Q4 2023 ATI Physical Therapy Inc Earnings Call
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Operator: Good afternoon, and welcome to ATI Physical Therapy's fourth quarter and full year 2023 earnings conference call and webcast. All participants will be in a listen-only mode.
Good afternoon, and welcome to the ATI physical therapies fourth quarter and full year 2023 earnings conference call and webcast.
All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note. This event is being recorded.
Operator: After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. On the call today are Sharon Bitty, Chief Executive Officer; Joseph Jordan, Chief Financial Officer; Chris Cox, Chief Operating Officer; and Joan Fong, Senior Vice President, Treasurer, and Head of Investor Relations. I will now turn the call over to Ms. Fong. Thank you, Mandeep.
On the call today is Sharon Biddy, Chief Executive Officer, Joseph Jordan, Chief Financial Officer, Chris Cox, Chief operating Officer and go on for.
<unk> Senior Vice President Treasurer, and head of Investor Relations I will now turn the call over to Miss Wong.
Joan Fong: Good afternoon, everyone. Thank you for joining us today. Before we begin, we'd like to remind you that certain statements made during this call are forward-looking statements that are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions, and information currently available to us. Although we believe these expectations are reasonable, we undertake no obligation to revise any statements or to make changes that occur after this call. Descriptions of some of the factors that cause the after results of different materials from these forward-looking statements can be found in the risk factors section in the company's filing with the Securities and Exchange Commission.
Thank you mandate good afternoon, everyone. Thank you for joining us today before we begin I'd like to remind you that certain statements made during this call before it looking statements are subject to various risks and uncertainties that the current expectation is that please.
Functions and information currently available to us although it made this extra patients are reasonable we undertake no obligation to revise any statements reflect changes that occur. After this call descriptions of some of the factors that cause actual results to differ materially from these forward looking statements can be found in the risk factors section in the company's filings with the Securities and Exchange Commission.
Joan Fong: In addition, please note that the company is discussing certain non-GAAP financial measures that we believe are important in evaluating performance. Details on relationships between these non-GAAP measures, the most comparable GAAP measures, and reconciliation of historical non-GAAP financial measures can be found in the earnings press release that's posted on ATI's website and filed with the SEC. So with that, I'd like to turn the call over to Sharon.
In addition, please note that the company is discussing certain non-GAAP financial measures that we believe are important in evaluating performance.
Sales on a relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations of historical non-GAAP financial measures can be found in the earnings press release that was supposed to be cashed website and FCC.
With that I'd like to turn the call over to Sharon.
Sharon Bitty: Thank you, Joanne, and welcome everyone. In addition to Chris and Joe, we have the rest of our ELT on the call. We have Emily Tanzi, our Chief People Officer, Scott Gregerson, our Chief Growth Officer, Beth Oaks, our Chief Information Officer, and Eric Cantz, our Chief Legal Officer. As you may know, earlier today, we reported our fourth quarter and full year 2023 results. 2023 was a reset year, and I'm very proud of our achievement. ATI staff exhibited strong teamwork across our national single brand platform to bring our purpose to life in our local community. Expanding access to care and helping people live their healthiest life. Our team implemented deliberate strategies to deliver meaningful quarter-over-quarter growth, allowing us to exceed our revenue targets and our 2023 guidance. 2023 was a year when we implemented many winning strategies, including strengthening the ATI culture and Rowing the Provider Base.
Thank you Joanne and welcome everyone.
In addition to Chris and Joe we have the rest of our E. L. T. On the call we have Emily Chan, our Chief people Officer, Scott Gregersen, our chief growth Officer, our chief information.
Information Officer, and Eric Katz, our Chief legal officer.
As you May know earlier today, we reported our fourth quarter and full year 2023 results.
2023 was a reset year and I'm very proud of our achievements.
<unk> exhibited strong teamwork across our national single branded single brand platform to bring our purpose to life in our local communities.
Expanding access to care and helping people live their healthiest lives.
Our team implemented deliberate strategies to deliver meaningful quarter over quarter growth, allowing us to exceed our revenue targets and our 2023 guidance.
2023.
It was a year when we implemented many winning strategies.
Including strengthening the hei culture.
Rowing the provider base.
Sharon Bitty: Elevating talent and creating development opportunities for our employees. Expanding access for patients. Advancing clinic operations.
Elevating talent and creating development opportunities for our employees.
Spanning access for patients advancing clinic operations enhancing the patient experience.
Sharon Bitty: Enhancing the patient experience, all resulting in improved financial and key KPI performance. I'm going to double down on a few areas that were highlights of 2023. Starting with demand for ATI services, it was exceptionally strong in 2023, and we saw an all-time high in ATI's history of referrals per day, and referrals continued to be robust into 2024. In 2023, the rate per visit increased by $3.30 over the previous year. And so as we look at this, there are two contributing factors.
All resulting in improved financial and key Kpis performance.
Yeah.
I'm going to double down on a few areas that are highlights of 2023.
Starting with the demand for ATI services. It was exceptionally strong in 2023, and we saw an all time high in Ati's history of referrals per day.
And referrals continue to be robust into 2024.
Okay.
In 2023, the rate per visit increased by $3.30 over the previous year.
And so as we look at this there are two contributing factors one payor rate increases.
Sharon Bitty: One, payer rate increases coupled with operational improvements in our revenue cycle management. The HR and Ops teams work together to allow us to see 390,000 more patient visits in 2023 compared to 2022. The labor market continues to remain tight.
Coupled with operational improvements in our revenue cycle management.
Okay.
The HR and ops teams work together.
To allow us to see 390000 more patient visits in 2023 compared to 2022.
The labor market continues to remain tight.
Sharon Bitty: And in 2023, Emily Tanzi, our Chief People Officer, led our HR teams to successfully grow the number of clinical FTs year over year and significantly reduced turnover to a more normalized level, creating stability in our clinic. Grace Park, our COO, led the team's focus on reducing administrative burdens and improving processes in the clinic, allowing our providers to see more visits per day per clinical FTE in 2023, achieving a historic high water
And in 2023, Emily Chan, our Chief people Officer led our HR teams to successfully grow.
A number of clinical ftes year over year.
And.
Significantly reduced turnover to a more normalized level, creating stability in our clinics.
Chris Cox, our COO led the team is focused on reducing administrative burdens and improving processes in the clinic, allowing our providers to see more visits per day per clinical FTE in 2023, achieving a historic.
High watermark.
Sharon Bitty: On our clinic footprint, we opened 13 de novo clinics and closed or divested 40 clinics for performance reasons. 2024 will be a year of investing in our current fleet with necessary upgrades, expansion, and consolidation, coupled with opening a limited number of new clinics.
On our clinic footprint, we opened 13 de novo clinics and closed or divested 40 clinics for performance reasons.
2024 will be a year of investing in our current fleet with necessary upgrades expansions and consolidations.
Coupled with an with opening a limited number of new clinics.
Sharon Bitty: Now our long-term goal is to grow the footprint while continuously monitoring local markets and clinic performance. Overall, we are focused on capitalizing on the momentum achieved in 2023 with people in operations to continue growing ATI's capacity in 2024. Our people are what set us apart from our competitors.
Now our long term goal is to grow the footprint, while continuously monitoring local markets in clinic performance.
Overall, we are focused on capitalizing on the momentum achieved in 2023 with people and operations to continue growing hei's capacity in 2024.
Our people are what set us apart from our competitors.
Sharon Bitty: Through all the changes in the market and within the company in the past few years, our team's commitment to our care excellence has grown. Hearing from our patients is a critical part of feedback. In 2023, we refined our patient survey processes during the year to gain additional insights into our patient experience. We anticipate sharing this new improved Customer Satisfaction KPI later this year in 2024. Our clinical quality remains exceptional. As previously reported, in 2023, ATI achieved an exceptional rating in patient quality from the Center for Medicare and Medicaid Services MIPS program for the fourth consecutive year, basically every year since the program's inception for physical therapy providers. In 2024, ATI will again receive a bonus payment to help offset the CMS fee schedule cuts in 2024. Another area of excellence is the launch earlier this month of the Institute for Musculoskeletal Advancement. The purpose of the institute is to advance scientific research and to enhance the quality of musculoskeletal clinical care.
Through all the changes in the market and within the company in the past few years, our teams commitment to our share excellence has grown.
Hearing from our patient is a critical part of feedback.
In 2023, we refined our patient survey processes during the year to.
To gain additional insights in our patient experiences.
We anticipate sharing this new improved customer satisfaction J P. J P. I later this year in 2024.
Our clinical quality remains exceptional.
As previously reported in 2023, ATI achieved an exceptional rating and patient quality from the center for Medicare and Medicaid services program.
Program for the fourth consecutive year.
Basically every year since the program's inception for physical therapy providers.
In 2024, Hei will again receive a bonus payment to help offset the CMS fee schedule cuts in 2024.
Another area of excellence is the launch earlier this month of the Institute for Musculoskeletal Advancement.
The purpose of the Institute.
As to advanced scientific research and to enhance the quality of muscle skeletal clinical care.
Sharon Bitty: The Institute for Musculoskeletal Advancement will create new opportunities for our colleagues to get involved with teaching, research, and influencing policy. A top priority in 2024. In 2023, the operations team completed numerous process improvements in technology implementation. Chris will provide a detailed discussion of those operational initiatives and performance later during the call. I do want to call out two areas.
The Institute for Musculoskeletal advancement.
Create new opportunities for our colleagues to get involved with teaching research and influencing policy.
It is a top priority in 2024.
In 2023, the operations team completed numerous process improvements and technology implementations.
This will provide a detailed discussion of those operational initiatives and performance later during the call.
I do want to call out two areas.
Sharon Bitty: The operations team drove increased clinic utilization every quarter over quarter during the year and in the fourth quarter drove the highest number of visits per clinic since the start of COVID in 2022. Our clinicians were highly productive throughout 2023, spending more time treating patients than the prior year, with each clinical FTE in 2023 seeing a historically high number of visits per day of 9.4. The strong demand for ATI services combined with the progress we made in the business resulted in the company feeding our 2023 revenue and adjusted EBITDA guidance. Shortly, Joe will provide a detailed walkthrough of Q4 and full 2023 financial results and share Q1 2024 expectations.
The operations team drove increased clinic utilization every quarter over quarter during the year.
And in the fourth quarter drove the highest visits per clinic since the start of Covid in 2022.
Our clinicians were highly productive throughout 2023 spending more title of treating patients than the prior year with each clinical S. T. In 2023, seeing a historically high visits per day of nine four.
The strong demand for ATI services combined with the progress we made in the business.
Resulted in the company, beating our 2023 revenue and adjusted EBITDA guidance.
Shortly Joe will provide a detailed walk through of Q4 and full 2023 financial results and.
Sure Q1 2024 expectations.
Chris Cox: Worth noting is our continuous progress in 2023 to increase revenue every quarter from the prior sequential quarter, with ATI's Q4 2023 revenue back to the level when the pandemic started in 2020. In 2024, we kicked off the year implementing numerous strategies to extend the progress we made in 2023. It goes without saying that we have incredible teams at ATI that are making a difference in the lives of our patients and communities every day. I have tremendous gratitude for our talented teams, dedicated clinicians, and leaders who emotionally invest in and are passionate about enriching the lives of our colleagues, patients, and community. Big congratulations to the entire ATI team for showing everyone the real ATI.
Worth noting is our continuous progress in 2023 to increase revenue every quarter from the prior sequential quarter with Hei's Q4, 2023 revenue back to levels when the pandemic started in 2020.
In 2024, we've kicked off the year implementing numerous strategies to extend the progress we made in 2023.
It goes without saying we have incredible teams at hei that are making a difference in the lives of our patients and communities every day.
I have tremendous gratitude for our talented teams dedicated clinicians and leaders, who mostly invest and are passionate about enriching the lives of our colleagues patients and communities.
Big congratulations to the entire ATI team for showing everyone. The real hei.
Chris Cox: With that, I will turn the call over to Chris to discuss the operation. All right, thank you, Sharon. I'm proud to share an update on our transformation efforts for the fourth quarter and the full year of 2023, as well as the outstanding operational results that we achieved. In January, I was able to attend our national leadership event for the second time. We brought together every clinic director from across our national footprint, along with our field and corporate leaders, as well as board members, to focus on leadership development, as well as our 2024 critical path. This meeting sets the stage for our year ahead and affords us the opportunity to continue to develop the core competencies and skill sets that our clinicians need to enable continued operational and clinical progress. I'm inspired by our providers and their passion for achieving exceptional outcomes for our patients.
With that I will turn the call over to Chris to discuss operations.
Alright, Thank you Sharon.
I'm proud to share an update on our transformation efforts from the fourth quarter and the full year of 2023 as well as the outstanding operational results that we achieved.
In January I was able to attend our national leadership event for the second time.
We brought together every clinic director from across our national footprint, along with our field and corporate leaders as well as board members.
Our focus on leadership development as well as our 2024 critical paths.
This meeting sets the stage for our year ahead, and affords us the opportunity to continue to develop the core competencies and skill sets that our clinicians need to enable continued operational and clinical progress.
I'm inspired by our providers and their passion for achieving exceptional outcomes for our patients.
Chris Cox: Our operational progress furthers our ability to deliver continued excellence in health outcomes, and I want to thank the ATI colleagues who bring our purpose to life every day. In 2023, our field and clinic teams will continue to deliver exceptional patient care, while our central operations teams diligently refine workflows and processes. Together, we remained focused on enhancing our capacity for care and on continuing to elevate the patient experience. As Sharon mentioned, our clinic teams again earned an exceptional rating by CMS MIPS for delivering quality patient care and will be awarded a bonus for Medicare services rendered.
Our operational progress furthers, our ability to deliver continued excellence in health outcomes.
And I want to thank the ATI colleagues, who bring our purpose to life every day.
In 2023, our field teams continued to deliver exceptional patient care.
While our central operations teams diligently refined workflows and processes.
Together, we remain focused on enhancing our capacity for care.
And on continuing to elevate the patient experience.
Hi, Sharon mentioned, our clinic teams again earned an a rating by CMS Mips for delivering quality patient care and we will be awarded a bonus for Medicare services rendered.
Chris Cox: The clinic teams also expanded patient access, with each clinical FTE seeing an additional 0.6 visits per day in 2023 over 2022. And, in fact, we increased visits per day and visits per day per clinic every single quarter in 2023 over the prior quarter as we made continued progress with our operations. At the beginning of 2023, I spoke about how we would leverage process innovation and enhancements in technology to reduce administrative burdens and support four-wall performance. Fast forward to the end of the year, and we can see that we realized greater efficiencies and higher customer satisfaction with our centralized intake initiative and clinic process innovation effort. In Q4, we completed the centralization of our intake, registration, and scheduling functions.
The clinic teams also expanded patient access with each clinical FTE seeing an additional six visits each day in 2023 over 2022.
And in fact, we increased visits per day and visits per day per clinic every single quarter in 2023 over the prior quarter as we made continued progress with our operations.
At the beginning of 2023 I spoke about how we would leverage process innovation and enhancements and technology to reduce administrative burdens.
Port fall four wall performance.
Fast forward to the end of the year and we can see that we realized greater efficiencies and higher customer satisfaction with our centralized intake initiative and clinic process innovation efforts.
In Q4, we completed the centralization of our intake registration and scheduling functions.
Chris Cox: Completing the rollout across all our clinics, this effort has removed over 3.8 million annual phone calls from our clinics and helped drive consistency in our referral management. Safeguarding referrals from slipping through the cracks. This effort, combined with enhancements to make our ATI EMR system even easier for our clinicians to use, in addition to other operational initiatives, enabled our providers to spend more time operating at the top of their game, focusing on patients and delivering high quality evidence-based care. But it doesn't stop there.
Leading the rollout across all of our clinics.
This effort has removed over three 8 million annual phone calls from our clinics and helped drive consistency in our referral management.
Pardon referrals from slipping through the cracks.
This effort combined with enhancements to make our ATI EMR system, even easier for our clinicians to use.
In addition to other operational initiatives.
Our providers to spend more time operating at the top of their license.
On patients and delivering high quality evidence based care.
Yeah.
But it doesn't stop there.
Chris Cox: Our initiatives to augment our clinical operations will continue in 2024. By further streamlining administrative processes in our clinics, we expect to unlock even greater value for our organization. We have ongoing efforts to reduce paperwork and digitize registration for new patients, which will save both clinicians and providers time.
Our initiatives to augment our clinical operations will continue in 2024.
By further streamlining administrative processes in our clinics, we expect to unlock even greater value for our organization.
We have ongoing efforts to reduce paperwork and digitize registration for new patients, which will save both clinicians and providers time.
Chris Cox: And now that we have a single centralized intake model, we will begin experimenting with new patient engagement strategies to drive higher referral conversion and appointment attendance. With reduced administrative burdens and a more predictable operating rhythm, we expect our clinics to continue to experience improved employee satisfaction with more time to focus on delivering exceptional care. Equally impactful, despite the ongoing imbalance in the physical therapy labor market, we successfully grew our clinical FTE base throughout 2023 and ended in Q4 at nearly 2600 FTEs. We remain committed to prioritizing strategies that bolster both retention and recruitment, recognizing the pivotal role our clinicians play in our continued growth and success. Admission turnover ended the year in the fourth quarter at 21 percent, which is on par with our pre-COVID level. Considering the challenging labor market we are in, this notable retention speaks volumes about the culture we are building to foster a community where providers are engaged to stay and grow. Final
And now that we have a single centralized intake model, we will begin experimenting with new patient engagement strategies to drive higher referral conversion and appointment of attendance.
With reduced administrative burdens and a more predictable operating rhythm.
We expect our clinics to continue to experience improved employee satisfaction with more time to focus on delivering exceptional care.
Equally impactful despite the ongoing imbalance in the physical therapy labor market. We successfully grew our clinical FTE base throughout 2023 and ended in Q4 at nearly 2600 ftes.
We remain committed to prioritizing strategies that bolster both retention and recruitment efforts.
Recognizing the pivotal role our clinicians play and our continued growth and success.
Munition turnover ended the year in the fourth quarter at 21%, which is on par with our pre COVID-19 levels.
Considering the challenging labor market. We are in this notable retention speaks volumes about the culture. We are building to foster a community where providers are engaged to stay and grow.
Finally, our rate in 2023.
Chris Cox: Our rate in 2023 was positively impacted by revenue cycle enhancements and ongoing negotiations with payers for reimbursement. During the year, we also standardized our workers' compensation offering to ensure that we are a provider of choice in that area. I previously talked about transforming our revenue cycle management function to achieve best-in-class performance. In 2023, we made significant improvements in almost every KPI that measures revenue cycle efficiency, from the denial rate, the cost to collect, the POS collection rate, and the net collection rate. With our decision to consolidate our relationships and work more closely with a preferred vendor partner to drive collection rates, we were able to reduce costs and employ more automation in our efforts. We have also seen a reduction in bad debt expense throughout the year, as reflected in the financials.
Was positively impacted by revenue cycle enhancements and ongoing negotiations with payers for reimbursement.
During the year, we also standardized our workers compensation offering to ensure that we are providing a provider of choice in that area.
You previously talked about transforming our revenue cycle management function to achieve best in class performance.
In 2023, we made significant improvement in almost every case that measures revenue cycle efficiencies.
From denial rate the cost to collect.
POS collection rates the net collection rates.
With our decision to consolidate our relationships and work more closely with a preferred vendor partner to drive collection rates, we were able to reduce costs and employing more automation in our efforts.
We have also seen a reduction in bad debt expense throughout the year as reflected in the financials driven by technology and process enhancements.
Chris Cox: Driven by Technology and Process Enhancement. To conclude, I want to emphasize that my priority remains driving innovative improvements to our processes to better support our teams and to stand out among the competition. We still have work to do, and I am energized by the progress we achieved in 2023. I look forward to providing updates as we continue to build on our momentum. I want to again express my heartfelt gratitude to our clinicians, field leaders, health services teams, and central teams for their steadfast commitment and passion. It is through their collective efforts that we can make meaningful strides in improving the health and outcomes of our patients. Their dedication is the cornerstone of our success, and I am deeply appreciative of their continued focus on driving positive change.
Yes.
To conclude I want to emphasize that my priority remains driving innovative improvements to our processes to better support our teams and to stand out among the competition.
We still have work to do.
And I am energized by the progress we achieved in 2023.
I look forward to providing updates as we continue to build on our momentum I want to again express my heartfelt gratitude to our clinicians field leaders and health services teams and central teams for their steadfast commitment and passion.
It is through their collective efforts that we can make meaningful strides in improving the health outcomes of our patients.
Their dedication is the cornerstone of our success and I am.
Deeply appreciative of their continued focus on driving positive change.
Joseph Jordan: As we move forward, I am excited by the abundant opportunities that lie ahead. Now, I'd like to turn the call over to Joe for an in-depth review of our financial results. Thank you, Chris, and thanks to everyone for joining us on the call today.
As we move forward.
Cited by the abundant opportunities that lie ahead.
Now I'd like to turn the call over to Joe right, an in depth review of our financial results.
Thank you, Chris and thanks to everyone for joining the call today.
Joseph Jordan: I'll talk about our fourth quarter and full year 2023 financial results, and then later on, as Sharon mentioned, I'll discuss, as early trends for 2024 as well as our expectations for the first quarter. Starting out with Q4, our net revenue for the fourth quarter was $182 million, which is a 12.7% increase year over year from $162 million in Q4 of the prior year. And as we go a layer deeper, net patient revenue was $166 million, which is a 13.6% increase year-over-year, while other revenue for the fourth quarter was $16 million, which is a 3.7% increase year-over-year.
I'll talk about our fourth quarter and full year 2023 financial results and then later on I will discuss as Sharon mentioned early trends for 2024 as well as our expectations for the first quarter.
Starting out with Q4, our net revenue in the fourth quarter. It was $182 million, which is a 12, 7% increase year over year from $162 million in Q4 of the prior year.
And as we go a layer deeper net patient revenue was $166 million, which is a 13, 6% increase year over year, while other revenue for the fourth quarter was $16 million, which is a three 7% increase year over year, and it's mostly due to higher revenue from our MSA clinics.
Joseph Jordan: And it's mostly due to higher revenue from our MSA. Our visits per day per clinic, as Chris talked about a little bit earlier, were 27 for the quarter, which is a sequential increase of 1.1 visits from the third quarter, which sat at 25.9. And since we began the execution of our clinic optimization and our operational improvement plans last year, the result continues to be stronger, more vibrant clinics and improved unit economics. And also, as Chris mentioned, we've seen a sequential increase every quarter in business per day per clinic. The business per day per clinic of 27 in the fourth quarter compares to 24.1 in the fourth quarter of the prior year. The rate per visit was $108.81 in the third quarter.
Our visits per day per clinic, as Chris talked about a little bit earlier was 27% for the quarter, which is a sequential increase of $1. One visits from the third quarter, which sat at 25 nine.
And since we began the execution of our clinic optimization and our operational improvement plans last year. The result continues to be stronger more vibrant clinics and improved unit economics and also as Chris mentioned, we've seen a sequential increase every quarter in visits per day per clinic.
The visits per day per clinic of <unk> 27 in the fourth quarter compares to $24 one in the fourth quarter of the prior year.
Rate per visit was $108 81 in the third quarter Thats, a decrease of 1% from $109 90 in the third quarter, but an increase of four 6%.
Joseph Jordan: That's a decrease of 1% from $109.90 in the third quarter but an increase of 4.6% from $103.99 in the fourth quarter of the prior year. Looking over the sequential quarters, the slight decrease in rate was mostly due to a more significant discrete rate adjustment occurring in Q3 related to prior period favorable collection expenses. And when we look year over year, the increase in rates is primarily driven by favorable rate realization due to operational enhancements of revenue cycle management and increased contracted rates, which Sharon and Chris both touched upon. Salaries and related costs in the fourth quarter of 2023 were $99 million, and that's a 9.5% increase year-over-year from $91 million in Q4 of the prior year. It was primarily driven by more clinical staff supporting higher revenue and higher wage rates due to inflation.
$103 99 in the fourth quarter of the prior year.
Looking over the sequential quarters, the slight decrease in rate was mostly due to a more more significant discrete rate adjustments occurring in Q3 related to prior period favorable collection experience.
And when we look year over year the increase in rate is primarily driven by favorable rate realization.
Due to operational enhancements and revenue cycle management, and increase contracted rates with which Sharon and Chris both touched upon.
Salaries and related costs in the fourth quarter, 2023 were $99 million and Thats, a nine 5% increase year over year from $91 million in Q4 of the prior year was primarily driven by more clinical staff supporting higher revenue.
The higher wage wage rates due to inflation.
Joseph Jordan: PT salaries and related costs per visit during the quarter were $56.56. This decreased 1.6% from $57.47 in the third quarter of 2023, and it increased 3% year over year from $54.92 in the fourth quarter of the prior year. The quarter over quarter decrease from Q3 is primarily due to higher labor productivity. While the year-over-year increase was primarily due to higher compensation, wage inflation, which was partially offset by higher labor costs.
Okay.
Salaries and related cost per visit during the quarter were $56.56 that decreased one 6% from $57 47 in the third quarter of 2023, and it increased 3% year over year from $54 92 in the fourth quarter of the prior year.
The quarter over quarter decrease from Q3 is primarily due to higher labor productivity, while the year over year increase was primarily due to higher compensation and wage inflation, which was partially offset by higher labor productivity.
Joseph Jordan: Rent, clinic supplies, contract labor, and other expenses in the fourth quarter were $53 million, which is a 7% increase year-over-year from $49 million in Q4 of the prior year. It's primarily due to increased spend on contract labor and outside. On a per-clinic basis, those same costs were approximately $57,000, which is essentially flat from the third quarter and increasing 11% year-over-year from $51,000 for the same previously noted reasons, contractor spend, and outside spending. Our provision for doubtful accounts during the quarter was approximately $1,000,000, which is 0.9% of PT revenue, and that compares favorably to 2.1% of PT revenue this year and 1.7% in Q4 of last year. And on a full year basis, the provision was 1.8% of PG revenue compared to 2.4% in the prior year.
Rent clinic supplies contract labor and other in the fourth quarter was $53 million, which is a 7% increase year over year from $49 million in Q4. The prior year is primarily due to increased spend on contract labor and outside services.
On a per clinic basis, those same costs were approximately $57000, which is essentially flat from the third quarter and increasing 11% year over year from 51000 for the same previously noted reasons contractor spend and outside services.
Our provision for doubtful accounts during the quarter was approximately $1 million, which is 0.9% of PT revenue and that compares favorably to two 1%.
We have this year and one 7% in Q4 of last year.
And on a full year basis. The provision was one 8% of PT revenue compared to two 4% in the prior year.
Joseph Jordan: Now, these improvements are the results of deliberate process improvements and collection efforts by our teams. Chris talked a lot about the Red Cycle Management improvements that have happened year over year. And those improvements and those processes will remain ongoing as we move into 2020. SG&A during the quarter was approximately $26 million, which is a 4.2% decrease year-over-year from $28 million in Q4 of the prior year. It's primarily driven by lower severance and lower non-ordinary legal costs, partially offset by higher outside services and contracts.
Now these improvements are the result of deliberate process improvements and collection efforts by our teams Chris talked a lot about the Rev cycle management improvements that have happened year over year and those improvements in those processes remain ongoing as we move into 2024.
SG&A during the quarter was approximately $26 million, which is a four 2% decrease year over year from $28 million in Q4. The prior year was primarily driven by lower severance and lower non ordinary legal costs, partially offset by higher outside services and contract labor.
Joseph Jordan: Non-cash, goodwill, intangible, and other asset impairment charges in the fourth quarter were six million dollars, and this was due to long-lived asset impairments related to primarily sub-leasing a portion of our corporate office. Operating income excluding impairment charges in the fourth quarter was three million dollars, which increased from an operating loss of eight million in the prior year, which reflects the higher revenue we earned in 2023 and the associated earnings that come Notable below the line items during the quarter included income resulting from a decrease in the fair value of our second lean pick notes, our contingent common shares, and warrants, which totaled $16 million.
Noncash goodwill intangible and other asset impairment charges in the fourth quarter were $6 million and is due to long lived asset impairments related to primarily sub leasing a portion of our corporate office space.
Yeah.
Operating income excluding impairment charges in the fourth quarter was $3 million, which increased from an operating loss of $8 million in the prior year, which reflects the higher revenue. We earned in 2023 and the associated earnings that come along with that.
Notable below the line items during the quarter included income, resulting from a decrease in the fair value of our second lien Pik notes are contingent common shares and warrants, which totaled $16 million those are mark to market to fair value every quarter. So as of yearend December 31st valuation analysis that resulted in 16 million.
Joseph Jordan: Those are mark-to-market to fair value every quarter, so as of year-end, December 31st, the valuation analysis resulted in $16 million. Our interest expense during the quarter was $15 million, which compares to $13 million in the fourth quarter of the prior year, and the increase is primarily due to lower interest rate hedge benefits.
<unk>.
Okay.
Our interest expense during the quarter was $15 million, which compares to $13 million in the fourth quarter of the prior year and the increase is primarily due to lower interest rate hedge benefit.
Okay.
Joseph Jordan: Income tax expense for the quarter was $2,000,000, which compares to a benefit of $5,000,000 in the fourth quarter of the prior year, and our net loss during the quarter was $5,000,000 compared to a net loss of $102,000,000 in the fourth quarter of the prior year. Looking at the full year, revenue for 2023 was $699 million. That's a 10% increase year-over-year from $636 million, and it outperformed revenue guidance of 680 to 695. The primary drivers were an increase in visits per day, which increased seven and a half percent year over year, and rate per visit, which grew 3.2%. And on the Adjusted EBITDA line, the full year was $36.2 million, which increased from $7 million in the prior year and also outperformed our Adjusted EBITDA guidance range of $30 to $36 million. Cash used during 2023 was approximately $46 million compared to cash generated in the prior year of $35 million.
Income tax expense for the quarter was 2 million, which compares to a benefit of $5 million in the fourth quarter. The prior year and our net loss during the quarter was $5 million compared to a net loss of 102 million in the fourth quarter of the prior year.
Okay.
Looking at the full year.
Revenue for 2023 was $699 million does a 10% increase year over year from $636 million and outperformed revenue guidance of $6 80 to 695. The primary drivers were an increase in visits per day, which increased seven 5% year over year and rate per visit which grew three 2%.
And on the adjusted EBITDA line, the full year was $36 2 million, which increased from $7 million in the prior year also outperforming our adjusted EBITDA guidance range of 30% to $36 million.
Cash used during 2023 was approximately $46 million compared.
Compared to cash generated in the prior year of $35 million.
Joseph Jordan: As we break that down further, operating cash use was $12 million in 2023 compared to $66 million in 2022, and the improvement reflects improved earnings in addition to the conclusion of the CARES Act. Investing cash use was $17 million compared to $28 million in 2022, with the decrease mostly due to fewer clinic openings, and financing cash use was $17 million compared to cash generated of $128 million in 2020, with a decrease driven primarily by the issuance of preferred stock that happened in 2022, as well as higher revolver repayments in 2023 as we had significant borrowings at the end of 2022 and then repaid some As of December 31st, 2023, our available liquidity was approximately $42 million, and that consisted of cash and cash equivalents of $37 million, and then available revolver capacity of $5 million. And in addition to that availability, we had access to twenty five million delayed draw term loan, which was fully drawn in January of twenty.
As we break that down further operating cash use was $12 million in 2023 compared to $66 million in 2022.
The improvement reflects.
Improved earnings in addition to that conclusion of cares Act.
Yeah.
Investing cash use was $17 million compared to $28 million in 2022 with the decreased mostly due to fewer clinic openings and.
Financing cash use was $17 million compared to cash generated of $128 million in 2022 with the decrease driven primarily by the issuance of preferred stock that happened in 2022 as well as higher revolver repayments in 2023, as we have significant borrowings at the end of 2022, and then repaid some of it in 'twenty three.
As of December 31, 2023, our available liquidity was approximately $42 million and that consisted of cash and cash equivalents of $37 million and then available revolver capacity of $5 million and in addition to that availability, we had access to $25 million delayed draw term loan which was fully drawn in January of 2000.
Sure.
Finally, as Sharon and Chris discussed the people and the operational advances that we achieved in 2023 led to volume and lead to capacity utilization increases throughout the year.
Joseph Jordan: Finally, as Sharon and Chris discussed, the people and the operational advances that we achieved in 2023 led to volume and led to capacity utilization increases throughout the year. And we're pleased with the progress that we made during 2023. And we're excited to continue these advancements into 2024. Despite the severe weather in January that negatively impacted patient visits, we currently expect Q1 revenue to be between $175 and $185 million and adjusted EBITDA to be between $5 and $10 million, demonstrating growth over the prior year.
And we're pleased with the progress that we made during 2023 and we're excited to continue these advancements into 2024.
Despite the severe weather in January that negatively impacted patient visits. We currently expect Q1 revenue to be between 175 and $185 million and adjusted EBITDA to be between five and $10 million demonstrating growth over the prior year.
Of course this will depend upon continued success of our current initiatives and the risks outlined in our press release and other filings.
Overall, we're continuing to see plenty of demand for ATI services, and Sharon talked about that early on in 2024 will be working to see if we can achieve the full potential of the process improvements in the technology solutions that we implemented throughout last year and with the changes made to date and other is still in process, but we plan to achieve productivity levels.
Sharon Bitty: Of course, this will depend upon the continued success of our current initiatives and the risks outlined in our press release and other documents. Overall, we're continuing to see plenty of demand for ATI services, and Sharon talked about that early on. In 2024, we'll be working to see if we can achieve the full potential of the process improvements and the technology solutions that we implemented throughout last year. And with the changes made to date and others still in process, we plan to achieve productivity levels exceeding 2023, and we expect to provide full-year guidance during our next early earnings call in the spring. With that, I'll turn the call back over to Sharon for her closing remarks. Thank you, Joe.
<unk> 2023, and we expect to provide full year guidance. During our next early earnings call in the spring.
With that I'll turn the call back over to Sharon for closing remarks.
Thank you Joe.
As I said before 2023 was a reset year and we succeeded in setting up hei for continued growth.
The successes accomplished during the year demonstrate that we have the right team in place.
Our aggressive aggressively executing our operations improvements.
While continuing to make notable strides toward our strategic vision.
I am very confident in our people strategy and ongoing initiatives.
And that we will continue to advance our national practice improved performance and lead in the musculoskeletal space.
Operator: As I said before, 2023 was a reset year, and we succeeded in setting up ATI for continued growth. The successes accomplished during the year demonstrate that we have the right team in place. We are aggressively executing our operations improvements while continuing to make notable strides toward our strategic goals. I am very confident in our people, strategies, and ongoing initiatives and that we will continue to advance our national practice, improve performance, and lead in the musculoskeletal space. We will capitalize on the 2023 momentum and execute on known growth orders to excel in 2024. I'll now hand the call back to the operator to open up for questions and answers. The floor is now open to your questions. To ask a question at this time, simply press the star, followed by the number one on your telephone keypad.
We will capitalize on the 2023 momentum and execute unknown gross to XL in 2024.
I'll now hand, the call back to the operator to open up for questions and answers.
Okay.
The floor is now open for your questions to ask a question at this time simply press star followed by the number one on your telephone keypad.
We will now take a moment to Kampala roster.
Our first question comes from the line of Brian <unk> with Jefferies. Please go ahead maam deep would you like to open up for questions and answers now.
Hi, Good evening, you have tashi sell Epsilon Bryan and thank you for taking my question. So first my first question is going to be on how we should think about the cadence of earnings power throughout the year. I mean, obviously you had provided some guidance for Q1, just curious even qualitatively you can provide some commentary.
Operator: We'll now take a moment to compile our roster. Our first question comes from the line of Brian Tanquilut with Jeffries. Please go ahead. Hi, Mandeep.
Operator: Would you like to open up for questions and answers now? Hi, good evening. You have Taji Phillips on for Brian.
Are you on how we should be thinking about revenue generation I'll jump in this is Joanne Brian would you like to go first.
Alright.
Taji Phillips: Thank you for taking my question. So, my first question is going to be about how we should think about the cadence of earnings power throughout the year. I mean, obviously, you provided some guidance for Q1. I'd be just curious, even qualitatively, if you could provide some commentary on how we should be thinking about revenue generation. Sorry, I'll jump in. This is Joanne. Brian, would you like to go first? Hey Taji, this is Chris. I'm not in the room with them, but there must be some sort of audio connection issue.
Okay.
Hey, Todd this is Chris I'm not in the room with them, but there must be some sort of audio connection issue Hello, Hello can you all hear me.
Yes can you hear me.
Yes can you hear me now apologies, if it's patchy Phillips on for Brian.
This is Chris I'm not in the room with them, but they must be having some sort of issue hang on one second.
And then one.
Okay no problem.
Okay.
Yeah.
Is the operator available asking questions we can't share.
Yes, okay.
Operator are you able to hear me.
Joanne: Hello, Hello. Can you all hear me?
Operator: Yes, can you hear me? Yes. Can you hear me now? Apologies. This is Taji Phillips on for Brian. Yeah, Taji.
So I can hear you, Chris and then our <unk> from Jefferies can hear you.
Chris Cox: Hey, this is Chris. I'm not in the room with them, but they must be having some sort of issue. Hang on one second. No. Okay, no problem. Is the operator available? You're asking questions we can't hear. Yes, it's the operator.
Room, with Sharon, Joe and Joanne cannot hear us.
Okay, I'm going to attempt to.
Contact them one moment please.
Operator: Are you able to hear me? So, I can hear you, Chris, and then Taji from Jeffries can hear you, but the room with Sharon, Joe, and Joanne cannot hear us. Okay, I'm going to attempt to contact them. One moment, please, www.ottobock.com. We hear you. Oh, sorry. Just so they can hear us. Sharon, can you hear me now? Holly.
Alright.
Yes.
Yeah.
No.
We hear you okay.
Just so they can hear us.
Darren can you hear me now.
At this time.
Yeah.
Hi.
Okay.
Okay, we are experiencing technical issues and we will.
Resume momentarily.
Hello can you hear us now.
Operator: We are experiencing technical issues, and we'll resume momentarily. Hello, can you hear us now? Hey Joanne, can you hear me?
Hey, Joanne can you hear me, we can hear you.
Again, I don't know M&A interest cost.
Okay.
Yeah.
Joanne: We can hear you. We now can. I don't know what happened.
Because you talk to your from Jefferies was asking a question.
Operator: OK. Taji from Jeffries was asking a question. Hi, yes, can you all hear me? Hi, thank you for taking my question and no worries. So, I know that you provided some commentary around Q1 and what we should be expecting in terms of revenue EBITDA. Just curious, even qualitatively, can you provide some commentary around what we should be expecting in terms of the cadence of earnings power throughout the rest of the year? I think it's Joe. I could I could start out, I think.
Can you all hear me.
Hi, sorry about that rate.
Hi, Thank you for taking my question and no worries. So I know that you had you had provided some commentary around Q1, and what we should be expecting in terms of revenue and EBITDA. Just curious even qualitatively can you provide some commentary around what we should be expecting in terms of the cadence of earnings power throughout the rest of the year.
I think it's Joe I could I could start out I think.
Joseph Jordan: I think we'd expect to follow seasonality trends like we have in past years, and you obviously understand the seasonality of the business at this point, Q2, Q4 being the strong quarters. And as I mentioned in my comments, and Chris and Sharon both touched on as well, we'd expect to continue to experience growth and see the positive trends that we developed in 2023 expand in 2024. So that's how you could think about it directionally.
I think we would.
To follow seasonality trends like we have in past years.
Obviously I understand the seasonality of the business at this point Q2, Q4, being the strong quarters and as I mentioned in my comments and Chris and share in both touched on as well we would expect to continue to experience growth and see the positive trends that we developed in 2023 expand in 2024. So that's how you can think about a directionally and then as I.
Sharon Bitty: And then, as I mentioned, when we get to Q1 earnings in the spring and May, we would come out with more definitive guidelines around what that revenue and adjusted EBIT and probably the clinic count look like as well. Yeah, we're, we're very proud of the 2023 accomplishment. Many of those initiatives have phase two, or we have some new initiatives in flight for 2024 related to leveraging technology, streamlining our front end intake process, continuing to standardize roles and team-based care, and so on. And then there is revenue cycle management sophistication. So those are there. We have a portfolio of initiatives, initiatives that we are putting in place for 2024 that we will, I think, start seeing some of the traction when we get to Q3. Great, I appreciate that.
Mentioned, when we get to Q1 earnings in the spring in May we would we would come out with more definitive guidelines around what that revenue and adjusted EBITDA, probably the clinic count looks like as well.
Yes.
Very proud of the 2023 accomplishments many of those initiatives have a phase III or we have some new initiatives in flight.
For 2024 related to leveraging technology streamlining our front end didn't take process continually continuing to standardize roles routine based care.
And so and then the revenue cycle management sophistication. So those are there are we have a portfolio of initiatives initiatives tied to you that we are.
Putting in place for 2024.
We will I think start seeing some of the traction when we get to Q2.
Great appreciate that and then.
Sharon Bitty: And then, slightly different topic, just curious about your thoughts on the near-term leverage target and the actions you'll take to hit that target. Well, I think the leverage target we haven't put out there, I would say for us, the focal point has been driving back towards cash flow break even, and one of the things that I talked about in our last earnings call is that I didn't expect 2020. 4 to be the breakeven year, but I think it's it is the continued building block to getting towards cash flow breakeven in 2025. If you look back at 2023 and you strip out the noise of our refinancing, we were Cash Use of somewhere around $35-$36 million on $36 million of EBITDA. So we need to, obviously, dependent on interest rates and borrowings, which could move around, we need to continue to grow into our capital structure, which is what we'll look to do in 2024, and continue to build on the momentum that we had last year.
Different topic, just curious around your thoughts on the near term leverage target and the actions you will take to to hit that target.
Well I think our leverage target, we haven't put out there I would say for us the focal point has been driving back towards cash flow breakeven.
And one of the things that I talked about in our last earnings call as I didn't expect 2020.
Four to be the breakeven year, but I think it is.
Continued building block to getting towards cash flow breakeven in 2025, if you look back at <unk>.
2023, and you strip out the noise of our refinancing we were.
Cash use of somewhere around 3500, $36 million and 36 million of EBITDA. So.
Obviously dependent on interest rates and borrowings, which could move around we need to continue to grow into our capital structure, which is what we'll look to do in 2024.
And continue to build on the momentum that we had last year, but target leverage isn't as it really our focus just at this point, it's really driving more towards cash flow breakeven.
Sharon Bitty: But target leverage isn't really our focus just at this point; it's really driving more towards cash flow. Great, and then just one last question for me. Obviously, a lot of improvement this year versus last year, and the comps are definitely favorable for this year. As you think about the sustainable growth path moving forward, I guess, what actions do you need to take to bring back that sustainable growth, even on top of tougher comps like we would see in 2023?
Great and then just last question for me, obviously, a lot of improvement this year versus last year and the comps are definitely favorable for this year as you think about the sustainable growth path moving forward I guess, what actions do you need to take to bring back that sustainable growth even on top of tougher comps like we would see.
In 2023.
Sharon Bitty: I think growth will, you know, follow two paths. One is the traditional areas that we have sought out growth before. And that relates to referrals, increasing referrals, and increasing capacity and productivity within the clinic. I also think that we are looking at other less traditional ways to grow the business in parallel, which may relate to new strategic partners, getting further upstream in the referral process, and also looking at different types of reimbursement models. Great! Thank you so much.
I think the growth will.
Solid two paths one is the traditional areas that we have sought outgrowth before and that relates to.
Referrals increasing referrals.
Increasing capacity and productivity within the clinics.
I also think that we are looking at other less traditional ways.
To grow the business in parallel which may relate to new strategic partners getting further upstream in the referral process and also looking at different types of reimbursement models.
Okay.
Great. Thank you so much.
Operator: Thank you, Tash. Our next question comes from the line of Bill Sutherland with the Benchmark Company. Please go ahead.
Thank you.
Our next question comes from the line of Bill Sutherland with Benchmark Company. Please go ahead.
William Sutherland: Thank you. Hello everybody. Nice, nice work coming here. Where are you at this point with the office? kind of rationalization process.
Thank you.
Hello, everybody.
Nice nice work here.
Where are you at.
At this point with the office kind of rationalization process.
Sharon Bitty: Clinic. A clinic, Bill? Clinic, sorry.
Clinic of clinics, Phil clinic, sorry, yes.
Sharon Bitty: Okay. So we are actively looking at our clinics and what the performance is and how that performance relates to what's happening within those communities. And so we have a list of clinics that we watch on a regular basis. And as I talked about in my call, we will, you know, we will continue to prune clinics that don't make sense for the flu anymore. That said, in 2024, we are also looking at how we maximize our current fleet through consolidations, expansions, and upgrades, and we're, you know, we're similar where we have more demand than we have capacity. We look at the market and the community to determine if there's an action we can take that makes sense to allow us to improve not only access but financial performance.
Yes.
So we have.
We are actively on a quarterly basis looking at our clinics and.
What the performance is and how that performance relates to what's happening within those communities.
And so we have a list of clinics that we watch on a regular basis.
And.
As I talked about in my in my call. When we will we will continue to prune.
<unk> that don't make sense in this with anymore.
That said in 2024, we are also looking at how do we maximize our current fleet.
Through consolidations expansions and.
Upgrades and.
And we are similar.
Similar.
Look at where we have more demand than we have capacity, we look at the market in the community to determine if there is an action. We can take that makes sense to allow us to improve not only.
Access, but the financial performance of the clinic.
Sharon Bitty: And then, and so that's our main focus for this year. We will do a small number of de novos, and I would anticipate that we would be looking at more de novos in the future. So it sounds like maybe you just hold steady with the office count between, you know, ads and closures, and you're just looking to increase productivity again across the base. Yeah, I think I think though it's in the clinic that would fall into a quote unquote watch list.
And then into that.
Our main focus for this year, we will do a small number of de novo's and.
I would anticipate that we would be looking at more de novo in the future.
So it sounds like.
Maybe you just hold steady with office count between.
And closures and you're just looking to increase productivity again.
Across the base.
Yes, I think.
The clinics that would fall into a quote unquote watch list that list has been getting smaller as we closed some clinics last year, but then also the performance improved throughout the year referrals have been going up number of Plenish isn't going up both of those contribute to clinics coming off the watch list and so we are in process of and we're constantly in process of reevaluating.
Sharon Bitty: That list has been getting longer as we closed some clinics last year, but performance has been improving throughout the year. Referrals have been going up, and the number of clinicians has been going up. Both of those contribute to clinics coming off of the watch list. And so we are in the process of, and we're constantly in the process of, re-evaluating that watch list and determining, you know, if what, if any clinics might close in, in, uh, in 2024. So it's hard to say exactly what that number looks like right now, but I think as we move towards the first quarter, we'll probably have a pretty decent view that we could share.
<unk> that watch list and determining if.
What if any clinics might close in.
In 2024, so its hard to say exactly what that number looks like right now, but I think as we move towards the first quarter, we will probably have a pretty decent view that we could share yes.
Sharon Bitty: Yeah, and our goal is to continue to grow the footprint, but it's also important to make sure we're maximizing what we've already got. Sure, sure. Um, on the hiring and productivity front, insurance has improved.
It to continue to grow the footprint, but it also is important to make sure. We're maximizing what we've already built sure sure.
On the.
Hiring and productivity front.
Churn has improved do you expect to further improve it and where are you with contracted utilization versus where you'd like to be.
William Sutherland: Do you expect to further improve it? And where are you with contractor utilization versus where you'd like to be? So three parts to that question. I would say one. We are continuing to hire, and we have put a lot of energy into rebuilding our structure around talent acquisition and retention. So both of those are key factors that I think will continue to produce results for us in 2024. I'm going to let Chris answer the productivity question because he's very close to it. And then I would just say the other thing is that we're sitting on about seven percent of our total clinician headcount, including our contractors. We continue in certain geographies to be dependent upon contractors where we have more supply than we have to make. So, on the other way around, we have more demand than we have supply. We, you know, the team is very cognizant of that.
So three parts to that question.
I would say one we are continuing to hire and we.
We had.
Put a lot of.
Energy into rebuilding our structure around our talent acquisition.
And our retention. So both of those are key factors that I think will continue to produce for us in 2024.
M&A I'm going to let Chris answer the productivity question, because he's very close to it.
And then I would just say the other is we're sitting on about 7% of our total clinician head count to our contractors.
We continue in certain geographies to be dependent upon contractors, where we have more supply than we have done in the back the other way around where we have more demand than we have supply.
The team is very cognizant of that and we.
Sharon Bitty: And we, you know, I don't I don't I actually don't see 2024 being a year where we move fully back to a lower level of contractors, similar to what we had prior to Covid. I think we're going to have to continue to have a reliance on contractors for the year with the eye toward trying to find ways to beef up the FTEs and not so that we don't have to rely on those guys. And Chris, why don't you take the productivity question? Sure. Yeah, Bill, what I would say is that we do see room for continued productivity growth as we look across the country, and we see certain geographies performing higher. Some of that is due to legacy targets that were set at different levels by different geographic P&L owners. Some of that is due to referral demand within particular geographies. And some of it is due just to peer execution.
I actually don't see 2020 for being a year, where we knew fully back to a lower level of contractors.
Or to what we had prior to Covid I think it's going to go into.
We're going to have continue to have a reliance on contractors for the year, but we'll see.
Toward.
Trying to where we can.
Beef up the Ftes and so.
So not not have to rely on those contractors.
Why do you take the productivity question.
Sure Bill what I would say is that we do see room for continued productivity growth as we look at across the country and we serve we see certain geographies performing.
Some of that is due to <unk>.
Legacy.
Targets that were set at different levels.
By different geographic.
All owners.
That is due to referral demand within particular geography.
Some of it is due just pure execution. So those are all levers that we are going after this year, we've standardized our expectations.
Chris Cox: So those are all levers that we are going after this year. We've standardized our expectations. Across all of our geographies to kind of the higher levels of what we had previously had. We're managing outliers in a very robust way. And then, finally, I'd say, to my prepared comments, the continued process, innovation, and removal of administrative burdens should open up the ceiling to be even higher there. So you hit on three things, Bill, that are going to continue to be important in 2024. And like I said, we're kind of on chapter two. We made some improvements and had great progress in 23, and we've lined up what's next to continue to push on those pieces. Great. Thanks so much for all the color, guys.
Across all of our geographies to kind of the higher levels of what we had previously had.
We're managing outliers in a very robust way.
And then we do see some of the pockets, where we've historically had some referral needs growing with referrals, which is helping us to improve productivity and then finally I'd say.
My prepared comments the continued process innovation removal of administrative burden and should open up.
The ceiling to be even higher there.
Got you hit it on.
Three things build that are that are going to continue to be important 2024.
Like I said, we're kind of on chapter two we've made some improvements and had great progress in 'twenty three and we've lined up what next to continue to push on that in pieces.
Thanks, so much for all the color guys.
Okay.
Operator: There are no further questions at this time. I would now like to turn the call over to Sharon Vitti for closing remarks. First of all, apologies for the technical difficulties. I guess everyone could hear each other except for us, so apologies there.
Yes.
There are no further questions at this time.
I would now like to turn the call over to Sharon <unk> for closing remarks.
Okay.
First of all apologies for those technical difficulties I guess, everyone can hear each other except for us.
So apologies there.
Sharon Bitty: Thank you for joining us. Thank you for the questions and participation. And we look forward to sharing our progress at our next earnings call, which will be in early May of 2024. This concludes today's call. You may now disconnect.
Thank you for joining us thank you for the questions and participation.
And we look forward to sharing our progress at our next earnings call until the early may of 2024.
This concludes today's call you may now disconnect.
Okay.
Okay.
This concludes today's call.