Q1 2024 Acadia Healthcare Company Inc Earnings Call

Good day.

Operator: Good day, and welcome to Acadia Healthcare's first quarter 2024 earnings call. All participants will be in a listen-only mode, and should you need any assistance during the call, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then one on your telephone keypad.

Speaker Change: And welcome to Acadia Healthcare's first quarter of 2024 earnings call.

Speaker Change: All participants will be in a listen only mode and should you need any assistance during the call. Please signal a conference specialist by pressing the star key 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 to withdraw your question. Please press Star then two.

Speaker Change: On today's call. We ask that you. Please limit yourself to one question and one follow up during Q&A.

Speaker Change: Also please be aware that today's call is being recorded.

Operator: And to withdraw your question, please press star, then two. On today's call, we ask that you please limit yourself to one question and one follow-up during Q&A. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Patrick Feeley, Head of Investor Relations. Please go ahead.

Speaker Change: I would now like to turn the call over to Patrick <unk> head of Investor Relations. Please go ahead.

Patrick Feeley: Thank you and good morning. Yesterday, after the market closed, we issued a press release announcing our first quarter 2024 financial results. This press release can be found in the investor relations section of the Acadia healthcare.com website. Here with me today to discuss the results are Chris Hunter, chief executive officer, and Heather Dixon, chief financial officer. To the extent any non-GAAP financial measures are discussed on today's call, you will find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP in the press release that is posted on our website.

Patrick: Thank you and good morning yesterday after the market closed we issued a press release announcing our first quarter 2024 financial results. This press release can be found in the Investor Relations section of the Acadia healthcare Dotcom website here with me today to discuss the results are Chris Hunter, Chief Executive Officer, and Heather Dickson Chief Financial Officer.

Patrick: To the extent any non-GAAP financial measures discussed on today's call you will find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP in the press release that is posted on our website.

Patrick: 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.

Patrick: 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 the Companys first quarter news release and consequences. Consequently, actual operations and results may differ materially from the results discussed in the forward looking statements.

Patrick Feeley: 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 the company's first quarter news release, and consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. At this time, I'd like to turn the conference call over to Chris for his opening remarks. Thank you, Patrick. And good morning, everyone.

Patrick: At this time I'd like to turn the conference call over to Chris for opening remarks.

Christopher Howal Hunter: Thank you Patrick and good morning, everyone. Thank you for being with US for <unk> first quarter 2024 conference call before we get to the results I want to note. Some recent key additions to our leadership team. He just introduced this call, but I want to officially welcome Patrick Feeley to Acadia as our new senior Vice President of Investor Relations.

Christopher Howal Hunter: Thank you for being with us for Acadia's first quarter 2024 conference call. Before we get to the results, I want to note some recent key additions to our leadership. He just introduced this call, but I want to officially welcome Patrick Feeley to Acadia as our new Senior Vice President of Investor Relations. Patrick joins the company after leading investor relations for Teladoc Health, and prior to that, he spent several years in healthcare equity research covering the healthcare services sector.

Christopher Howal Hunter: We want to also thank Gretchen Hommrich for her eight years of dedicated service leading investor relations for Acadia. In early April, we announced Dr. Stephanie Eakin as Acadia's new chief medical officer. A triple board-certified physician, Dr. Eakin brings more than two decades of behavioral healthcare experience in a variety of settings.

Christopher Howal Hunter: <unk>.

Christopher Howal Hunter: Patrick joins the company after leading Investor relations for Teladoc health and prior to that he spent several years in health care equity research covering the health care services sector.

Christopher Howal Hunter: We want to also thank Gretchen homrich for her eight years of dedicated service, leading investor relations for Acadia.

Christopher Howal Hunter: She joins Acadia after spending 15 years at Rogers Behavioral Health, a not-for-profit nationwide independent provider of specialized mental health and addiction treatment. At Rogers, she most recently served as Chief Medical Officer, partnering with the system's executive leadership to lead patient care, quality, and facilities expansion. We look forward to working with Dr. Eakin and benefiting from her experience and expertise. We also want to thank Dr. Michael Genovese, who has served in this important role for Acadia since 2017.

Christopher Howal Hunter: In early April we announced Doctor, Stephanie <unk> as <unk>, New Chief Medical Officer.

Christopher Howal Hunter: Triple Board certified physician, Dr. Ian brings more than two decades of behavioral health care experience in a variety of settings.

Christopher Howal Hunter: She joins the Acadia after spending 15 years at Rogers behavioral health and not for profit nationwide independent provider of specialized mental health and addiction treatment.

Christopher Howal Hunter: And Roger She most recently served as Chief Medical Officer, partnering with the systems executive leadership to lead patient care quality and facilities expansion, we look forward to working with Doctor, Ian and benefiting from her experience and expertise.

Christopher Howal Hunter: We also want to thank Dr. Michael Genovese, who has served in this important role for Acadia. Since 2017, we're grateful for his dedicated service and are pleased that he will continue in a consulting role for the company and work with Doctor Ian as we make this transition.

Christopher Howal Hunter: We're grateful for his dedicated service and are pleased that he will continue in a consulting role for the company and work with Dr. Ekin as we make this transition. Now, turning to our first quarter results. Total revenue increased 9.1% over the prior year's first quarter to $768 million, driven by both rate improvement and patient-day growth. Our top line growth, combined with strong operating leverage, drove adjusted EBITDA growth of 14.9% and adjusted EPS growth of 12.0% as compared to the first quarter of 2023. We continue to be pleased with our progress on labor costs.

Christopher Howal Hunter: Now turning to our first quarter results.

Christopher Howal Hunter: Total revenue increased nine 1% over the prior year's first quarter to $768 million driven by both rate improvement and patient day growth.

Christopher Howal Hunter: Our topline growth combined with strong operating leverage drove adjusted EBITDA growth of 14, 9%.

Christopher Howal Hunter: And adjusted EPS growth of 12.0% as compare to the first quarter of 2023.

Christopher Howal Hunter: We continue to be pleased with our progress on labor costs improvements in the overall labor market combined with our continued efforts around hiring retention and quality helped drive meaningful operating leverage and margin contribution in the first quarter those trends continue to give us a high level.

Christopher Howal Hunter: Improvements in the overall labor market combined with our continued efforts around hiring, retention, and quality helped drive meaningful operating leverage and margin contribution in the first quarter. Those trends continue to give us a high level of confidence in our EBITDA outlook for the full year. On a same-store basis, revenue growth was strong, increasing 9.2% over the first quarter of last year. However, during the quarter, we experienced slightly weaker than anticipated same-store patient volume. This was primarily driven by greater than typical seasonality due to the timing of spring break and Easter, which occurred in March of this year compared to April of last year.

Christopher Howal Hunter: Full of confidence in our EBITDA outlook for the full year.

Christopher Howal Hunter: On a same store basis revenue growth was strong increasing nine 2% over the first quarter of last year.

Christopher Howal Hunter: During the quarter, we experienced slightly weaker than anticipated same store patient volumes.

Christopher Howal Hunter: This was primarily driven by greater than typical seasonality due to the timing of spring break and Easter which occurred in March of this year compared to April of last year.

Christopher Howal Hunter: While our first quarter outlook contemplated normal holiday seasonality around each of these events, the proximity of Easter to Spring Break resulted in an extended period of lower volumes through the back half of March. We also experienced weaker admissions towards the end of the quarter for our Military Specialty Program. Given the strong underlying demand for our services in the broader marketplace, we're already well on our way towards rebuilding the census at these facilities.

Christopher Howal Hunter: While our first quarter outlook contemplated normal holiday seasonality around each of these events the proximity of Easter and spring break resulted in an extended period of lower volumes through the back half of March.

Christopher Howal Hunter: We also experienced weaker admissions towards the end of the quarter.

Christopher Howal Hunter: For our military specialty programs given the strong underlying demand for our services in the broader marketplace, we're already well on our way towards rebuilding census at these facilities overall demand for our services remains strong and we believe we are well positioned within our markets for continued.

Christopher Howal Hunter: Overall demand for our services remains strong, and we believe we are well positioned within our markets for continued growth, especially given the visibility we have with new beds coming online and ramping up over the course of the calendar year. Now I'd like to provide an update on each of our five defined growth pathways for our First Pathway Facility expansion. We added 27 beds during the first quarter. We continue to expect to add more than 400 beds to existing facilities in 2024, a step up from our historical average of 300.

Christopher Howal Hunter: Growth, especially given the visibility we have with new beds coming online and ramping up over the course of the calendar year.

Christopher Howal Hunter: These additions will be more heavily weighted toward the second half of the year. For our second pathway, we remain focused on developing wholly owned de novo facilities in underserved markets for behavioral health care services. During the first quarter, we opened a 20-bed specialty facility, Sable Palms Recovery Center, located near Tampa, Florida, which will provide residential addiction treatment services.

Christopher Howal Hunter: Now I'd like to provide an update on each of our five defined growth pathways.

Christopher Howal Hunter: For our first pathway facility expansions, we added 27 beds during the first quarter we.

Christopher Howal Hunter: We continue to expect to add more than 400 beds to existing facilities in 2020 for a step up from our historical average of 300.

Christopher Howal Hunter: These additions will be more heavily weighted towards the second half of the year.

Christopher Howal 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 first quarter, we opened a 20 bed specialty facility Sabal Palm as recovery Center, located near Tampa, Florida, which will provide residential addiction treatment services and.

Christopher Howal Hunter: Additionally, planning is already underway for an expansion to this facility.

Christopher Howal Hunter: Additionally, planning is already underway for an expansion to this facility. Following the end of the first quarter, Acadia opened a 100-bed acute care hospital, Agave Ridge Behavioral Hospital, in Mesa, Arizona.

Christopher Howal Hunter: Following the end of the first quarter Acadia opened a 100 bed acute care hospital agave rich behavioral hospital in Mesa, Arizona.

Christopher Howal Hunter: We continue to plan to open up to 14 additional Comprehensive Treatment Centers, or CTCs, in 2024. As a reminder, our CTC service line offers comprehensive care for patients who are affected by opioid use disorder, or OUD. For our third growth pathway, we are working to expand our reach through our joint venture. We're extremely proud to partner with premier healthcare systems across the country with a shared mission to expand behavioral healthcare in more communities.

Christopher Howal Hunter: We continue to plan to open up to 14 additional comprehensive treatment centers, where ctc's in 2024 as a reminder, our CTC service line offers comprehensive care for patients who are affected by opioid use disorder or <unk>.

Christopher Howal Hunter: For our third growth pathway, we are working to expand our reach through our joint ventures, we're extremely proud to partner with Premier healthcare systems across the country with a shared mission to expand behavioral health care and more communities.

Christopher Howal Hunter: During the first quarter, Acadia held groundbreaking ceremonies for a 144-bed behavioral health hospital in Epoca, Florida, in partnership with Orlando Health, as well as another 144-bed behavioral health hospital in Malden, Massachusetts, in partnership with Tufts Medicine. These facilities will expand much-needed access to life-saving behavioral health services in their respective communities. Today, Acadia Health System 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.

Christopher Howal Hunter: During the first quarter, we commenced construction on two new hospitals with previously announced partners Acadia held groundbreaking ceremonies for a 144 bed behavioral health hospital in a poker, Florida and partnership with Orlando Health as well as another 144.

Christopher Howal Hunter: Bed behavioral health hospital in Malden, Massachusetts, and partnership with tough medicine.

Christopher Howal Hunter: These facilities will expand much needed access to life saving behavioral health services in their respective communities.

Christopher Howal Hunter: Today, Acadia has 21 joint venture partnerships for 'twenty, two hospitals with 11 hospitals already in operation and 11 Haas additional hospitals expected to open over the next few years joint ventures will continue to play an important role in <unk> future.

Christopher Howal Hunter: Joint ventures will continue to play an important role in Acadia's future growth, and we are 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. During the quarter, we closed on the acquisition of Turning Point Centers, a 76-bed specialty provider of substance abuse disorder and primary mental health care treatment services in Utah.

Christopher Howal Hunter: Growth and we are excited about the opportunities to work with other leading providers and attractive geographies.

Christopher Howal 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: During the quarter, we closed on the acquisition of turning point centers 76 bed specialty provider of substance abuse disorder, and primary mental health care treatment services in Utah.

Christopher Howal Hunter: At the end of the first quarter, we completed the acquisition of three CTCs in North Carolina, serving patients with OUD in Raleigh, Greenville, and Hillsborough and their respective surrounding communities. These acquisitions build upon our existing and strong clinical foundation within the state of North Carolina. North Carolina is a focus for Acadia to expand capacity and add additional sites of care given the state's immense need and progressive approach to behavioral health care treatment programs.

Christopher Howal Hunter: At the end of the first quarter, we completed the acquisition of <unk> in North Carolina, serving patients with <unk>, and Raleigh, Greenville, and Hillsboro and their respective surrounding communities.

Christopher Howal Hunter: These acquisitions build upon our existing and strong clinical foundation within the state of North Carolina.

Christopher Howal Hunter: North Carolina is a focus for Acadia to expand capacity and add additional sites of care given the state's immense need and progressive approach to behavioral health care treatment programs.

Christopher Howal Hunter: With the addition of these three CTCs, Acadia now operates 10 CTC locations in North Carolina and 160 locations in 32 states across the country. As the opioid epidemic continues to intensify, we will continue to expand this important area of our business as we see record demand for our CTC services. It is estimated that 9 million Americans are suffering from OUD, and only about 10% of this group is in treatment for medication-assisted therapy, which is considered the gold standard for treatment. As we have previously discussed, the increasing prevalence of fentanyl mixed with other potent drugs has escalated the complexity and severity of OUD.

Christopher Howal Hunter: With the addition of these three Ctc's Acadia now operates 10 CTC locations in North Carolina, and 160 locations in 32 states across the country.

Christopher Howal Hunter: As the opioid epidemic continues to intensify we will continue to expand this important area of our business as we see record demand for our <unk> services.

Christopher Howal Hunter: <unk> estimated that 9 million Americans are suffering from <unk> and only about 10% of this group is in treatment for medication assisted therapy, which is considered the gold standard for treatment.

Christopher Howal Hunter: As we've previously discussed the increasing prevalence of federal mixed with other potent drugs has escalated the complexity and severity of OLED. We remain focused on meeting the critical demand for treatment by improving access to treatment driving favorable clinical outcomes and delivering an <unk>.

Christopher Howal Hunter: We remain focused on meeting the critical demand for treatment by improving access to treatment, driving favorable clinical outcomes, and delivering an exceptional patient experience. For our fifth growth pathway, extending the continuum of care remains important to our clinical strategy. One of the key focus areas of this pathway is expanding our partial hospitalization programs, or PHPs, and intensive outpatient programs, IOPs, that can provide four to six hours of care per day. These programs not only improve clinical outcomes but also enhance the overall patient experience. We added 15 outpatient programs during the first quarter of 2024, and we'll continue to focus on this important clinical service.

Christopher Howal Hunter: Exceptional patient experience.

Christopher Howal Hunter: For our fifth growth pathway, extending the continuum of care remains important to our clinical strategy.

Christopher Howal Hunter: One of the key focus areas of this pathway is expanding our partial hospitalization programs or php's, an intensive outpatient programs iop's that can provide four to six hours of care per day. These.

Christopher Howal Hunter: These programs not only improve clinical outcomes, but also enhance the overall patient experience. We added 15 outpatient programs during the first quarter of 2024, and we will continue to focus on this important clinical service.

Christopher Howal Hunter: As we continue to extend our market reach, patient safety and quality patient care remain 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. We continue to make investments in our quality programs that drive greater efficiency, including electronic medical records, patient monitoring technology, and employee safety technology. We also recognize the importance of having quality measures and the right technology in place to make sure we're providing data that aligns with what our payers want to measure.

Christopher Howal Hunter: As we continue to extend our market reach patient safety and quality.

Christopher Howal Hunter: Quality patient care remain 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.

Christopher Howal Hunter: We continue to make investments in our quality programs that drive greater efficiency, including electronic medical records patient monitoring technology and employee safety technology.

Christopher Howal Hunter: We also recognize the importance of having quality measures and the right technology in place to make sure we're providing data that aligns with what our payers want to measure we expect to compete on the strength of our clinical outcomes and the ability to measure and demonstrate these outcomes is important for our collaborations with payors.

Christopher Howal Hunter: We expect to compete on the strength of our clinical outcomes, and the ability to measure and demonstrate these outcomes is important for our collaborations with payers. We're proud of the important work that we're doing. The demand for our behavioral health services across our nation has never been greater. Every demographic is affected by the lack of affordable access to behavioral health services, especially for the poor and elderly population.

Christopher Howal Hunter: We're proud of the important work that we're doing the demand for our behavioral health services across our nation has never been greater.

Christopher Howal Hunter: Every demographic is affected by the lack of affordable access to behavioral health services, especially for the poor and elderly populations.

Heather Dixon: While 1 in 5 adults have a mental illness, less than half of those receive treatment. A recent report from the Office of the Inspector General, or OIG, found that about one-third of behavioral health providers in selected counties serve patients in the Medicare, Medicare Advantage, or Medicaid programs. The shortage of providers also explains the lower use of the behavioral health system, with only 8% of Medicaid enrollees and less than 4% of Medicare and Medicare Advantage enrollees receiving behavioral health services.

Christopher Howal Hunter: While one in five adults have a mental illness less than half of those received treatments. A recent report from the office of the Inspector General or <unk> found that about one third of behavioral health providers and selected counties serve patients in the Medicare Medicare advantage or Medicaid programs the shortage.

Heather Dixon: A providers also explains the lower use of the behavioral health system with only 8% of Medicaid enrollees in less than 4% of Medicare and Medicare advantage enrollees, receiving behavioral health services.

Heather Dixon: Acadia is dedicated to serving the needs of Medicare and Medicaid patients, as well as all other patients who come to us for care. For example, Acadia has 10 facilities that serve Medicare and Medicaid beneficiaries in the top 20 underserved counties cited by OIG in the study just referenced. We believe there are significant opportunities ahead for Acadia to extend its market reach to serve even more patients in 2024. Our strategic priorities will focus on accelerating facility growth.

Heather Dixon: Acadia is dedicated to serving the needs of Medicare and Medicaid patients as well as all other patients who come to US for care. For example, Acadia has 10 facilities that serve Medicare and Medicaid beneficiaries in the top 20 underserved counties cited by <unk> in the study just rough.

Heather Dixon: Ernst.

Heather Dixon: We believe there are 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.

Heather Dixon: Expanding services across the care continuum, strengthening our core capabilities, and strategically leveraging technology to enhance patient care and improve clinical outcomes, all with a focus on delivering the highest quality patient care. We're well positioned to meet our objectives with our impressive scale and proven operating model across our network of 258 facilities, the financial strength to support our continued growth, and over 23,500 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. Thanks, Chris. And good morning, everyone.

Heather Dixon: Spanning services across the care continuum, strengthening our core capabilities and strategically leveraging technology to enhance patient care and improved clinical outcomes, all with a focus on delivering the highest quality patient care.

Heather Dixon: We're well positioned to meet our objectives with our impressive scale and proven operating model across our network of 258 facilities.

Heather Dixon: This financial strength to support our continued growth and over 23500 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.

Heather Dixon: At this time I will now turn the call over to Heather to discuss our financial results for the quarter.

Heather Dixon: Our first quarter financial performance reflects continued growth across our business and a solid start to the year. We reported $768.1 million in revenue for the quarter, representing an increase of 9.1% over the first quarter of last year. As Chris discussed, we experienced certain headwinds in the quarter that affected our same-store revenue and patient-day growth by approximately 150 basis points. Despite this, we drove some same facility revenue growth of 9.2% over the first quarter of 2023, including a 6.9% increase in revenue per patient day and a 2.2% increase in patient days.

Heather Dixon: Thanks, Chris and good morning, everyone. Our first quarter financial performance reflects continued growth across our business and a solid start to the year.

Heather Dixon: We reported $768 $1 million in revenue for the quarter, representing an increase of nine 1% over the first quarter of last year.

Heather Dixon: As Chris discussed we experienced certain headwinds in the quarter that affected our same store revenue and patient day growth by approximately 150 basis points.

Heather Dixon: By that we drove same facility revenue growth of nine 2% over the first quarter of 2023, including a six 9% increase in revenue per patient day, and a two 2% increase in patient days.

Heather Dixon: Adjusted EBITDA for the first quarter of 2024 increased 14.9% over the prior year to $173.9 million. Adjusted EBITDA margins expanded by over 100 basis points over the prior year's first quarter to 22.6%, a reflection of strong cost control efforts, particularly on the labor line. Adjusted income attributable to Acadia shareholders per diluted share was $0.84, up 12% from the prior year.

Heather Dixon: Adjusted EBITDA for the first quarter of 2024 increased 14, 9% over the prior year to $173 $9 million.

Heather Dixon: Adjusted EBITDA margins expanded by over 100 basis points over the prior year's first quarter to 22, 6% a reflection of strong cost control effort, particularly on the labor line.

Heather Dixon: Adjusted income attributable to Acadia shareholders per diluted share was <unk> 84 up.

Heather Dixon: At 12% percent from the prior year.

Heather Dixon: Consistent with previous periods, adjustments to income for the first quarter of 2024 include transaction, legal, and other costs and related income tax effects of all items. We continue to focus on maintaining a strong financial position, providing the flexibility to deploy capital and make strategic investments in our business that offer the greatest return. As of March 31, 2024, we had $77.3 million in cash and cash equivalents and $371.5 million available under our $600 million revolving credit facility with a net leverage ratio of approximately 2.5 times.

Heather Dixon: Consistent with previous periods adjustments to income for the first quarter of 2024 include transaction legal and other costs and related income tax effects of all items.

Heather Dixon: We continue to focus on maintaining a strong financial position, providing the flexibility to deploy capital and make strategic investments in our business that offer the greatest return as.

Heather Dixon: As of March 31, 2024, we had $77 $3 million in cash and cash equivalents and $371 $5 million available under our $600 million revolving credit facility with a net leverage ratio of approximately two five times.

Heather Dixon: Moving on to our outlook for 2024. As noted in our press release, we have affirmed our previously announced 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 Additions, excluding acquisitions of approximately 1,200 beds.

Heather Dixon: Moving onto our outlook for 2024 as noted in our press release, we have affirmed our previously announced 2024 guidance which includes Rev.

Heather Dixon: Revenue in the range of $3, one 8% to $3 billion to $5 billion.

Heather Dixon: Adjusted EBITDA in the range of $730 to $770 million.

Heather Dixon: Adjusted earnings per diluted share in the range of $3 40 to $3 70.

Heather Dixon: And total bed additions, excluding acquisitions of approximately 200 beds.

Operator: 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 6 cents per diluted share was received in the first quarter of 2024, in line with our prior expectations. 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.

Heather Dixon: Please note that our guidance includes onetime payment from a state of approximately $10 million or <unk> <unk> per diluted share for the year of which approximately $7 million or <unk> <unk> per diluted share was received in the first quarter of 2024 in line with our prior expectations.

Operator: Also as a reminder, the company's guidance does not include the impact of any future acquisitions divestitures translate transaction legal and other costs are nonrecurring legal settlements expense.

Operator: With that, operator, we're ready to open the call. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys.

Operator: With that operator, we're ready to open the call for questions.

Operator: We will now begin the question and answer session.

Operator: To ask a question you May press Star then one on your telephone keypad.

Operator: If youre using a speakerphone please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two.

Operator: Again, we ask that you please limit yourself to one question and one follow up during Q&A.

Operator: And to withdraw a question, please press star, then two. Again, we ask that you please limit yourself to one question and one follow-up during Q&A. At this time, we will pause just momentarily to assemble our roster. We will now take our first question, which will come from Scott Fidel with Stevens. Please go ahead. Hi, thanks. Good morning. First question, just in the context of some of the volume headwinds that you did cite in the first quarter, and also I talked about intra-quarter, just interested in sort of how you're thinking about meeting the full year revenue guidance. Is there a particular sort of area of the range that you're comfortable with in terms of the low end, the mid range, and the higher end?

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Operator: We will now take our first question will come from Scott Fidel with Stephens. Please go ahead.

Operator: Hi, Thanks, good morning.

Operator: First question just just in the context of some of the volume headwinds that you did cite in the first quarter and also I talked about intra quarter, just interested in sort of how youre thinking about the achieving of the full year revenue guidance is there a particular area of the range that you're comfortable with in terms.

Operator: The low and the mid range.

Operator: Higher end.

Operator: And then also if you can talk about how you are expecting.

Operator: Volumes in patient days.

Operator: <unk> sort of ramp now from the first quarter over the balance of the year.

Scott J. Fidel: And also, if you can talk about how you're expecting volumes and patient days to sort of ramp up now from the first quarter over the balance of the year. Great. Scott, thanks for the question. This is Chris.

Operator: Great Scott. Thanks for the question. This is Chris I'll start and maybe let Heather pick up on some of your questions on guidance, but maybe just a little bit of backdrop on volume as we had previously discussed.

Christopher Howal Hunter: I'll start and maybe let Heather pick up on some of your questions on guidance, but maybe just a little bit of a background on volume. You know, as we had previously discussed, January got off to a little bit of a slower than expected start coming out of the holiday season, but then we saw a really nice improvement in February and certainly into March. And we felt really good about where we stood at that point.

Scott J. Fidel: January got off to a little bit slower.

Christopher Howal Hunter: Than expected start coming out of the holiday season, and then we saw a really nice improvement in February and certainly into March and we felt really good about where we stood at that point.

Christopher Howal Hunter: You know, as we approach the back half of March, we began to see some softness in volumes. And it's, you know, of course, normal for us to experience lower volumes during holidays and school breaks as, you know, our patients spend more time with their families. However, what we found was an extended period of slower admissions in between spring break and Easter, which was earlier than usual, that being Easter at the end of March this year.

Christopher Howal Hunter: As we approach the back half of March we.

Christopher Howal Hunter: We began to see some softness in volumes.

Christopher Howal Hunter: Of course normal for us to experience lower volumes during holidays in school breaks as our patient spend more time with their families.

Christopher Howal Hunter: What we found was an extended period of slower admissions.

Christopher Howal Hunter: In between spring break and Easter.

Christopher Howal Hunter: Which was earlier than usual that being Easter at the end of March this year, so while we baked normal holiday seasonality into our outlook, what we experienced with significantly stronger seasonality in March really due to this dynamic we.

Christopher Howal Hunter: So while we baked normal holiday seasonality into our outlook, what we experienced was significantly stronger seasonality in March, really due to this dynamic. We also had two markets where government facilities opened access to new behavioral beds, and this resulted in a temporary slowdown in admissions to several of our military specialty programs in those markets toward the end of the quarter as those new beds were filled. We're already well on our way back to building back census at those facilities, and we expect to be back on track by the end of the second quarter. The issues that weighed on volumes in March, while they were certainly frustrating, were distinct issues that we just don't expect to have a lasting impact.

Christopher Howal Hunter: We also had two markets where government facilities opened access to new behavioral beds and this resulted in a temporary slowdown in admissions to several of our military specialty programs in those markets towards the end of the quarter is those new beds were filled.

Christopher Howal Hunter: We're already well on our way back to building back census at those facilities and we expect to be back on track by the end of the second quarter.

Christopher Howal Hunter: The issues that weighed on volumes in March while we were certainly frustrating.

Christopher Howal Hunter: Our distinct issues that we just don't expect to have a lasting impact.

Christopher Howal Hunter: We've seen consistent improvement in volumes over the course of April, and we expect to be back on track by the end of the second quarter. We continue to expect mid-single-digit same-store patient-day growth in the second half of the year. And what gives us confidence for the back half of the year is that we really will start to see a benefit from the ramp in a number of the bed additions and the JVs that we put in place last year, as well as the expansion plans for this year. Is there anything you want to add from there?

Christopher Howal Hunter: We've seen consistent improvement in volumes over the course of April we expect to be back on track by the end of the second quarter. We continue to expect mid single digit same store patient day growth in the second half of the year and what gives us confidence in the back half of the year is that we really start to see a benefit from the ramp in a number of the bed additions.

Christopher Howal Hunter: And the JV that we put in place last year as well as the expansion plans for this year.

Speaker Change: Is there anything you want to add from there, yes, yes, sure maybe I'll just pick up on the questions around sort of what we expect to see in following quarters.

Heather Dixon: Yeah, yeah, sure. Maybe I'll just pick up on the questions around sort of what we expect to see in the following quarter. I mean, as you know, we don't provide quarterly guidance except for the first quarter amounts that we issue, but we did experience these issues towards the end of March, and that resulted in a little bit of a slower start to the month of April, so we'll still have a similar drag on the second quarter in the same store growth numbers.

Heather Dixon: As you know, we don't provide quarterly guidance, except for the first quarter.

Heather Dixon: That we issue, but we did experience these issues.

Heather Dixon: Towards the end of March and that resulted in a little bit of a slower start to the month of April. So we will still have a similar drag to second quarter and the same store growth numbers.

Heather Dixon: Just recall that our specialty facilities have a longer length of stay; it's usually about 28 days or longer, and so you get a little bit of a lag effect whenever you have a delay in admissions for patient days. And then if I think about the full year, as we discussed in February, our guidance already contemplated that we would have a little bit slower start to the year at our, sort of, slightly below our mid-single-digit target, and obviously, the first quarter finished a little bit below that expectation, and then the knock-on effect that I just mentioned will have a little bit of a slower start to the second quarter than we previously would have

Heather Dixon: Recall that our specialty facilities have a longer length of stay it's usually about 28 days or longer and so you get a little bit of a lag effect whenever you have a delay in admissions per patient days.

Heather Dixon: And then if I think about the full year as we discussed in February our guidance already contemplated that we would have a little bit slower start to the year at or slightly below our mid single digit target and obviously first quarter finished a little bit below that expectation and then the knock on effect that I. Just mentioned, we will have a little bit of a slower start to second quarter.

Heather Dixon: And we previously would have assumed.

Heather Dixon: But, as Chris said, we continue to have a lot of confidence in the back half of the year as we benefit from that ramp-up of veterinary expansions and JVs that we opened over the last several quarters. We have a large number of vets that will come online throughout the second half, and so that gives us a lot of confidence. So, while the first quarter volume was a little weaker than our expectations, when I look at the prior year comp and the ramp that we're seeing in beds that we've added over the last several quarters and then the new beds, of course, I think we'll be comfortably in the mid-single-digit range in the second half and within striking distance of that for the full year. Appreciate all that color, and, as a related follow-up, just appreciate all that color on the ball side.

Speaker Change: But as Chris said, we continue to have a lot of confidence in the back half of the year as we benefit from that ramp up of that expansion in JV that we opened over the last several quarters.

Heather Dixon: A large number of events that will come online throughout the second half and so that gives us a lot of confidence.

Heather Dixon: So while one quarter first quarter volume was a little weaker than our expectations when I look at the prior year comp.

Heather Dixon: A ramp that we're seeing in beds that we've added over the last several quarters and then the new beds of course, I think we'll be comfortably in the mid single digit range in the second half and within striking distance of that for the full year.

Heather Dixon: I appreciate all that color and just as a related follow up just.

Speaker Change: I appreciate all that.

Scott J. Fidel: Just wondering, on the rate side, on the pricing side, how things are developing so far in line with your expectations. It looked like you did have a solid pricing print in the first quarter. You did have some benefits from that one time when you called out. So, just interested to hear your updated views on pricing for the year relative to how you were thinking about the initial guidance. And that's it for me.

Heather Dixon: Color on the ball side, just wondering on the rate side on the pricing side, how things are developing so far in line with your expectations look like you did have a solid pricing print in the first quarter. You did have some benefit from that one time or you had called out. So just interested in sort of your updated views on on pricing for the year relative to how you were thinking about the <unk>.

Scott J. Fidel: Guidance and Thats It for me thanks.

Heather Dixon: Yeah, sure. Yeah, you're right. We did, as we discussed in February with our guidance, we did benefit from the $7 million in one-time state supplemental payments. And that was probably around 100 basis points on our same-store revenue per patient day. Remember, we also have TTC growth that goes into that calculation, and that contributed probably around the same amount, about 100 basis points, to the year-over-year patient day growth. And then when I think about those same-store comps, the first quarter does have an easier comp than the rest of the year.

Speaker Change: Yes, sure, yes, Youre right we did.

Heather Dixon: Just in February with our guidance, we did benefit from the $7 million of one time state supplemental payment then that was probably around 100 basis points on our same store revenue per patient day.

Heather Dixon: We also have CTC growth, but that goes into that calculation and that contributed probably around the same amount about 100 basis points to the year over year patient day growth and then when I think about those same store comp. The first quarter does have an easier comp than the rest of the year or.

Heather Dixon: So we're not assuming that the year over year revenue per patient day growth continues at the same pace as first quarter. After the rest of the year.

Heather Dixon: Taking you back to our guidance that we put out in February for the full year, we talked about revenue per patient day in the mid single digit range and that Hasnt changed.

Heather Dixon: Okay.

Heather Dixon: So we're not assuming that the year-over-year revenue per patient day growth continues at the same pace as the first quarter for the rest of the year. And, you know, just taking you back to our guidance that we put out in February for the full year, we talked about revenue per patient day in the mid-single-digit range, and that hasn't changed. And our next question will come from Rick Mayo with Lering Partners. Please go ahead.

Heather Dixon: And our next question will come from Whit Mayo with Leerink partners. Please go ahead.

Benjamin Whitman Mayo: Um, hey, thanks. Maybe comment a little bit on closures or divestitures in the quarter; it looks like the prior year. Transcribed by https://otter.ai Yes, if you think about what affected the quarter, if you recall we had four facilities that we closed last year throughout the year, and those would have certainly been in Q1 last year but not in Q1 of this year. Three of those were in the specialty business, and then one was in the acute side, and then we had one other closure in Q1 of this year in the acute side. Other question I have is we're going to get the physician fee schedule out, I guess, language or discussion around it. I'm curious if you have any.

Benjamin Whitman Mayo: Hey, thanks.

Benjamin Whitman Mayo: Can you maybe comment a little bit on the closures or divestitures in the quarter. It looks like the prior year comp was was a little bit lower than we expected.

Benjamin Whitman Mayo: Yes, if you think about what affected the quarter. If you recall, we had four facilities that we closed last year throughout the year and those would have certainly been in Q1 last year, but not in Q1 of this year three of those are in our specialty business and then one was in the acute side and then we had.

Benjamin Whitman Mayo: One other closure in Q1 this year on the acute side.

Benjamin Whitman Mayo: Okay.

Benjamin Whitman Mayo: Other question I have is.

Benjamin Whitman Mayo: We're going to get the physician fee schedule out I guess in the next month or so and there is probably going to be some.

Benjamin Whitman Mayo: Language or discussion around.

Benjamin Whitman Mayo: The CTC Otp business just curious if you have.

Benjamin Whitman Mayo: Insight perspective thoughts around like what we should expect, Policy Regulation Add-On, must be helped. With this, of course, are you referring to the CTC business specifically? Yeah, yeah, just like, you know, in reference to, like, are they going to look at rebasing the bundle?

Benjamin Whitman Mayo: Any insight perspective thoughts around like what we should expect when you put your.

Benjamin Whitman Mayo: Policy regulation hat on any any comments would be helpful. Thanks.

Speaker Change: This is correct, so you're referring to the CTC business, specifically, yes, yes just.

Benjamin Whitman Mayo: In reference.

Christopher Howal Hunter: Just just any commentary or thoughts you have from your policy people around like what we may see or expect? Yeah, I would say overall, on the CTC front, we're just not expecting anything material. You know, SAMHSA and HHS have made some favorable rule changes regarding the regulation of CTC clinics in their recent rule update. And I think there were really three main areas of positive change on that. One was just continuing take-home flexibilities.

Benjamin Whitman Mayo: Are they going to look at re basing the bundle just just any any commentary or thoughts you have from your policy people around like what what we may see or expect.

Christopher Howal Hunter: Yes, I would say overall we're.

Christopher Howal Hunter: Just on the CTC front, we're just not expecting anything material.

Christopher Howal Hunter: Sampson HHS have made some favorable rule changes just regarding the regulation of CTC clinics in there.

Christopher Howal Hunter: <unk> rule update and then I think there were really three main areas of positive change on that one was just continuing take home flexibilities.

Christopher Howal Hunter: There was also one around the ability to use telehealth more broadly. And the third was just enablement of small, small format medication units that can allow the full range of OTP services. But other than that, you know, would be just speculative. And our next question will come from Brian Tanquilut with Jefferies. Please go ahead.

Christopher Howal Hunter: There was also one around the ability to use telehealth more broadly and the third was just enablement of small small format med medication units that can allow the full range of OTT services, but other than that.

Brian Gil Tanquilut: Would be just speculative.

Brian Gil Tanquilut: And our next question will come from Brian <unk> with Jefferies. Please go ahead.

Brian Gil Tanquilut: Hey, good morning, guys. Maybe Chris, first question for me, as we think about legislative efforts to make changes to methadone treatment access, I'd be just curious to hear your thoughts again on how, if implemented, these changes would affect your business. And then maybe tying that to comments from the DEA recently on other drugs used to treat opioid addiction and how that's tracking in terms of expanding access for folks who are addicted to opioids. Yeah, no. Thank you for the question.

Brian Gil Tanquilut: Hey, good morning, guys let.

Brian Gil Tanquilut: Let me Chris first question for me just as we think about.

Speaker Change: Got it.

Brian Gil Tanquilut: Sorry legislative efforts to make changes to methadone treatment access maybe just curious to hear your thoughts again on.

Speaker Change: Yes implemented these changes would affect your business and then maybe tying that to.

Brian Gil Tanquilut: Maybe comments from the DEA recently.

Brian Gil Tanquilut: Other drugs used to treat opioid addiction.

Brian Gil Tanquilut: Tracking in terms of.

Brian Gil Tanquilut: Expanding access for folks who are addicted to opioids.

Christopher Howal Hunter: And I would say that, you know, overall, we continue to be very strong proponents of increasing access to care for the poor. And there obviously are a number of policy proposals out there. We have, I think, done an excellent job in our CTC business of focusing on patient quality. CARF is the regulatory body that measures the quality of care provided by the poor.

Speaker Change: Yes, no. Thank you for the question I would say.

Christopher Howal Hunter: Overall, we continue to be very strong proponents of increasing access to <unk> care.

Christopher Howal Hunter: And there obviously are a number.

Christopher Howal Hunter: Policy proposals out there.

Christopher Howal Hunter: We have I think done an excellent job in our CTC business of.

Christopher Howal Hunter: Focusing on patient quality curve is the.

Christopher Howal Hunter: Regulatory body that measures.

Christopher Howal Hunter: And our quality scores have continued to be in the 98 plus percent range. And so we continue to believe that our focus on quality, our focus on patient outcomes, where we find that, you know, 90% of our 80% plus percent of our patients are illicit opioid free within six months of treatment. And then we've operationally put in all sorts of patient, You know, very positive changes over the course of the last six months, including significantly reducing wait times, and our patient satisfaction is really up as well.

Christopher Howal Hunter: The <unk> players.

Christopher Howal Hunter: Our quality scores have continued to be in the 98 plus percent range.

Christopher Howal Hunter: And so we continue to believe that our focus on quality or our focus on patient outcomes were.

Christopher Howal Hunter: We find that 90% of our 80 plus percent of our patients or illicit opioid free within six months of treatment.

Christopher Howal Hunter: And then we've operationally put in all sorts of patient.

Christopher Howal Hunter: Very.

Christopher Howal Hunter: Positive changes over the course of the last six months, including significantly reducing wait times and our patient satisfaction is really up as well so with all of those things together, we just continue to feel like.

Christopher Howal Hunter: So with all those things together, we just continue to feel like, you know, we want to continue to expand access. We're going to continue to make significant investments in this business, and we'll continue to monitor the legislation and continue to work with lawmakers to expand access and move that along.

Christopher Howal Hunter: We want to continue to expand access.

Christopher Howal Hunter: <unk> continued to make significant investments in this business and we will continue to monitor the legislation and continue to work with lawmakers and expanding access and moving moving that along.

Christopher Howal Hunter: And then maybe just any update you can share with us on litigation in New Mexico. Um, you know, the only thing that I would say, uh, you know, they're, if you're referring specifically to the six Desert Hills case. It's just very difficult for us to comment on pending litigation, but you should know that there's much still to be tested in court, and we intend to vigorously defend the company in that case.

Speaker Change: Got it and then maybe just any update you can share with us on litigation in New Mexico.

Christopher Howal Hunter: The only thing that I would say.

Christopher Howal Hunter: If you're referring specifically to the six desert Hills case.

Christopher Howal Hunter: It's just very difficult for us to comment on pending litigation, but you should know that there is much still to be tested in court and we intend to vigorously defend the company on that case. We were served with an amended complaint on March 25th and we filed initial pleadings on April 24th.

Christopher Howal Hunter: We were served with an amended complaint on March 25th, and we filed initial pleadings on April 24th, and I would just say our legal team is very diligently working on developing the case. And our next question will come from Andrew Mok with Barclays. Please go ahead. Thanks. Good morning.

Andrew Mok: And I would just say our legal team is very diligently working on developing the case.

Christopher Howal Hunter: And our next question will come from Andrew Mok with Barclays. Please go ahead.

Andrew Mok: First, I just wanted to follow up on the volume trends in the quarter. So it sounds like the quarter was bookended by seasonal factors in January and March and further impacted by the new military facility openings. Were all three of those items expected in the quarter and just had a greater than expected impact? Or were any of those items, you know, truly a surprise, maybe the military facility openings you didn't have visibility into?

Andrew Mok: Thanks, Good morning, first I just wanted to follow up on the volume trends in the quarter. So it sounds like the quarter was bookended by seasonal factors in January and March and further impacted by the new military facility openings openings, where all three of those items expected in the quarter and just had a greater than expected impact or were any of those.

Andrew Mok: Items truly a surprise maybe the.

Andrew Mok: Military.

Christopher Howal Hunter: Can you just clarify that first? Yeah, sure. I would say those were not expected to the extent that we saw them. The first thing I would tell you is that the seasonality, the difference between spring break and the interval between spring break and Easter, certainly we would have anticipated normal seasonality around each of those events. But the difference was the interval between the two. And so, of course, we anticipated the events, but we didn't anticipate that it would be so significant. difference in the interval between the two.

Andrew Mok: Facility openings, you didn't have visibility into it can you just clarify that first.

Speaker Change: Yes, sure I would say.

Christopher Howal Hunter: Were not expected to the extent that we saw then.

Christopher Howal Hunter: First thing I would tell you is that the seasonality the difference between spring break or the interval between spring break and Easter and certainly we would have anticipated normal seasonality around each of those events.

Christopher Howal Hunter: The difference was the interval between the two and so of course, we anticipate the events that we didn't anticipate that significant difference in the interval between the two.

Christopher Howal Hunter: In terms of the few facilities with the military business, those beds opened earlier than the other facilities opened earlier in the quarter, but we didn't see any impact of that for, you know, several weeks. And so that did sort of pop up as a surprise to us in the second half of March. And that's just really thinking about Those facilities were more heavily weighted to the specialty business, and keep in mind that those have a longer length of stay, and so it takes a little bit longer for sort of a downturn in admissions or a shortfall to flow through, and so we would not have anticipated that either. Those are really the two things that came up in the back half of March that we didn't anticipate. I got it.

Christopher Howal Hunter: In terms of the few facilities with the military business.

Christopher Howal Hunter: Beds opened earlier at the other facilities opened earlier in the quarter, but we didn't see any impact of that.

Christopher Howal Hunter: For several weeks and so that did sort of pop up as a surprise to us in the second half of March and Thats, just really thinking about.

Christopher Howal Hunter: Those facilities it was more heavily weighted to the specialty business and keep in mind that those have a longer length of stay and so it takes a little bit longer for sort of a downturn in admissions or a shortfall to flow through and so we would not have anticipated that either of those are really the two things that came up in the back half of March that we didn't anticipate.

Andrew Mok: Okay. And then your SWB per patient day in the quarter, I think, finished below 5%, despite the headwinds from patient days. So anything in particular that helped to drive the strong results there? And given the normalizing patient day trends we should be seeing, you know, in 2Q and 3Q, is it reasonable that SWB per patient day continues to track below 5%? Thanks. Yeah, you're right.

Speaker Change: Got it Okay, and then your <unk> per patient day in the quarter I think finished below five five.

Andrew Mok: <unk>, 5%, despite the headwinds from patient days, so anything in particular that helped drive the strong results there and given the normalizing patient day trends, we should be seeing.

Andrew Mok: <unk> and <unk> is it reasonable that SW be per patient day continues to track below 5%.

Heather Dixon: It did track below the 5%, which is, as you recall, what we discussed last quarter and where those levels are anticipated staying. And we see base wage inflation coming in line with SWB per patient day as well. We continue to focus on all of the things that we have been focusing on for the last, I would say, 12 to 18 months in regards to employee engagement and retention.

Speaker Change: And yes, Youre right. It did track and below the 5%, which is as you recall, what we discussed last quarter and where those levels.

Heather Dixon: Anticipating staying and yet we see base wage inflation coming in line with SBB per patient day as well.

Heather Dixon: We continue to focus on the things that we have been focusing on for the last I would say 12 months to 18 months in regards to employee engagement and retention and we're seeing the benefits of that come through.

Heather Dixon: And we're seeing the benefits of that come through. You would expect that that same level would continue throughout the year, and we'll keep a very close eye on it, as I'm sure you can appreciate. As any company that operates in multiple geographies across the country, we still have some pockets of challenges, but we feel really good about what we've been doing and the investments we've made so that we can have a great start to 2024.

Heather Dixon: We will expect that that same level would continue throughout the year and we will keep a very close eye on it as I'm sure. You can appreciate as any company that operates in multiple geographies across the country. We still have some pockets of challenges that we feel really good about what we've been doing and the investments. We've made so that we can have a great start to 2024.

Heather Dixon: So just maybe to wrap that up, for the full year of 2024, we still expect that base wage inflation, and SWB per patient day will reflect that normalized rate. And maybe to add in on base wage inflation, I mean, we clearly saw the high watermark in the fourth quarter of 2022 and have been, you know, as Heather said, just very focused on our efforts around employee engagement, around retention, working with the local market operators, and have been able to continue to bring that down to ending the year under 5%.

Heather Dixon: So.

Heather Dixon: Maybe to wrap that up for the for the full year for 'twenty four we still expect that base wage inflation in <unk>.

Heather Dixon: Patient day will reflect that normalized rate.

Heather Dixon: And, you know, as Heather said, likewise, with the FWD per patient day also being under 5%, we see that trend continue. Our next question will come from Ben Hendrix with RBC Capital Markets. Please go ahead.

Heather Dixon: And just maybe to add in on base wage inflation I mean, we clearly saw the high watermark in the fourth quarter of 2022 and have been.

Benjamin Hendrix: As Heather said, just very focused on our efforts around employee engagement around retention and working with the local market operators and have been able to continue to bring that down to ending the year under 5% and as Heather said.

Benjamin Hendrix: Was with the SWT per patient day.

Heather Dixon: Also being under 5%, we see that trend continuing.

Heather Dixon: Our next question will come from Ben Hendrix with RBC capital markets. Please go ahead. Thank.

Benjamin Hendrix: Thank you very much. I just wanted to get some follow-up commentary on your partial hospital program and IOPs, kind of information on where they fit in terms of your development strategy going forward. Should we think about those as just an extension of the acute platform, or could this be a new leg of the stool in terms of your business line segmentation? Thanks.

Benjamin Hendrix: Thank you very much I just wanted to get some follow up commentary on your partial hospital program and Iop's kind of information on where they fit in in terms of your development strategy going forward should we think about those as just an extension of the acute platform or could this be a new leg of the stool in terms of your your business lines.

Benjamin Hendrix: Segmentation.

Christopher Howal Hunter: Yeah, thanks, Ben. You know, we really believe that the impact of PHP-IOP on the clinical outcomes of our patients can really be significant. You know, the vast majority of both our acute and our specialty patients are indicated for PHP or IOP as a step-down therapy post-discharge. And we see the clinical outcomes from that, and continuity of care being extremely important to maintain those strong outcomes. You know, given the value to patients, we have begun to build these programs out in some form at or near most of our acute and specialty facilities.

Speaker Change: Yes, Thanks Ben.

Benjamin Hendrix: We believe that the impact of PHP IOP on the clinical outcomes of our patients can really be significant.

Christopher Howal Hunter: No.

Christopher Howal Hunter: Vast majority of both our acute and our specialty patients.

Christopher Howal Hunter: Are indicated for PHP or IOP is a step down therapy post discharge and we see the clinical outcomes from that and that continuity of care being extremely important.

Christopher Howal Hunter: Two to maintaining those strong outcomes.

Christopher Howal Hunter: Given the value to the patients we have begun to build these programs out in some form at or near most of our acute and specialty facilities.

Christopher Howal Hunter: But for multiple reasons, you know, we continue to see opportunity for growth in the future. I mean, I think there's opportunity for an expansion in the number of PHP-IOP programs per facility. We have real variability across the company in terms of how many tracks of PHP-IOP we have at a given facility. We also look at each of our facilities for opportunities to just better serve our patients by adding more programs. So, you know, adult versus adolescent, women's focus, evening versus daytime, and just PHP versus IOP in general.

Speaker Change: But for multiple reasons, we continue to see opportunity for growth in the future I mean, I think there is opportunity.

Christopher Howal Hunter: And expansion in the number of PHP IOP programs per facility, we have real variability across the company in terms of how many tracks of PHP IOP, we have at a given facility.

Christopher Howal Hunter: We also look at each of our facilities for opportunities to better serve our patients by adding more programs. So.

Christopher Howal Hunter: Adult versus adolescent women's spoke as evening versus daytime and just PHP versus IOP in general. So I think just overall, increasing the share of the clinically eligible patients who benefit from PHP IOP is in the best interest of the patients and we need to be more intentional about.

Christopher Howal Hunter: So, I think just overall, increasing the share of the clinically eligible patients who benefit from PHP-IOP is in the best interest of patients, and we need to be more intentional about ensuring that continuity of care. And we really try to address the needs of the community and how we can best impact that continuity of care. So, we are opening new facilities. We're working through licenses and certifications, and we're looking at what the most appropriate programs are to add initially.

Christopher Howal Hunter: Ensuring that continuity of care and we really try to address the needs of the community and how we can best impact that continuity of care. So we are opening new facilities, we're working through licenses and certifications.

Christopher Howal Hunter: Looking at what the most appropriate programs arent add initially and we're also looking hard at the ability to cross refer occur.

Benjamin Hendrix: And we're also looking hard at the ability to cross-refer across Arcadia lines of business where possible. You know, as we've said before, we know that 70% of our specialty patients that come in also have an underlying OUD diagnosis. And so, that cross-referral is also very important. So, we just see this pathway as something that has a lot of opportunity for our patients because of the strong clinical outcomes. And, you know, we intend to capitalize on that. Thank you very much.

Benjamin Hendrix: Across our <unk> lines of business, where possible as we've said before we know that 70% of our specialty patients that present.

Benjamin Hendrix: Also have an underlying <unk> diagnosis and so that cross referrals also very important. So we just see this pathway is something that has a lot of opportunity.

Benjamin Hendrix: For our patients because of the strong clinical outcomes and we intend to capitalize on it.

Heather Dixon: Just a quick follow-up on the labor trend: should we, is there any way to quantify how much perhaps incremental hiring or recruiting costs we might see later in the year, as you know, your development pipeline plays out in the second half? Thanks. You know, I don't know that we'll quantify the amount, but I can tell you that we have assumed that the sort of normal course of business will continue as we've seen it throughout the back half of last year and then continuing into Q1. So what you're asking is if we're assuming an elevated level, and the answer is no.

Speaker Change: Thank you very much just a quick follow up on the on the labor trend should we is there any way to quantify how much perhaps incremental hiring or recruiting costs, we might see later in the year as you know.

Heather Dixon: Your development pipeline plays out.

Heather Dixon: Second half thanks.

Heather Dixon: I don't know that we will quantify the amount, but I can tell you that we have assumed that instead of the normal course of business will continue as we've seen it throughout the back half of last year, and then continuing into Q1 so.

Speaker Change: What you are asking is if we're assuming an elevated level and answers now.

Heather Dixon: Yes.

Albert J. William Rice: Our next question will come from AJ Rice with UBS. Please go ahead. Hi, everybody. Maybe first, just to ask... We haven't talked in a while about the opioid settlement and how those dollars are spent or maybe whether any of that's flowing to your areas of focus and, to the extent it is, is that in a little more healthy rate updates or is it in other areas? Any comments on that? Yeah, thanks, AJ. This is Chris.

Heather Dixon: Our next question will come from AJ Rice with UBS. Please go ahead.

Chris: Hi, everybody.

Albert J. William Rice: Maybe first just ask.

Albert J. William Rice: We haven't talked in a while about the opioid settlement and how those dollars are states or maybe.

Albert J. William Rice: Whether any of that's flowing to your areas of focus.

Chris: To the extent it is is that in.

Albert J. William Rice: Little more healthy rate updates or as in other areas and any comment on that.

Christopher Howal Hunter: I'll take that one. I think just to step back, the settlement funding continues to trickle along. So again, of the roughly 50 billion of funds available, approximately 4.5 billion have actually been distributed to date. And just to give you some context on that, in mid-2023, we were at 3 billion. So, you know, still under 10% of funds have actually been distributed to the states. And then, obviously, from the states, they have to be deployed to individual counties.

Albert J. William Rice: Yeah. Thanks, a J this is Chris I'll take that one.

Christopher Howal Hunter: I think just to step back the settlement funding.

Christopher Howal Hunter: Continues to trickle, along so again of the roughly $50 billion of funds available.

Christopher Howal Hunter: Approximately $4 5 billion have actually been distributed to date and just to give you. Some context on that in mid 2023, we were at $3 billion. So still under 10% of funds have actually been distributed to the states and then obviously from the states they have to be deployed.

Christopher Howal Hunter: You know, we see a number of states leading the way on this, and we continue to position ourselves, just given the very strong clinical outcomes that we're seeing in our CTC business, to participate in those grant funding opportunities and to win. And so, the best recent award settlement example that I can give you is that, in Q1, we were awarded funding by Opportunity in Tennessee. And we were actually awarded. I think there were over 400 different applicants, and we were one of the top recipients.

Christopher Howal Hunter: Wade to individual counties.

Christopher Howal Hunter: We see a number of states leading the way on this and we continue to position ourselves just given the very strong clinical outcomes that we're seeing in our in our CTC business.

Christopher Howal Hunter: To participate in those grant funding opportunities and to win in so.

Christopher Howal Hunter: The Best Recent award settlement example, that I can give you is that in Q1.

Christopher Howal Hunter: We were awarded funding by.

Christopher Howal Hunter: Opportunity in Tennessee, and we.

Christopher Howal Hunter: We were actually awarded I think there were over 400 different applicants and we were one of the top recipients we were awarded $6 million in funding by the Tennessee opioid Abatement Council.

Christopher Howal Hunter: We were awarded $6 million in funding by the Tennessee Opioid Abatement Council. And the funds there are going to, you know, meaningfully contribute to treatment for underserved populations, which is really what the focus of the grant was, hiring peer support personnel to help patients go through their recovery and just overall helping patients stay in treatment, particularly by covering expenses associated with social determinants such as transportation.

Christopher Howal Hunter: The funds there are going to meaningfully contribute to treatment to underserved populations, which is really what the focus of the grant was.

Christopher Howal Hunter: Hiring peer support personnel to help patients go through their recovery and just overall, helping patients stay in treatment, particularly by covering expenses associated with social determinants, such as transportation and so.

Christopher Howal Hunter: And so of that $6 million, we're right now, you know, we have won that $6 million component. We're in the contracting phase. Funds will take a few months to be dispersed, but we expect this to be $2 million a year over a three-year period.

Christopher Howal Hunter: Of that 6 million, where right now we are we have one that $6 million component. We're in the contracting phase funds will take a few months to be dispersed, but we expect this to be $2 million a year over a three year period.

Christopher Howal Hunter: So hopefully that's helpful. Yeah, that's good. And then on... Maybe on the development and acquisition pipeline, there's been some recent scrutiny, both in some of the articles that have been written about opioid use disorder, et cetera, as well as in some of the congressional activity around private equity and healthcare generally and questioning that. I wondered whether, because I know private equity is quite active in some of your spaces, has that impacted anything, both created any new opportunities for you, or changed any way the competitive Yeah, I would do that.

Speaker Change: So hopefully that's helpful.

Speaker Change: Yes, that's good.

Christopher Howal Hunter: And then on.

Christopher Howal Hunter: Maybe on the development and acquisition pipeline, but there has been some recent scrutiny. Both in some of the articles that have been written about opioid use disorder et cetera, as well as in some of the congressional activity around private equity and.

Christopher Howal Hunter: And.

Christopher Howal Hunter: And the health care generally in.

Christopher Howal Hunter: Questioning that I wondered whether is that because I know private equity is quite active in some of your spaces is that impacted.

Christopher Howal Hunter: Anything both created any new opportunities or you changed any way the competitiveness of transactions you are looking at.

Christopher Howal Hunter: Thanks, AJ. I would say to start that this has been a very difficult operating environment for a very fragmented industry of, you know, various players in the OED space. So, you know, a year ago at this time, we were so focused on Medicaid redetermination and made significant investments in putting a dedicated 800 hotline in place, putting kiosks in place for our patients, actively preparing to help them manage through the complexities of redetermination, which, you know, I think we have done, our team has done an excellent job on. But that has been really challenging for a number of players.

Speaker Change: Yes, I would thanks, a J I would say to start that this has been a very difficult operating environment for a very fragmented industry.

Christopher Howal Hunter: Of various players in the <unk> space.

Christopher Howal Hunter: So.

Christopher Howal Hunter: Youll recall a year ago at this time, we were so focused on Medicaid redetermination and made significant investments in putting a dedicated 800 hotline in place putting kiosks in place for our patients.

Christopher Howal Hunter: Actively preparing to help them manage through the complexities of Redetermination, which I think we have done our team has done an excellent job on.

Christopher Howal Hunter: And I think we are increasingly seen as an acquirer of choice. So we've seen interest from a lot of smaller clinics. And, you know, the three clinics that we recently acquired in North Carolina, I think are illustrative of that. So we're now in North Carolina; we've extended from, you know, seven CTCs with these three additions to 10.

Christopher Howal Hunter: But that has been really challenging for a number of players and I think we are increasingly seen as an acquirer of choice. So we've seen interest from a lot of smaller <unk>.

Christopher Howal Hunter: Clinics and three clinics that we were recently that we recently acquired in North Carolina, I think are illustrative of that.

Christopher Howal Hunter: They are now fully operational strong track record of positive patient outcomes.

Christopher Howal Hunter: But putting those on our chassis.

Christopher Howal Hunter: We're able to serve these patients even more efficiently, particularly given some of the advances in technology that we've made there. So we're now in North Carolina, we've extended from seven Ctc's with these three additions to 10, we're a real market leader in the state there and we continue to think that there will be <unk>.

Christopher Howal Hunter: You know, we're a real market leader in the state there, and we continue to think that there will be additional M&A opportunities, particularly in the future, from, you know, in this space that remains so fragmented. I think your question may also relate to some of the larger private equity players. And you know, we really have not seen a lot of activity on that front.

Christopher Howal Hunter: Additional M&A opportunity, particularly.

Christopher Howal Hunter: From in this space that remains so fragmented I think your question May also.

Christopher Howal Hunter: Tied to some of the larger private equity scale players and we really have not seen.

Christopher Howal Hunter: A lot of activity on that front, but it's just difficult to say how that will continue through the year, but we from from an attractiveness of these smaller opportunities. We continue to be very positive on those and continue to pursue those.

Christopher Howal Hunter: But it's just, you know, difficult to say how that will continue through the year. But we from the attractiveness of these smaller opportunities continue to be very positive about those and continue to pursue those. And our next question will come from John Ransom with Raymond James. Please go ahead. Hey, good morning.

Christopher Howal Hunter: And our next question will come from John Ransom with Raymond James. Please go ahead.

John Wilson Ransom: Um, you know, some of your providers, I guess they're not peers, but other providers have called out the Medicaid to HIC thing as being a thing in their results. Are you seeing anything with either health exchange enrollment or Medicaid to call out so far this year? Hi, John.

John Wilson Ransom: Hey, good morning.

John Wilson Ransom: Some of your <unk>.

John Wilson Ransom: Provider, I guess theyre not payers, but other providers have called out.

John Wilson Ransom: The Medicaid to Hicks.

John Wilson Ransom: As being a thing and their results are you seeing anything with either health exchange enrollment or Medicaid to call out so far this year.

John Wilson Ransom: Okay.

Heather Dixon: No, we're not. I think you're referring to as patients move from Medicaid, maybe through the redetermination process and on to the exchanges, are we seeing any impact as a result of that? And we're not. It's a very, very small portion of our patients that would be in that category. Those are mostly in the CTC business. But again, it's a very, very small percentage of patients.

John: Hi, Dan No no, we're not and I think you're referring to as patients move from Medicaid maybe through the redetermination process and onto the exchanges are we seeing any impact as a result of that and we're not at the <unk>.

Heather Dixon: Very very small portion of our patients that that that would be in that category. Those are mostly in the CTC business, but again, it's a very very small percentage of patients.

John Wilson Ransom: Okay. And then my follow-up is just going back to corporate overhead. It's running, you know, about $26 million higher than it was in 2022 to 2023. And then it's, you know, elevated again, although at a slower pace.

Speaker Change: Okay and then my follow up is.

John Wilson Ransom: Just going back to corporate overhead.

John Wilson Ransom: Running.

John Wilson Ransom: About $26 million higher than it was in 2022 to <unk> 23, and then <unk>.

Speaker Change: Elevated again, although at a slower pace can you just give us an outlook for our corporate overhead for the remainder of the year and just kind of remind us where are those dollars went to whether it's technology or people or other.

Heather Dixon: Can you just give us an outlook for corporate overhead for the remainder of the year and just kind of remind us where those dollars went to, you know, whether it's technology or people or something else? Yeah, sure, I'll kick that off. And then Chris may want to jump in on the last part of your question.

Heather Dixon: So you're right, we did see a sequential increase of about 20 basis points, but on a year over year basis, we saw an improvement of about the same amount. And that's what I would consider, you know, the lowering of the baseline of growth there, because we have really been focused on those corporate costs, but also normal seasonality from Q4 to Q1 that we typically see. A couple of reasons for that might be, you know, merit increases, or, you know, some of the differences that come in Q1 from a payroll tax perspective come into play, but that's what I would consider normal seasonality.

Chris: Yes sure.

Heather Dixon: And.

Heather Dixon: And then Chris May want to jump in on the last part of your question. So you're right. We did see a sequential increase of about 20 basis points, but on a year over year basis. We saw an improvement of about the same amount and thats, what I would consider the lowering of the baseline of growth there because we have really been focused on.

Heather Dixon: That is corporate cost that also normal seasonality from Q4 to Q1 that we typically see a couple of reasons for that it might be merit increases or as some of the differences that come in Q1 from a payroll tax perspective come into play, but thats, what I would consider normal seasonality.

Heather Dixon: In general we've seen the stabilization as I mentioned in those corporate costs and we're starting to really see the benefit of some of those investments and maybe just to think about how we view the balance of the year as those investments continue to pay off and frankly as they start to lap some of those investments from last year, we will expect to continue that theme.

Heather Dixon: Operating leverage as we move throughout the year.

Heather Dixon: We expect that the corporate cost will stay relatively consistent certainly as a percentage of revenues and then they'll moderate.

Christopher Howal Hunter: I mean, in general, you know, we've seen the stabilization, as I mentioned, and those corporate costs, and we're starting to really see the benefit of some of those investments. And just the last part of your question on what we've been focused on, it's across the board. You know, we've, of course, invested in IT. We've invested in quality. Our managed care team has really been a big focus and a benefit to us. Some of the marketing things that we've done, so just overall, just looking across the board, no one specific area, I would say, is outpaced. Yeah, John. This is Chris.

Heather Dixon: And just create that leverage.

Heather Dixon: The last part of your question on what we've been focused on it's across the board Dino.

Chris: Of course invested in it.

Chris: We've invested in quality, our managed care team has really been I.

Chris: I think focus and a benefit to us.

Chris: The marketing things that we've done to just overall just looking across the board no one specific area I would say outpace.

Christopher Howal Hunter: I think the only other thing I would say is that we continue to watch this very closely. I think we also, given the commitment that we put out at our first ever Investor Day in December of 2022, we really felt like there was too much variation across the company in terms of the way we were approaching quality and IT and just, you know, other corporate areas where we needed to make some investments.

Christopher Howal Hunter: Yes, John This is Chris I think the only other thing I would say is just that we continue to watch this very closely.

Christopher Howal Hunter: We also just given the commitment that we put out at our first ever Investor day in December of 2022.

Christopher Howal Hunter: We really felt like there was too much variation across the company in terms of the way we were approaching quality in it.

Christopher Howal Hunter: Other corporate areas that we needed to make some investments and we feel very pleased with what we've been able to do there and some of the talent that we've been able to attract but also some of the process that we've put in place in some of the results that we're continuing to see that position us well for the future. So we'll continue to watch it.

Christopher Howal Hunter: It.

Christopher Howal Hunter: Moving forward.

Christopher Howal Hunter: And we feel very pleased with what we've been able to do there and some of the talent that we've been able to attract, but also some of the process that we've put in place and some of the results that we're, you know, continuing to see in that position as well for the future. So we'll continue to watch it moving forward. And our next question will come from Peter Chickering with Deutsche Bank. Please go ahead. Hey, good morning.

Christopher Howal Hunter: And our next question will come from <unk> Chickering with Deutsche Bank. Please go ahead.

Philip Chickering: Hey, good morning, Thanks for taking my questions.

Philip Chickering: Thanks for taking my questions. To start off here, I know you don't give quarterly guidance, but the comments are on a slower start to April and a lagging impact from the longer-living state patients and specialty. Can you give us any commentary around whether 2Q consensus is mismodeled? Yeah, you know, as you know, we don't give quarterly guidance except for the first quarter and, you know, really don't like to comment on consensus and how the modeling comes in.

Philip Chickering: Sure lead up here I know you don't give quarterly guidance, but with the comments around a slower start to April and the lagging impact from the longer length of stay patients specialty can you give us any commentary around <unk>.

Philip Chickering: Consensus is mis modeled.

Philip Chickering: Yes.

Philip Chickering: Yes.

Philip Chickering: As you know, we don't give quarterly guidance, except for first quarter and and I really don't like to comment on consensus on how the modeling comes and I'll, just maybe reiterate what we said.

Heather Dixon: I'll just maybe reiterate, Peto, what we said, you know, the When we think about how the quarters will play out, we think that we will have a similar drag to the beginning of Q2, certainly on a same-store basis, just as we start to bring ourselves through the second quarter. Q1, obviously, is a little bit slower, and that's going to drive a slightly slower start to Q2, but we really have a lot of confidence in the back half of the year.

Heather Dixon: When we think about how the quarters will play out we think that we will have a similar drag to the beginning of <unk> certainly on a same store basis, just as we start to bring to bring ourselves through the second quarter.

Heather Dixon: One obviously.

Heather Dixon: And that's going to drive a little bit slower start to Q2, but we really have a lot of confidence in the back half of the year.

Heather Dixon: Okay, and a follow-up here, you know, despite the seasonal softness that you guys talked about, even to margins of 22.6%, or the highest first quarter that we've seen, is there any sort of one-time benefit that you guys saw on the cost side? Or should this be a baseline margin fee as you start to grow from in 2024 and 2025? And besides the one-time $10 million payment, are there any new supplemental Medicaid programs starting in 2024? So maybe I'll take that in two parts.

Speaker Change: Okay, and then a follow up here. Despite the seasonal softness you guys talked about EBITDA margins of 26% was the highest first quarter that we've seen.

Heather Dixon: Is there any sort of onetime benefit you guys saw on the cost side.

Heather Dixon: Or should this be a baseline margins you guys are sort of grow from $224 2025, and besides the one time $10 million payment or other means.

Heather Dixon: This alone making program started in 2024.

Heather Dixon: So in terms of EBIDTA, when we set up the guidance at the beginning of the year, we said we expected to see some leverage, and so we are seeing that leverage. We're really, really pleased to see that we're outperforming in the first quarter, and that's driven largely by the SWB line, which, of course, we've been very focused on over the last 12 months. So we're doing the work around all of the things we've done to invest in hiring retention.

Heather Dixon: And so maybe I'll take that in two parts. So in terms of EBITDA.

Heather Dixon: When we set out the guidance at the beginning of the year. We said, we expected to see some leverage and so we are seeing that leverage.

Heather Dixon: Really really pleased to see that we are outperforming in the first quarter and thats driven largely by the <unk> line, which of course, we've been very focused on over the last 12 months.

Heather Dixon: We're just seeing that, as we said earlier, continued moderated rate. But also, I think it's important to point out, we were able to really react quickly to some of the softer volumes that we saw at the end of March, and I think the team did a really good job of just managing through that. And so that gives us a lot of confidence, really, in the EBIDTA outlook for the balance of the year, payments, and what those supplemental funds look like.

Heather Dixon: Doing the work around all of the things we've done to invest in hiring or attention. We're just saying that as we said earlier continued moderated rate.

Heather Dixon: And also I think it's important to point out we were able to really react quickly.

Heather Dixon: To some of the softer volumes that we saw at the end of March and I think the team did a really good job of managing through that and so that gives us a lot of confidence really in the EBITDA outlook for the balance of the year.

Heather Dixon: If I think about those sort of payments and what the supplemental funds look like I think that's where you're headed some state.

Heather Dixon: I think that's where you're headed. I mean, you know, some states, as you know, use this to enhance what they can pay for Medicaid rates and really to bolster those and, you know, intending to correct for what's, you know, frankly, historically inadequate reimbursement for keeping up with the cost of care for our patients. And, you know, I know some of our peers have had some large distributions in specific states. We typically see those on a year-to-year basis. They're relatively consistent,

Heather Dixon: As you know use this to enhance what they what they can pay for the Medicaid rates and really to to bolster those and.

Heather Dixon: Intending to correct for what frankly, historically inadequate reimbursement for <unk>.

Heather Dixon: Keeping up with the cost of care for our patients and I know some of our peers have had some some large distributions and specific states.

Heather Dixon: We typically see those on a year to year basis. They are relatively consistent and frankly, we just consider it part of our reimbursement.

Heather Dixon: And frankly, we just consider it part of our reimbursement as we go through. That said, if we have something that's outsized as a one-time payment, we'll call those out. I think we've done it a couple of times in the past. And, as you mentioned, we called that out for one state with our guidance that we put out earlier this year. And that was, you know, $10 million for the full year and $7 million in Q1.

Heather Dixon: We go through that said, if we have something that's outside of the onetime payment we will call those out I think we've done it a couple of times in the past and as you mentioned, we called that out for one state with our guidance that we put out earlier this year and that was $10 million for the full year and $7 million in Q1.

Sarah Elizabeth James: And our next question will come from Sarah James with Cantor Fitzgerald. Please go ahead. Hi Gabby, this is Gabby on behalf of Sarah. I just had a quick question on what results you guys have seen from the remote monitoring at the 53 facilities that you had rolled out by the end of last year and if you have any more plans to add to more facilities. Thank you. Yeah, Gabby. This is Chris.

Heather Dixon: And our next question will come from Sarah James with Cantor Fitzgerald. Please go ahead.

Sarah Elizabeth James: Hi, This is gabby on for Sarah I, just had a quick question on what results you guys have seen from the remote monitoring at the 53 facilities that you had rolled out by the end of last year.

Chris: If you have any more plans to add two more facilities. Thank you.

Christopher Howal Hunter: I'll take that one. You know, we've seen very positive results from the remote monitoring that we've now implemented in all 53 of our acute facilities. You know, this is technology that we think has been critical to ensuring that our scheduled observation rounds are taking place at the appropriate time. I think our staff has told us that they feel safer and more comfortable with this mechanism in place. Our patient experience and our patient satisfaction scores have actually gone up.

Sarah Elizabeth James: Yeah. Gaby this is Chris I'll take that one.

Christopher Howal Hunter: We've seen very positive results from the remote monitoring that we've now implemented in all 53 of our acute facilities.

Christopher Howal Hunter: This is technology that.

Christopher Howal Hunter: We think has been critical to.

Christopher Howal Hunter: Ensuring that our scheduled observation rounds are taking place at.

Christopher Howal Hunter: At the appropriate time, I think our staff.

Christopher Howal Hunter: <unk> has told us that they feel safer and more comfortable with this mechanism in place.

Christopher Howal Hunter: Patients experienced in our patient satisfaction scores have actually gone up.

Christopher Howal Hunter: And we've gotten extremely positive feedback from surveyors that have come into our facilities, being able to show them the results that we've had from this monitoring, whether it's state surveyors or even talking to others across the board. Just, it's been very consistently positive feedback. So we are looking at potentially expanding that even further, investing pretty heavily in staff safety with personal alarm buttons for all of our hospital staff, which we're also rolling out this year. And I think you will continue to see more of that, you know, as we look to continue to improve our overall employee engagement but also our patient satisfaction, and it's proving out. Okay, that's awesome.

Christopher Howal Hunter: And we've got an extremely positive feedback from surveyors that have come into our facilities being able to show them.

Christopher Howal Hunter: The results that we've had from from this monitoring whether it's state surveyors or.

Christopher Howal Hunter: Even talking to others across the board just it's been very consistently.

Christopher Howal Hunter: Positive feedback so we are looking at potentially expanding that even further we've also.

Christopher Howal Hunter: <unk> has been <unk>.

Christopher Howal Hunter: Investing pretty heavily and staff safety.

Christopher Howal Hunter: With personal alarm buttons for all of our hospital staff that we're also rolling out this year and think you will continue to see more of that.

Christopher Howal Hunter: We look to continue to improve.

Christopher Howal Hunter: Our overall employee engagement, but also our patient satisfaction and it is proving out.

Speaker Change: Okay awesome. Thank you.

Speaker Change: And this concludes our question and answer session.

Christopher Howal Hunter: Thank you. And this concludes our question and answer session. I would now like to turn the conference back over to Chris Hunter for any closing remarks. Thank you. Before we end the call, I just want to again thank our committed facility leaders, clinicians, and approximately 23,500 dedicated employees across the country who've continued to work tirelessly to meet the needs of the over 75,000 patients that we treat daily and their families in a safe and effective manner and who every day exemplify our purpose as an organization to lead care with light.

Christopher Howal Hunter: I would like to now turn the conference back over to Chris Hunter for any closing remarks.

Christopher Howal Hunter: Thank you before we end the call I just want to again, thank our committed facility leaders clinicians and approximately 23500 dedicated employees across the country, who continue to work tirelessly to meet the needs of the over 75000 patients that we treat daily in there.

Christopher Howal Hunter: Families in a safe and effective manner, and who everyday exemplify our purpose as an organization to lead care with light.

Christopher Howal Hunter: We have a strong foundation and a proven strategy for driving growth and delivering greater value to both the patients we serve and our shareholders. Thank you for being with US This morning and for your interest in Acadia. If you have additional questions. Today, please do not hesitate to contact us directly.

Christopher Howal Hunter: We have a strong foundation and a proven strategy for driving growth and delivering greater value to both the patients we serve and our shareholders. Thank you for being with us this morning and for your interest in Acadia. If you have additional questions today, please do not hesitate to contact us directly. Have a good day. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your line. Copyright 2019 IFA Productions. All rights reserved.

Christopher Howal Hunter: Have a good day.

Christopher Howal Hunter: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

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