Q4 2023 Acadia Healthcare Company Inc Earnings Call
[music].
Operator: Good day and welcome to the Acadia Healthcare fourth quarter and full year. All participants will be After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star then 1 on your telephone.
Good day and welcome Shelley.
Health care fourth quarter, and full year 2023 earnings conference call.
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After today's presentation there'll be an opportunity to ask questions.
To ask a question you May press Star then one on your telephone keypad.
Operator: To withdraw your question, please press star 1. Please note, today's event is being, and now we turn the conference over to Gretchen Hommrich. Good morning, and welcome to Acadia's fourth quarter 2023 conference call. I'm Gretchen Hommrich, Vice President of Investor Relations for Acadia. Here with me today are Chris Hunter, Acadia's Chief Executive Officer, and Heather Dixon, our Chief Financial Officer. I'll first provide you with our safe harbor before turning the call over to Chris.
To withdraw your question. Please press Star then two.
Please note today's event is being recorded.
I'd now like to turn the conference over to Gretchen harmless. Please go ahead.
Right.
Gretchen Harmless: Good morning, and welcome to Acadia <unk> fourth quarter 2023 conference call. Congrats on Homrich, Vice President of Investor Relations for Acadia here with me today are Chris Hunter, Acadia, as Chief Executive Officer, and Heather Jackson, Our Chief Financial Officer, I'll first provide you with our safe Harbor before turning the call over to <unk>.
Gretchen Hommrich: To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP on our website by viewing yesterday's news release under the Investor section. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Acadia's expected quarterly and annual financial performance for 2024 and beyond. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Acadia's filings with the Securities and Exchange Commission and in the company's fourth quarter news release. Consequently, actual operations and results may differ materially from the results discussed in the forward-looking statement. At this time, I would like to turn the conference call over to our Chief Executive Officer, Chris Hunter, for opening remarks. Thank you, Gretchen, and good morning, everyone.
Gretchen Harmless: Chris.
Gretchen Harmless: Any non-GAAP financial measure is discussed in today's call. You'll also find a reconciliation of that measure to the most directly.
Gretchen Harmless: Parable financial measure calculated according to GAAP on our website by viewing yesterday's news release under the investors link.
Gretchen Harmless: This conference call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095, including statements among others regarding Acadia is expected quarterly and annual financial performance for 2024 and beyond.
Gretchen Harmless: You are hereby cautioned that these statements may be affected by the important factors among others set forth in <unk> filings with the Securities and Exchange Commission and in the company's fourth quarter news release, and consequently, actual operations and results may differ materially from the results discussed in the forward looking statements.
Gretchen Harmless: At this time I would like to turn the conference call over to our Chief Executive Officer, Chris Hunter for opening remarks.
Chris Hunter: Thank you Gretchen and good morning, everyone. Thank you for being with Us for Acadia as fourth quarter 2023 conference call.
Christopher Howal Hunter: Thank you for being with us for Acadia's fourth quarter 2023 conference call. Our strong fourth quarter capped off another outstanding year of solid financial and operational performance for Acadia. Our team has continued to execute on our strategy with positive results across our four lines of business. For the full year 2023, we reported robust annual revenue growth of 12.2 percent, adjusted EBITDA growth of 13.1%, and adjusted EPS growth of 14.3% as compared to 2022, excluding income from the Provider Relief Fund recognized in both periods. Moving to our fourth quarter results, our same facility revenue increased 10.3% compared with the fourth quarter of last year, with the increase driven by both rate improvements and patient day growth. We were also pleased to see consistent improvement in our labor trends throughout 2023. Our wage inflation decreased from a peak of 8% in the fourth quarter of 2022 to below 5% in the fourth quarter of 2023, which is an improvement of over 300 days.
Chris Hunter: Our strong fourth quarter capped off another outstanding year of solid financial and operational performance for Acadia.
Chris Hunter: Our team has continued to execute on our strategy with positive results across our four lines of business.
Chris Hunter: For the full year 2023, we reported robust annual revenue growth of 12, 2%.
Chris Hunter: Adjusted EBITDA growth of 13, 1% and adjusted EPS growth of 14, 3% as compared to 2022, excluding income from the provider relief fund recognized in both periods.
Chris Hunter: Moving to our fourth quarter results. Our same facility revenue increased 10, 3% compared with the fourth quarter of last year with the increase driven by both rate improvements and patient day growth.
Chris Hunter: We were also pleased to see consistent improvement in our labor trends throughout 2023.
Chris Hunter: Our wage inflation decreased from a peak of 8% in the fourth quarter of 2022 to below 5% in the fourth quarter of 2023, which is an improvement of over 300 basis points in.
Christopher Howal Hunter: In addition to improvements in the external labor market, our initiatives to drive higher employee engagement and more operational consistency in our facilities have enhanced our ability to attract and retain employees in a competitive market. We have focused on more extensive clinical training for new staff and more intentional sharing of best practices, while at the same time investing in technology tools that support Acadia employees and clinicians across our 253 facilities. We've also put an emphasis on benefits and progressive career development opportunities for employees at all levels of our facility.
Chris Hunter: In addition to improvements in the external labor market, our initiatives to drive higher employee engagement and more operational consistency in our facilities have enhanced our ability to attract and retain employees in a competitive market.
Chris Hunter: We are focused on more extensive clinical training for new staff and more intentional sharing of best practices. While at the same time investing in technology tools that support Acadia employees and clinicians across our 253 facilities.
Chris Hunter: We've also had an emphasis on benefits and progressive career development opportunities for employees at all levels of our facilities.
Christopher Howal Hunter: Efforts to improve retention and hiring are evident in our ability to support annual patient day growth of over 5% to ensure we provide high-quality patient care. Our team has done an outstanding job of meeting the higher patient demand and effectively managing operations. During the fourth quarter, we continued to extend our market reach and add capacity through each one of our five defined growth pathways, as follows. In support of our first pathway, Facility Expansions, we added 98 beds during the fourth quarter for a total of 302 bed additions to existing facilities in 2023. We are pleased that this was in line with our stated goal to add approximately 300 beds. For our second pathway, we remain focused on developing wholly owned de novo facilities in underserved markets for behavioral healthcare services.
Chris Hunter: Efforts to improve retention and hiring are evident in our ability to support annual patient day growth of over 5% to ensure we provide high quality patient care.
Chris Hunter: Our team has done an outstanding job in meeting the higher patient demand and effectively managing operations.
Chris Hunter: During the fourth quarter, we continued to extend our market reach and add capacity through each one of our five defined growth pathways as follows in.
Chris Hunter: In support of our first pathway facility expansions, we added 98 beds during the fourth quarter for a total of 302 beds bed additions to existing facilities. In 2023. We are pleased that this was in line with our stated goal to add approximately 300 beds.
Chris Hunter: For our second pathway, we remain focused on developing wholly owned de novo facilities in underserved markets for behavioral health care services.
Christopher Howal Hunter: During the fourth quarter, we opened the newly renovated 101-bed adult hospital, Montrose Behavioral Health Hospital in Chicago, Illinois. We have also completed construction on our 80-bed inpatient hospital, Coachella Valley Behavioral Health, located in Indio, California, which we expect to open later this year. Our CTC service line offers comprehensive care for patients who are affected by Opioid Use Disorder, or OUD.
Chris Hunter: During the fourth quarter, we opened the newly renovated 101 bed adult hospital Montrose behavioral Health Hospital in Chicago, Illinois. We have also completed construction on our 80 bed inpatient Hospital Coachella Valley behavioral health located in India, California, which we expect to open later this.
Chris Hunter: Year.
Chris Hunter: Our CTC service line offers comprehensive care for patients who are affected by opioid use disorder or <unk>. We opened two new CTC locations in the fourth quarter, bringing our total to six CTC opened opened in 2023 in line with.
Christopher Howal Hunter: We opened two new CTC locations in the fourth quarter, bringing our total to six CTCs opened in 2023, in line with our goal for the year. And we remain focused on accelerating our CTC expansion by opening up to 14 CTCs in 2024. The opioid epidemic continues to intensify, with approximately 9 million Americans misusing opioids in the past year, and new, more potent drugs continuing to emerge. In fact, some experts believe that we have now entered the fourth wave of the opioid epidemic, as drug users have now evolved from prescription drugs in the first wave to heroin and then to fentanyl in the second and third waves, and now to polysubstances that include fentanyl mixed with substances such According to a recent report, nearly 93% of fentanyl-positive urine samples contained additional substances. Methamphetamine, a highly addictive drug, was found in 60% of fentanyl-positive tests last year, which is an 875% increase since 2015.
Chris Hunter: Our goal for the year and we remain focused on accelerating our CTC expansion by opening up to support <unk> in 2024.
Chris Hunter: The opioid epidemic continues to intensify with approximately 9 million Americans misusing opioids in the past year and new more potent drugs continuing to emerge.
Chris Hunter: In fact, some experts believe that we have now entered the fourth wave of the opioid epidemic as drug users have now evolved from prescription drugs in the first wave two heroine and then to federal in the second and third waves and now two poly substances that include federal mixed with substances such as co.
Chris Hunter: Kane and methamphetamine.
Chris Hunter: According to a recent report nearly 93% of fentanyl positive urine samples contained additional substances methamphetamine highly addictive drug was found in 60% of fentanyl positive tests last year, which is an 875% increase.
Chris Hunter: Since 2015.
Christopher Howal Hunter: As we continue to expand this important area of our business, we remain focused on driving strong clinical outcomes, improving access, and delivering an exceptional patient experience, spanning our traditional opioid treatment programs, or OTPs, to mobile vans and telehealth solutions. But regardless of how patients come to Acadia for OUD treatment, quality is always a top priority, and we were proud to have recently received a quality score of over 99% across 13 measures by the Commission on Accreditation of Rehabilitation Facilities, or CARF. For our third growth pathway, we are working to expand our reach through our joint venture. Notably, Acadia is considered an attractive partner of choice for establishing relationships with premier health systems across the country.
Chris Hunter: As we continue to expand this important area of our business. We remain focused on driving strong clinical outcomes, improving access and delivering an exceptional patient experience spanning our traditional opioid treatment programs are otp's to mobile vans, and telehealth solutions, but regardless of how patients come in.
Chris Hunter: Acadia for OLED treatment quality is always a top priority and we were proud to have recently recently received a quality score of over 99% across 13 measures by the commission on accreditation of rehabilitation facilities or carp.
Chris Hunter: For our third growth pathway, we are working to expand our reach through our joint ventures, notably Acadia is considered an attractive partner of choice for establishing relationships with Premier health systems across the country.
Chris Hunter: As the leading pure play behavioral health provider, we bring the clinical expertise and experience and a proven ability to expand behavioral healthcare and more communities.
Christopher Howal Hunter: As the leading pure play behavioral health provider, we bring clinical expertise and experience and a proven ability to expand behavioral health care to more communities. We bring clinical expertise and experience and a proven ability to expand behavioral health care to more communities. Today, Acadia Healthcare has 21 joint venture partnerships for 22 hospitals, with 11 hospitals already in operation and 11 additional hospitals expected to open over the next few years.
Chris Hunter: Today, Acadia has 21 joint venture partnerships for 'twenty, two hospitals with 11 hospitals already in operation and 11 additional hospitals expected to open over the next few years.
Chris Hunter: In early January 2020 for Acadia announced a joint venture partnership with Ascension Seton one of the nation's leading integrated health care systems. The joint venture will focus on expanding <unk> current operations at Cross Creek Hospital in Austin, Texas by constructing a 100.
Chris Hunter: Third six bed expansion of our existing acute behavioral hospital.
Chris Hunter: This is the company's second joint venture partnership with Ascension and follows the opening in 2020 of Ascension Saint Thomas of behavioral health facility in Nashville.
Christopher Howal Hunter: In early January 2024, Acadia announced a joint venture partnership with Ascension Seton, one of the nation's leading integrated healthcare systems. The joint venture will focus on expanding Acadia's current operations at Cross Creek Hospital in Austin, Texas by constructing a 106-bed expansion of our existing acute behavioral hospital. This is the company's second joint venture partnership with Ascension and follows the opening in 2020 of Ascension St. Thomas, a behavioral health facility in Nashville. Our new partnership with Ascension is a testament to the strength of our relationship and reflects our solid track record of clinical, operational, and financial outcomes with our joint venture partners. The new partnership will expand access to behavioral health care in Austin and its surrounding communities.
Chris Hunter: Our new partnership with Ascension is a testament to the strength of our relationship and reflects our solid track record of clinical operational and financial outcomes with our joint venture partners.
Chris Hunter: The new partnership will expand access to behavioral health care in Austin and its surrounding communities.
Chris Hunter: The joint venture hospital will be in close proximity to Ascension Seton hospitals and will be one of the training sites for students residents and fellows from the Dell Medical school at the University of Texas at Austin.
Chris Hunter: Together with our JV partners, we have a shared commitment to providing access to high quality compassionate behavioral healthcare and supporting the critical need in our local communities joint ventures will continue to play an important role in <unk> future growth and we remain excited about the opportunities to work.
Chris Hunter: With other leading providers and attractive geographies.
Chris Hunter: For our fourth pathway, we continue to look for acquisitions that support our growth objectives and meet the criteria of our capital allocation strategy.
Christopher Howal Hunter: The Joint Venture Hospital will be in close proximity to Ascension-Seton Hospitals and will be one of the training sites for students, residents, and fellows from the Dell Medical School at the University of Texas at Austin. Together, with our JV partners, we have a shared commitment to providing access to high-quality, compassionate behavioral health care and supporting the critical need in our local communities. Joint Ventures will continue to play an important role in Acadia's future growth, and we remain excited about the opportunities to work with other leading providers in attractive geography. For our fourth pathway, we continue to look for acquisitions that support our growth objectives and meet the criteria of our capital allocation strategy. Last week, we closed on our previously announced acquisition of Turning Point Centers, a 76-bed specialty provider of substance use disorder and primary mental health treatment services that serves the Salt Lake City, Utah metropolitan market.
Chris Hunter: Last week, we closed on our previously announced acquisition of turning point centers, a 76 bed specialty provider of substance use disorder and primary mental health treatment services that supports the Salt Lake City, Utah Metropolitan market.
Chris Hunter: This acquisition completes the continuum of care in that market and represents the first market, where Acadia has all four service lines present.
Chris Hunter: Our fifth and final growth pathway, extending the continuum of care is important to our clinical strategy.
Chris Hunter: One of the key focus areas of this pathway is expanding our partial hospitalization programs or PHP and intensive outpatient programs IOP that can provide.
Chris Hunter: <unk> four to six hours of care per day.
Chris Hunter: The majority of our acute and specialty patients can clinically benefit from these programs as they offer a step down level of care after discharge from a high acuity stay but also enable patients to step up again and acuity as their needs change.
Chris Hunter: This not only improves clinical outcomes, but also enhances the overall patient experience.
Chris Hunter: We added 13 outpatient programs during the fourth quarter, bringing <unk> total to 39 outpatient programs added during calendar 2023. We are also working to increase the opportunity for our patients to utilize PHP IOP services is only a portion of our.
Christopher Howal Hunter: This acquisition completes the continuum of care in that market and represents the first market where Acadia has all four service lines present. Our fifth and final growth pathway, extending the continuum of care, is important to our clinical strategy. One of the key focus areas of this pathway is expanding our Partial Hospitalization Programs, or PHP, and Intensive Outpatient Programs, IOP, that can provide four to six hours of care per day. The majority of our acute and specialty patients can clinically benefit from these programs as they offer a step-down level of care after discharge from a high-acuity stay but also enable patients to step up again in acuity as their needs change This not only improves clinical outcomes but also enhances the overall patient experience. We added 13 outpatient programs during the fourth quarter, bringing Acadia's total to 39 outpatient programs added during calendar 2023.
Chris Hunter: Clinically eligible patients step down to PHP IOP care post discharge today.
Chris Hunter: As we stated at our Investor Day in December of 2022, we expected an acceleration of our bed additions in 2024, and we are pleased to deliver on that goal this year by adding approximately 200 beds.
Chris Hunter: This will include approximately 400 bed additions to existing facilities, which is a step up from our historical average of 300 bed additions to existing facilities.
Chris Hunter: We continue to make progress on our new facilities that will open in Florida, California, Michigan, Texas, Colorado, Arizona, and Wisconsin in 2024.
Chris Hunter: Additionally, we plan to open up to 14, new CTC locations in 2024.
Chris Hunter: As we continue to extend our market reach patient safety and quality patient care remain our top priorities for delivering the best possible outcome for our patients.
Christopher Howal Hunter: We are also working to increase the opportunity for our patients to utilize PHP IOP services as only a portion of our clinically eligible patients step down to PHP IOP care post-discharge today. As we stated at our Investor Day in December of 2022, we expected an acceleration of our bet additions in 2024. And we are pleased to deliver on that goal this year by adding approximately 1200 beds. This will include approximately 400 bed additions to existing facilities, which is a step up from our historical average of 300 bed additions to existing facilities.
Chris Hunter: Quality is foundational to every aspect of the work we do at Acadia and drives operational effectiveness, our quality initiatives are focused on providing industry, leading care to the patients we serve daily supporting our Acadia teammates through leadership development and thorough competency based training building.
Chris Hunter: <unk> tools for identifying risks and opportunities and utilizing technology, including a quality data platform and predictive analytics to monitor our progress.
Chris Hunter: We have made significant technology investments in 2023 to further strengthen our core capabilities enable us to deliver stronger clinical outcomes.
Chris Hunter: Our recent investments in electronic medical records have helped support our clinical staff with improved retention employee satisfaction and workflow efficiencies.
Christopher Howal Hunter: We continue to make progress on our new facilities that will open in Florida, California, Michigan, Texas, Colorado, Arizona, and Wisconsin in 2024. Additionally, we plan to open up to 14 new CTC locations in 2024. As we continue to extend our market reach, patient safety and quality patient care remain our top priorities for delivering the best possible outcome for our patients. Quality is foundational to every aspect of the work we do at Acadia and drives operational effectiveness.
Chris Hunter: Our optimized EMR, which has been implemented using the insight from several of our medical nursing and clinical leaders ensures we translate the best behavioral science into practice at every bed side.
Chris Hunter: In addition, we have now implemented patient monitoring technology in 53 facilities promoting higher touch care for fewer incidents and enhance patient safety. These investments in our core infrastructure combined with the EMR and patient care technology provide access to better data.
Chris Hunter: To measure outcomes and provide a framework for value based care.
Chris Hunter: The ability to measure and demonstrate these outcomes is important for collaborating with payors.
Chris Hunter: We are proud of our impressive growth and progress over the past year and look forward to the significant opportunities ahead for Acadia to extend our market reach to serve even more patients in 2024.
Christopher Howal Hunter: Our quality initiatives are focused on providing industry-leading care to the patients we serve daily, supporting our Acadia teammates through leadership development and thorough competency-based training, and building proactive tools for identifying risk and opportunities and utilizing technology, including a quality data platform and predictive analytics, to monitor our progress. We have made significant technology investments in 2023 to further strengthen our core capabilities and enable us to deliver stronger clinical outcomes. Our recent investments in electronic medical records have helped support our clinical staff with improved retention, employee satisfaction, and workflow efficiency. Our optimized EMR, which has been implemented using the insight from several of our medical, nursing, and clinical leaders, ensures we translate the best of behavioral science into practice at every bedside. In addition, we have now implemented patient monitoring technology in 53 facilities, promoting higher touch care for fewer incidents and enhancing patient safety.
Chris Hunter: Our strategic priorities will focus on accelerating facility growth expanding services across the care continuum, strengthening our capabilities and strategically leveraging technology to enhance patient care and improve clinical outcomes, all with a focus on delivering the highest quality patient care.
Chris Hunter: We are well positioned to meet our objectives with our financial strength scale and committed employees and clinicians who work hard every day to address the nation's critical need for safe quality treatment for mental health and substance use issues.
At this time I will now turn the call over to Heather to discuss our financial results for the quarter and 2020 for guidance.
Heather Jackson: Chris and good morning, everyone, our fourth quarter financial performance reflects strong and consistent growth in our business in 2023, we achieved solid top line growth with $742 $8 million in revenue for the quarter up 10% over the fourth quarter of last year.
Heather Jackson: Our same facility revenue grew 10, 3% compared with the fourth quarter of 2022, which included an increase in revenue per patient day of seven 1% and patient days growth of two 9%.
Heather Dixon: These investments in our core infrastructure, combined with the EMR and patient care technology, provide access to better data to measure outcomes and provide a framework for value-based care. The ability to measure and demonstrate these outcomes is important for collaborating with payers. We are proud of our impressive growth and progress over the past year and look forward to the significant opportunities ahead for Acadia to extend our market reach to serve even more patients in 2024. Our strategic priorities will focus on accelerating facility growth, expanding services across the care continuum, strengthening our capabilities, and strategically leveraging technology to enhance patient care and improve clinical outcomes, all with the focus on delivering the highest quality patient care. We are well positioned to meet our objectives with our financial strength, scale, and committed employees and clinicians who work hard every day to address the nation's critical need for safe, quality treatment for mental health and substance use issues. At this time, I will now turn the call over to Heather to discuss our financial results for the quarter and our 2024 guidance. Thanks, Chris. And good morning, everyone.
Heather Jackson: The company recorded income related to the provider relief fund established by the cares act of $2 million during the fourth quarter of 2023 and $5 $2 million during the fourth quarter of 2022.
Heather Jackson: Excluding income from the PRA for both periods as well as the unfavorable adjustment to <unk> of $5 9 million or five cents per diluted share that was recorded in the fourth quarter of 2000 to adjusted EBITDA for the fourth quarter of 'twenty three increased 11, 9% over the prior year to 100.
Heather Jackson: $69 $6 million and adjusted income attributable to Acadia stockholders per diluted share was <unk> 85.
Heather Jackson: Up 13, 3% from the prior year.
Heather Jackson: Consistent with previous periods adjustment to income for the fourth quarter of 2023 included transaction legal and other costs loss on impairment gain on sale of property and the related income tax effects of all items.
Heather Jackson: Maintaining a strong financial position and disciplined capital allocation are top priorities for Acadia as of December 31, 2023, we had $100 $1 million in cash and cash equivalents and $516 5 billion available under our $600 million revolving credit facility.
Heather Jackson: With a net leverage ratio of approximately one nine times.
As previously announced on January 19th 2024, we entered into an amended credit agreement with our lenders to increase our term loan a by $350 million.
Heather Jackson: Also in January 24, we paid $400 million to settle three lawsuits in new Mexico previously disclosed.
Heather Dixon: Our fourth quarter financial performance reflects strong and consistent growth in our business in 2023. We achieved solid top line growth with $742.8 million in revenue for the quarter, up 10% over the fourth quarter of last year. Our same facility revenue grew 10.3% compared with the fourth quarter of 2022, which included an increase in revenue per patient day of 7.1% and patient days growth of 2.9%. The company recorded income related to the Provider Relief Fund established by the CARES Act of $2 million during the fourth quarter of 2023 and $5.2 million during the fourth quarter of 2022. Excluding income from the PRF for both periods, as well as the unfavorable adjustment to PLGL of 5.9 million or 5 cents per diluted share that was recorded in the fourth quarter of 22, adjusted EBITDA for the fourth quarter of 23 increased 11.9 percent over the prior year to $169.6 million and adjusted income attributable to Acadia stockholders per diluted share was 85 cents up 13.3 percent from the prior year.
Heather Jackson: Moving onto our outlet for 2024 as noticed as noted in our press release, we established our 2024 guidance which includes.
Heather Jackson: Revenue in the range of three eight to $3 $2 $5 billion.
Heather Jackson: Adjusted EBITDA in the range of $730 to $770 million.
Heather Jackson: Adjusted earnings per diluted share in the range of $3 40 to $3 70.
Heather Jackson: And total bed additions, excluding acquisitions of approximately 200 beds.
Heather Jackson: We also established financial guidance for the first quarter of 2024 as follows.
Heather Jackson: Revenue in a range of 775% to $785 million.
Heather Jackson: Adjusted EBITDA in a range of $1 $70 million to $175 million and adjusted earnings per diluted share in a range of 78 to 83.
Heather Jackson: This guidance reflects our expectation that same facility revenue growth will be driven by mid single digit growth for both revenue per day and patient days for the full year.
Heather Jackson: Please note that our guidance our guidance includes onetime payment from a state of approximately $10 million or <unk> <unk> per diluted share for the year.
Heather Jackson: Of which approximately $7 million or <unk> <unk> per diluted share was received in the first quarter of 2024.
Heather Jackson: Also as a reminder, the company's guidance does not include the impact of any future acquisitions divestitures transaction legal and other costs or nonrecurring legal settlement expense.
Speaker Change: With that operator, we are ready to open the call for questions.
Heather Dixon: Consistent with previous periods, adjustments to income for the fourth quarter of 2023 include transaction legal and other costs, loss on impairment, gain on sale of property, and the related income tax effects of all items. Maintaining a strong financial position and disciplined capital allocation are top priorities for Acadia. As of December 31, 2023, we had $100.1 million in cash and cash equivalents and $516.5 million available under our $600 million revolving credit facility with a net leverage ratio of approximately 1.9 times. As previously announced on January 19, 2024, we entered into an amended credit agreement with our lenders to increase our term loan A by $350 million. Also, on January 24, we paid $400 million to settle three lawsuits in New Mexico, previously disclosed.
Speaker Change: I would like to ask a question. Please press Star then one on your telephone keypad.
Speaker Change: If your question has already been addressed and like to withdraw your question. Please press Star then two.
Speaker Change: Today's first question comes from with.
Ana Gupte: With Leerink partners. Please go ahead.
Ana Gupte: Hey, thanks.
Ana Gupte: Heather just on the guidance can you maybe frame for us what youre, assuming inside that four startup losses, and then also corporate overhead. This year I don't think youre going to be investing as much as last year and then if you could share any more details on the $10 million state payment I presume that's just state supplemental.
Ana Gupte: DTP like payment or something thanks.
Heather Jackson: Hi, good morning.
Heather Jackson: So maybe in reverse order the $10 million payment you are correct that is a onetime that split over two payments.
Speaker Change: TPP payment.
Heather Jackson: In terms of corporate costs.
Heather Jackson: We have seen in 2023, we did see the cost increase.
Heather Jackson: From the prior year that we've seen that stabilize in Q4 of 2023.
Heather Jackson: And we are starting to see our selective investments pay off for example investments we've made in quality.
Managed care marketing many areas.
Heather Dixon: Moving on to our outlook for 2024. As noted in our press release, we established our 2024 guidance, which includes revenue in the range of $3.18 to $3.25 billion, adjusted EBITDA in the range of $730 to $770 million, adjusted earnings per diluted share in the range of $3.40 to $3.70, and Total Bed Editions, excluding acquisitions of approximately 1,200 beds.
Heather Jackson: Starting to see those benefits to the business as a whole and specifically in the positive labor trends that we just talked about and also our continued ability to meet that growing demand and deliver quality care.
Heather Jackson: Turning to 2024, we expect to continue to see operating leverage as we move throughout the year.
Heather Jackson: And our inspection expectation is that our corporate costs will stay relatively consistent and continue to moderate specifically as a percentage of revenue as we see the continued leverage throughout the year.
Heather Jackson: In terms of startup costs.
Heather Jackson: We expect to start up costs will run in a similar range to 2023, probably around $20 million to $25 million for the full year and around $5 million to $6 million per quarter.
Operator: We also established financial guidance for the first quarter of 2024 as follows: revenue in a range of $775 to $785 million, adjusted EBITDA in a range of $170 to $175 million, and adjusted earnings per diluted share in a range of $0.78 to $0.83. This guidance reflects our expectation that same-facility revenue growth will be driven by mid-single-digit growth for both revenue per day and patient days for the full year. Please note that our guidance includes one-time payments from a state of approximately $10 million, or 9 cents per diluted share, for the year, of which approximately $7 million, or $0.06 per diluted share, was received in the first quarter of 2024. Also, as a reminder, the company's guidance does not include the impact of any future acquisitions, divestitures, transaction, legal, and other costs or non-recurring legal settlements expenses. With that, Operator, we are ready to open the call for questions. If you would like to ask a question, please press star then 1 on your telephone.
Heather Jackson: Not significantly higher really because of the back ending at the opening of the bed. So youll see that probably increased a little bit per quarter, but that's what we're expecting for startup costs.
Speaker Change: Great and my second question, Chris just CMI is launching a new behavioral pilot focused on what appears to be the integration of behavioral with primary care with some value based care flair to it I know, it's early but just any preliminary thoughts on your desire to participate in this program. We're seeing a lot more of these 11 15 waiver programs.
Speaker Change: From states as well so just curious if you have any thoughts on both of those.
Speaker Change: Yes, Thanks, Whit I mean, I'd say to start I mean, just overall, we're really glad to see the announcement I mean, we're tracking it closely but I think we're still largely in waiting mode here for a number of the key areas of additional detail from CMS. So.
Speaker Change: A number of those details that would include the care model funding model geographic participation et cetera, but.
Speaker Change: Overall, just the key details of the program are yet to be released.
Speaker Change: And we are eagerly awaiting the specifics it is something that we would like to participate in and we think that we have some really compelling capabilities and just eagerly we'll continue to track and await those ongoing details.
Speaker Change: Or to come.
Operator: The question has already been addressed; would you like to withdraw your... Today's first question comes from Whit Mann with Lurie. Hey, thanks. Good morning.
Speaker Change: Okay. Thanks.
Speaker Change: Yes.
Speaker Change: Thank you and our next question today comes from AJ Rice of UBS. Please go ahead.
AJ Rice: Hi, everybody. Thanks.
AJ Rice: Obviously.
Heather Dixon: Heather, just on the guidance, can you maybe frame for us what you're assuming inside that for startup losses and then also corporate overhead this year? I don't think you're going to be investing as much as last year. And then if you could share any more details on the $10 million state payment. I presume that's just a state supplemental payment or something. Hi Whit. Good morning. I'll go maybe in reverse order.
AJ Rice: <unk> been an important part of the story I guess, there's two ways that you could be seeing volume growth one from <unk>.
AJ Rice: Continued growth of demand underlying demand, but also I know the industry space constraints on staffing and that seems to be easy now I Wonder if you can.
AJ Rice: Could you just give us a little flavor for what true underlying demand is trending and how much.
AJ Rice: Some of the growth is happening just because you're getting more access to staffing to be able to take patients.
Speaker Change: So I would say youre right a day there.
Heather Dixon: The $10 million state payment, you're correct, that is a one-time payment split over two payments, DPP payment. In terms of corporate costs, we have seen, you know, in 2023, we did see those costs increase from the prior years, but we've seen that stabilize in Q4 of 2023. When we are starting to see our selective investments pay off, for example, investments we've made in quality, IT, managed care, marketing, many areas, we are starting to see those benefits to the business as a whole, specifically in the positive labor trends that we just talked about and also our continued ability to meet that growing demand and deliver quality care. Turning to 2024, we expect to continue to see operating leverage as we move throughout the year.
Speaker Change: There is a mix of both and we're seeing the demand for our services continue to be very strong.
Speaker Change: That's certainly not slowing down we're also benefiting from capacity additions that we've made over the last couple of years. So we have the ability to meet the demand whether it's the capacity additions are fully owned or.
Speaker Change: Our JV and then we're starting to see our ability to optimize how we except puts incoming and really make sure that we have patients accessing the facilities in the right way.
Speaker Change: You're right. We're also seeing improvement in the labor trends, that's certainly contributing to our ability to serve the patients.
Speaker Change: Seeing that all of the investments that we've made in our ability to really begin to see stabilization in labor contributed to our ability to serve those beds.
Speaker Change: Hey, Jay This is Tom I would just add a couple of a couple of quick things on that I. Just think overall some of the recruiting practices that we've put in place have also helped us to meet that volume this volume.
Tom: But we're continuing to see and now.
We expect that to remain the case throughout 24, just a few initiatives that I might point out that I think are helping us attract talent in but also retain talent I mean first of all these investments that we continue to make in technology to improve patient care and employee safety.
Heather Dixon: And our expectation is that corporate costs will stay relatively consistent and continue to moderate specifically as a percentage of revenue as we see sort of continued leverage throughout the year. In terms of startup costs, we expect startup costs to run in a similar range to 2023, probably around $20 to $25 million for the full year and around $5 to $6 million per quarter.
Tom: Been extremely helpful. As we've done employee engagement surveys as well I think the the intentional onboarding and training for our clinical staff has also helped significantly to that front, we've seen some real variation historically and then I just think.
Tom: Relentless focus on employee engagement in every facility tracking it and measuring it and holding our operators accountable has also led to some real improvements on that front that have enabled us to meet the demand that you are referencing so.
Christopher Howal Hunter: They're not significantly higher, really, because of the back-end of the opening of the bed, so you'll see that probably increase a little bit per quarter, but that's what we're expecting for startup costs. Great. My second question, Chris, is that CMMI is launching a new behavioral pilot focused on what appears to be the integration of behavioral health with primary care with some value-based care flare to it. I know it's early, but any preliminary thoughts on your desire to participate in this program? We're seeing a lot more of these 1115 waiver plans approved by states as well, so just curious if you have any thoughts on both of those. Yeah, thanks, Whit.
Speaker Change: No that's helpful and maybe just a follow on to that is.
Speaker Change: No.
Speaker Change: Youre, commenting on the strength in the rate updates and so forth I think in the 10-K you typically.
Speaker Change: Provides payor mix data has that been across the board is.
Speaker Change: Is it resulting in any shifts.
Speaker Change: The growth Youre seeing does it tend to be more mitigated commercial Medicare can you comment on any trend in payer mix youre seeing.
Speaker Change: Yes, sure Hey, Jay I can give you a quick update on the payer mix and.
Speaker Change: What you will see whenever you see the 10-K, you're right Youll see it this afternoon and Youll see a slight uptick and Medicaid as a mix percentage. It went from 54, 3% to 56, 8% as part of the mix.
Christopher Howal Hunter: I mean, I'd say to start, I mean, just overall, we're really glad to see the announcement. I mean, we're tracking it closely, but I think we're still largely in waiting mode here for a number of the key areas of additional detail from CMS. So, you know, a number of those details that would include the care model, the funding model, geographic participation, et cetera. But, you know, overall, just the key details of the program are yet to be released.
Speaker Change: Full of things I would say driving that part of it is volume growth, where we've opened new facilities or new beds and expanded facilities.
Speaker Change: There is.
Speaker Change: Certainly more more bed additions related to Medicaid and Thats driving some of the increase in the payer mix.
Speaker Change: And then we just continue to have strong demand there as we build referral resources and really talk about.
Speaker Change: The relationships that we have there to make sure we can meet the demand.
Speaker Change: We continue to have really good support from our Medicaid payers.
Operator: And, you know, we're eagerly awaiting those specifics. You know, it is something that we would like to participate in, and we think that we have some really compelling capabilities and will just eagerly continue to track and await those ongoing details that are to come. [inaudible] Thank you. And our next question today comes from A.J. Rice, EUBS.
Speaker Change: Historically on average I would say, our Medicaid rates have performed a little bit better.
And then what we've seen in the historical trend.
Speaker Change: Certainly a part of the growth and then we have some some incremental funding that comes through from the Medicaid facilities as they see the need to really bolster the behavioral programs that they have.
Speaker Change: Sure.
Speaker Change: Medicare.
Speaker Change: We saw a little bit more normalized seasonality typically that sort of decline a little bit in Q4, and that's kind of what's leading to the increase are a part of it in Medicaid and then certainly our commercial business book is part of the seasonal decline from a specialty perspective in Q4.
Heather Dixon: Hi everybody. Thanks. Obviously, volumes have been an important part of the story. I guess there are two ways that you can be seeing volume growth. One from just continued growth and demand, underlying demand, but also, I know the industry's faced some constraints on staffing, and that seems to be easing now. I wonder if you could just give us a little flavor for what true underlying demand is trending and how much of some of the growth is happening just because you're getting more access to staff to be able to take pay. So, I would say you're right, AJ. There's a mix of both.
Speaker Change: Interesting okay. Thanks, so much.
Speaker Change: Of course.
Speaker Change: Our next question today comes from Brian <unk>.
Brian: Jefferies. Please go ahead.
Brian: Hey, good morning, guys and congrats on the quarter.
Brian: Chris maybe as I think about your.
Brian Jefferies: Your comments about.
Brian Jefferies: How we're in phase four of the opioid epidemic.
Brian Jefferies: What sort of investments do.
Brian Jefferies: Do you need to make or should we expect you can make in order to take further advantage of.
Brian Jefferies: I'd say the opportunity emerging from the continuation of this opioid crisis.
Speaker Change: Yeah. Thanks for the question, Brian I mean, I think we've continued to invest not only in pulling together a really strong team.
Heather Dixon: We're seeing the demands, you know, for our services continue to be very strong. That's certainly not slowing down. We're also benefiting from capacity additions that we've made over the last couple of years. So, we have the ability to meet demand, whether it's through capacity additions or fully-owned DeNovos or JVs. And then we're starting to see our ability to optimize how we accept what's incoming and really make sure that we have patients accessing the facilities in the right way. You're right; we're also seeing improvement in labor trends.
Speaker Change: For our CTC business, but also just optimizing the facilities that we have I think we've done an excellent job and our team has done an excellent job. This past year of significantly reducing the variations that we have seen and wait times as an example.
Speaker Change: We've made investments in advance of Redetermination.
Speaker Change: To make sure that we were ready we had kiosks in place at each of these facilities that continue.
Speaker Change: To be very beneficial for patients when they check in they want to get in and out of our CTC clinics inside of five minutes and the technology that we've put in place with these kiosks has enabled them to do that.
Christopher Howal Hunter: That's certainly contributing to our ability to serve the patients. We're seeing that all of the investments that we've made and our ability to really begin to see stabilization in labor contribute to our ability to serve those beds. And AJ, this is Chris.
So I think that's been very beneficial as well, but I think overall our ability to coordinate occur.
Speaker Change: Across the company and.
Speaker Change: In advance of Redetermination is one of the reasons that we've been able to navigate through that particularly well this past year and there are investments that we will make.
Christopher Howal Hunter: I might just add a couple quick things on that. I just think overall that some of the recruiting practices that we put in place have also helped us to meet the volume that we're continuing to see. And we expect that to remain the case throughout 24. Just a few initiatives that I might point out that I think are helping us attract talent but also retain talent. I mean, first of all, these investments that we continue to make in technology to improve patient care and employee safety have been extremely helpful, as we've done employee engagement surveys as well. I think the intentional onboarding and training for our clinical staff has also helped us significantly on that front. We've seen some real variation historically, and then I just think relentless focus on employee engagement in every facility, tracking it, measuring it, and holding our operators accountable, has also led to some real improvements on that front that have enabled us to meet the demand that you're referencing. No, that's helpful.
Speaker Change: That I think are modest with respect to just ensuring that we have the right team.
Speaker Change: Particularly to be able to handle.
Speaker Change: Many of these rfps that we anticipate.
Given the magnitude of the 50 plus million dollars in opioid settlement dollars. So thats one area that I would call out.
Speaker Change: There are also some things that we've considered from a technology standpoint.
Speaker Change: Dispensing units for dispensing methadone, which is obviously DEA regulated and.
Speaker Change: Very precise dosing is critical and so we've looked at some technology there as well, but none of these are significant investments that I would call out and I would just call. It continued optimization of the really strong operational job that this team has continued to deliver.
Speaker Change: Now that makes a lot of stuff and then maybe as I think about the fact that you are adding 200 beds.
Speaker Change: Year end I think you've got another 10000, <unk> thousand or so next year and then the Austin announced that.
Speaker Change: We expect an uptick in sort of patient day growth going forward.
Speaker Change: Yes.
Speaker Change: I'll take that one.
Patient day growth, we've seen has been.
Speaker Change: Strong over the last.
Speaker Change: Last quarter. We also are thinking about how it is going to trend for the fourth for the four quarters for next year for 'twenty three we saw an uptick for the full year to five just over 5% five 1% and that's up from what we had seen in the previous years that were sort of hovering around the 3% to 4%.
Heather Dixon: And maybe just to follow on to that is, I know you're commenting on the strength and the rate updates and so forth. I think in the 10K, you typically provide some pay or mix data. Has that been across the board? And is it resulting in any shift, the growth you're seeing? Does it tend to be more Medicaid, commercial, or even Medicare?
Speaker Change: Range, plus or minus and we do expect to see a continuation at that higher level for the patient days growth for the full year for 2024 in the mid single digits.
Speaker Change: Maybe a direct answer to your question is yes, we do expect to see that sort of continue at that higher range, but pretty consistent with where we came in.
Heather Dixon: Can you comment on any trend in pay or mix you're seeing? Yeah, sure. AJ, I can give you a quick update on the payer mix. What you will see, whenever you see the 10K, you're right; you'll see it this afternoon. You'll see a slight uptick in Medicaid as a mixed percentage. It went from 54.3% to 56.8% as part of the mix. There's a couple of things I would say about driving that.
Speaker Change: And one other thing I would just add Brian is that when we did the investor day one of our.
Speaker Change: Goals was to lay out the significant ramp in bed growth that we anticipated from 570 beds in 2022 to $6 70 in 2023, and then really stepping up to what we had guided it was $11 50, both this year and next year and so we continue to feel very confident in our ability.
Speaker Change: To deliver on that obviously, we have.
Speaker Change: <unk> said in my opening remarks.
Heather Dixon: Part of it is volume growth, where we've opened new facilities or new beds at expanded facilities. There are certainly more bed additions related to Medicaid, and that's driving some of the increase in the payer mix. And then we just continue to have strong demand there as we build referral resources and really talk about the relationships that we have there to make sure we can meet the demand. And we continue to have really good support from our Medicaid payers.
Speaker Change: A number of JV projects that we expect to come online. This year three in particular, the Ascension Seton facility in Austin, which is our second with Ascension Henry Ford.
Speaker Change: Detroit, which is a particularly large.
Speaker Change: Facility of 192 beds, there and then we'll be opening a facility just outside of Denver with inner mountain 144 bed facility there.
Later this year as well and then there's a number of de novo's that we have very strong visibility into from one that we're getting ready to open in Tampa. The Agave Ridge facility in Mesa and then there is another facility in Madison, Wisconsin with over 100 beds that we will open later this year as well.
Heather Dixon: On average, I would say our Medicaid rates have performed a little bit better than what we've seen in the historical trend, and that's certainly part of the growth. And then we have some incremental funding that comes through from Medicaid facilities as they see the need to really bolster the behavioral programs that they have. Medicare, we saw a little bit, you know, more normalized seasonality, typically that sort of declines a little bit in Q4. And that's kind of what's leading to the increase, or part of it, in Medicaid. And then certainly, our commercial business book is part of the seasonal decline from a specialty perspective in Q4. Okay, thanks so much.
Speaker Change: You also have really strong visibility into our bed additions and then our CTC de novo's as well that I've mentioned will ramp from six to 14 incremental this year as well so all of that in totality just continues to give us strong visibility into what we had previously laid out.
Speaker Change: <unk> of $11 50, and we've guided to roughly 200 beds that we'll bring online this year.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thank you and our next question comes from Kevin Fischbeck with Bank of America. Please go ahead.
Speaker Change: Okay.
Kevin Mark Fischbeck: Great. Thanks.
Kevin Mark Fischbeck: It sounds like Youre, making lot of progress on labor I guess can you just.
Kevin Mark Fischbeck: Tell us what labor expense growth youre expecting in the guidance for 2024.
Operator: Corp. And our next question today comes from Brian Tanquilut with, Hey, good morning, guys. And congrats on the quarter. Chris, maybe as I think about your comments about how we're in phase four of the opioid epidemic.
Kevin Mark Fischbeck: Yes, sure no problem.
Speaker Change: Yeah. We are we're pleased we have seen some progress.
Speaker Change: Think about base wage inflation.
Speaker Change: As we mentioned in answer to the first part of the call. We did see the continued decline and we saw an improvement at down below 5% base wage inflation for Q4 dollars 23.
Brian Gil Tanquilut: What sort of investments do you need to make or should we expect you to make in order to take further advantage of, I hate to say it, but opportunities emerging from the continuation of this opioid crisis? Yeah, thanks for the question, Brian. I mean, I think we've continued to invest, not only in pulling together a really strong team for our CTC business but also just optimizing the facilities that we have. I think we've done an excellent job, and our team has done an excellent job this past year of significantly reducing the variations that we've seen in wait times, as an example. We've made investments in advance of redetermination to make sure that we were ready. We have kiosks in place at each of these facilities that continue to be very beneficial for patients when they check in. They want to get in and out of our CTC clinics within five minutes, and the technology that we've put in place with these kiosks has enabled them to do that.
Speaker Change: We'd expect for that managed level of wage inflation to continue during 2024.
Speaker Change: We're really pleased with the investments we've made we still have some pockets of challenges, but we've made investments in specific geographies as you know over the past year and we are focused on employee engagement initiatives that Chris has talked about.
Speaker Change: So we expect that that beige waste based wage inflation will reflect more.
Speaker Change: A more normalized rate and we will continue to see the trends that we saw as we exited 2023.
Speaker Change: As a reminder, Q1 we had.
Speaker Change: Our Q4 last year, we had a high watermark and we've come down over 300 basis points.
Speaker Change: To just below 5%.
Speaker Change: Okay. So this is kind of where you think the run rate is theres not like a step down from here to three years to 4%.
Speaker Change: The near term.
Speaker Change: I wouldn't say in the near term that we would be expecting that we'll see a little bit of.
Speaker Change: Just the normal quarterly cadence as we have merit increases and we have.
Speaker Change: Some of the payroll tax resets that come in Q1, but apart from that I would think this would be sort of the new normal normal rate for 2020.
Christopher Howal Hunter: So I think that's been, you know, very beneficial as well. But I think, overall, our ability to coordinate across the company in advance of redetermination is one of the reasons that we've been able to navigate through that particularly well this past year. And, you know, there are investments that we will make that I think are modest with respect to just ensuring that we have the right team, particularly to be able to handle many of these RFPs that we anticipate, given the magnitude of the 50 plus million in opioid settlement dollars. So that's one area that I would call out. There are also some things that we've considered from a technology standpoint, dispensing units for dispensing methadone, which is obviously DEA regulated and where very precise dosing is critical. And so we've looked at some technology there as well. But none of these are significant investments that I would call out.
Speaker Change: And then it sounds like the Medicaid volume was relatively strong in Q4, but just wanted to make sure.
Speaker Change: Any disruption at all from re determinations.
Speaker Change: Hey, Kevin This is Chris I'll take that I mean overall I would say no during the fourth quarter. We just continue to be pleased and the continuation of the same trends that we were seeing in the.
Chris Hunter: Third quarter and really throughout the year. So we just don't see a significant impact on either patient volume or patient mix going forward I think the impact continues to be.
Chris Hunter: Very consistent and manageable.
Chris Hunter: I think we're.
Chris Hunter: Sure.
Chris Hunter: <unk> ended the year and said that we estimated that about 70% of our patients had completed re determinations.
Chris Hunter: We.
Chris Hunter: We continue to anticipate the process will run its course.
Chris Hunter: Largely we can complete our patient population by.
Chris Hunter: Midway through the year by the end of the second quarter and I just think the experience that we're seeing is that.
Christopher Howal Hunter: And I would just call it, you know, continued optimization of the really strong operational job that this team has continued to deliver. Now that makes a lot of sense. And then maybe as I think about the fact that you're adding 1,200 beds this year, and I think you've got another 10,000 or 1,000 or so next year, and then the Austin announcement, should we expect an uptick in sort of patient day growth going forward? You know, I'll take that one.
Chris Hunter: Our ability to secure alternate forms of coverage for our patients remains really strong I mean, the vast majority of those patients that have loss coverage.
Chris Hunter: Our resolving favorably within 30 days of a coverage notification, which is really consistent with what we saw in the third quarter. So just overall, we continue to be.
Chris Hunter: Cautiously optimistic and think we're just going to continue to see a continuation of the trends from Q3.
Heather Dixon: The patient day growth, you know, we've seen has been strong for the last, last quarter. We also are thinking about how it's going to trend for the fourth, sorry, for the four quarters for next year. For 23, we saw an uptick for the full year to five, just over 5%, 5.1%.
Speaker Change: Alright, great. Thank you.
Speaker Change: Thank you and our next.
Speaker Change: Question comes from Scott Fidel with Stephens. Please go ahead.
Scott J. Fidel: Hi, Thanks, good morning.
Scott J. Fidel: Just wanted to drill in a bit more on.
Scott J. Fidel: The way the rate increases that you've talked about.
Mid single digits, and just interested in terms of between the commercial and the Medicaid books, which would you say that both are generally trending in that mid single digit range or is there any variance and then on the Medicaid side and carrier surround what you're budgeting or assuming for for FY 'twenty five.
Heather Dixon: And that's up from what we had seen in the previous years that were sort of hovering around the three to 4% range, plus or minus. We do expect to see a continuation at that higher level for patient days growth for the full year in 2024 in the mid-single digits. So maybe a direct answer to your question is yes, we do expect to see that sort of continue at that higher range, but pretty consistent with where we came in.
Scott J. Fidel: Medicaid rates as the cycle starts to kick in in the back half of the year.
Speaker Change: So let me let.
Speaker Change: Let me take the first half of that so in terms of the rate what I would say is across the different payers end markets.
Christopher Howal Hunter: Yeah, and one other thing I would just add, Brian, is that when we did the investor day, one of our goals was to lay out the significant ramp in bed growth that we anticipated from, you know, 570 beds in 2022 to 670 in 2023 and then really stepping up to what we had guided as 1150 both this year and next year. And so we continue to feel very confident in our ability to deliver on that. Obviously, we have, you know, I said in my opening remarks, a number of JV projects that we expect to come online this year, three in particular, the Ascension-Seton facility in Austin, which is our second facility with Ascension, Henry Ford in Detroit, which is a particularly large facility, 192 beds there, and then we'll be opening a facility just outside of Denver with Intermountain, a And then there's a number of DeNovos that we have very strong visibility into, from one that we're getting ready to open in Tampa, the Agave Ridge facility in Mesa, and then there's another facility in Madison, Wisconsin, with over 100 beds that we'll open later this year as well.
Speaker Change: Of course, we have variation and it just depends on what the market is inside of what the bed needed in those markets and a variety of factors.
Speaker Change: Sure.
Speaker Change: <unk> for the year is that mid single digit growth and that I would say you always have some some above some below but.
Speaker Change: It's pretty consistent across the business lines, and it's pretty consistent across the payer line. So nothing that I would think that we need to point out and sort of call out as a significant deviation from that it's relatively consistent as.
Speaker Change: As we think about the full year and specifically to your question for the back half.
Speaker Change: As usual, we don't have a lot of visibility into the second half of the year, we do have visibility into the first half the strong rate growth that were projecting which is the mid single digit level. We have a significant portion of our contracts that are renewed in the second half of the year and as we have seen.
Speaker Change: That's come through and sort of the conversations that we're having.
Speaker Change: He'll really good about the visibility we have with first half of the year that we'll continue to watch and continue to have those conversations with payers in and see how those go for the second half of the year before I am able to really give you any specific information about Medicaid or any other payers for the second half of the year.
Speaker Change: Yes.
Speaker Change: Okay got it and then just on my follow up question just just interested at from this.
Speaker Change: Current vantage point, when thinking about the quarterly cadence of bulk EBITDA.
Christopher Howal Hunter: We also have really strong visibility into our bed additions and then, you know, our CTC DeNovos, as well, that I'd mentioned will ramp from six to fourteen incremental this year as well. So all of that in totality just continues to give us strong visibility into what we had previously laid out of 1150 beds, and we've, you know, got it to roughly 1,200 beds that we'll bring online this year. Thank you. Thank you. And our next question comes from Kevin Fischbeck with Bank of America. Great, thanks.
Speaker Change: And operating cash flows if theres any any sort of unique items relative to 2024 that you'd want to call out.
Speaker Change: Or do you think that it's going to be largely a sort of normal seasonality too to EBITDA and cash flows this year. Thanks.
Speaker Change: Yeah I mean.
Speaker Change: I think the quarterly cadence will be relatively consistent with what we normally see from year to year, obviously, calling out the couple of years ago, we had some abnormalities.
Speaker Change: We do think Q1 will have the normal seasonality.
Speaker Change: Again, the ramp from the holiday period from 2023.
Speaker Change: A little bit slower growth and volume.
Speaker Change: The first quarter as part of the normal cadence and then Youll see as I mentioned that Q1 impact as we reset of payroll taxes at the beginning of the year from a cost perspective.
Kevin Mark Fischbeck: It sounds like you're making a lot of progress on labor. I guess, can you just tell us what labor expense growth you're expecting in the guidance for 2024? Yeah, sure. No problem.
Speaker Change: Q2, and Q3, usually look pretty similar.
Speaker Change: And then Q4 as you know has a little bit abnormal seasonality that comes through and relating to the holiday and some of their patients days. So that's what I would expect I think Q4, probably we have that impact of normal seasonality Q1 normal seasonality and then Q2 and Q3 look pretty similar.
Heather Dixon: So, yeah, we are pleased. We have seen some progress. If you think about base wage inflation, as we mentioned in sort of the first part of the call, we did see a continued decline, and we saw an improvement below 5% base wage inflation for Q4-23.
Speaker Change: Okay. Thank you.
Speaker Change: Got it.
Speaker Change: Thank you and our next question comes from Sarah James with Cantor Fitzgerald. Please go ahead.
Sarah James: Thank you I was hoping we could dive a little bit deeper into the technology advancements you're making so when you talk about.
Sarah James: Clinical efficiency and.
Heather Dixon: We would expect that managed level of wage inflation to continue during 2024. We're really pleased with the investments we've made. We still have some pockets of challenges, but we've made investments in specific geographies, as you know, over the past year, and we've focused on the employee engagement initiatives that, you know, Chris has talked about. So we expect that base wage inflation will reflect that more normalized rate, and we'll continue to see the trends that we saw as we exited 2023. Just as a reminder, you know, Q1, we had sort of a, or Q4 last year, we had a high watermark, and we've come down over 300 basis points to just below 5%. OK, so this is kind of where you think the run rate is.
Sarah James: Remote monitoring how do you think about that changing daily workflow or the efficiency of your clinical workers can they see more patients or how do you think about it and then when you say remote monitoring what type of devices are you talking about are you talking about like.
Sarah James: Tablet and.
Sarah James: Video camera based or nurses or are you talking more.
Sarah James: Like RPM devices.
Sarah James: Yes, Sir this is Chris I'll take that.
Chris Hunter: For the remote monitoring we're effectively talking about not video, but being able to <unk>.
Chris Hunter: Track monitoring of the patients that are generally wearing a bracelet and we have a tablet where one of our staff is able to check on them at the appropriate time as you know for those that are a danger to themselves or others, particularly our acute patients. We may have to do bad checks.
Heather Dixon: There's not like a step down from here to three or four percent in the near term. I wouldn't say in the near term that we would be expecting that, you know, we'll see a little bit of just a normal quarterly cadence as we have merit increases and we have some of the payroll tax resets that come in Q1, but apart from that, I would think this would be sort of the new normal rate. 2020 And then it sounds like Medicaid volume was relatively strong in Q4, but I just want to make sure. Any disruption at all from redetermination? Hey, Kevin. This is Chris.
Chris Hunter: From a.
Chris Hunter: Five minute duration to a 15 minute duration and this really enables us to monitor that and.
Chris Hunter: To follow through and execute on those requirements. So thats been incredibly helpful. As we've rolled that out to 53 facilities as.
Chris Hunter: We also continue to rollout our EMR, we continue to see just really strong overall outcomes across the board I would start with quality.
Chris Hunter: We've seen really strong improvements in a number of just very important metrics. The metabolic screening discharge planning national quality metrics that will continue to be really important to payers going forward and I think we continue to perform well ahead of the benchmark on restrained.
Christopher Howal Hunter: I'll take that. I mean, overall, I would say no. You know, during the fourth quarter, we just continue to be pleased with the continuation of the same trends that we were seeing in the third quarter and really throughout the year. So we just don't see a significant impact on, you know, either patient volume or patient mix going forward. I think the impact continues to be very consistent and manageable. You know, we ended the year and said that we estimated that about 70% of our patients had completed redeterminations. And we, you know, I can continue to anticipate the process will run its course and will largely complete our patient population by midway through the year, by the end of the second quarter.
Chris Hunter: In seclusion national quality measures as well, which is really important as these events are where both staff and patient injuries. Most frequently occur. So we're clearly seeing benefits just from a patient safety and compliance standpoint as well.
Chris Hunter: Seen upticks as I said earlier on employee satisfaction, because clearly clinicians in this day and age are trained on an EMR, they're not trained in paper and so that is very dissatisfied.
Chris Hunter: When they come into our industry broadly and there has not been historically the level of investment as you know relative to the med surge facilities that we see in behavioral health across the board not just Acadia. So I think our ability to make that happen has been.
Chris Hunter: Very effective and then I think just overall the efficiency to your question.
Chris Hunter: Everything from.
Chris Hunter: Utilization review to improve documentation quality from standardized charts.
Chris Hunter: Reducing paper storage cost.
Chris Hunter: All of these things together.
Christopher Howal Hunter: And I just think that the experience that we're seeing is that, you know, our ability to secure alternate forms of coverage for our patients remains really strong. I mean, the vast majority of those patients that have lost coverage are resolving favorably within 30 days of a coverage notification, which is really consistent with what we saw in the third quarter. So just, you know, overall, we continue to be, you know, cautiously optimistic and think we're just going to continue to see a continuation of the trends from Q3. All right, great.
Chris Hunter: All tie in to enabling us to serve our patients in a more quality oriented and efficient manner and also keep our patients safe.
Chris Hunter: And our.
Chris Hunter: Yes.
Speaker Change: Thats helpful.
Speaker Change: Thank you and our next question comes from Peter Chickering with Deutsche Bank. Please go ahead.
Pito Chickering: Hey, good morning, guys. Thanks for taking my questions.
Pito Chickering: Just two quick ones here what percent of revenues where to CVC in a quarter and a bad thing about growth is around 20% is that in the ballpark.
Pito Chickering: And also can you breakout the growth from patients versus pricing that would be amazing.
Speaker Change: Yes, so what youll see IP to et cetera.
Speaker Change: Later this afternoon.
Speaker Change: Revenue growth by business line and CTC was just right at 20% just right under 20% so pretty consistent with what we've seen in the previous quarters.
Christopher Howal Hunter: Thank you. Thank you. And our next question comes from Scott Fidel. Hi, thanks. Good morning. Just wanted to drill in a bit more on the rate increases that you've talked about in the mid-single digits, and I was just interested in terms of the commercial and the Medicaid books. Would you say that both are generally trending in that mid-single digit range, or is there any variance? And then on the Medicaid side, I am curious about what you're budgeting or assuming for FY25 Medicaid rates as the cycle starts to kick in, in the back half of the year? So, let me, let me take a first pass at that.
Speaker Change: For Q4 is that the breakout you are asking for for Q4 volume versus rate or were you asking for Q.
Speaker Change: You're asking for 2020 for either would be lovely.
Speaker Change: Okay, great so for 'twenty.
Speaker Change: 23, Q4, we saw.
Speaker Change: The growth in patient days of two 9% on a same facility basis and then the revenue per patient day was seven 1%.
Speaker Change: For 2023, Q4, and then for the full year 2024, we're expecting mid single digit for both.
Speaker Change: Got it and then so looking at the fourth quarter with CDC at 20% implies the rest of the business is growing around 9%. So those were two two times of growth coming from CDC I guess any color on what percent of your 12% EBIT growth in the quarter came from CPC. Thank you so much.
Heather Dixon: So in terms of the rate, what I would say is, across the different payers and markets, you know, of course, we have variation; it just depends on what the market is and sort of what the bed need is in those markets and, and a variety of factors. What we're, And I think what we're expecting for the year is mid-single-digit growth. And that, I would say, you always have some above and some below, but it's pretty consistent across the business lines, and it's pretty consistent across the payer lines. So nothing that I would think that we need to point out and sort of call out as a significant deviation from that.
Speaker Change: No I would just say that we continue to see EBITDA margins across the different business lines relatively consistent.
Speaker Change: As you look at those from quarter to quarter in that across the business lines.
Speaker Change: One thing I would point out is our closures during 2023, and we had a few closures and there were three that were in the specialty business Youll see a little bit of differentiation. There as you look at the revenue contribution by business line, but apart from that pretty.
Heather Dixon: It's relatively consistent. As we think about the full year and specifically to your question about the back half, as usual, we don't have a lot of visibility into the second half of the year. We do have visibility into the first half, hence the strong rate growth that we're projecting, which is at the mid-single-digit level. Additionally, we have a significant portion of our contracts that are renewed in the second half of the year. And as we have seen those come through and sort of the conversations that we're having, we feel really good about the visibility we have for the first half of the year. But we'll continue to watch and continue to have those conversations with payers and see how those go for the second half of the year before I'm able to really give you any specific information about, I would say, Medicaid or any other payers for the second half of the year. Okay, I got it.
Speaker Change: Pretty consistent.
Speaker Change: Great. Thanks, so much.
Speaker Change: No problem. Thank.
Speaker Change: Thank you. This concludes today's question and answer session I would like to turn the conference back over to Chris for closing remarks.
Chris Hunter: Thank you before we end the call I just want to again, thank our committed facility leaders, our clinicians and our over 23000 dedicated employees across the country, who have continued to just worked tirelessly to meet the needs of patients in a safe and effective manner, we have a really strong.
Chris Hunter: Wrong Foundation, and a proven strategy for driving growth and delivering greater value to both the patients we serve and our shareholders.
Speaker Change: Thank you all for being with US This morning, and thank you for your interest in Acadia.
Have any additional questions today, please don't hesitate to contact us directly have a great day.
Speaker Change: Thank you. This concludes today's conference call.
Speaker Change: Thank you all for attending today's presentation.
Speaker Change: Disconnect your lines and have a wonderful day.
Heather Dixon: And then just on my follow-up question, just interested in, from this, you know, current vantage point, when thinking about the quarterly cadence of both EBITDA and operating cash flows, if there's any, any sort of unique items relative to 2024 that you'd want to call out? Or do you think that it's going to be, you know, largely a sort of normal seasonality for EBITDA and cash flows this Thanks.
Speaker Change: Okay.
Heather Dixon: Um, yeah, I think the quarterly cadence will be relatively consistent with what we normally see from year to year, obviously, calling out that a couple years ago, we had some abnormalities. We do think, you know, Q1 will have the normal seasonality, as we sort of begin the ramp from the holiday period in 2023. Probably a little bit slower growth and in volume from the first quarter as part of the normal cadence. And then you'll see, as I mentioned, that Q1 impact as we reset payroll taxes at the beginning of the year from a cost perspective. Q2 and Q3 usually look pretty similar.
Heather Dixon: And then Q4, as you know, has a little bit of normal seasonality that comes through relating to the holidays and sort of inpatient stays. So that's what I would expect. I think in Q4 probably we have, you know, that impact of normal seasonality, Q1 has normal seasonality, and then Q2 and Q3 look pretty similar. Okay, thank you.
Sarah Elizabeth James: Thank you. And our next question comes from Sarah James at Canterford Sherald. Thank you. I was hoping we could dive a little bit deeper into the technological advancements you're making. So when you talk about clinical efficiency and remote monitoring, how do you think that it will change the daily workflow or the efficiency of your clinical workers? Can they see more patients, or what do you think about that? And then when you say remote monitoring, what type of devices are you talking about? Are you talking about, like, tablet and video camera-based remote nurses, or are you talking more like RPM devices? Yeah, hey, sir, this is Chris.
Christopher Howal Hunter: I'll take that. You know, for remote monitoring, we're effectively talking about not video but being able to track the patients who are generally wearing a bracelet. And we have a tablet where one of our staff is able to check on them at the appropriate time. As you know, for those that are a danger to themselves or others, particularly our acute patients, we may have to do bed checks from a five-minute duration to a 15-minute duration. And this really enables us to monitor that and, you know, to follow through and execute on those requirements. So that's been incredibly helpful as we've rolled that out to 53 facilities. You know, as we also continue to roll out our EMR, we continue to see really strong overall outcomes across the board.
Speaker Change: [music].
Christopher Howal Hunter: You know, we've seen really strong improvements in a number of really important metrics, such as metabolic screening, discharge planning, and national quality metrics that will continue to be really important to payers going forward. And I think we continue to perform, you know, well ahead of the benchmark on restraint and seclusion national quality measures as well, which is really important as these events are where both staff and patient injuries occur most frequently. So, you know, we're clearly seeing benefits just from a patient safety and compliance standpoint as well. We've seen an uptick, as I said earlier, in employee satisfaction because, clearly, clinicians in this day and age are trained on an EMR. They're not trained on paper.
Christopher Howal Hunter: And so that is very dissatisfactory when they come into our industry broadly. And there has not historically been the level of investment, as you know, relative to the med surg facilities that we see in behavioral health across the board, not just Acadia. So I think our ability to make that happen has been, you know, very effective. And then I think just overall efficiency in your question, everything from Utilization Review to improve documentation quality from standardized charts, reducing paper storage costs, you know, all of these things together tie in to enabling us to serve our patients in a more quality-oriented and efficient manner and also, you know, keep our patients safe, in our, on our staff. Yeah. We'll see you next time.
Operator: And our next question comes from Peter Chickering with... Go ahead. Hey, good morning, guys. Thanks for taking my questions. Um, some quick ones here.
Philip Chickering: What percent of revenues was CDC getting in a quarter? And if I think about growth, it was around 20%. Is that in the ballpark?
Heather Dixon: And also, can you break out the growth from patients versus pricing? Yeah, so what you'll see is, hi Peter, it's Heather. You'll see later this afternoon sort of the revenue growth by business line and CTC was just right at 20%, just right under 20%, so pretty consistent with what we've seen in the previous quarters. For Q4, is that the breakout you're asking for, for Q4 volume versus rates, or were you asking for 2024? Either would be lovely.
Heather Dixon: Okay, great. So for 2023Q4, we saw growth in patient days of 2.9% on a same facility basis, and then revenue per patient day was 7.1% for 2023 Q4. And then for the full year 2024, we're expecting mid single digits for both. Got it.
Heather Dixon: And then so looking at the fourth quarter with CDC at 20% implies the rest of the business is growing around 9%. So there were over two times the growth coming from CDC. I guess any color on what percent of your 12% EBITDA growth in the quarter came from CDC? Thank you so much.
Heather Dixon: No, I would just say that we continue to see EBITDA margins across those different business lines relatively consistent as you look at those from quarter to quarter and then across the business lines. The only thing I would point out is our closures during 2023. We had a few closures, and of those, there were three that were in the specialty business. So you'll see a little bit of differentiation there as you look at the revenue contribution by business line, but apart from that, pretty consistent.
Speaker Change: [music].
Heather Dixon: Great, thanks. No problem. Thank you. This concludes today's question and answer session. I'd like to turn the conference back over to Chris Hunter for closing.
Christopher Howal Hunter: Before we end the call, I just want to again thank our committed facility leaders, our clinicians, and our over 23,000 dedicated employees across the country who have continued to work tirelessly to meet the needs of patients in a safe and effective manner. We have a really strong foundation and a proven strategy for driving growth and delivering greater value to both the patients we serve and our shareholders. Thank you all for being with us this morning, and thank you for your interest in Acadia. If you have any additional questions today, please don't hesitate to contact us directly. Have a great day!
Operator: Thank you. Let's see who's today's conference call. Thank you all for attending today's presentation. And now to switch your lines and have a, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? [inaudible] ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??.
Operator: .. .. .. .. .. .. .. ...
Gretchen Hommrich: Good day and welcome to the Acadia Healthcare fourth quarter and full year. All participants will be Thank you to all conference specialists for pressing the star key, followed by... After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone.
Gretchen Hommrich: To withdraw your question, please press star 1. Please note today's event is being, and now we turn the conference over to Gretchen Hommrich. Good morning, and welcome to Acadia's fourth quarter 2023 conference call. I'm Gretchen Hommrich, Vice President of Investor Relations for Acadia. Here with me today are Chris Hunter, Acadia's Chief Executive Officer, and Heather Dixon, our Chief Financial Officer. I'll first provide you with our safe harbor before turning the call over to Chris.
Gretchen Hommrich: To the extent any non-GAAP financial measure is discussed in today's call, you'll also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP on our website by viewing yesterday's news release under the Investor section. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Acadia's expected quarterly and annual financial performance for 2024 and beyond. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Acadia's filings with the Securities and Exchange Commission and in the company's fourth quarter news release. Consequently, actual operations and results may differ materially from the results discussed in the forward-looking statement. At this time, I would like to turn the conference call over to our Chief Executive Officer, Chris Hunter, for opening remarks. Thank you, Gretchen, and good morning, everyone.
Christopher Howal Hunter: Thank you for being with us for Acadia's fourth quarter 2023 conference call. Our strong fourth quarter capped off another outstanding year of solid financial and operational performance for Acadia. Our team has continued to execute on our strategy with positive results across our four lines of business. For the full year 2023, we reported robust annual revenue growth of 12.2%, adjusted EBITDA growth of 13.1%, and adjusted EPS growth of 14.3% as compared to 2022, excluding income from the Provider Relief Fund recognized in both periods. Moving to our fourth quarter results, our same facility revenue increased 10.3% compared with the fourth quarter of last year, with the increase driven by both rate improvements and patient day growth. We were also pleased to see consistent improvement in our labor trends throughout 2023. Our wage inflation decreased from a peak of 8% in the fourth quarter of 2022 to below 5% in the fourth quarter of 2023, which is an improvement of over 300 basis points.
Speaker Change: [music].
Christopher Howal Hunter: In addition to improvements in the external labor market, our initiatives to drive higher employee engagement and more operational consistency in our facilities have enhanced our ability to attract and retain employees in a competitive market. We have focused on more extensive clinical training for new staff and more intentional sharing of best practices, while at the same time investing in technology tools that support Acadia employees and clinicians across our 253 facilities. We've also put an emphasis on benefits and progressive career development opportunities for employees at all levels of our facility.
Speaker Change: Good day and welcome Shelley.
Health care fourth quarter, and full year 2023 earnings conference call.
Speaker Change: All participants will be in listen only mode.
Speaker Change: Should you need assistance, please signal a conference specialist for especially the star followed by zero.
Speaker Change: After todays presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: Your question. Please press Star then two.
Speaker Change: Please note today's event is being recorded.
Speaker Change: I'd now like to turn the conference over to Gretchen harmless. Please go ahead.
Speaker Change: Good morning, and welcome to Acadia <unk> fourth quarter 2023 conference call I'm, Gretchen Hallmark, Vice President of Investor Relations for Acadia here with me today are Chris Hunter, Acadia, as Chief Executive Officer, and Heather Dickson, Our Chief Financial Officer, I'll first provide you with our safe Harbor before turning the call over to Chris.
Christopher Howal Hunter: Efforts to improve retention and hiring are evident in our ability to support annual patient day growth of over 5% to ensure we provide high-quality patient care. Our team has done an outstanding job of meeting the higher patient demand and effectively managing operations. During the fourth quarter, we continued to extend our market reach and add capacity through each one of our five defined growth pathways, as follows. In support of our first pathway, Facility Expansions, we added 98 beds during the fourth quarter for a total of 302 bed additions to existing facilities in 2023. We are pleased that this was in line with our stated goal to add approximately 300 beds. For our second pathway, we remain focused on developing wholly owned de novo facilities in underserved markets for behavioral healthcare services.
Speaker Change: To the extent any non-GAAP financial measure is discussed in today's call. You'll also find a reconciliation of that measure to the most directly.
Speaker Change: Comparable financial measure calculated according to GAAP on our website by viewing yesterday's news release under the investors link.
Speaker Change: This conference call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, including statements among others regarding Acadia is expected quarterly and annual financial performance for 2024 and beyond you're hereby cautioned that these statements may be affected by the important factors.
Speaker Change: Among others set forth in Acadia as filings with the Securities and Exchange Commission and in the company's fourth quarter news release, and consequently, actual operations and results may differ materially from the results discussed in the forward looking statements.
Speaker Change: At this time I would like to turn the conference call over to our Chief Executive Officer, Chris Hunter for opening remarks.
Christopher Howal Hunter: During the fourth quarter, we opened the newly renovated 101-bed adult hospital, Montrose Behavioral Health Hospital in Chicago, Illinois. We have also completed construction on our 80-bed inpatient hospital, Coachella Valley Behavioral Health, located in Indio, California, which we expect to open later this year. Our CTC service line offers comprehensive care for patients who are affected by Opioid Use Disorder, or OUD.
Chris Hunter: Thank you Gretchen and good morning, everyone. Thank you for being with Us for Acadia as fourth quarter 2023 conference call.
Chris Hunter: Our strong fourth quarter capped off another outstanding year of solid financial and operational performance for Acadia R.
Chris Hunter: Our team has continued to execute on our strategy with positive results across our four lines of business.
Chris Hunter: For the full year 2023, we reported robust annual revenue growth of 12, 2%.
Christopher Howal Hunter: We opened two new CTC locations in the fourth quarter, bringing our total to six CTCs opened in 2023, in line with our goal for the year. And we remain focused on accelerating our CTC expansion by opening up to 14 CTCs in 2024. The opioid epidemic continues to intensify, with approximately 9 million Americans misusing opioids in the past year, and new, more potent drugs continuing to emerge. In fact, some experts believe that we have now entered the fourth wave of the opioid epidemic, as drug users have now evolved from prescription drugs in the first wave to heroin and then to fentanyl in the second and third waves, and now to polysubstances that include fentanyl mixed with substances such According to a recent report, nearly 93% of fentanyl-positive urine samples contained additional substances. Methamphetamine, a highly addictive drug, was found in 60% of fentanyl-positive tests last year, which is an 875% increase since 2015.
Chris Hunter: Adjusted EBITDA growth of 13, 1% and adjusted EPS growth of 14, 3% as compared to 2022, excluding income from the provider relief fund recognized in both periods.
Chris Hunter: Moving to our fourth quarter results. Our same facility revenue increased 10, 3% compared with the fourth quarter of last year with the increase driven by both rate improvements and patient day growth.
Chris Hunter: We were also pleased to see consistent improvement in our labor trends throughout 2023.
Chris Hunter: Our wage inflation decreased from a peak of 8% in the fourth quarter of 2022 to below 5% in the fourth quarter of 2023, which is an improvement of over 300 basis points in.
Chris Hunter: In addition to improvements in the external labor market, our initiatives to drive higher employee engagement and more operational consistency in our facilities have enhanced our ability to attract and retain employees in a competitive market.
Chris Hunter: We are focused on more extensive clinical training for new staff and more intentional sharing of best practices. While at the same time investing in technology tools that support Acadia employees and clinicians across our 253 facilities.
Christopher Howal Hunter: As we continue to expand this important area of our business, we remain focused on driving strong clinical outcomes, improving access, and delivering an exceptional patient experience, spanning our traditional opioid treatment programs, or OTPs, to mobile vans and telehealth solutions. But regardless of how patients come to Acadia for OUD treatment, quality is always a top priority, and we were proud to have recently received a quality score of over 99% across 13 measures by the Commission on Accreditation of Rehabilitation Facilities, or CARF. For our third growth pathway, we are working to expand our reach through our joint venture. Notably, Acadia is considered an attractive partner of choice for establishing relationships with premier health systems across the country. As the leading pure play behavioral health provider, we bring clinical expertise and experience and a proven ability to expand behavioral health care in more communities.
Chris Hunter: We've also had an emphasis on benefits and progressive career development opportunities for employees at all levels of our facilities.
Chris Hunter: Efforts to improve retention and hiring are evident in our ability to support annual patient day growth of over 5% to ensure we provide high quality patient care.
Chris Hunter: Our team has done an outstanding job in meeting the higher patient demand and effectively managing operations.
Chris Hunter: During the fourth quarter, we continued to extend our market reach and add capacity through each one of our five defined growth pathways as follows in.
Chris Hunter: In support of our first pathway facility expansions, we added 98 beds during the fourth quarter for a total of 302 beds bed additions to existing facilities. In 2023. We are pleased that this was in line with our stated goal to add approximately 300 beds.
Chris Hunter: For our second pathway, we remain focused on developing wholly owned de novo facilities in underserved markets for behavioral health care services.
Chris Hunter: During the fourth quarter, we opened the newly renovated 101 bed adult hospital Montrose behavioral Health Hospital in Chicago, Illinois. We have also completed construction on our 80 bed inpatient Hospital Coachella Valley behavioral health located in India, California, which we expect to open later this.
Christopher Howal Hunter: Today, Acadia has 21 joint venture partnerships for 22 hospitals, with 11 hospitals already in operation and 11 additional hospitals expected to open over the next few years. In early January 2024, Acadia announced a joint venture partnership with Ascension Seton, one of the nation's leading integrated healthcare systems. The joint venture will focus on expanding Acadia's current operations at Cross Creek Hospital in Austin, Texas by constructing a 106-bed expansion of our existing acute behavioral hospital. This is the company's second joint venture partnership with Ascension and follows the opening in 2020 of Ascension St. Thomas, a behavioral health facility in Nashville. Our new partnership with Ascension is a testament to the strength of our relationship and reflects our solid track record of clinical, operational, and financial outcomes with our joint venture partners. The new partnership will expand access to behavioral health care in Austin and its surrounding communities.
Chris Hunter: Year.
Chris Hunter: Our CTC service line offers comprehensive care for patients who are affected by opioid use disorder or <unk>. We opened two new CTC locations in the fourth quarter, bringing our total to six CTC opened opened in 2023 in line with.
Chris Hunter: Our goal for the year and we remain focused on accelerating our CTC expansion by opening up to sport teams Cpc's and 2024.
Chris Hunter: The opioid epidemic continues to intensify with approximately 9 million Americans misusing opioids in the past year and new more potent drugs continuing to emerge.
Chris Hunter: In fact, some experts believe that we have now entered the fourth wave of the opioid epidemic as drug users have now evolved from prescription drugs in the first wave two heroine and then to fit in all in the second and third waves and now two poly substances that include federal mixed with substances such as co.
Chris Hunter: Kane and methamphetamine.
Chris Hunter: According to a recent report nearly 93% of fentanyl positive urine samples contained additional substances methamphetamine highly addictive drug was found in 60% of fentanyl positive tests last year, which is an 875% increase.
Christopher Howal Hunter: The Joint Venture Hospital will be in close proximity to Ascension-Seton Hospitals and will be one of the training sites for students, residents, and fellows from the Dell Medical School at the University of Texas at Austin. Together, with our JV partners, we have a shared commitment to providing access to high-quality, compassionate behavioral health care and supporting the critical need in our local communities. Joint ventures will continue to play an important role in Acadia's future growth, and we remain excited about the opportunities to work with other leading providers in attractive geographies. For our fourth pathway, we continue to look for acquisitions that support our growth objectives and meet the criteria of our capital allocation strategy. Last week, we closed on our previously announced acquisition of Turning Point Centers, a 76-bed specialty provider of substance use disorder and primary mental health treatment services that serves the Salt Lake City, Utah metropolitan market.
Chris Hunter: Since 2015.
Chris Hunter: As we continue to expand this important area of our business. We remain focused on driving strong clinical outcomes, improving access and delivering an exceptional patient experience spanning our traditional opioid treatment programs are otp's to mobile vans, and telehealth solutions, but regardless of how patients come in.
Chris Hunter: Acadia for OLED treatment quality is always a top priority and we were proud to have recently recently received a quality score of over 99% across 13 measures by the commission on accreditation of rehabilitation facilities or cough.
Chris Hunter: For our third growth pathway, we are working to expand our reach through our joint ventures, notably Acadia is considered an attractive partner of choice for establishing relationships with Premier health systems across the country.
Chris Hunter: As the leading pure play behavioral health provider, we bring the clinical expertise and experience and a proven ability to expand behavioral healthcare and more communities.
Christopher Howal Hunter: This acquisition completes the continuum of care in that market and represents the first market where Acadia has all four service lines present. Our fifth and final growth pathway, extending the continuum of care, is important to our clinical strategy. One of the key focus areas of this pathway is expanding our Partial Hospitalization Programs, or PHP, and Intensive Outpatient Programs, IOP, that can provide four to six hours of care per day. The majority of our acute and specialty patients can clinically benefit from these programs as they offer a step-down level of care after discharge from a high-acuity stay but also enable patients to step up again in acuity as their needs change This not only improves clinical outcomes but also enhances the overall patient experience. We added 13 outpatient programs during the fourth quarter, bringing Acadia's total to 39 outpatient programs added during calendar 2023. We are also working to increase the opportunity for our patients to utilize PHP IOP services, as only a portion of our clinically eligible patients step down to PHP IOP care post-discharge today.
Chris Hunter: Today, Acadia has 21 joint venture partnerships for 'twenty, two hospitals with 11 hospitals already in operation and 11 additional hospitals expected to open over the next few years.
Chris Hunter: In early January 2020 for Acadia announced a joint venture partnership with Ascension Seton one of the nation's leading integrated health care systems. The joint venture will focus on expanding <unk> current operations at Cross Creek Hospital in Austin, Texas by constructing a 100.
Chris Hunter: Third six bed expansion of our existing acute behavioral hospital.
Chris Hunter: This is the company's second joint venture partnership with Ascension and follows the opening in 2020 of Ascension Saint Thomas a behavioral health facility in Nashville.
Chris Hunter: Our new partnership with Ascension is a testament to the strength of our relationship and reflects our solid track record of clinical operational and financial outcomes with our joint venture partners.
Chris Hunter: The new partnership will expand access to behavioral health care in Austin and its surrounding communities.
Chris Hunter: The joint venture hospital will be in close proximity to Ascension Seton hospitals and will be one of the training sites for students residents and fellows from the Dell Medical school at the University of Texas at Austin.
Chris Hunter: Together with our JV partners, we have a shared commitment to providing access to high quality compassionate behavioral healthcare and supporting the critical need in our local communities joint ventures will continue to play an important role in <unk> future growth and we remain excited about the opportunities to work.
Christopher Howal Hunter: As we stated at our Investor Day in December of 2022, we expected an acceleration of our bet additions in 2024, and we are pleased to deliver on that goal this year by adding approximately 1200 bets. This will include approximately 400 bed additions to existing facilities, which is a step up from our historical average of 300 bed additions to existing facilities.
Chris Hunter: With other leading providers and attractive geographies.
Chris Hunter: For our fourth pathway, we continue to look for acquisitions that support our growth objectives and meet the criteria of our capital allocation strategy.
Chris Hunter: Last week, we closed on our previously announced acquisition of turning point centers, a 76 bed specialty provider of substance use disorder and primary mental health treatment services that supports the Salt Lake City, Utah Metropolitan market.
Christopher Howal Hunter: We continue to make progress on our new facilities that will open in Florida, California, Michigan, Texas, Colorado, Arizona, and Wisconsin in 2024. Additionally, we plan to open up to 14 new CTC locations in 2024. As we continue to extend our market reach, patient safety and quality patient care remain our top priorities for delivering the best possible outcome for our patients. Quality is foundational to every aspect of the work we do at Acadia and drives operational effectiveness.
Chris Hunter: This acquisition completes the continuum of care in that market and represents the first market, where Acadia has all four service lines present.
Chris Hunter: Our fifth and final growth pathway, extending the continuum of care is important to our clinical strategy.
Chris Hunter: One of the key focus areas of this pathway is expanding our partial hospitalization programs or PHP and intensive outpatient programs IOP that can provide four to six hours of care per day.
Chris Hunter: The majority of our acute and specialty patients can clinically benefit from these programs as they offer a step down level of care after discharge from a high acuity stay but also enable patients to step up again and acuity as their needs change.
Christopher Howal Hunter: Our quality initiatives are focused on providing industry-leading care to the patients we serve daily, supporting our Acadia teammates through leadership development and thorough competency-based training, and building proactive tools for identifying risks and opportunities and utilizing technology, including a quality data platform and predictive analytics, to monitor our progress. We have made significant technology investments in 2023 to further strengthen our core capabilities and enable us to deliver stronger clinical outcomes. Our recent investments in electronic medical records have helped support our clinical staff with improved retention, employee satisfaction, and workflow efficiency. Our optimized EMR, which has been implemented using the insight from several of our medical, nursing, and clinical leaders, ensures we translate the best of behavioral science into practice at every bedside. In addition, we have now implemented patient monitoring technology in 53 facilities, promoting higher touch care for fewer incidents and enhancing patient safety.
Chris Hunter: This not only improves clinical outcomes, but also enhances the overall patient experience.
Chris Hunter: We added 13 outpatient programs during the fourth quarter, bringing <unk> total to 39 outpatient programs added during calendar 2023. We are also working to increase the opportunity for our patients to utilize PHP IOP services is only a portion of our.
Chris Hunter: Clinically eligible patients step down to PHP IOP care post discharge today.
Chris Hunter: As we stated at our Investor Day in December of 2022, we expected an acceleration of our bed additions in 2024, and we are pleased to deliver on that goal this year by adding approximately 200 beds.
Chris Hunter: This will include approximately 400 bed additions to existing facilities, which is a step up from our historical average of 300 bed additions to existing facilities.
Chris Hunter: We continue to make progress on our new facilities that will open in Florida, California, Michigan, Texas, Colorado, Arizona, and Wisconsin in 2024.
Chris Hunter: Additionally, we plan to open up to 14, new CTC locations in 2024.
Chris Hunter: As we continue to extend our market reach patient safety and quality patient care remain our top priorities for delivering the best possible outcome for our patients.
Christopher Howal Hunter: These investments in our core infrastructure, combined with the EMR and patient care technology, provide access to better data to measure outcomes and provide a framework for value-based care. The ability to measure and demonstrate these outcomes is important for collaborating with payers. We are proud of our impressive growth and progress over the past year and look forward to the significant opportunities ahead for Acadia to extend our market reach to serve even more patients in 2024. Our strategic priorities will focus on accelerating facility growth, expanding services across the care continuum, strengthening our capabilities, and strategically leveraging technology to enhance patient care and improve clinical outcomes, all with the focus on delivering the highest quality patient care. We are well positioned to meet our objectives with our financial strength, scale, and committed employees and clinicians who work hard every day to address the nation's critical need for safe, quality treatment for mental health and substance use issues. At this time, I will now turn the call over to Heather to discuss our financial results for the quarter and our 2024 guidance. Thanks, Chris.
Chris Hunter: Quality is foundational to every aspect of the work we do at Acadia and drives operational effectiveness, our quality initiatives are focused on providing industry, leading care to the patients we serve daily supporting our Acadia teammates through leadership development and thorough competency based training building.
Chris Hunter: <unk> tools for identifying risks and opportunities and utilizing technology, including a quality data platform and predictive analytics to monitor our progress.
Chris Hunter: We have made significant technology investments in 2023 to further strengthen our core capabilities enable us to deliver stronger clinical outcomes. Our recent investments in electronic medical records have helped support our clinical staff with improved retention and employee satisfaction and work.
Chris Hunter: Flow efficiencies.
Chris Hunter: Our optimized EMR, which has been implemented using the insight from several of our medical nursing and clinical leaders ensures we translate the best behavioral science into practice at every bed side.
Chris Hunter: In addition, we have now implemented patient monitoring technology in 53 facilities promoting higher touch care for fewer incidents and enhance patient safety. These investments in our core infrastructure combined with the EMR and patient care technology provide access to better data.
Chris Hunter: To measure outcomes and provide a framework for value based care.
Chris Hunter: The ability to measure and demonstrate these outcomes is important for collaborating with payors.
Heather Dixon: And good morning, everyone. Our fourth quarter financial performance reflects strong and consistent growth in our business for 2023. We achieved solid top-line growth with $742.8 million in revenue for the quarter, up 10% over the fourth quarter of last year. Our same facility revenue grew 10.3% compared with the fourth quarter of 2022, which included an increase in revenue per patient day of 7.1% and patient days growth of 2.9%. The company recorded income related to the Provider Relief Fund established by the CARES Act of $2 million during the fourth quarter of 2023 and $5.2 million during the fourth quarter of 2022. Excluding income from the PRF for both periods, as well as the unfavorable adjustment to PLGL of 5.9 million, or 5 cents per diluted share that was recorded in the fourth quarter of 22, adjusted EBITDA for the fourth quarter of 23 increased And adjusted income attributable to Acadia stockholders per diluted share was 85 cents, up 13.3 percent from the prior year.
Chris Hunter: We are proud of our impressive growth and progress over the past year and look forward to the significant opportunities ahead for Acadia to extend our market reach to serve even more patients in 2024.
Chris Hunter: Our strategic priorities will focus on accelerating facility growth expanding services across the care continuum, strengthening our capabilities and strategically leveraging technology to enhance patient care and improve clinical outcomes, all with a focus on delivering the highest quality patient care.
Chris Hunter: We are well positioned to meet our objectives with our financial strength scale and committed employees and clinicians who work hard every day to address the nation's critical need for safe quality treatment for mental health and substance use issues.
Chris Hunter: At this time I will now turn the call over to Heather to discuss our financial results for the quarter and 2020 for guidance.
Heather: Chris and good morning, everyone.
Heather: Our fourth quarter financial performance reflects strong and consistent growth in our business in 2023, we achieved solid top line growth with $742 $8 million in revenue for the quarter up 10% over the fourth quarter of last year.
Heather: Our same facility revenue grew 10, 3% compared with the fourth quarter of 2022, which included an increase in revenue per patient day of seven 1% and patient days growth of two 9%.
Heather: The company recorded income related to the provider relief fund established by the cares act of $2 million during the fourth quarter of 2023 and $5 $2 million during the fourth quarter of 2022.
Heather Dixon: Consistent with previous periods, the adjustment to income for the fourth quarter of 2023 includes transaction legal and other costs, loss on impairment, gain on sale of property, and the related income tax effects of all items. Maintaining a strong financial position and disciplined capital allocation are top priorities for Acadia. As of December 31, 2023, we had $100.1 million in cash and cash equivalents and $516.5 million available under our $600 million revolving credit facility with a net leverage ratio of approximately 1.9 times. As previously announced on January 19, 2024, we entered into an amended credit agreement with our lenders to increase our term loan A by $350 million. Also, on January 24, we paid $400 million to settle three lawsuits in New Mexico, previously disclosed.
Heather: Excluding income from the PRA for both periods as well as the unfavorable adjustment to <unk> of $5 9 million or five cents per diluted share that was recorded in the fourth quarter of 2000 to adjusted EBITDA for the fourth quarter of 'twenty three increased 11, 9% over the prior year to 100.
Heather: $69 $6 million and adjusted income attributable to Acadia stockholders per diluted share was <unk> 85.
Heather: Up 13, 3% from the prior year.
Heather: Consistent with previous periods adjustment to income for the fourth quarter of 2023 include transaction legal and other costs loss on impairment gain on sale of property and the related income tax effects of all items.
Heather: Maintaining a strong financial position and disciplined capital allocation are top priorities for Acadia as of December 31, 2023, we had $100 $1 million in cash and cash equivalents and $516 5 billion available under our $600 million revolving credit facility.
Heather: With a net leverage ratio of approximately one nine times.
Heather Dixon: Moving on to our outlook for 2024. As noted in our press release, we established our 2024 guidance, which includes revenue in the range of $3.18 to $3.25 billion, adjusted EBITDA in the range of $730 to $770 million, adjusted earnings per diluted share in the range of $3.40 to $3.70, and Total Bed Editions, excluding acquisitions of approximately 1,200 beds.
Heather: As previously announced on January 19th 2024, we entered into an amended credit agreement with our lenders to increase our term loan a by $350 million.
Heather: Also in January 24, we paid $400 million to settle III lawsuits in new Mexico previously disclosed.
Heather: Moving onto our outlet for 2024 as noticed as noted in our press release, we established our 2024 guidance which includes.
Heather: Revenue in the range of $3, one eight to $3 $25 billion.
Heather: Adjusted EBITDA in the range of $730 to $770 million.
Heather: Adjusted earnings per diluted share in the range of $3 40 to $3 70.
Heather: And total bed additions, excluding acquisitions of approximately 200 beds.
Heather Dixon: We also established financial guidance for the first quarter of 2024 as follows: revenue in a range of $775 to $785 million, adjusted EBITDA in a range of $170 to $175 million, and adjusted earnings per diluted share in a range of $0.78 to $0.83. This guidance reflects our expectation that same-facility revenue growth will be driven by mid-single-digit growth for both revenue per day and patient days for the full year. Please note that our guidance includes one-time payments from a state of approximately $10 million, or 9 cents per diluted share, for the year, of which approximately $7 million, or $0.06 per diluted share, was received in the first quarter of 2024. Also, as a reminder, the company's guidance does not include the impact of any future acquisitions, divestitures, transactions, legal, and other costs, or non-recurring legal settlements expenses.
Heather: We also established financial guidance for the first quarter of 2024 as follows.
Heather: Revenue in a range of 775% to $785 million.
Heather: Adjusted EBITDA in a range of $1 $70 million to $175 million and adjusted earnings per diluted share in a range of 78 to 83.
Heather: This guidance reflects our expectation that same facility revenue growth will be driven by mid single digit growth for both revenue per day and patient days for the full year.
Heather: Please note that our guidance our guidance includes onetime payment from a state of approximately $10 million or <unk> <unk> per diluted share for the year.
Heather: Which approximately $7 million or <unk> <unk> per diluted share was received in the first quarter of 2024.
Heather: Also as a reminder, the company's guidance does not include the impact of any future acquisitions divestitures transaction legal and other costs or nonrecurring legal settlement expense.
Operator: With that, operator, we are ready to open the call for questions. If you would like to ask a question, please press star then 1 on your telephone. This question has already been addressed; would you like to withdraw your... Today's first question comes from Witt Mayo with Lurie. Hey, thanks. Good morning. Heather, just on the guidance, can you maybe frame for us what you're assuming inside that for startup losses and then also corporate overhead this year? I don't think you're going to be investing as much as last year. And then, if you could share any more details on the $10 million state payment. I presume that's just a state supplemental payment, the P-Lite Payment or something.
Speaker Change: With that operator, we are ready to open the call for questions.
Speaker Change: Thank you.
Speaker Change: To ask a question. Please press Star then one on your telephone keypad.
Speaker Change: Thanks for the question has already been addressed and I'd like to withdraw your question. Please press Star then two.
Speaker Change: Today's first question comes from Whit Mayo with Leerink partners. Please go ahead.
Whit Mayo: Hey, Thanks, Good morning, Heather just on the guidance can you maybe frame for us what youre, assuming inside that four startup losses, and then also corporate overhead. This year I don't think youre going to be investing as much as last year and then if you could share any more details on the $10 million state payment I presume that's just state supplemental.
Whit Mayo: M D.
Whit Mayo: TTP like payment or something thanks.
Benjamin Whitman Mayo: Hi Wiz. Good morning. I'll go, maybe in reverse order.
Heather: Hi, Good morning, I'll go maybe in reverse order the $10 million payment you are correct that is a onetime that split over two payments.
Heather Dixon: The $10 million state payment, you're correct, that is a one-time payment split over two payments, DPP payment. In terms of corporate costs, we have seen, you know, in 2023, we did see those costs increase from the prior years, but we've seen that stabilize in Q4 of 2023. When we are starting to see our selective investments pay off, for example, investments we've made in quality, IT, managed care, marketing, many areas, we are starting to see those benefits to the business as a whole, specifically in the positive labor trends that we just talked about and also our continued ability to meet that growing demand and deliver quality care. Turning to 2024, we expect to continue to see operating leverage as we move throughout the year.
Heather: DPP payment.
Speaker Change: In terms of corporate costs.
Speaker Change: We have seen in 2023, we did see the increase from the prior year, but we've seen that stabilize in Q4 of 2023.
Heather: And we are starting to see our selective investments pay off for example investments we've made in quality.
Heather: Managed care marketing many areas.
Heather: Starting to see those benefits to the business as a whole and specifically in the positive labor trends that we just talked about and also our continued ability to meet that growing demand and deliver quality care.
Heather: Turning to 2024, we expect to continue to see operating leverage as we move throughout the year.
Heather Dixon: And our expectation is that corporate costs will stay relatively consistent and continue to moderate specifically as a percentage of revenue as we see sort of continued leverage throughout the year. In terms of startup costs, we expect startup costs to run in a similar range to 2023, probably around $20 to $25 million for the full year and around $5 to $6 million per quarter. They're not significantly higher, really, because of the back-end of the opening of the bed, so you'll see that probably increase a little bit per quarter, but that's what we're expecting for startup costs.
Heather: And our expected <unk> expectation is that our corporate costs will stay relatively consistent and continue to moderate specifically as a percentage of revenue as we see the continued leverage throughout the year.
Heather: In terms of startup costs.
Heather: We expect to start up costs will run in a similar range to 2023, probably around 20% to $25 million for the full year and around $5 million to $6 million per quarter.
Heather: Not significantly higher really because of the back ending at the opening of the bed. So youll see that probably increased a little bit per quarter, but that's what we're expecting for startup costs.
Christopher Howal Hunter: And my second question, Chris, is that CMMI is launching a new behavioral pilot focused on what appears to be the integration of behavioral health with primary care with some value-based care flare to it. I know it's early, but any preliminary thoughts on your desire to participate in this program? We're seeing a lot more of these 1115 waiver plans approved by states as well, so just curious if you have any thoughts on either of those.
Speaker Change: Great and my second question, Chris just CMI is launching a new behavioral pilot focused on what appears to be the integration of behavioral with primary care with some value based care flair to it I know, it's early but just any preliminary thoughts on your desire to participate in this program. We're seeing a lot more of these 11 15 waiver plans.
Speaker Change: Proof from states as well so just curious if you have any thoughts on both of those.
Christopher Howal Hunter: Yeah. Thanks, Whit. I mean, I'd say to start, I mean, just overall, we're really glad to see the announcement. I mean, we're tracking it closely, but I think we're still largely in waiting mode here for a number of the key areas of additional detail from CMS. So, you know, a number of those details that would include the care model, the funding model, geographic participation, etc. But, you know, overall, just the key details of the program are yet to be released. And, you know, we're eagerly awaiting those specifics. You know, it is something that we would like to participate in. And we think that we have some really compelling capabilities and will just eagerly continue to track and await those ongoing details that are to come.
Speaker Change: Yes, Thanks, Whit I mean, I'd say to start I mean, just overall, we're really glad to see the announcement I mean, we're tracking it closely but I think we're still largely in waiting mode here for a number of the key areas of additional detail from CMS. So.
Speaker Change: A number of those details that would include the care model the funding model geographic participation et cetera, but.
Speaker Change: Overall, just the key details of the program are yet to be released.
Speaker Change: And we are eagerly awaiting the specifics it is something that we would like to participate in and we think that we have some really compelling capabilities and just eagerly we'll continue to track and await those ongoing details.
Albert J. William Rice: 10-6. Thank you. And our next question today comes from A.J. Rice, EUBS. Hi, everybody. Thanks.
Speaker Change: Or to come.
Speaker Change: Okay. Thanks.
Speaker Change: Yes.
Speaker Change: Thank you and our next question today comes from AJ Rice of UBS. Please go ahead.
AJ Rice: Hi, everybody. Thanks.