to a lot of good studies that are out right now, physical therapy should be the entry point for musculoskeletal care. If it is, it saves a massive amount of money.
But I think in everyone's hard physical.
Physical therapy.
Statistically and according to a lot of good studies that are out right now physical therapy as should be the entre point for musculoskeletal care. If it is it's a massive amount of cost.
So we're going to continue to beat that drum.
My ability to absolutely predict what happens I would say, it's not great but.
Yeah.
Okay.
Okay.
Lucia.
Oh no no.
I think.
Thank you.
Great and just one quick one on the M&A. That's included in the guidance. That's all I'm, assuming that's all <unk> injury prevention is that correct.
Okay.
Don't make that assumption.
Okay fair enough alright, thank you so much.
Nice finish to the year. Thanks.
No I will say that for everybody's benefit I mean statistically speaking, while we've been active in injury prevention and expect to continue to be active the majority of the deals that we get are in the <unk> space, but.
Operator: And so we're going to continue to beat that drum. My ability to absolutely predict what happens, I would say, is not great, but, you know, we're focused. [inaudible] Oh, no, I think I've lost you. Thank you. That's great. And just one quick one.
You can expect us to be active in both.
Thanks.
Thanks, Mike sure.
Christopher J. Reading: On the M&A that's included in the guidance, I'm assuming that it's all PT, no injury prevention. Is that correct? Ah, don't make that assumption.
And it appears that we have no further questions. At this time I will now turn the program back over to our presenters for any additional or closing remarks.
Christopher J. Reading: Okay. Fair enough. All right. Thank you so much, and nice finish to the year. Thanks. Now, I will say that, for everybody's benefit, I mean, statistically speaking, while we've been active in injury prevention and expect to continue to be active, the majority of the deals that we get done are in the physical therapy space.
But we really truly appreciate your time and attention. This morning, Karen and I are available later to answer questions.
Today or later this week or next week.
We appreciate.
Christopher J. Reading: You can expect us to be active in both. Thanks. Thanks, Mike. And it appears that we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks. We really, truly appreciate your time and attention this morning. Carey and I are available later to answer questions either today or later this week or next week.
And we hope you have a great day bye now thanks, everyone.
That concludes today's teleconference. Thank you for your participation you may now disconnect.
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Christopher J. Reading: We appreciate your interest, and we hope you have a great day. Bye now. Thanks, everyone. That concludes today's teleconference. Thank you for your participation. You may now disconnect.
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