Q3 2024 US Physical Therapy Inc Earnings Call
2. All sites on hold, we appreciate your patience and as they please continue to stay in by, program will begin momentarily.
Music
Music
Music
Please stand by your program as best we can.
Speaker Change: Good day and thank you for standing by. Welcome to the US Physical Therapy 3rd Quarter 2024 earnings conference call. At this time, all participants are an endless snowly mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session. In order to ask a question during the session, please press the star key followed by the number one on your telephone keypad.
Speaker Change: Please be advised that today's conference is being recorded, and if you require any further assistance, please press star then zero.
Speaker Change: I now like to turn the call over to Chris Reading, Chairman and CEO. Please go ahead, sir.
Chris Reading: Thank you. Good morning and welcome everyone to our Q3 2024 U.S. physical therapy, our next call.
With me on the line this morning I've got our executive team including Carrie Hendrickson, for CFO, Eric Williams, a president in C-O-O, Graham Reeve, Chief Operating Officer West.
Chris Reading: Rick Binks, you know, Executive Vice President General Council. I'll talk also with the Sunday College at Martinez, a Senior Vice President of Prime Minister of County.
I got lots to discuss with you this morning but before we begin we need to cover brief disclosures statement so Jake if you want to please.
Jake: Thank you, Chris.
Jake: This presentation includes forward-looking statements, which involve certain risks and uncertainties.
Jake: He's forward-looking statements are based on the company's current views and assumptions.
Speaker Change: The company's actual results may vary materially from those anticipated. Please see the company's filings with the securities and exchange permission for more information.
Speaker Change: This presentation also contains certain non-gap measures as defined in regulation G. And the related reconciliation can be found in the company's earnings release and the company presentation on our website. Chris?
Chris: Thank you Jake.
Chris Reading: So we've got a lot to unpack here, a lot of things going on in this quarter, but I want to begin by thanking our partners and all of our operations support for the focus around care. The grinding general and what has been a little bit of a challenging market for a while now.
Chris Reading: The good news that a number of key areas were making steady forward progress.
Chris Reading: First, visit volume, which directly correlates to our referrals. Ties most closely with the tremendous care that our partners and clinicians deliver every day. The more than 700 locations around the country, it continues to be very strong. We've seen some of the man though a year.
Chris Reading: This Q3 of patients visits increased 6% and her visits per clinic per day, which is really our measure of local clinic demand, hit an all-time high for any third quarter, at 30.1
Chris Reading: Coupled with that, our net rate continues to climb year over year to 105-65 versus 102-37 in the prior year quarter.
Chris: This combination drove revenue 9.3% to 142.2 million for Q3 and it's just that even EbaDah up 13.4% will occur.
Chris Reading: All this during the time of sequential rape pressure from Medicare and wage another inflation overall.
Chris: and the Coss I've been made some decisions this quarter which will have an impact next year particularly as we look ahead.
Chris: We closed and will sell some of our underperforming facilities in secondary markets which are no longer working for us, creating a disproportionate investment in time.
Chris: This is never easy, but with recent incoming investments in great markets like Wyoming, Oregon, and most recently New York. We have to focus on time and attention and where we can create the greatest return.
Chris: So, a net of closures we are operating in an owned and managed capacity now totaling 750 locations and continuing to grow in 43 states.
Chris: In order to get all this done, we have some cleaning up to do considering our current slate of opportunities and our expectations around growth and return.
Chris: Other additions in the quarter beyond New York Metro.
Chris: Included a previously announced a clinic practice in the northeast.
Chris: To the end of October we have opened or acquired 20-denovo or Aqua-Novo facilities in addition to our larger announced acquisitions. With other opportunities in the pipeline yet to come, making for some good momentum as we look ahead to 2025.
Jake: Also in the highly positive side of the equation was a performance in our injury prevention business, which continues to grow in our size pace.
Jake: Revenue this quarter.
Chris: Group approximately 30% compared to Q3 last year, an operating profit was up over 27% in the same period.
Jake: We continue on best in that space and police amounts. We just started a very substantial auto manufacturing contract. And a further expansion, one of our largest longest tenure clients among many other organic opportunities in our development pipeline.
Jake: want to take a minute to thank both of our IEP leadership teams for their work this year and grow faith delivered underpin by exceptional service. We care that they provide within many of our nation's largest and most prominent employers.
Jake: So let's shift gears from the discuss one topic that continues to be the big area focus.
Jake: Broughts operationally, and that is dealing with and responding to the increased cost for people, as well as products and services that have resulted in a cost for visiting increase in a year of year basis.
Jake: First let's look at where we are for the quarter before we speak about what we've done to adjust the trajectory going forward.
Jake: For the quarter, our salary-related costs per visit, which includes not only our clinical costs, but all of our clinic-level salaries, including our billing and collections teams and our front desk staff.
Jake: Looking at our salary and related costs as a percentage of revenue, we were able to hold our costs flat year-over-year at approximately 57.6 percent, which I feel we can continue to improve upon, especially as we get continued rate left.
Jake: So let's talk about what we did to make some adjustments as we look forward.
Jake: In the quarter, the Ops team went back and remapped our clinics to where we were in 2021.
Jake: Why 2021? Well, that was a fairly lean year coming out of the first year of COVID.
Jake: Where possible, they've worked to use that as a template, adjusted, of course, for visit changes and wage inflation to a certain extent. That roadmap of sorts should help us as we finish the year. Excuse me one second.
Jake: to better understand this and why it's taken us a little longer than normal.
Jake: to be able to fully address it. For the most part that we're talking about small daily cost numbers.
Jake: Now with approximately 750 facilities, the difference each day of just $50 in total cost increase, and that's across salary, hours, goods and services, rent, electricity, the list goes on.
Jake: of only $50 aggregates quickly to $9.5 million over the course of the year.
Jake: So our team is down in the weeds, pruning and pulling very carefully so as not to disturb the flowers. The fruit of what we are trying to do, which is to take great care of our patients and ensure that we have the right available resources to do that on a consistent basis.
Jake: So it's tedious work, but just like in a beautiful garden, it's necessary work. And once through, it won't be enough. It will have to be repeated often to ensure we maintain.
Jake: Our clinical garden in the way that we desire, bearing great fruit in terms of continued visit and referral growth, fueled by patients and physicians alike who have a great experience as a result of our care and service, while being careful to have the right resource allocation.
Jake: It's a tough balancing act for sure.
Jake: So even though that took a good deal of time this past quarter to sort through
Jake: increased 14.5%.
Jake: Not yet where we want it to be, but moving in the right direction.
Jake: Before I wrap up, let me speak to one thing that I think some of our investors have been concerned with since we did our capital raise late spring of last year, and that has been our pace of deployment of those funds by way of acquisitions.
Jake: As many of you may remember, when we raised that money,
Jake: We said we would be disciplined in deploying it.
Jake: with partners whom we believe would be a great long-term fit for our company, sharing our values around the importance of people delivering great patient care.
Jake: I will tell you that wait has been worth it. Partnerships we have acquired this year strengthening our core injury prevention business and the PT partnerships we have acquired over these past 17 months have been and will be outstanding additions to our company.
Jake: For the longest time, we've waited on New York. That patience has paid off in a big way with our partnership with the Metro PT team.
Jake: Those guys are on fire to deliver strong growth and exceptional care. We're excited to work alongside them and all of our partners to make a difference to our patients as well as their shareholders.
Jake: Sometimes it takes us a little time.
Jake: But this team generally does what we say we're going to do. We appreciate your patience as we work to build a sustainable and bright future for us.
Jake: our partners and staff, and certainly for all of our patients and companies who count on us to show up and deliver results for them every day.
Jake: So thank you That concludes my prepared comments at least until we open things up for questions So Gary you always do such a good job of covering the intricate details of our overall quarter and year-to-date Financial performance, so I'm handing you the ball
Gary: Great. Thank you, Chris, and good morning, everyone. I'll start with a few highlights and notes inside of our third quarter results. Our net rate, as Chris mentioned, increased again in the third quarter to $105.65 per visit.
Jake: That's the highest our net rate has been since late 2020, which was prior to the four consecutive years of Medicare rate reductions by CMS, which also, at that time, benefited from a 2% sequestration rate relief.
Jake: Our average visits per day in the third quarter were a record high for a third quarter at 30.1. Our contract labor costs decreased by $600,000 from the second quarter to the third quarter, and our PT margin improved by 90 basis points over the third quarter of last year.
Jake: And then our IIP business grew more than 13% in the third quarter, even before adding the acquisition that we made earlier this year.
Jake: We reported adjusted EBITDA for the third quarter of 2024 of 21.1 million dollars compared to 18.6 million dollars in the prior year. Our adjusted EBITDA margin was 15.5 percent in the third quarter of this year, which was up slightly from 15.3 percent in the third quarter of last year.
Jake: Our operating results were $10.4 million in the third quarter of 2024, an increase of $1.2 million, or 12.4%, over the third quarter of 2023. On a per share basis, operating results were 69 cents in the third quarter of this year versus 62 cents in the third quarter of last year.
Jake: Our average visits per clinic per day, as I mentioned, was 30.1.
Jake: That was the highest volume for the third quarter in the company's history. July and August were both at 29.9, consistent with our seasonal patterns for summer months. And then September increased to 30.7. Each of those months was a record high volume for that particular month, July, August, and September.
Jake: Our net rate of $105.65 in the third quarter of 2024 was $3.28 per visit, or 3.2% higher than the third quarter of last year, even with the 1.8% Medicare rate reduction that by CMS that was put into effect at the beginning of 2024.
Jake: If you exclude Medicare, our rate was up $4.17 per visit, or 3.9% over the third quarter of last year.
Jake: The increase was largely related to our continuing strategic priority of increasing reimbursement rates through contract negotiations with commercial and other payers and our focus on growing our workers' comp business.
Jake: We are also focused on maximizing our cash collection through improvements in our revenue cycle management.
Jake: Each major category of payers increased year over year.
Jake: and Workers' Comp, which is one of our highest-ranked categories, continues to increase as the percentage of revenue mix.
Jake: Moving from 9.6% of our revenue in the third quarter of 2023 to 10.4% in the third quarter of 2024. And it was also up on a sequential basis, increasing from 10.1% in the second quarter of 2024 to 10.4% in the third quarter of this year.
Jake: These rate enhancing initiatives remain a high priority for us.
Jake: The increase was driven by our higher net rate, an increase in visits in our mature clinics, as well as having 21 more clinics on average in the third quarter of 24 than we had in the third quarter of 23.
Jake: On a per visit basis, our salaries and related costs were $62.47 in the 3rd quarter of 24. That compares to $60.35 in the 3rd quarter of 23, which is an increase of 3.5%.
Jake: Our PT margin was 18.9% excluding closure cost in the third quarter up from 18.0% in the third quarter of last year.
Speaker Change: As Chris mentioned, our IIP team produced excellent growth in the third quarter. Our IIP net revenues were up $5.8 million or almost 30% over the third quarter of 2023, with IIP income up $1.2 million or 27.1% over the prior year.
Jake: Excluding the IIP acquisition we made earlier this year, our net revenues were still up 12.9% with our gross profit up 13.2% and our IIP margin was a very healthy 22.2%.
Jake: Our corporate office costs are in line for both the third quarter and the full year. Through the first nine months of 2024, our corporate costs were 8.7% of net revenue as compared to 8.5% in the first nine months of 2023.
Jake: Our balance sheet continues to be in an excellent position. We have $140.6 million of debt on our term loan. With a swap agreement in place, it places the rate on our debt at 4.7%, which, as you know, is a very favorable rate in today's market and well below the current Fed funds rate.
Jake: Under that swap, our one-month term SOFR is fixed at 2.8% and that extends to the middle of 2027.
Jake: In addition to the term loan, we also have a $175 million revolving credit facility that had nothing drawn on it during the third quarter. Our cash balance at the end of September was $117 million, with approximately $90 million of that cash available for acquisitions and other growth initiatives.
Jake: As we've announced, we used $75 million for the Metro acquisition, which we made on October 31st, leaving us with approximately $15 million in available cash before we'd have to draw on a revolving credit facility.
Jake: We have deployed, so far this year, $117 million of cash into acquisitions.
Speaker Change: And with that, Chris, I'll turn the call back to you and we'll take
Jake: questions.
Chris Reading: Thanks, Kerry. Okay, operator, we'll go ahead and open the line for our questions.
Speaker Change: Absolutely. At this time, if you'd like to ask a question, please press the star and one keys on your telephone keypad. Keep in mind, you can remove yourself from the question queue at any time by pressing star and two. Again, it is star and one to ask a question today.
Speaker Change: We'll take our first question from Brian Tenklett with Jefferies. Please go ahead, your line is open.
Brian Tenklett: Good morning, guys. Good morning. So maybe, Chris, I'll just ask you about these moves that you've made, you know, exiting some markets and some of the labor initiatives that you've put in place. So how should we be thinking about
Jake: Yo.
Jake: The flow-through impact of these over the next six to twelve months, number one, and then are you thinking of any incremental moves, whether it's further evaluations of markets and clinics or anything else in the labor front that you can walk us through in terms of what those moves actually are?
Speaker Change: Sure, I would say give us a little time to let
Speaker Change: Some of these changes kind of flow through, so I think the bigger impact is next year.
Speaker Change: particularly, well, in two areas. One, we won't have any of the aggregate drain of those facilities.
Speaker Change: But more importantly probably than anything
Jake: is that we'll have the time and attention freed up from our, you know, our very important ops team so they can focus on our partnerships and our partners who are better positioned to grow.
Jake: So that's kind of the overall view in terms of will there ever, is there ever, could there be other markets and times where we make adjustments and the answer to that is absolutely.
Jake: and we have to respond. People business, number one. People aren't like numbers, you know. Things ebb and flow and sometimes they change over time.
Jake: Goodness is with many of these facilities.
Jake: We've had them for many, many years, and they've been with us for a long time, and they've done well, and at this point, you know, we see a better opportunity to carry forward with time and focus in other areas, but we'll continue to have what we think is a disciplined
Jake: you know, pruning process, if that's the right term.
Jake: and but you know I think we've gotten a heavy lift of that done and some of these facilities will in fact will sell and are in the process of doing that and so that'll further help us just as we position ourselves for the right resources as we go forward.
Speaker Change: That makes sense. And then maybe just on the metro acquisition, carry number one, you know, is that going to be consolidated going forward? And then maybe Chris for you.
Jake: Given the size of that deal, it's larger than what you've normally been doing. How should we be thinking about your appetite and capability to do, you know, chunk deals, at least for the next 12 months, as you work on the integration of this asset? Thanks.
Speaker Change: Yes, Brian, I'll just say yes, we do expect to be able to consolidate Metro into all of our metrics, our revenue, expenses, all along our P&L, yes.
Jake: And then, you know, the answer to the other question.
Jake: running is really about.
Jake: What's the right fit? So I think we're going to be well positioned because the Metro team's in really good shape. They have a great team They have a great plan on the year. We certainly are in the middle and have been in the middle of integration related things even before You know the deal closed we were on the ground had people on the ground working on some key things
Jake: It's of the same size.
Jake: But if there was something that came along that ended up like Metro will be and is, which is a great fit, then sure, we have the resources and I think the appetite to tackle it. Now whether that happens in the next 12 months or not, we'll have to see.
Jake: We're still working on good things. We have other things that we expect to get done.
Jake: this year.
Jake: and into the early part of next year that are kind of typical for us and certainly DeNovo expansions and a lot of.
Jake: planned expansion within the Metro partnership as well. So, you know, I don't see us changing our tact. It's just about looking for the right fit at the right time.
Speaker Change: understand. Thank you.
Jake: Thanks, Brian.
Speaker Change: We'll take our next question from Joanna Gashuk with Bank of America. Please go ahead, your line is open.
Joanna Gashuk: Hi, good morning. Thanks so much for taking that question. So first, I guess just to make sure to confirm this, since you did not mention the guidance, should I read it as no change to your EBITDA guidance for the year?
Speaker Change: That's right, yeah. We still expect it to come within the range we previously provided of $80 to $85 million.
Jake: and also to confirm the Metro acquisition which is something about was that already contemplated in this guidance range?
Speaker Change: Yes, it was.
Speaker Change: So if I do the math, so Ralph Madagascar, EBITDA, NCI.
Jake: to address the Ivada number. So this deal adds to maybe a million dollars or so. Right, and you still have some clinics in there, but it sounds like you...
Speaker Change: USPH. Going to give us a little bit of color what's driving that is because they are management companies, there's a cost structure or there's something market specific that's driving the better metrics for that asset.
Speaker Change: I was just going to say they have
Speaker Change: They have larger clinics than us for the most part than the rest of our portfolio on average. So they run somewhere between 45 and 47.5 visits per day. So that will obviously have some upward pressure on our average visits per clinic per day. Their net rate is pretty similar to ours, so there won't be a whole lot of change there.
Speaker Change: with their support team from a finance perspective, their billing and collections and all of those things. So the margins actually ...
Speaker Change: pretty similar to ours from an adjusted EBITDA margin standpoint, and that'll all be in our PT line, so it may, it'll be pretty similar to the rest of the margin for the group.
Speaker Change: Okay, thank you. And I know you don't have a guidance for next year, but an obvious question would be, so now we know this acquisition had closed, so that's good to know it now. But other than that, you know, any, I guess, tailwinds and headwinds to think about as we think about next year, I guess we have the final Medicare rate update. But anything else we should be thinking about as we think about next year? Thank you.
Speaker Change: Yeah, not that I know of. I mean the most recent thing is the Medicare final rule update which...
Speaker Change: As you know, we know all too well, has been...
Speaker Change: typically on an annual basis and further modified by Congress.
Jake: All of which is in motion and shifting sands as we speak right now as a result of the election last night. And so, that's all going to have to shake out. Other than that, you know, I don't know of anything that is...
Jake: on the horizon, you know, plus or minus that is material for next year.
Speaker Change: Right, and of course we'll benefit from a full year's performance of some of the acquisitions we've made. And Metro in particular, we have two months this year, we'll have 12 months next year and that's a significant acquisition, so that'll be an add to our 2025.
Speaker Change: And let me, Joanne, let me add one thing and Carrie made a couple of good points.
Jake: One of the things that's really helped us a lot this year
Jake: And it's taken us a little time, but, you know, we've really made good progress around net rate. So the team's done an excellent job. We continue to get pretty meaningful increases in key contracts that haven't started yet. And so we continue to be hopeful that we can see rate lift.
Jake: The other area that's been particularly strong, and I just really want to give a shout out to the people who've worked on this, and they've done an excellent job, is in our War Comp area.
Jake: Kerry shared with you some of the percent change numbers, and I think in those, while those were 100% accurate, I think it gets lost in the shuffle a little bit. Our work comp...
Jake: Visits increased.
Jake: on a year-over-year basis.
Jake: A little more than 16 and a half percent.
Jake: compared to third quarter last year. It's a pretty strong increase.
Jake: Our revenue for work comp increased just under 19% on a year-over-year basis because the rate in the work comp space also increased as a result of the work that the team has done.
Jake: And so, we're hoping that combination, you know, obviously, is giving us some continued
Jake: giving us the list that we've enjoyed so far and will continue to give us some continued lift as we go forward.
Speaker Change: to get to, I guess, there was a time, you know, years ago where you were maybe more like 14% workers' console.
Speaker Change: Is that achievable, or should we just continue to grow from this 10.5% going forward and maybe over time get there, but maybe not. So any color, I guess, how you think about where it could get to. Thank you.
Speaker Change: I wish I had a really, really clear...
Speaker Change: great crystal ball I don't all I can tell you is
Speaker Change: The team has been focused on it.
Speaker Change: We've discussed it.
Speaker Change: and is moving in the right direction at an outsized rate. And where we end up, I don't honestly know. I'd be making up a number, which I'm not going to do. So I think for now, you know where we are, and you know that it's changing slowly. And, you know, there are going to be things that happen in between.
Jake: in lots of different areas, some expected, some not. And so, you know, just kind of mix it all together. And I think the net overall is definitely more progress to be made.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: We'll take our next question from Larry Salo with CJS Securities. Please go ahead, your line is open.
Larry Salo: The CMS decline, as these rates continue to tick up nicely sequentially, it feels like you're building some good momentum, right?
Larry Salo: It's fair to say that, like you said, you have, I assume, annual kickers, too, in these things. So, are you more comfortable that we're entering a period now where these, at least on the commercial side, rates should...
Speaker Change: grow 2-3% a year? Is that like a fair, you know, multi-year outlook?
Speaker Change: Kerry, let me let me start with this and then you can jump in. So I would say, Larry, the rates that we've, just to be really clear, the rates, most of the rates
Speaker Change: that we've recontracted. Many have been a multi-year, you know, contract so it might be four or five percent in year one and then two or three percent for two or three years thereafter.
Speaker Change: have a perpetual annual increase associated with them. They're contracted for a period of time and then they just renew after that and we've got to go back and
Speaker Change: right, get after it again before these contracts expire.
Speaker Change: Many are going to have additional boosts, not all, but many. And so, you know, that is helping us to offset the continued pressure, unfortunately, that we're feeling.
Speaker Change: from Medicare, at least for this, you know, one more year.
Speaker Change: Right. And on that Medicare, so the 2.9%, right? I think it's a 2.9% cut for you guys, right? Or something like that. Is that what it works out to? Yes. It's just under 3, I think, although it's very code-specific, so.
Speaker Change: Right, and assuming there may or may not be some congressional action obviously there's been the last few years feels like they're probably a good chance reasonable chance there will be but let's just assume it it could be a similar rate decline to what we're seeing this year.
Speaker Change: Any thoughts, you know, from a high level, you know, I've heard from various sources that this should be the last year, right, on the Physician Fee Schedule and, you know, any thoughts as we look out 26 and beyond that hopefully Medicare
Speaker Change: which historically has been more of a little bit of a good guy for you guys, at least becomes neutral.
Speaker Change: Yeah, I think so. I mean, look, I'm trying also to predict what the government's going to do.
Speaker Change: It's been kind of a foolish business, but yeah, this should be the last year, and we believe it'll be the last year, and nobody we talked to in Congress thinks these cuts were right to begin with. In fact, they were based on faulty assumptions.
Speaker Change: that MedPAC now admits, you know, erroneous assumptions that were unintended. We ended up, you know, with the unintended consequences. And so I can't see that...
Speaker Change: They're going to perpetuate that, but, you know, we'll have to wait and see. Unfortunately, Medicare is a year-to-year thing and really should be probably a two or three.
Speaker Change: Yeah.
Speaker Change: Rolling kind of a look so that companies like ours had the opportunity to know what the landscape was going to look like It's not that way yet, but
Speaker Change: We're expecting this to be the last year that, you know, we have a headwind there, for sure. Good, good. Let's help cross our fingers there. On the volumes, Chris, obviously at a record high, so I can't complain per se, but...
Speaker Change: But only up about 1%-ish in the last couple quarters, and I think flat-ish for the year. It was a little bit of a difficult comp in the beginning of the year, but is that, you know...
Speaker Change: Is that more like what you know you've had bigger volume growth we look over the last 10 years probably average more like two to three percent is that just kind of move around a little bit I know you had some staffing challenges too which may be led to some inability to meet all the demand but just any thoughts on on volume
Speaker Change: as we look forward.
Speaker Change: Yeah, and Kerry, I don't have it at my fingertips, and I should. I'm trying to remember what same store was this quarter. I thought it was two something, but yeah, you're right.
Speaker Change: Go ahead.
Speaker Change: note was up about 2.2 and a half percent.
Speaker Change: at the Root Volume's Jaffnay. You know, no question. I'd love for that to be, you know, 3.5%. Daffing is tight right now. You know, it's tight everywhere. And at the same time, as you heard, we're trying to balance...
Speaker Change: And so, it's a little bit tricky, but, you know, I can tell you the team's working very, very hard to create that.
Speaker Change: to keep the demand up and to create that growth. We are where we are right now and we've had a lot to deal with in terms of rate pressure and response on that side and cost pressure and response on that side.
Speaker Change: I think all in all, it's a perfect, well, it's not perfect, but...
Speaker Change: Not too bad either. It's been pretty good, you know, net-net. So we continue to work hard at it and and you know None of us are satisfied With where we are. We have things that we can do better and and we're working hard at so and that'll be Continue to be one of them
Speaker Change: Great. Thanks. I appreciate the call.
Speaker Change: Yes, sir. Thank you.
Speaker Change: And as a reminder, if you'd like to ask a question today, please press the star and one keys.
Speaker Change: We'll take our next question from Mike Petusky with Barrington Research. Please go ahead. Your line is open.
Mike Petusky: Hey Mike, good morning. Hey, good morning guys. Hey, could you all give, just real quick on housekeeping, the payer-payer mix breakout?
Speaker Change: If you have it, sure, yeah.
Mike Petusky: Thank you.
Speaker Change: and the third quarters.
Speaker Change: Pretty typical. Commercials, 47%.
Speaker Change: And then, you know, there's everything else. It's Medicaid, personal injury, and self-pay. So pretty consistent. It's very consistent with the second quarter, other than, you know, workers' comp inching up a little bit.
Speaker Change: Was Medicaid somewhere around like 6% or something like that? 5, 6%? No, it's about 3.5%.
Speaker Change: Thank you. Great.
Speaker Change: Okay, great. Yeah, six and a half percent or so for everybody.
Speaker Change: OK.
Speaker Change: So, curious on the, you know, injury prevention business, Chris. This, you know,
Speaker Change: You know obviously the top line is great because the M&A but it's also great X the M&A double-digit growth And I'm just curious. I mean is that that new bit new business. Are you getting deeper with you know earning customers? What's driving that?
Chris Reading: Yeah, I would say yes and yes. So, business and deeper with existing customers. The nice thing about this business is...
Speaker Change: And this is true of anything. It truly, truly works. And so it's designed to save companies money. It does that. It does that on a very consistent basis.
Speaker Change: worse locations in terms of injury management or injury exposure. And we start with that, and the team does a great job, and then we get embedded organic.
Speaker Change: expansion kind of opportunities with that company based on, you know, the great job that the team has done.
Speaker Change: And then there are new companies, risk managers, and certain industries move between companies. They've had experience, so they've heard about us.
Speaker Change: And so we get brought in either on a direct basis or through an RFP process and win those opportunities.
Speaker Change: Again, I'm really proud of that. Both teams have done a really good job this year Our core team, our legacy team
Speaker Change: their largest customer has decided to put us in every one of their locations around the country. And so, you know, that's been, we're already in hundreds of locations. So, that's been a fantastic relationship. And then the other team.
Speaker Change: We have a lot of auto industry business. We've displaced one of the biggest providers in the injury prevention industry in their...
Speaker Change: They're a home state with a major auto manufacturer, and that's a 50 FTE book of business where we have 50 people now.
Speaker Change: you know, on-site, full-time, or nearly so, within, you know, a given footprint. And so that's a big win. That's a new win. And so it's really both.
Speaker Change: And so, as you point out, we've done some very...
Speaker Change: Good acquisitions that have worked out really well for us that have opened and broadened not only our service delivery the products and services That we are able to sell to industry so it's created more cross-selling opportunities
Speaker Change: But it's also increased our...
Speaker Change: exposure in different industry verticals, so it may be that we were primarily in
Speaker Change: you know, distribution, and warehousing, and now manufacturing, and now auto manufacturing, and now construction, and transportation. And so, once you get a footholder or a customer in each of those industry verticals,
Speaker Change: You open yourself up to a world of other people who think, okay, they understand my business. Now maybe we can talk. It's been great overall. Like I said, really proud of both of those teams.
Speaker Change: In terms of the Metro deal, I'm just curious, is there any ability for you guys to, I think Carey may have said that the net rate is pretty favorable for Metro, but I'm just curious if there's anything on the contracting side that you guys can bring to them where maybe your contracting is a little bit more favorable for certain insurers, just curious if there's any opportunity for some uplift from your contracts. Thanks.
Speaker Change: So, I will tell you that the Metro team did a great job historically and even leading up to our acquisition in terms of what they've done with their own contract rates. Now they have some additional resources that we can...
Speaker Change: that we can, you know, bring to bear with and for their team. Some of the rates that Metro has recontracted haven't really kicked in yet, or just now kicking in, or will kick in shortly.
Speaker Change: And so yeah, I think there's some additional lift and we're we're looking at that whole
Speaker Change: New York market very strategically to see how we can, you know, continue to add to that and, you know, time will tell based on our ability to execute on this but I feel pretty confidently over a period of time, you know, we can do really good things.
Speaker Change: but I will tell you that they themselves did the heavy lift so far and you know we'll see if we can help them with that as they go forward.
Speaker Change: Last question for me, just in terms of the election results last night, is there anything that came out of that last night that made you think that the U.S. Congress would be more or less likely to sort of do their typical, you know, week before Christmas action on the election?
Speaker Change: you know, on the proposed reduction in reimbursement.
Speaker Change: Yeah, that's an interesting question, and I kind of expected it, and I don't really know how to answer it. You know, we'll see if both houses of Congress end up being, you know, Republican-controlled. It looks like that's going to happen.
Speaker Change: Look, I...
Speaker Change: I'm not going to predict. I don't know. I think, and this isn't a political statement by me in any way, shape, or form, so I don't want anybody to read into it. I think...
Speaker Change: Most of us understand that Republicans are more deficit-focused and smaller government-focused than, you know, their counterparts on the Democratic side of things.
Speaker Change: And so we've been in kind of a little bit of a more balanced relationship the last couple of years. That may change a bit as we go forward.
Speaker Change: And any time you have change, you have, you know, pieces get moved around. So I don't know that I can predict. We're prepared for the cut that's been announced regardless of what happened last night.
Speaker Change: And we're going to be working to try to get that cut that was announced here a week or so ago mitigated as we have over the last number of years. And I feel reasonably confident that
Speaker Change: Let me say I feel reasonably hopeful that we can get that done, but, you know, the political landscape, it's, you know, it's hard to predict.
Speaker Change: Can I just ask a quick follow-up to that? Are you aware of any folks that were particularly, you know, in Congress that were particularly friendly to outpatient PPE that, you know, will no longer be part of Congress going forward? I mean, did you all lose anybody that's been particularly helpful in terms of...
Speaker Change: your advocacy for PT and, you know, the industry in general.
Speaker Change: I think the folks on our side through APTQI, which I'm very much part of and proud to be a part of, have done great work. Liberty Partners has done great work to help us long ago understand that we have to have
Speaker Change: you know, broad connectivity on both houses of Congress and across both parties. And so I think we're pretty well positioned. Many of our primary advocates are key people that are very secure on both sides.
Speaker Change: Again, both parties and both sides of Congress, and so I think we're okay there. I definitely don't think we're starting over, if that's the question.
Speaker Change: It was. Thank you.
Speaker Change: Thanks Mike.
Speaker Change: And once again, if you'd like to ask a question today, please press the star and one keys on your telephone keypad. We can pause for a moment to allow any further questions to queue.
Speaker Change: Again, there are no further questions on the line. I'll return the call to our speakers for any additional or closing remarks.
Speaker Change: Yeah, thank you everybody. I appreciate your time today.
Speaker Change: Again, team's working very hard. Give us a chance to finish out this year the way that we, you know, have described to you. And, you know, we're focused on delivering continued growth next year with some of the capital deployments that we made and some of the adjustments that we've made ongoing and even the ones here more recently. So, again, we thank you for your patience and your trust. And we hope you have a great day. Take care. Bye now.
Speaker Change: This does conclude today's program. Thank you for your participation and you may now disconnect.
Speaker Change: www.youtube.com.au
Speaker Change: [music]