Q2 2024 HCA Healthcare Inc Earnings Call
Operator: Welcome to the HCA Healthcare Second Quarter 2024 Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to the Vice President of Investor Relations, Mr. Frank Morgan. Please go ahead.
Okay.
Speaker Change: Welcome to the HCA Healthcare's second quarter, the 'twenty 'twenty four earnings conference call.
Speaker Change: This call is being recorded.
Speaker Change: At this time for opening remarks, and introductions I would like to the call.
Speaker Change: All over to the Vice President of Investor Relations Mr. Frank Morgan. Please go ahead Sir.
Frank Morgan: Good morning. Welcome to everyone on today's call. With me this morning is our CEO Sam Hazen and our CFO Mike Marks. Sam and Mike will provide some prepared remarks, and then we'll take some questions. Before I turn the call over to Sam, let me remind everyone that should today's call contain any forward-looking statements, they are based on management's current expectations. However, numerous risks, uncertainties, and other factors may cause actual results to differ materially from those that might be expressed today.
Speaker Change: Good morning, and welcome to everyone on today's call with me. This morning is our CEO, Sam Hazen and our CFO, Mike March Sam in mind.
Speaker Change: Some prepared remarks, and then we'll take some questions before I turn the call over to Sam Let me remind everyone that should call contain any forward looking statements. They are based on management's current expectations numerous risks uncertainties and other factors may cause actual results to differ materially from those that might be expressed today.
Frank Morgan: More information on forward-looking statements and these factors is listed in today's press release and in our various SEC files. On this morning's call, we may reference measures such as Adjusted EBITDA, which is a non-GAAP financial measure. A table providing supplemental information on Adjusted EBITDA and reconciling net income attributable to HCA is included in today's release. This morning's call is being recorded, and a replay of the call will be available later today. With that, I'll now turn the call over to Sam.
Speaker Change: More information on forward looking statements and these factors listed in today's press release and in our various SEC filings.
Speaker Change: On this morning's call we may reference measures such as adjusted EBITDA, which is a non-GAAP financial measure.
Samuel N. Hazen: Table, providing supplemental information on adjusted EBITDA and reconciling net income attributable to HCA is included in today's release. This mornings call is being recorded and a replay of the call will be available later today with that I'll now turn the call over to Sam Alright. Thank you Frank and good morning to everyone. The Companys results for the <unk>.
Samuel N. Hazen: All right, thank you, Frank, and good morning to everyone. The company's results for the second quarter were positive across the board and reflected strong demand for our service. In addition, our teams continue to execute our strategic plan effectively and produce positive outcomes for our patients, while also enhancing efficiencies in our facilities, including better throughput and case management. I want to thank our HCA colleagues for their outstanding work and their continued efforts to innovate and deliver on our mission. As compared to the prior year, diluted earnings per share, as adjusted, increased 28% to $5.50.
Samuel N. Hazen: Second quarter were positive across the board and reflected strong demand for our services.
Samuel N. Hazen: In addition, our teams continued to execute our strategic plan effectively and produce positive outcomes for our patients while also enhancing efficiencies at our facilities, including better throughput and case management.
Samuel N. Hazen: I want to thank our HCA colleagues for their outstanding work and their continued pursuits to innovate and deliver on our mission.
Samuel N. Hazen: As compared to the prior year diluted earnings per share as adjusted increased 28% to $5 50.
Samuel N. Hazen: Consistent with the first quarter, we saw broad-based volume growth across our markets and service lines. On a same facility basis in the second quarter, inpatient admissions grew 5.8 percent, and equivalent admissions grew 5.2 percent. Emergency room visits increased 5.5%, inpatient surgeries were up 2.6%, outpatient surgery cases were down 2%, and like the first quarter, the declines were mostly explained by lower volumes in Medicaid and self-pay categories. However, similar to the past few quarters, other volume categories, including cardiac procedures and inpatient rehab services, experienced strong growth.
Samuel N. Hazen: Consistent with the first quarter, we saw broad based volume growth across our markets and service lines.
Samuel N. Hazen: On a same facilities basis in the second quarter.
Samuel N. Hazen: In patient admissions grew five 8%.
Samuel N. Hazen: Equivalent admissions grew five 2%.
Emergency room visits increased five 5% inpatient surgeries were up two 6% outpatient surgery cases were down 2% and like the first quarter. The declines were mostly explained by lower volumes in Medicaid and self pay categories.
Samuel N. Hazen: Similar to the past few quarters, other volume categories, including cardiac procedures and inpatient rehab services experienced strong growth.
Samuel N. Hazen: Hair mix improved year-over-year, with commercial volumes representing 36.2% of equivalent admissions. Lastly, the acuity of our inpatient services, as reflected in our case index, increased slightly as compared to last year. These factors helped generate same fertility revenue growth of 10%.
Samuel N. Hazen: Payor mix improved year over year with commercial volumes, representing 36, 2% of equivalent admissions.
Samuel N. Hazen: Lastly, the acuity of our inpatient services as reflected in our case mix index increased slightly as compared to last year.
Samuel N. Hazen: These factors helped generate same facility revenue growth of 10%.
Samuel N. Hazen: Also in the quarter, we progressed further on our cost agenda and produced solid operating margins. As we transition to the last half of 2024, we are encouraged by the company's results. We believe the increased investments we are making in our people and facilities, along with our disciplined approach to operations, will continue to produce positive outcomes for our stakeholders. In closing, given our year-to-date performance and the backdrop of strong demand that we forecast for the remainder of the year, we have updated our guidance for the year, as indicated in our press release. With that, let me turn the call over to Mike for more details. Thank you, Sam, and good morning, everyone.
Samuel N. Hazen: Also in the quarter, we progressed further on our cost agenda and produced solid operating margins.
Speaker Change: As we transition to the last half of 2024, we are encouraged by the company's results. We believe the increased investments we are making in our people and facilities along with our disciplined approach to operations will continue to produce positive outcomes for our stakeholders in.
Speaker Change: In closing given our year to date performance and the back drop of supply.
Speaker Change: And demand that we forecast for the remainder of the year, we have updated our guidance for the year as indicated in our press release with that let me turn the call over to Mike for more detail.
Mike Marks: The second quarter showed continued solid performance with strong demand, improved margins, and a balanced allocation of capital. Sam reviewed our top-line results, so I will cover operating costs in the next section. Operating costs were well managed, resulting in a margin improvement of 100 basis points compared to the prior year and sequentially to the first quarter. Labor costs as a percent of revenue improved 200 basis points from the prior year, and we continue to see good results in contract labor, which declined 25.7% from the prior year and represented 4.8% of total labor. Supply costs as a percent of revenues improved 50 basis points from the prior year.
Mike Marks: Thank you Sam and good morning, everyone. The second quarter showed continued solid performance with strong demand improved margins and a balanced allocation of cash.
Mike: Same reviewed our topline results so I will cover operating costs in the quarter.
Mike: Operating costs were well managed resulting in a margin improvement of 100 basis points to prior year and sequentially to the first quarter labor.
Mike: Labor cost as a percent of revenue improved 200 basis points from the prior year and we continued to see good results in contract Labor declined 25, 7% from the prior year.
And represented four 8% of total labor costs <unk>.
Mike Marks: On other operating costs and percent of revenue, they did grow compared to the prior year, but it remained relatively consistent for the past four. We were encouraged that year-over-year skilled facility professional fee cost growth moderated to approximately 13% in the second quarter, which compares favorably to the 20% increase we experienced in the first quarter. Adjusted EBITDA was $3.55 billion in the quarter, which represents a 16% increase over the prior year and included a modest benefit from Medicaid supplemental. As a management team, we are very pleased with the operational performance of the company.
Mike: <unk> cost as a percent of revenues improved 50 basis points from the prior year.
Mike: On the other operating cost as a percent of revenue they did grow compared to the prior year, but remained relatively consistent for the past four quarters.
We were encouraged that year over year same facility professional fee costs growth moderated.
Mike: Approximately 13% in the second quarter, which compares favorably to the 20% increase we experienced in the first.
Mike: Adjusted EBITDA was 355 billion in the quarter.
Mike: This represents a 16% increase over the prior year.
Mike: Included a modest benefit from Medicaid supplemental payments.
Mike Marks: Now moving to capital allocation, we continue to deploy a balanced strategy of allocating capital for long-term value creation. Cash flow from operations was just under $2 billion in the quarter, which is a decline of $500 million from prior years.
As a management team we are very pleased with the operational performance of the company.
Mike: Now moving to capital allocation, we continued to deploy a balanced strategy of allocating capital for long term value creation.
Mike: Cash flow from operations was just under $2 billion in the quarter, which is a decline of 500 million to prior year.
Mike Marks: Driven by an increase in tax payments and the timing of Medicaid Supplemental Program accruals and cash, Capital expenditures totaled $1.28 billion, and we repurchased $1.37 billion of our outstanding shares or more. We also paid about $170 million in dividends. Our debt-to-adjusted EBITDA leverage remains near the low end of our stated guidance.
Mike: Driven by increase in tax payments and timing of Medicaid supplemental program accruals and cash receipts.
Mike: Capital expenditures totaled $1 2 billion, and we repurchased $137 billion of our outstanding shares during the quarter.
Mike: We also paid about $170 million in dividends.
Mike: Our debt to adjusted EBITDA leverage remains near the low end of our stated guidance range and we believe we are well positioned from a balance sheet perspective.
Mike Marks: And we believe we are well positioned from a balance sheet perspective. Finally, in our release this morning, we are updating estimated guidance for 2020. For revenues, our new guidance range is $69.75 billion to $71.75 billion. Net income attributable to HCA Healthcare is $5.675 billion to $5.975 billion. Adjusted EBITDA is $13.75 billion to $14.25 billion, and diluted earnings per share is $21.60 to $22.80
Mike: Finally in our release. This morning, we are updating estimated guidance for 2024.
Mike: Alright, so revenues, our new guidance range of $69 75 billion $2 70 175 billion.
Mike: Net income attributable to HCA healthcare five $6 75 billion to $5 975 billion.
Mike: Adjusted EBITDA $13 75 billion to $14 two 5 billion.
Frank Morgan: Based on the strength of our year-to-date results and our revised outlook, we estimate that share repurchases will be around $6 billion in 2024, subject to market conditions. With that, I'll turn the call over to you, Frank, for questions. Thank you, Mike. As a reminder, please limit yourself to one question so we can give as many as possible in the queue an opportunity to ask a question. Kelly, you may now give instructions to those who would like to ask a question. Thank you very much. We are now opening the floor for a question and answer session. If you'd like to ask a question, please press star 1. Again, that's star number 1.
Mike: And diluted earnings per share $21 60 to $22 80 per share.
Mike: Based on the strength of our year to date results.
Mike: The outlook, we estimate that share repurchases will be around $6 billion in 2024 subject to market conditions with that I'll turn the call over to you Frank for questions and answers.
Frank Morgan: Thank you Mike as a reminder, please limit yourself to one question. So we might have as many as possible in the queue an opportunity to ask a question.
Albert Rice: Our first question comes from AJ Rice from UBS. Your line is now open. Hi everybody, congratulations on a good quarter there. Maybe just two areas that people are very focused on are supplemental payments. How is that running relative to your expectations?
Frank Morgan: Kelly you May now give instructions to those who would like to ask a question.
Kelly: Thank you very much.
Kelly: I will now open the floor for a question and answer session. If you'd like to ask a question. Please press star zero.
John: Hi, John.
Speaker Change: One our first question comes from AJ Rice from UBS. Your line is now open.
Speaker Change: Okay.
Albert Rice: Hi, everybody and congratulations on a good quarter there.
Mike Marks: And in your back half comments, are you including anything for Tennessee? And then the other area being the public exchange. What is the trend there year to year, and how much is growth in that helping? For these strong, Hey, thank you, AJ. This is Mike.
Speaker Change: Maybe just two areas where people are very focused on our supplemental payments.
Albert Rice: How is that running relative to your expectations and in your back half comments are you, including anything for Tennessee, and then the other area would be in the public exchanges.
Speaker Change: What is the trend there year to year end.
Mike Marks: I think the supplemental question, you know, I think if you're aware, Medicaid has historically been our most challenging payer, really, other than patients without insurance, typically paying us significantly below the cost of caring for Medicaid patients. Over the last several years, most states in which we operate have implemented or enhanced Medicaid reimbursement through Supplemental Payment Programs. And while these supplemental programs are growing, it is important to put them in context. They can be complex, variable in their impact from quarter to quarter, and when taken together with historical Medicaid reimbursement, are still well short of covering the cost to treat Medicaid patients. We believe it is important to understand this context when discussing these programs. But now to the quarter.
Speaker Change: How much is growth and that helping.
Speaker Change: These strong results.
Speaker Change: Okay.
Speaker Change: Hi, Thank you AJ this is Michael.
Speaker Change: The supplemental question I.
Speaker Change: I think as Youre aware Medicaid has historically been our most challenging payor really other than patients without insurance typically paying us significantly below the cost of caring for Medicaid patients.
Speaker Change: Over the last several years, most states in which we operate and implemented our enhanced Medicaid reimbursement through supplemental payment programs.
Speaker Change: And while the supplemental programs are growing it is important to put them in context that it can be complex variable in their impact from quarter to quarter and when taken together with historic Medicaid reimbursement are still well short of covering the cost to treat Medicaid patients. We believe it is important to understand this backdrop when discussing these programs.
Mike Marks: In the second quarter, we recognized a year-over-year earnings increase of approximately $125 million related to our Medicaid Supplemental Payment Program, driven primarily by the new program in Nevada and the accrual of the Florida program, which began in the fourth quarter of 2020. To your specific question about the new program in Tennessee, that is with CMS for review, and we do not anticipate financial impact from that program. If you want to go to the public exchanges,
Speaker Change: But now through the quarter.
Speaker Change: Second quarter, we recognized a year over year earnings increase of approximately $125 million related to our Medicaid supplemental payment programs driven primarily by the new program in Nevada, and the accrual of the Florida program, which began in the fourth quarter of 2023.
Speaker Change: To your specific question about the new program in Tennessee.
Speaker Change: That is with CMS for a review and we do not anticipate financial impact from that program in 2024.
Samuel N. Hazen: You know, for the quarter, and let me just kind of give commercial volumes in general first, and then we'll kind of break out HICS, but our equivalent admissions for managed care, including our healthcare exchange volumes were up 12.5% in this quarter versus the prior year quarter. If you take our managed care volumes without healthcare exchanges, they were up just short of 5% on equivalent admissions. And for healthcare changes, we were up 46% over the prior year. Okay, thanks a lot.
If you want to go too.
Speaker Change: To the public exchanges.
Speaker Change: For the for the quarter.
Speaker Change: And let me just kind of give commercial volumes in general first and then we'll kind of breakout hits, but our equivalent admissions for for managed care, including our health care exchange volumes were up 12, 5% in this quarter versus the prior year quarter.
If you take our maintenance care volumes without healthcare exchanges. They were up just short of 5% on equivalent admissions and for health care exchanges, we were up 46% over prior year for the quarter.
Samuel N. Hazen: So, AJ, on volumes, I think, as I mentioned and Mike alluded to there, Medicare volumes were up, I think, by six and a half percent. So, you know, volumes were supported really across all payer categories. Clearly, the exchanges with enrollment over the last three years or so have become a bigger component of the business. It's still relatively small in comparison to the other payer classes, but nonetheless, we did see good volume across all payer classes, with Medicaid, I think, being the only category that was down. And Medicaid was down 10% on equivalent admissions, mostly related to Medicaid redetermination. Okay, great. Thanks a lot.
Speaker Change: Okay. Thanks, a lot.
J: So a J on the volumes I think.
J: As I mentioned as Mike alluded to there.
Speaker Change: Medicare volumes were up I think by six 5% so.
Speaker Change: The volume was supported really across all payer categories clearly the exchanges with the enrollment over the last three years or so has it become a bigger component of the business. It's still relatively small in comparison to the other payer classes, but nonetheless, we did see good volume across.
Ross: Ross all payor classes with the Medicaid I think the only category that was down and Medicaid were down 10% equivalent admissions mostly related to Medicaid redetermination.
Ann Kathleen Hynes: Our next question comes from Ann Hynes from Mizzou Securities. Your line is now open. Great. Thanks. Can you talk about FW&B? It was down quarter sequentially, and it's usually flat. Is that just driven by contract labor improvement? And if you can give us just any details on temporary labor, percentage of total contract labor, things like that, that would be great.
Speaker Change: Okay, great. Thanks, a lot.
Speaker Change: Okay.
Speaker Change: Our next question comes from Ann Hynes from Mizuho Securities. Your line is now open.
Speaker Change: Okay.
Ann Kathleen Hynes: Great. Thanks.
Ann Kathleen Hynes: Thank you.
Ann Kathleen Hynes: SWM be it was down quarter sequentially and it's usually flat is that just driven by contract labor implement anything you can give us just any details on temporary labor percentage to the contract labor things like that that would be great. Thank you.
Mike Marks: Thank you. Sure. Thanks, Ann. Contract labor was down 25 to 27 percent this quarter versus the prior year quarter.
Mike Marks: As I noted in my opening comments, contract labor's percentage of revenue, or, sorry, percentage of SWB was at 4.8 percent in the quarter. This compares to 6.8 percent in the second quarter of last year and almost 10 percent at the height of COVID in early 2022. So we're continuing to see the improvements from all the work we're doing around recruiting and around retention, and that's paying dividends in terms of dividends and contract labor. If you think about wage inflation, wage inflation was stable and kind of continues to run where we expected it to run.
Speaker Change: Sure. Thanks Ann.
Speaker Change: Labor was down 27% this quarter versus prior year quarter as I noted in my opening comments.
Speaker Change: Contract labor as a percentage of revenue I'm sorry percentage.
Speaker Change: <unk> was at four 8% in the quarter. This compares to six 8% in the second quarter of last year and almost 10% at the height of Covid in early 2022, So we're continuing to see the improvement.
Speaker Change: From all of the work, we're doing around recruiting and around retention.
Speaker Change: Paying the dividends.
Speaker Change: And contract labor.
Mike Marks: So, you know, we were pleased with our labor results for the quarter. And seasonally, Ann, we do tend to drop from the first quarter to the second quarter because some of the payroll taxes that we have to absorb in the first quarter are consumed by the end of the quarter or the early part of the second quarter.
Speaker Change: If you think about kind of wage inflation wage inflation was stable and kind of continues to run where we expected it to run so.
Speaker Change: All of that we were pleased with our labor results for the quarter.
Speaker Change: And seasonal and we do tend to drop off.
Speaker Change: From the first quarter to the second quarter, because some of the payroll taxes that we have to support.
Speaker Change: First quarter are consumed by the end of the quarter or the early part of the second quarter and then.
Pito Chickering: And that tends to improve a little bit our metrics simply because of the timing of those tax payments. Our next question comes from Pito Chickering from Deutsche Bank. Your line is now open. Hey, good morning guys. This is my question.
Speaker Change: Tends to improve a little bit of our metrics simply because of the timing of those tax payments.
Mike Marks: Can you bridge us to the back half of EBITDA raised for this year? What percent of the upside that you're changing is coming from better volume? Transcripts provided by Transcription Outsourcing, LLC. Yeah, Pito. Good morning.
Speaker Change: Alright. Thanks.
Speaker Change: Our next question comes from Peter Chickering Deutsche.
Speaker Change: Deutsche Bank. Your line is now open.
Good morning, guys. Thanks for taking my question can you bridge us to the back half EBITDA raise for this year.
Philip Chickering: What percent of that upside to your to your changing is coming from better volumes.
Speaker Change: What percent is coming from changes to pricing mix or acuity.
Mike Marks: So, you know, we are obviously really pleased with our year-to-date June performance. It kind of sets our thinking about the back half of the year. On the top line, our volume and payer mix for the first six months of this year were better than our original expectations. We saw the labor management, as we just talked about, including the contract labor declines, also contributed to our thinking around our results. As we move into the second half of the year, we believe most of these trends should continue.
Speaker Change: And then I'm just going from just better margin improvement coming from for Labor and then finally are there any changes to your supplemental assumptions for the back half the year versus original guidance.
Speaker Change: Yes, good morning.
Speaker Change: We're obviously really pleased with our year to date performance and kind of SaaS or thinking about the back half of the year.
Speaker Change: On the top line, our volume and payer mix for the first six months of this year were better than our original expectations.
Mike Marks: We anticipate volume growth to be in the 4-6% range for the year. We expect salary, wages, and benefits, supplies, and other operating expenses as a percent of revenue to run mostly where we did June year-to-date. Contract labor as a percentage of salary, wages, and benefits is projected to be roughly in the mid-4% range in the back half of 2024.
Speaker Change: Solid labor management, as we just talked about including the contract labor declines also contributed to our thinking around the <unk>.
Speaker Change: Kind of our results as we move into the back half of the year. We believe most of these trends should continue.
Speaker Change: Anticipate volume growth.
Speaker Change: 4% to 6% range for the year, we expect salary wages and benefits supplies and other operating expenses as a percent of revenue to run mostly where we did June year to date.
Brian Gil Tanquilut: And we do expect professional fee expense growth compared to the prior year to moderate a bit more in the back half of 2024 as well. Specifically on Medicaid Supplemental Payments, as you recall, in our original guidance, we anticipated a headwind of $100 to $200 million from the Medicaid Supplemental Payment Program. As we've noted previously, these programs are complex and have a lot of variability quarter to quarter, but given that we are now deeper into 2024 and have better visibility into the programs across our states, we now anticipate an approximate $100 million to $200 million tailwind in 2024 from Medicaid Supplemental Payment Great, thanks so much.
Speaker Change: Contract labor as a percentage of salary wages and benefits is projected to be in roughly in the mid 4% range in the back half of 2024, and we do expect the expense growth to the prior year to moderate a bit more in the back half of 2024 as well.
Speaker Change: Specifically on Medicaid supplemental payments as you recall in our original guidance, we anticipated a headwind.
Speaker Change: $100 million to $200 million from the Medicaid supplemental programs. As we've noted previously these programs are complex and have a lot of variability quarter to quarter.
Speaker Change: But given that we are now deeper into 2024 and have better visibility into the programs across our states. We now anticipate an approximate $100 million to $200 million tailwind in 2024 from Medicaid supplemental payment programs most of which occurred in the first half of 2024.
Samuel N. Hazen: Our next question comes from Brian Tanquilut from Jeffries. Your line is now open. Hey, good morning, guys. And congrats on a solid quarter. Um, maybe Sam, just as we think about, you know, you called up Medicaid with the redeterminations kind of dragging in volumes a little bit here, but still, very good performance. So just curious where you stand now, as you think about the sustainability of this elevated, you know. Well, as Mike just mentioned, Brian, we do expect that these volume trends will continue throughout 2024.
Speaker Change: Great. Thanks, so much.
Speaker Change: Okay.
Unknown Attendee: Our next question comes from Brian <unk> from Jefferies. Your line is now open.
Unknown Attendee: Hey, good morning, guys and congrats on solid quarter.
Samuel N. Hazen: And we have had, you know, for the years including 2023, really solid volume growth. I think when we pull back and we look at volume for the company and overall demand for services, it starts with the markets that we serve. We are in markets, as we indicated at our investor day, that we think have solid characteristics that are going to support organic growth. That's the first thing.
Speaker Change: Maybe Tim just as we think about.
Brian: Called out Medicaid with the Redetermination kind of dragging on volumes and a little bit here, but still a very very good performance. So just curious where you stand now as you think about the sustainability of this elevated utilization trend.
Brian: Well as Mike just mentioned, Brian we do.
Speaker Change: Expect that these volume trends will continue throughout 2024, and we have had for eight including 2023 really solid volume growth.
Speaker Change: I think when we pull up and we look at volume for the company overall demand for our services. It starts with the markets that we serve we are end markets as we indicated at our Investor day that.
Samuel N. Hazen: The second thing is the HCA network way. And that is how we build our networks, how we execute inside of that. Our inpatient bed capacity is up two percent year over year. When you look across all of our facilities, we've added a few hospitals to that as well, really small ones that are complimentary. Our outpatient facilities overall are up five percent.
Speaker Change: That we think have solid share touristic.
Speaker Change: To support organic growth. That's the first thing the second thing is the HCA network way and that is how we build our networks, how we execute inside of that our inpatient bed capacity is up 2% year over year. When you look at across all of our facilities. We've added a few hospitals and.
Samuel N. Hazen: So our network development is a key part of our growth. And we think it's part and parcel to our ability to grow our market share, which we have grown, and we continue to see a metric that suggests our market share continues to be positive. The third thing for us is capital.
Speaker Change: And in that as well really small ones that are complementary.
Speaker Change: Our outpatient facilities.
Speaker Change: We're all are up 5%. So our network element is a key part of our.
Samuel N. Hazen: We are investing heavily in who we are. We're investing in our networks. We're investing in our people. We're investing in clinical technology for our physicians. And we're finding ways to use our capital to make our services better and produce better outcomes for our patients. So this year, we'll invest somewhere around five point two billion dollars, which is significantly higher over the last couple of years. And we continue to see opportunities inside of our organization to invest capital.
Speaker Change: Growth and we think it's part and parcel to our ability to grow our market share, which we have grown and we continue to see a metrics that suggest our market share continues to be positive.
Speaker Change: Third thing for US is capital we are investing heavily in who we are we're investing in our networks, we're investing in our people.
Speaker Change: Being a clinical technology for our physicians and we're finding ways to use our capital to make our service better and produce better outcomes for our patients. So this year, we will invest somewhere around $5 $2 billion, which is significantly up over the last couple of years, we continue to see opportunities.
Samuel N. Hazen: The next area, and it's hard for us to know this, but we do believe that coverage, when people are covered, whether it's through the exchanges mostly, through their employers, through Medicare, they tend to purchase services. And so coverage is up, so that helps stimulate demand. And we are in really uncharted territories for growth in demand in a normal environment, and it's hard to know if there's a hangover from COVID, as we've mentioned in past calls and so forth.
Speaker Change: Inside of our organization to invest capital.
Speaker Change: The next area, it's hard to know this but we do believe that coverage when people are covered whether it's through the exchanges mostly through their employers through Medicare.
Ken: Ken to purchase services.
Ken: Coverage is up so that helps elevate demand.
Speaker Change: We are in really unchartered territories for growth in demand in <unk>.
Samuel N. Hazen: But we do believe the fundamental attributes of coverage help support demand growth. And then when you start looking across, like we said earlier, the different payer classes, it's broad-based. It's broad-based across all the different payers.
Speaker Change: Normal environment, and it's hard to know if theres hangover from Covid as we've mentioned in past calls and so forth, but we do believe the fundamental attributes of coverage helped support demand growth.
Samuel N. Hazen: It's broad-based across our services. I mean, even obstetrics was up slightly in the quarter. So we have seen just sort of a lift across all aspects of our business. And again, the diversification of HCA from market to market, as well as the diversification from services, allows us to participate in this demand growth. And we're pretty encouraged by what we see year-to-date and what we expect over the balance of this year. Thank you. Our next question comes from Ben Hendrix from RBE Capital Markets. Your line is now open. Thank you very much.
Speaker Change: And then when you start looking across like we said earlier the different payer classes. It's broad based it's broad based across the different payers, it's broad based across our services.
Keven: Keven obstetrics was up slightly in the quarter. So we have seen just sort of a lift across all aspects of our business and again the diversification of HCA from market to market as well the diversification for the services service allows us to participate in this demand growth.
Keven: And and we're pretty encouraged by what we see.
Benjamin Hendrix: I was wondering if you could comment a little bit more on the sources of acuity strength that you continue to see, when you parse that out between maybe the two midnight rule investments and higher acuity capabilities, or if there's, like we heard some MCOs talk about higher acuity and continuing Medicaid books, and then maybe even some pull-through pull forward of acuity ahead of members being redetermined off. So just wanted to get any indication of kind of where you're seeing that acuity growth. Thank you. Well, this is Sam.
Keven: Year to date, and what we expect over the balance of this year.
Speaker Change: Awesome. Thank you.
Speaker Change: Our next question comes from.
Speaker Change: From RBC capital markets. Your line is now open.
Speaker Change: Thank you very much I was wondering if you could comment a little bit more on the sources of acuity strength that you continue to see.
Speaker Change: We can parse that out between maybe the two midnight rule investments in higher acuity capabilities or if there is we like we heard some MTO is talk about higher acuity and continuing Medicaid books, and then maybe even some pull through pull forward of acuity ahead of members being re determined off so I just wanted to get any.
Samuel N. Hazen: Let me speak to sort of our core strategy. And our core strategy is to create sort of a one-stop capability within our systems. And by that, I mean the ability to take care of a patient's needs regardless of what their condition happens to be.
Speaker Change: That's kind of where youre seeing that acuity growth. Thank you.
Samuel N. Hazen: So we, over time, have built complexity in the services that we've offered. For example, we've enhanced trauma programs. We've enhanced transplant programs, and we've enhanced neonatal services. We've opened up our infrastructure with our transfer centers, with helicopters, and with ground transportation. We've interacted with the rural community in a way to support the healthcare needs there, which typically tend to be more acute care service requirements than not. And so all of that has been part and parcel of our network strategy over the years.
Speaker Change: Well this is Sam let me speak to sort of our core strategy. Our core strategy is to create sort of about one stock capability within our systems and by that I mean.
Samuel N. Hazen: The ability to take care of our patients need regardless of what they are there.
Samuel N. Hazen: There are condition happens to be so we over time have built complexity in the services that we've offered so we've enhanced trauma programs, we've enhanced transplant programs. We've enhanced neonatal services, we've opened up our infrastructure with our transfer centers with helicopters with ground transportation.
Samuel N. Hazen: I will tell you, again, we had broad-based service growth in trauma and in the number of ambulance deliveries that occurred at our hospitals. Our cardiac care, and our cardiac surgery was up. So we had neonatal admissions were up. All of these components that I mentioned that are essential to our network strategy saw growth. And so that has naturally lifted the case mix and the acuity of the patients that we serve. The two-midnight rule is actually diluted when it comes to our case mix on the inpatient side.
Samuel N. Hazen: Haitian we've interacted with the rural community in a way to support the health care needs, there, which typically tends to be more acute care service requirements.
Samuel N. Hazen: They're not and so all of that has been part and parcel of dot toward our network strategy over the years I will tell you again, we had broad based service growth in trauma in the number of ambulance deliveries that occurred at our hospitals are cardiac care, our cardiac surgery was up.
Samuel N. Hazen: So we've jumped over the implications of the two-midnight rule because those are lower-acuity patients deserving of being in an inpatient status but nonetheless, less than average acuity by comparison. And our quarter suggests that the acuity and the complexity of the services that we offer are even more than what it reports out simply because of the dilutive effects of the two-midnight rule. Thank you. You're welcome. I'll wait.
Samuel N. Hazen: We had neonatal admissions were up all of these components that I mentioned that are essential to our network strategy saw growth and so that has naturally lifted the case mix and the acuity of the patients that we serve the two midnight rule is actually dilutive when it comes.
Samuel N. Hazen: Two our case mix on the inpatient side. So we've jumped over the implications of the two midnight rule because those are lower acute patients deserved deserving to be in an inpatient status, but nonetheless less than average acuity by comparison, so our quarter suggests that.
Justin Lake: Our next question comes from Justin Lake of Wolf Research. Your line is now open. Thanks. Good morning.
Samuel N. Hazen: The acuity and the complexity of the services that we offer is even more than what it points out simply because of the dilutive effect of the two midnight rule.
Samuel N. Hazen: Sam, I wanted to get your view on one of the bigger questions we're all getting from investors heading into the elections, which is the potential for exchange disruption. Should the enhanced subsidies be allowed to expire at the end of 2025? Has the company run any scenario analysis of what happened to these volumes in hospital economics? And if you could just share with us what you think happened to those patients in terms of coverage, who might drop from the exchanges, do they become uninsured, do you think they move to other payer types?
Samuel N. Hazen: Thank you.
Speaker Change: Youre welcome our next.
Speaker Change: Our next question comes from Justin Lake of.
Speaker Change: <unk> Research your line is now open.
Justin Lake: Thanks, Good morning.
Justin Lake: I wanted to get your view on one of the bigger questions. We're all getting from investors heading into the <unk>, which is the potential for exchange disruption.
Speaker Change: B a chance subsidies be allowed to expire at the end of 2025 as the company run any scenario analysis of what happens to these volumes and hospital economics.
Samuel N. Hazen: And then if I could just squeeze in a numbers question, can you tell us what same store ASC revenue growth was in the quarter? On the exchanges, Justin, obviously there's a lot to play out politically between now and the end of the year, so it's a little premature for us to say what level of subsidies participants in the exchange will have and how that will play out. It's really difficult for us to know precisely what that is.
Speaker Change: Those subsidies expire and if not maybe you could just share with us what you think happens to the patient.
Speaker Change: In terms of coverage, who might drop from the exchanges do they become uninsured do you think they moved to other payer types and then if I could just squeeze in a numbers question could you tell us what same store revenue growth was in the quarter. Thanks.
Speaker Change: Okay.
Speaker Change: On the exchanges Justin.
Speaker Change: Obviously, theres a lot to play out here politically between now and the end of the year. So it's a little premature for us to.
Speaker Change: Forecast, what's going to happen politically with respect to the exchanges.
Speaker Change: It's no secret that they are scheduled to expire at the end of 2025.
Samuel N. Hazen: We are starting to try to study as much as we can study, and we're hopeful that in 2025 we'll have some sense of the policies that might be put forth, a better sense of the economics around the exposure if the subsidies go away. At this point in time, it's way too early for us to make any judgments on that.
Speaker Change: Many of the participants are in states that we serve obviously you all seen that in the data that's available.
Speaker Change: We don't have great line of sight on which.
Speaker Change: Participants in the exchange have what level of subsidies and how that will play out it's really difficult for us to know precisely what that is.
Speaker Change: Starting to thrive study as much.
Samuel N. Hazen: But we will be as transparent as we possibly can be with you all around it once we have information that we feel we can support and share appropriately. All in all, same store, ASC revenue growth is about 8%. Thanks, guys. Thank you. Our next question comes from Whit Mayo from Living Partners. Your line is now open. Hey, thanks. Sam, you've talked a lot. I have an ER.
Speaker Change: Study and we're hopeful that in.
Speaker Change: 2025, we will have some sense of the policies that might be put forward.
Speaker Change: A better sense of the economics around.
Speaker Change: The exposure if the subsidies go away at this point in time, it's too early for us to make any judgments on that but we will be as transparent as we possibly can be with you all around it once we have information that we feel we can support and share appropriately.
Speaker Change: Hey, Justin on same store ASC revenue growth.
Benjamin Whitman Mayo: Any numbers that you can share around any of those productivity gains that puts this in perspective? Maybe we see it on the back end with length of stay. Comment on the commercial.
Justin Lake: That 8%.
Speaker Change: Yes.
Justin Lake: Great. Thanks, guys.
Justin Lake: Thank you.
Speaker Change: Our next question comes from.
Samuel N. Hazen: Growth in the ER this quarter. Thanks. Okay, let me start with the commercial ER growth. Our commercial volumes in the emergency department grew almost 18%, so really strong growth in that category. Again, we are focused on throughput, patient satisfaction, and high clinical performance with what we call our ER revitalization program. And our ER revitalization program has produced really positive results for us. Our throughput, let's start with time to see a patient, is down two minutes. Oh, that didn't sound like that much. Well, we're moving from 11 to nine minutes.
Speaker Change: From Leerink partners. Your line is now open.
Speaker Change: Hey, Thanks, Sam you've talked a lot in recent quarters around the efficiencies and the throughput initiatives that you have.
Speaker Change: Having the ER any numbers that you can share around any of those productivity gains that puts us in perspective, maybe we see it on the backend with length of stay and just if you could comment on the commercial.
Speaker Change: Growth in the ER this quarter. Thanks.
Samuel N. Hazen: Okay, Let me start with the commercial ER growth.
Samuel N. Hazen: Personal <unk>.
Speaker Change: Volumes in the emergency grew.
Speaker Change: Almost 18%, so really strong growth in that category.
Speaker Change: Again, we are focused on.
Speaker Change: Throughput patient satisfaction and high clinical performance with what we call our ER revitalization program and our ECR revitalization program has produced really positive results for us.
Samuel N. Hazen: That's the starting point. Our length of stay for patients who have been discharged is down, I think, about 15 to 20%, to around 160 minutes or something in that zone. Again, throughput, getting the patient through the system, communicating with them effectively, and then getting them out when they're ready to be out. Then we have patients who are admitted. For those patients, we've also improved the hold time in the emergency room so we can get them up to the floor and in a proper setting for care, and that also has improved markedly on a year-over-year basis.
Speaker Change: Our throughput.
Speaker Change: Let's start with Tom to see a patient is down two minutes, Oh that didn't sound like that much.
Tom: Moving from 11 to nine minutes.
Speaker Change: Thats.
Speaker Change: That's the starting point our length of stay for patients who had been discharged is down I think about 15% to 20% to around 160 minutes or something in that zone again throughput getting the patient through the system communicating with them effectively and then getting them out when they are ready to be out there.
Samuel N. Hazen: We have room to go, and we're continuing to invest in our leadership development. We're continuing to invest in technology. We've put our care transformation and innovation team inside of our ER processes to help them think about different approaches. Our patient satisfaction has improved in our emergency room, and I want to say that more than eight out of ten patients would highly recommend or recommend an HCA emergency room.
Speaker Change: Then we have patients who are admitted for those patients. We've also improved the whole time in the emergency room. So we can get them up to a floor.
Speaker Change: Setting for care and that also has improved markedly on a year over year basis, we have room to go and we're continuing to invest in our leadership development, we're continuing to invest in.
Samuel N. Hazen: In addition to that, we're adding capacity. We've added capacity on our hospital campuses, but we've also added capacity off-campus to really meet the needs of different communities, and that's been part of our growth as well. We continue to invest in both aspects from a supply standpoint, and then we're investing heavily in our processes to make sure that we're delivering the services that our communities need and that our patients deserve. I'm really proud of the emergency room effort that our teams have put forth.
Speaker Change: Technology, we've put our care transformation and innovation team inside of our ER processes to help them think about different approaches our patient satisfaction has improved in our emergency room and I want to say over eight out of 10 patients would highly recommend or recommend.
Speaker Change: And HCA emergency room in addition to that we're adding capacity.
Speaker Change: Added capacity on our hospital campuses, but we've also added capacity off campus to really meet the needs of different communities and that's been part of our growth as well and we continue to invest in both aspects from a supply standpoint, and then we're investing heavily in our process standpoint.
Andrew Mok: Thank you. Our next question comes from Andrew Mok from Barclays. Your line is now open. Hi, good morning.
Mike Marks: One clarification and a question. First, can you just give us the exchange admissions as a percentage of total in the quarter? And then on the question, outpatient surgeries were down about 2%. Can you elaborate on some of the trends you're seeing there and maybe break that out between hospital outpatient and ASE volumes? Thanks. Yeah, so on exchange volumes, they're just right at 7% of admissions and AR visits as well as percent of total. What was the second question? It was about outpatient surgery. I've got it right here.
Speaker Change: With to make sure that we're delivering.
Speaker Change: The services that our communities need and that our patients deserve and I'm really proud of the efforts that our teams have put forth. Thank you.
Speaker Change: Thanks.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Andrew Mok from Barclays. Your line is now open.
Andrew Mok: Hi, good morning, one clarification.
Andrew Mok: Question first can you just give us the exchange admissions as a percentage of total in the quarter and then on the question outpatient surgeries were down about 2% can you elaborate on some of the trends youre seeing there and maybe break that out between hospital outpatient and ASC volumes. Thanks.
Mike Marks: Yeah. So we were down, in the quarter, a little over 2% on same stores and a little over 1% on ASCs, and that weighted out to about the 2% that we mentioned. Again, it's exclusively Medicaid and uninsured, so our overall revenue growth in our ASC and hospital outpatient surgery platform was up. Our profitability on that segment was up, and yes, we have a volume metric that's down, but the implications to our business really aren't there as a result of it. Great, thank you. Our next question comes from Stephen Baxter from Wells Fargo. Your line is now open.
Speaker Change: Yes, so on the exchange volumes, there just right at 7% of admissions and ER visits as well for exchange as a percent of total what was the second question was on.
Speaker Change: ISC outpatient surgery I've got it right here, yes, so we were down.
Speaker Change: In the quarter, 2% in the hospital on a same well, let me back up last night, saying towards here sorry, Yes, we're a little over 2% on same stores at a little over 1% on afcs and that that weighted out to about the 2% that we mentioned again.
Speaker Change: It's exclusively in Medicaid and uninsured so our overall revenue growth in our ASC and hospital outpatient surgery platform was up our profitability on that segment was up and yes.
Stephen C. Baxter: Hi, thanks. Just a couple more on the guidance. I was hoping to hear if you've updated your thinking on core wage inflation as part of this guidance revision. Wondering if that's a contributor or potentially not due to the higher volumes you're staffing for. And then if there's any impact of M&A in the guidance, you can leave that out. That'd be great to know too.
Yes, yes, we have a volumetric that down but the implications to our business.
Speaker Change: Really aren't there as a result of it.
Speaker Change: Okay.
Speaker Change: Great. Thank you.
Speaker Change: Yeah.
Steven James Valiquette: Our next question comes from Steven <unk> from Wells Fargo. Your line is now open.
Mike Marks: All right. Thanks. Yeah, we if you look at wage inflation, you know, we kind of came in this year thinking in the two and a half to 3% range. And that stays consistent as we think about where we are here and how we're going, you know, kind of close to the back half of the year. So we're thinking wage inflation will be fairly M&A, so there were some questions on M&A. Let's kind of run through that. So you have $400 million in revenue from new stores. About $250 million of that is from Valesco. The rest is from the acquisitions in Texas.
Steven: Hi, Thanks, just a couple more on the guidance I was hoping to hear if you've updated your core wage inflation as part of this guidance revision wondering if thats a contributor potentially not due to the higher volumes or staffing too and then if there is any impact of M&A in the guidance on revenue EBITDA it'd be great to know too.
Steven James Valiquette: Thanks.
Steven James Valiquette: Yes.
Speaker Change: Look at wage inflation.
Speaker Change: As we kind of came in this year, we were thinking in two and half to 3% range and that stayed consistent as we think about where we are here and how we're going to.
Mike Marks: You heard us talk about the Wise Healthcare System acquisition and a couple of others. And, you know, that's the revenue side of that. It was diluted to earnings, though, at about a 1% negative impact on EBITDA for the quarter.
Speaker Change: You know kind of close to the back half of the year. So we're thinking wage inflation will be fairly steady.
Speaker Change: And then it's more of a <unk>.
Mike Marks: So the M&A trends, you know, don't really impact or did not really impact our year-over-year EBITDA growth in any material way. Our next question comes from Scott Fidel from Stephens. Your line is now open. Hi, thanks. Good morning.
Speaker Change: Young M&A.
Speaker Change: So there were some questions on M&A.
Speaker Change: On a run through that so you have $400 million of revenue in new stores.
About $250 million of that is from Glasgow and the rest are from the acquisitions in Texas you heard US talk about the why is health care system acquisition.
Speaker Change: Couple of others.
Speaker Change: That's the revenue side of that it was diluted to earnings though in about 1% negative impact to EBITDA for the quarter. So the M&A trends.
Scott J. Fidel: I was hoping to circle back on the Medicaid supplemental payments. And maybe you could just sort of talk about how your Medicaid margins have evolved, you know, from maybe where they were a couple of years ago to where they are currently, inclusive of the Medicaid supplemental payments. I know that you mentioned how this is really just, you know, trying to get the business still on Medicaid back closer to break even, or maybe not even there yet. It would be so helpful if you could sort of walk us through that. And then, you know, just looking out for the election.
Speaker Change: Don't really impact our did not really impact our year over year EBITDA growth in any material way.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Scott Sidell from Stephens. Your line is now open.
Scott J. Fidel: Hi, Thanks, Good morning, I was hoping to just circle back on the Medicaid supplemental payments and maybe if you could just sort of talk about how your Medicaid margins have evolved.
Mike Marks: There is a level of investor uncertainty around the sustainability of Medicaid supplemental payments if there was a switch in the White House, although I do think it's notable that many of the states that are sponsoring these payments are from red states. So it feels like these payments likely would be, you know, quite sustainable. But there is a lot of investor uncertainty around this topic, so we certainly appreciate your thinking on that. Thanks. Yeah, thank you. I'll take the second one first.
Scott J. Fidel: From maybe where they were a couple of years ago to where they are currently inclusive of the Medicaid supplemental payments I know that you had mentioned now. This is really just trying to get the business still are Medicaid back closer to breakeven or maybe not even there yet. So helpful. If you could sort of walk us through that and then.
Speaker Change: Looking out to the elections.
Speaker Change: There is a level of investor uncertainty around the sustainability of Medicaid supplemental payments. If there was a switch in the whitehouse, Although I do think it's notable that we do see many of the states that are sponsoring these payments are from Red states. So it feels like these payments likely would be.
Mike Marks: You know, we do see good sustainability around the Medicaid supplemental payment programs. As you noted, they're well supported historically, both in red states and blue states. And, you know, frankly, two of our biggest programs are in Texas and Florida, so that'll give you a sense of those things. The new rule that came out earlier this year on sustainable programs, on Medicaid supplemental programs, we found to be positive and supportive and actually good for the provider industry.
Speaker Change: Quite sustainable, but there is a lot of investor uncertainty around this topic. So certainly appreciate youre thinking on that thanks.
Speaker Change: Yes. Thank you I'll take the second one first.
Speaker Change: We do see good sustainability around the Medicaid supplemental payment programs. As you noted they are well supported historically, both in Red States and Blue States.
Mike Marks: If you think about kind of margins over time, you know, if you go historically back in time, the Medicaid margins, and you're right, supplemental payments are really just core to Medicaid. But, you know, they were pretty significantly below the cost of caring for Medicaid patients in the past.
Speaker Change: And frankly two of our biggest programs are in Texas, and Florida. So that will give you a sense of those things.
Speaker Change: The new rule that came out earlier this year on sustainable programs.
Speaker Change: Medicaid supplemental programs, we found to be positive and supportive.
Speaker Change: And actually good for the provider industry. If you think about kind of margins over time. If you go historically back in time, the Medicaid margins and Youre right I mean, submental payments are really just core to Medicaid.
Speaker Change: They were pretty significantly below the cost of caring for Medicaid patients in the past.
Speaker Change: Over the last several years they have grown.
Speaker Change: Some in more states have added programs or enhanced programs, but even now if you look at where we are in 2024, and you think about the historical base Medicaid reimbursement plus a supplemental payment reimbursement is still pretty well short of the cost of caring for those patients. So that's the context.
Mike Marks: Over the last several years, they have grown some, and more states have added programs or enhanced programs. But even now, if you look at where we are in 2024, and you think about the historical kind of base, Medicaid reimbursement, and Medicaid supplemental payment reimbursement, it's still, you know, pretty well short of the cost of caring for those patients. So that's the context that we would provide on that. Next question. Our next question comes from Jason Casoria from Citigroup. Your line is now open. Great, thanks. Good morning.
Jason Paul Cassorla: Just wanted to ask on CapEx. It sounds like you're maintaining your outlook there. But just in context of the higher 2024 revenue and EBITDA outlook, I just, I guess curious if there's anything to call out on the CapEx side. And apologies if I missed this.
Speaker Change: We said we would provide on that.
Speaker Change: Okay.
Speaker Change: Next question.
Jason Paul Cassorla: Our next question comes from Jason <unk> from Citigroup. Your line is now open.
Mike Marks: But it sounds like maybe perhaps you're expecting to use the excess free cash flow from the guide raise just for share repurchase? Or how should we think about that? Yeah, we're not really revising our CapEx. You know, when we started this year, we talked about 5.1 to 5.2 billion; we think it's still going to generally be in that same range. As noted in our comments, you know, we do expect, based on the improved outlook and updated guidance, that we're going to spend about $6 billion in 2024 on share repurchase.
Jason Paul Cassorla: Great. Thanks.
Jason: I just wanted to ask on Capex sounds like Youre, maintaining your outlook there, but just in context of a higher 2020 for revenue and EBITDA outlook.
Speaker Change: I guess curious if there's anything to call out on the Capex side and I apologize if I missed this but it sounds like maybe perhaps you are expecting to use the excess free cash flow on the guide range for share repurchase or how should we think about that thanks.
Speaker Change: Yes.
Speaker Change: Yes.
Samuel N. Hazen: So, you know, the bulk of the increase from the, you know, from the improved results would be going towards share Let me add, Mike, if I may, to Sam, to the capital. I think it's important to understand that we operate on an inpatient occupancy level in the low to mid-70s, even in the second quarter, which is in addition to the fact that we added 2% inpatient beds, as I mentioned. So our inpatient occupancy continues to grow, reflecting the acuity of our patients, reflecting the overall demand, and reflecting the market share gains that we believe we're experiencing.
Speaker Change: We are not really revising our capex.
Speaker Change: As we started this year, we talked about <unk>, 1% to <unk> 2 billion. We think is still going to generally be in that same range as noted in our in our comments, we do expect.
Speaker Change: Based on the improved outlook and the updated guidance that we're going to spend about $6 billion in <unk>.
Speaker Change: 24 on share repurchase so.
Speaker Change: The bulk of the increase from the <unk>.
Mike: From the improved results will be going towards share repurchase let me, let me add Mike if I made it Sam to the capital I think it's important to understand that we operate on an inpatient occupancy levels in the mid low to mid seventies, even in the second quarter, which is in.
Samuel N. Hazen: The second piece is our ambulatory network development. Again, we have about 2,600 outpatient facilities and clinics across the company, up 5% from where they were last year. These are a component of our capital spending as well, and we will continue to look for opportunities from one market to the other to build out a network that serves our patients as we need to serve them. The third piece is infrastructure. We are in an infrastructure business. It requires us to have facilities that provide the appropriate environment for our patients.
Speaker Change: In addition to the fact, we had a 2% inpatient bed as I mentioned Saar inpatient occupancy continues to grow reflecting the acuity of our patients reflecting the overall demand than reflecting the market share gains that we believe we are.
Speaker Change: Experiencing the second piece is our ambulatory network development.
Speaker Change: Again, we have about 2600 outpatient facilities and clinics across the company up 5% from where it was last year those are component of our capital spending as well and we will continue to look for opportunities from one market to the other to build out a network that serves our patients as we can.
Samuel N. Hazen: We have to upgrade basic elements of those facilities and so forth, and so a lot of that is maintenance. Half of our capital goes toward maintenance to keep our facilities where they need to be. Then the last thing for us is technology.
Speaker Change: Need to serve them in the <unk>.
Samuel N. Hazen: We are investing more in our technology agenda because we see opportunities for it to support the company's next-generation growth and allow us to serve our patients even better, so our technology component of our CapExes continues to grow. All of this is against the backdrop of our long-term view on demand. As we indicated in November at our Investor Day, we expect long-term demand to be in that 2% to 3% zone as well, and so we have to build the necessary capabilities in our networks and in our facilities to be able to serve that demand, and that's what our capital expenditure plan is intended to accomplish. Hey, Sam, let me clarify real quick. I said 5.1 to 5.2.
Speaker Change: Third piece is infrastructure.
Speaker Change: We are in.
Speaker Change: And infrastructure business.
Speaker Change: It requires us to have.
Speaker Change: Facilities that have the appropriate environment for our patients we have to upgrade basic elements of those facilities and so forth and so a lot of that is maintenance so half of our capital goes towards maintenance.
Speaker Change: To keep our facilities, where they need to be and then the last thing for US is technology, we are investing more in our technology agenda, because we see opportunities for it to support the company's next generation growth and allow us to serve our patients even better so our technology.
Mike Marks: It's actually 5.1 to 5.3 billion in capital spending for 2024. Thank you. Next question, please. Our next question comes from Kevin Fischbeck from Bank of America. Your line is now, Great, thanks.
Speaker Change: <unk> of our Capex is actually continues to grow all of this is in the backdrop of our long term view on demand as we indicated in November at our Investor Day, We expect long term demand to be in that 2% to 3% zone as well.
Speaker Change: And so we have to build the necessary capabilities and our networks and our facilities to be able to serve that demand and thats, what our capital expenditure plan is intended to accomplish.
Kevin Mark Fischbeck: It sounds like you believe that the, you know, the volume and the demand side of things. Is this the right way to be thinking about the base when we think about next year? Is there anything puts or takes that you would point to? I know sometimes when volume comes in stronger than you planned for, maybe there's a little bit more margin leverage than you would expect.
Samuel N. Hazen: Hi, Sam let me clarify real quick I said five one to $5. Two is actually five one to $5 3 billion in capital spending for 2024. Thank you.
Samuel N. Hazen: And maybe that might moderate, or whether you mentioned the timing in the past about some of the supplemental payments. Is there any obvious headwind from timing from this year to next year we should be thinking about as we think about margin? Thanks everybody for joining us and I hope that sustainability is a good base for thinking about next year's growth. Thanks. We aren't going, Kevin and Sam, speak to 2025.
Speaker Change: Okay.
Speaker Change #100: Next question please.
Speaker Change #101: Our next question comes from Kevin Fischbeck from Bank of America. Your line is now open.
Kevin Mark Fischbeck: Great. Thanks, So it sounds like you believe that the volume and the demand.
Kevin Mark Fischbeck: Supports this volume is a kind of a base for the future I wanted to see if you could give a little color on the on.
Speaker Change #103: On the margin side of things and that's the right way to be thinking about the base. When we think about next year is there anything <unk>.
Speaker Change #104: So it takes that you would point to I know, sometimes when volume comes in stronger than you planned for maybe there's a little bit more margin.
Samuel N. Hazen: I will tell you that we... Do not have any unusual events thus far through the first six months of this year. This is core operations enhanced, as Mike said, slightly by the Medicaid supplemental program. So as sort of a core operational level of performance, it's really quite clean by comparison to, you know, some of the choppiness that naturally occurs with COVID, with the supplemental payment timings and so forth, with some of the challenges we experienced last year with just the inheritance of Valesco and so forth.
Speaker Change #105: Leverage than you would expect maybe that might moderate or whether you mentioned the tightening in the past about some supplemental payments is there any obvious headwind from timing from this year into next year, we should be thinking about as we think about margins and EBITDA.
Speaker Change #106: Sustainability is this a good base for thinking about next year's growth. Thanks.
Speaker Change #105: Okay.
Kevin Mark Fischbeck: We are at one Kevin the Sam speak to 2020.
Speaker Change #107: I will tell you that we.
Speaker Change #108: Do not have any.
Unusual.
Speaker Change #108: Events, thus far through.
Speaker Change #108: The first six months of this year of its core operations.
Samuel N. Hazen: But when we look at the first six months and we think about the balance of the year, this is really a solid operational performance supported by strong volume and not really unusual items benefiting or dragging the business in any material way. That's how I'd answer that question. Our next question comes from Ryan Langston from TD Cohen. Your line is now open. Hi, good morning. I just want to go back to labor for a second. Is there anything particular you would like to know?
Speaker Change #108: Enhanced as Mike said slightly by the the Medicaid supplemental programs.
Mike: As for the core operational level of performance.
Mike: It's really quite clean by comparison to some of the Choppiness that naturally occurs with COVID-19 with.
Mike: With the supplemental payment timings and so forth with some of the challenges we experienced last year with just the inheritance of velazco and so forth, but when we look at the first six months and we think about the balance of the year. This is really a solid operational performance supported.
Ryan Langston: https://www.hcahealthcareinc.com and then just there is some potential M&A larger deals in the market both on the hospital https://www.hcahealthcareinc.com https://www.healthcareonline.com more, Yes, so, you know, labor, as we've already said, the biggest driver, if you think about, you know, our performance in the first half of the year, compared to prior year, was this reduction in contract labor, and that kind of comes through all the work we've been doing over the last several years, improving our recruitment activities, and really working on retention. On the recruitment side, you've heard us talk about our academic affiliation work, our work around the Galen School of Nursing, and all of that has kind of produced improved supply of nursing into our market. Super beneficial.
Mike: Supported by strong volume and not really unusual items.
Mike: Benefiting or dragging the business in any material way.
Mike: That's how I'd answer that question.
Speaker Change #109: Perfect. Thanks.
Speaker Change #109: Okay.
Ryan <unk>: Our next question comes from line of Ryan <unk> from Cowen. Your line is now open.
Ryan <unk>: Hi, Good morning, I, just want to go back to labor for a second obviously impressive results is there anything particular in recent achievements driving these results maybe past throughput and length of stay reduction and maybe how to think about that carrying forward over the next few quarters and then just there is some.
Speaker Change #111: M&A larger deals in the market both on the hospital and the ambulatory side understand end market tends to be where you focus but can you maybe just remind us of the parameters that you would.
Speaker Change #112: Entertain media more larger market or national expansion. Thanks.
Speaker Change #113: Yes labor as we've already said the biggest driver if you think about our performance in the first half of the year compared to prior year was this reduction in contract labor and that kind of comes through all the work we've been doing over the last several years.
Mike Marks: You know, I do think from a contract labor perspective, you know, we're, as I noted in my comments, we're down to 4.8% contract labor as a percentage of salary wages and benefits. You know, I do think that the go for improvement will still have some, you know, we got it, as you've noted from my comment on guidance that, you know, we think we'll run, you know, probably in the mid four range in the back half of the year.
Speaker Change #113: Proving our recruitment.
Speaker Change #113: Activities and really working on retention on the recruitment side, you've heard us talk about our academic affiliation work our work around the Galen school of nursing and all of that is kind of produce improved supply of nursing into our markets, which is super beneficial I do think from a contract labor perspective.
Mike Marks: So there's some improvement in the future, but, you know, I think the big move on contract labor from the heights of COVID has really been reflected now, and what's to come is more incremental improvement as we continue to work on recruitment and retention. So that would be my, I don't see anything other than that as material related to driving our labor trends, and productivity remains good, wage inflation has been stable, especially kind of coming off COVID and into 2024. So those are the major things that we think about when we think about from now to the back half of the year. And Mike, let me just put a wrap around that.
Speaker Change #112: <unk>.
Speaker Change #114: As I noted in my comments were down four 8% contract labor as a percentage of salary wages and benefits.
Speaker Change #114: Do think that the go forward improvement, we will still have some we guided as you've noted from my comment on guidance.
Speaker Change #114: We think will run probably in the mid four range in the back half of the year. So there is some improvement in the future but.
Samuel N. Hazen: I mean, our focus now is finding ways to help our employees succeed even more in what they do. So we are investing in the education of our existing workforce, just as much as we're investing in education and new nurses and so forth. We are improving our processes around supporting our caregivers so they can deliver better care. So we have a number of initiatives that are connected to our nursing operations and so forth that really make sure that we have resources and support for our caregivers on a day in and day out basis. And we're investing heavily in our leadership because good leaders produce good outcomes for our patients and good outcomes for the organization. So those things are wraparounds to what Mike just alluded to.
Speaker Change #115: <unk> the big move on contract Labor from the Heights of Covid really have been reflected now and whats to come as more incremental improvement as we continue to work on.
Speaker Change #115: Prudent and retention.
Mike: So that would be monitor I don't see anything other than that is material related to driving our labor trends and productivity remains good wage inflation has been stable, especially kind of come in all COVID-19 and into 2024. So those are those are the major things that we think about when we think about from now to the back half of the year and Mike Let me just put a <unk>.
Mike: Wrap around that I mean, our focus now is finding ways to help our employees succeed even more what they do so we are investing in education of our existing workforce just as much as <unk>.
Mike: Investing in education, and new nurses and so forth we are.
Samuel N. Hazen: With respect to M&A, we have added to our platform this year with some tuck-in acquisitions from one market to the other. In Texas, as Mike alluded to, we added a number of hospitals to our North Texas market, small but very complementary, and we're starting to see good results out of them. In Houston, for example, we added an outpatient business to our network there that has produced very good outcomes. We are built to be bigger, we know that, and we have the balance sheet to support that, but we're very selective around making sure that an acquisition fits the model and can produce the returns that we expect from acquisitions. Will we enter new markets? Hopefully, yes, but those opportunities haven't necessarily presented themselves.
Speaker Change #116: Improving our processes around supporting our caregivers. So they can deliver better care. So we have a number of initiatives that are connected to our nursing operations and so forth that really make sure that we have our resources and support for our caregivers on a day in and day out basis and.
And we're investing heavily in our leadership because good leaders produce a good outcome for our patients and good outcome for the organization. So those things are wrapped around as to what Mike just alluded to with respect to M&A.
We have added to our platform this year with <unk>.
Mike: Tuck in acquisitions from one market to the other end.
Mike: Texas as Mike alluded to we added a number of hospitals to our north Texas market small, but very complementary and we're starting to see good results out of them and Houston as an example, we added on.
Samuel N. Hazen: I don't know that we'll deviate from our model. Our model is more centered on making our system, our local system, work better, work better for the community, work better for our patients, and work better for other stakeholders that are connected to it. We obviously could do that, but we don't think that's the best answer for the company. And that's been part of what we define as the durability of HCA Healthcare, staying true to the model in ways that produce really good outcomes for our stakeholders. It's possible that something will cause us to deviate from that, but we haven't really seen it so far.
Mike: On outpatient business to our network. There that has produced a very good outcome. We are built to be bigger we know that and we have the balance sheet to support that but we're very selective.
Speaker Change #117: Around making sure that an acquisition fits the model and produce the returns that we expect from acquisitions when we enter a new market hopefully, yes, but those opportunities haven't necessarily presented himself I don't know that we will deviate from our model or more.
Speaker Change #117: Model is more centered on making our system our local system work better work better for the community work better for our patients and work better for other stakeholders that are connected to it.
John Wilson Ransom: So, our focus is on investing back in our business, doing selective strategic acquisitions that complement our networks where we can, and really advancing our position in these great markets that we serve. One more comment on labor. The other thing that was very helpful for us, not only in the quarter, but year to date, was this 2% reduction in lead to staff. So, you know, if you think about how we serviced almost 6% growth in inpatient volume on the admission side, 2% reduction in length of stay, Sam mentioned this, but we had a 2% increase in our bed count from our capital investment program, and then our occupancy levels were up 2%.
Speaker Change #117: We obviously can do that but we don't think thats the best answer for the company and Thats been part of what we define as the durability of HCA healthcare is staying true to the model in ways that produce a really good outcomes for our stakeholders.
Speaker Change #117: Possible that something will cause us to deviate from that but we haven't really seen it up to this point. So our focus is on investing back into our business.
Speaker Change #117: Doing selective strategic acquisitions that complement our networks, where we can and really advancing our position in these great markets that we serve.
Speaker Change #117: Comment on labor and the other thing that was very helpful for us not only in the quarter year to date is this 2% reduction length of stay.
John Wilson Ransom: But that 2% drop in length of stay and the ER efficiency that Sam mentioned earlier also support our labor costs and efficiency in the way we're managing our labor. So I wanted to add that as well. Our next question comes from John Ransom from Raymond James. Your line is now open. Hey, good morning. Great job. Just curious, a question we're getting is if you look at the back half, do you happen to have the DPP comparison of 23 versus 24 in your back half?
Speaker Change #118: If you think about kind of how did we service is almost 6% growth in inpatient volume on the admission side, 2% reduction linked to say Sam mentioned this but we had a 2% increase in our bed count from our capital investment program and then our occupancy levels were up 2%, but that that 2% drop in length of stay and the ER.
Speaker Change #118: Our efficiency that Sam mentioned earlier also supports our labor cost and efficiency in the way, we're managing our labor So I wanted to add that as well.
Mike Marks: Here's what I would say about the guidance for the back half of the year. You know, we talked about when we came into this year that we thought we would have a headwind of $100 to $200 million for the Medicaid Supplemental Payment Program. As we've gotten deeper into this year, you know, we're now kind of changing that or updating that to a $100 to $200 million total. So if you think about that flip of 200 to $400 million, I would tell you that much of that already occurred in the first half.
Speaker Change #119: Thank you.
Speaker Change #119: Our next question comes from John.
Speaker Change #119: John Ransom from Raymond James Your line is now open.
John Wilson Ransom: Hey, good morning, great job.
John Wilson Ransom: Just curious a question we're getting is if you look at the back half.
Speaker Change #121: Do you happen to have.
The DTP compare 23 versus 24 in your back half.
Mike Marks: So if you think about the back half of 24, you know, what we're expecting for supplemental payment programs will look pretty similar to what we had in the back half of 2020. Okay, and if I could just think one more about M&A, what is the year over year?
Speaker Change #122: Here's what I would say about that.
The guidance on the back half of the year.
Speaker Change #123: We talked about when we came into this year that we thought we would have a headwind of $100 million to $200 million from Medicaid supplemental payment programs as we've gotten deeper into this year. We're now kind of changing that are updating that to a $100 million to $200 million tailwind. So if you think about that slip of $200 million to $400 million.
Mike Marks: Transcripts provided by Transcription Outsourcing, LLC. It is I mean, as I said earlier, if I think about M&A or another way to think about kind of new stores, it was a, you know, through for the second quarter about a 1% dilution to EBITDA. In terms of the impact from M&A activity, that includes, by the way, Valesco. I mean, I would note that Valesco will move to the same store in, you know, 2025.
Speaker Change #123: I would tell you that much of that already occurred in the first half of 2004. So if you think about the back half of 'twenty four.
Speaker Change #123: Expecting for supplemental payment programs will look pretty similar to what we had in the back half of 2023.
Speaker Change #124: Okay, and if I could just sneak one more in M&A.
Speaker Change #125: One is the year over year M&A contribution to EBITDA because it looks like in your cash flows M&A has been quite modest but it looks a little bigger in your table. So can we can we kind of was that fully in your guide the M&A effect when you guided for 24. Thanks.
Speaker Change #126: It is.
Speaker Change #127: As I said earlier, if I think about M&A.
Speaker Change #128: The way to think about it as kind of new stores.
Speaker Change #129: For the second quarter is about a 1% dilution to EBITDA for the quarter.
Speaker Change #130: In terms of the impact.
Speaker Change #130: From M&A activity that includes by the way Velazco I would note.
Joshua Raskin: And so, you know, you'll see it kind of stop talking about Valesco next year. But that, you know, M&A, you know, was not a material impact related to, you know, our earnings for the course. And Mike, as it moves through the last half of the year, it gets slightly better, and we're hopeful that by the end of the fourth quarter, it won't be diluted. Great, thank you. Our next question comes from Joshua Raskin from Necron Research. Your line is now open. Hi, thanks. Good morning.
Speaker Change #130: Co moves in the same store in 2025, and so youll see us kind of stopped talking about let's go next year, but that is M&A.
Mike Marks: I'm just getting back to the exchanges. I heard 7% of admissions now are coming from patients with ACA exchange coverage. What does that translate into revenues?
Speaker Change #130: <unk> was not a material impact related to.
Speaker Change #130: Related to our earnings for the for the quarter.
And Mike as it moves through the last half of the year it gets slightly better and.
Mike Marks: And should we assume that those patients carry margins that are typical of the broader commercial population? What we typically say about our healthcare exchange, you know, it's a payer category, it's our second best payer, you know, it's below the reimbursement level, it's below commercial, and it's above Medicare. So it's in between those. So it would have margins less than your typical commercial margins, but better than Medicare. That would be roughly what we're talking about. So, you know, on, you know, 7% of admissions, if you look at revenue, something like eight to 9%.
Mike: We're hopeful that by the end of the fourth quarter, it's not dilutive.
Mike: Great. Thank you.
Mike: Yeah.
Speaker Change #131: Our next question comes from Joshua Raskin from Nephron Research. Your line is now open.
Joshua Raskin: Hi, Thanks, Good morning, I'm, just getting back to the exchanges I heard 7% of admissions now are coming from patients with ACA exchange coverage, what does that translate into revenues and should we assume that those patients carrying margins that are typical of the broader commercial population.
Well, we typically say about our health care exchange payer categories, our second best payer it's.
Operator: Just a question. Our next question comes from Sarah James of Canterbury Fitzgerald; your mind is now open.
Sarah Elizabeth James: Our next question comes from Sarah James of Cantor Fitzgerald. Your line is now open.
Speaker Change #133: It's below from a reimbursement level is below commercial it's above NAV here. So it's in between those so it would have margins less than your typical commercial margins, but better than Medicare would be roughly what we're talking about so.
Sarah James: Sarah James is thank you for your speech, Gerald.
Gerald: Thank you. Yes, thank you.
Joshua Raskin: On.
Joshua Raskin: 7% of admissions if you look at revenue.
Sarah James: Can you give us some clarity if the commercial outpatient surgeries that were delayed related to holidays in one cue were rebuked? And then just taking a step back, if I look at outpatient surgical trends, you know, first half last year was kind of a single digit re-determination, started, and it dropped down to low single digit. Now it's a negative two for first half this year. So it's that, like, full change from the mid single digit first half last year to now the negative two, all related to Medicaid. And should we start to see that fall off in the back half of this year then, as we start to anniversary some of the impacts.
Joshua Raskin: Something like 8% 9% of revenues.
Speaker Change #134: Perfect. Thank you.
Speaker Change #134: Question.
Speaker Change #134: Our next question comes from Sarah James of Cantor Fitzgerald. Your line is now open.
Speaker Change #134: Okay.
Speaker Change #134: Okay.
Speaker Change #134: Yeah.
Speaker Change #134: Sarah James Thank you Sheila.
Speaker Change #135: Yes, thank you sorry about that.
Samuel N. Hazen: Thank you. In the back half of this year, then as we start the anniversary some of the Again, the volume declines on outpatient surgery are associated with Medicaid declines in that category, as well as uninsured self-pay categories. So both of those categories explain year-to-day pretty much 100% of I mean, there's a thesis inside of our company, it's not proven yet, that the patients who've migrated from Medicaid into the exchanges through the redetermination process may be in a different seasonality category with respect to when they access services.
Speaker Change #136: Can you give us some clarity is the commercial outpatient surgeries that were delayed holiday and <unk> and then.
Gerald: Again, the volume declines on outpatient surgery are associated with Medicaid declines in that category as well as on insured cell pain categories. So both of those categories explain your today pretty much 100% of the volume declines.
Speaker Change #138: Just taking a step back if I look at our patient surgical churn in the first half last year with kind of mid single digit Redetermination started and I'll turn it down.
Speaker Change #137: Low single digits.
Speaker Change #136: For the first half of this year so is that like.
Speaker Change #136: Small change from the mid single digits first half are here tomorrow or another kiln.
Gerald: I mean, there's a thesis inside of our company. It's not proven yet that the patients who migrated from Medicaid into the exchanges through the re-determination process may be in a different seasonality category with respect to when they access services. So that's a theory we have; we'll have to see how that plays out as we move through the balance of the year. But I think it's important to understand is that, you know, the revenue growth, the service level growth that we've seen in our outpatient surgery business has been solid and produced a pretty good financial outcome for the company.
Speaker Change #136: All related to Medicaid and should we start to see that fall off.
Speaker Change #136: In the back half of this year.
Speaker Change #136: As we start to anniversary some of the impact.
Speaker Change #136: Okay.
Again, the volume declines on the outpatient surgery are associated with Medicaid declines in that category as well as uninsured self pay category. So both of those categories explain year to date pretty much 100% of.
Samuel N. Hazen: So that's a theory we have; we'll have to see how that plays out as we move through the balance of the year. But I think it's important to understand that the revenue growth and the service level growth that we've seen in our outpatient surgery business have been solid and produced a pretty good financial outcome for the company. And if, in fact, our thesis is accurate, it should be better in the second half of the year than in the first half of the year. But again, we don't know that for sure.
Speaker Change #136: The volume decline I mean, there is a thesis inside of our company its not proven yet that the patients who have migrated from Medicaid into the exchanges through the redetermination process, maybe in a different seasonality category with respect to when they access services so that.
Gerald: And if, in fact, our thesis is accurate, it should be better in the second half of the year than the first half of the year. But again, we don't know that. For sure, we need to experience this change in our business with this movement for one payer class to the other before we can land on that being the situation.
Mike Marks: We need to experience this change in our business with this movement from one payer class to the other before we can land on that being Sarah, I would just add Medicaid redeterminations. You know, we're about one year into the redetermination process in most of our states, but you remember from last year, it really started gaining speed towards the end of last year. So, you know, I don't think you'll sunset or anniversary; you're into the full Medicaid year-over-year comparison period until you get closer to the end of the year.
Speaker Change #136: Thats. The theory, we have we will have to see how that plays out as we move through the balance of the year, but I think it's important to understand that.
Gerald: Sir, I would just add a Medicaid re-determination. You know, we're about one year into the re-determination process in most of our state. But you remember from last year, it really started gaining the towards the end of last year.
Speaker Change #136: The revenue growth.
Speaker Change #136: The service level growth that we've seen in our outpatient surgery business has been solid and produced.
Speaker Change #136: Good financial outcome for the company and if in fact, our thesis is accurate it should be better in the second half of the year and the first half of the year, but again, we don't know that for sure we need to experience. This change in our business with this movement for one payer class to the other before we can land on that.
Gerald: So you know, I don't think you'll sunset or anniversary you're into the full Medicaid year over your comparison period until you get closer to the end of the year.
Operator: This now concludes our question and answer session.
Mike Marks: This now concludes our question and answer session. I'd now like to hand the floor back to Mr. Frank Morgan for final remarks. Thank you. Ellie, thank you so much for your help today, and thanks to everyone for joining our call. We hope you have a great week and a successful burning season. I'm around this afternoon if I can answer any additional questions you might have. Thanks. Thank you, everyone, for attending today's conference call. You may now disconnect. Have a wonderful day!
Frank George Morgan: I'd now like to hand back over to Mr. Frank Morgan for final remarks.
Speaker Change #136: Being.
Speaker Change #136: The situation.
Frank Morgan: Thank you.
I would just add on Medicaid Redetermination, we're about one year into the Redetermination process and most of our states, but you remember from last year really started gaining speed towards the end of last year. So I don't think youll sunset our anniversary you're into the full Medicaid year over year comparison period until you get closer to the end.
Frank Morgan: Thank you so much for your help today, and thanks for everyone for joining our call. We hope you have a great week in a successful learning season. I'm around this afternoon.
Frank Morgan: In fact, an answer in the additional questions. Thank you.
Operator: Thank you, everyone, for attending today's conference call.
Operator: You may now disconnect. Have a wonderful day.
Speaker Change #136: Of the year.
Speaker Change #136: Okay.
Speaker Change #136: Okay.
Speaker Change #139: This now concludes our question and answer session I would now like to hand back over to Mr. Frank Morgan for final remarks. Thank you.
Frank Morgan: Thank you so much for your help today and thanks for everyone for joining our call. We hope you have a great week and a successful earning season I'm around this afternoon. If I can answer any additional questions you might now thank you.
Frank Morgan: Yes.
Speaker Change #140: Thank you everyone for attending today's conference call. You May now disconnect have a wonderful day.