Q4 2024 Concentra Group Holdings Parent Inc Earnings Call
Good morning, and thank you for joining us today for Consensual Group Holdings parent Inc. Earnings conference call to discuss the fourth quarter and full year 2024 results as well as some important company updates.
Speaker Change: <unk> today are the company's Chief Executive Officer, Keith New and in the company's President and Chief Financial Officer, Matt to can you management will give you an overview and then open the call for questions.
Speaker Change: Before we get started we would like to remind you that this conference call may contain forward looking statements regarding future events or the future financial performance of the company, including without limitation statements regarding operating results growth opportunities and other statements that refer to concentrix plans expectations strategies.
Speaker Change: Jeez intentions and beliefs. These.
Speaker Change: These forward looking statements are based on the information available to management of concentric today and the company assumes no obligation to update these statements as circumstances change at.
Speaker Change: At this time I would like to turn the conference call over to Mr. Keith New IND.
Speaker Change: Thanks, operator, good morning, everyone welcome to consensus fourth quarter 2024 earnings call.
Speaker Change: If you recall from our conference call in January we touched on three key developments the preliminary release of our Q4 and full year 2024 financial results the signing of the Nova Medical centers acquisition.
Speaker Change: And our financial outlook for 2025.
Speaker Change: Today, we will provide updates and more color on each of those topics and set the stage for the year ahead.
Speaker Change: Before we do that I'd like to express my sincere gratitude to all of consensus colleagues patients employer customers ecosystem partners and investors 2024 was a transformative year with our successful IPO a spin off from select medical solid growth and financial performance.
Speaker Change: And continued execution on our strategic initiatives.
Speaker Change: As the largest provider of occupational health services in the United States by number of locations. We are relentless in our mission to improve the health of America's workforce, one patient at a time that is the key driving force behind our success.
Speaker Change: <unk> pursuit of excellence.
Speaker Change: Switching to our fourth quarter 2020 for performance.
Speaker Change: <unk> ended the quarter with 550 to occupational health centers and 157 on site health clinics at employer work sites for a total of 709 locations, which is 15 more than Q4 2023.
Speaker Change: In the quarter revenue was $465 million compared to $440 7 million in the prior year, representing a five 5% growth year over year.
Speaker Change: Adjusted EBITDA was $77 5 million in the quarter versus 68 3 million in the same quarter prior year or a 13, 6% increase.
Speaker Change: Adjusted EBITDA margin increased from 15, 5% in Q4 2023 to 16, 7% in Q4 2024, a result of revenue growth and improved cost of services.
Speaker Change: All of this is consistent with our pre release announcement back in January.
Speaker Change: Net income was $22 8 million and earnings per common share were <unk> 17 cents for the fourth quarter 2024.
Speaker Change: Net income was slightly better than the range, we provided in our preliminary flash in January due to the timing of the finalization of our tax expense entries.
Speaker Change: Net income was lower than the same quarter prior year, primarily due to the IPO recapitalization.
Speaker Change: From a patient visit standpoint year over year trends in Q4 2024 were very similar to recent quarters.
Speaker Change: Total visits per day were 46, 8000, a two 1% decline compared to the same quarter. Prior year. This was driven by a four 8% decline in our employer services visits which was expected and consistent with the variance we had been seeing in earlier quarters the decline in employer.
Speaker Change: Service visits were partially offset by a one 1% increase in our workers' compensation volume.
Speaker Change: As we've discussed before the foundation for our employer services and workers compensation visit volumes in the United States is driven by the U S labor market and its underlying trends total employment continues to gradually grow which supports our workers' compensation visits.
Speaker Change: Employer service visits are more correlated to job creation and churn within the workforce is hiring events are the key driver of these type visits hiring.
Speaker Change: Hiring rates and the quit rates in the United States are starting to show signs of stabilization and bottoming out.
Speaker Change: While we continue to manage these employer service trends to still drive revenue profit growth and stable margins. We are optimistic and expect that a more stable growing economy and labor market will help boost our employer services volumes from current levels.
Speaker Change: So far we are seeing some better trends in these type of visits early in 2025.
Speaker Change: From a rate standpoint, we had a strong quarter with five 8% increase in revenue per visit in Q4 2024 compared to the same quarter. Prior year. The growth was driven by increases in both workers compensation and employer services revenue per visit as well as a slight shift in mix between these categories.
Speaker Change: Beyond the financial metrics, we continue to execute on our strategic initiatives and growth objectives, we established for ourselves.
Speaker Change: For example, the spinoff from so Black medical was completed we made further progress on our separation, we continue to advance our various clinical operational and technology initiatives and our development pipeline.
Speaker Change: All while achieving strong satisfaction scores from our patients and customers and improving our colleague retention.
Speaker Change: This concludes my overall company remarks, I'll now turn the call over to Matt to provide more color on our operating segments key operating metrics cost and expenses.
Matt: Cash flow and balance sheet will then wrap the call with further insight into the Nova transaction and the previously provided guidance for 2025.
Matt: Thanks, Keith and good morning, everyone.
Matt: I'll begin with some additional commentary on our operating segments and our major expense categories as well as other key performance indicators.
Matt: And our occupational Health Center operating segment revenue of $437 million in Q4, 2024 was five 4% higher than the same quarter prior year.
Matt: Keith outlined our visit declined year over year, driven by the continued and expected lower employer services volume, which are lower revenue and lower margin visit.
Matt: And the five 8% increase in revenue per visit.
Matt: From $137 in Q4 2023 to $145 in Q4 2024.
Matt: Within this center operating segment Workers' compensation revenue of $289 1 million was 7% higher than prior year.
Matt: Q4, 2020 for work comp visits per day increased one 1% from prior year.
Matt: Q4, 2020 for work comp revenue per visit increased four 4% versus prior year.
Matt: Workers' compensation revenue represented 66% of our total center operating segment revenue.
Matt: From Q4, 2024 versus 65% in Q4 2023.
Matt: Employer services revenue in the center operating segment of $137 2 million increased one 3% from prior year.
Matt: Employer services visits per day decreased four 8% from prior year.
Matt: In line with expectations and continued trends from recent quarters.
Matt: Q4, 2020 for employer services revenue per visit increased four 8% versus prior year.
Matt: Onsite revenue of $17 1 million in Q4.
Matt: Increased 7% from the same quarter prior year we.
Matt: We had a solid business development quarter in this operating segment, winning 10 nuance sites that will open in the coming months and we continue to build out an exciting growth pipeline.
Matt: Other business revenue of $10 9 million increased 8% against same quarter prior year.
Matt: Our cost of services expense, excluding depreciation and amortization a major component of which is personnel cost includes all direct and indirect support costs related to providing services to our customers.
Matt: Cost of services was $344 9 million.
Matt: Or 74, 2% of revenue in Q4 2024.
Matt: <unk> from 75, 1% of revenue for the same quarter prior year.
Matt: General and administrative expense includes corporate overhead such as finance legal human resources marketing corporate offices and other administrative areas.
Matt: Our general and administrative expenses were 45.5 million or.
Matt: Or nine 8% of revenue.
Matt: Q4, 2024 compared to nine 6% of revenue in the same quarter prior year.
Matt: For the fourth quarter, we had strong cash flow generation with operating activities provided $93 7 million in cash flow and our days sales outstanding or DSO was 43 days at December 31, 2024, which was two days better than prior year.
Matt: Our cash flow metrics continue to improve over historical levels.
Investing activities used $16 7 million of cash in the fourth quarter almost entirely from purchases of property and equipment as our teams continue to successfully manage to healthy levels of capital expenditure for maintenance and growth each quarter.
Matt: Financing activities used $30 6 million of cash for the fourth quarter and we ended the quarter with a cash balance of $183 3 million.
Matt: Our net leverage ratio at the end of 2024 was 346 times.
Matt: One from approximately three nine times at the time of our IPO last July.
Matt: This is a good proof point of our ability to generate strong cash flow and delever.
Matt: With the strong financial performance. We are pleased to announce that on February 28, 2025, and centers Board of directors declared a quarterly cash dividend of six and a quarter cents per share.
Matt: The dividend will be payable on or about April one 2025 to stockholders of record as of the close of business on March 18th 2025.
Matt: We continue to recognize the importance of our dividend as a means to return value to shareholders, but our two highest priorities for capital allocation in the near future remain our growth efforts and Delevering.
Matt: Switching to our corporate development efforts, we continued our successful de Novo strategy with three new occupational health centers in the fourth quarter.
Matt: We opened our fourth center in the greater Orlando area, and especially exciting development with the increase in the Florida work comp fee schedule that went into effect on January one 2025.
Matt: We opened a center in Desoto, Texas are highly industrial section of the Dallas Fort worth area.
Matt: Bringing our total count to 19 centers in greater DFW.
Matt: And we opened our first center in Knoxville, Tennessee, and exciting growth area for Concentrix.
Matt: Our de Novo efforts will continue in 2025 as we have already opened an additional center in the Dallas Fort worth area in January and we have five additional leases signed for centers expected to open this year.
Matt: Our acquisition pipeline remains robust as well as we continue to execute on our core M&A strategy of highly accretive occupational health practices.
Matt: An onsite additions across the U S. We.
Matt: We will talk more about the Nova acquisition here shortly.
Matt: And now I'll comment on our separation process from select medical highlighted by the completion of select spinoff of concentric in November.
Matt: We have continued to make solid progress on these efforts as we execute on key leadership hires building out specific teams in certain functional areas.
Matt: Separating certain support functions and vendor contracts from select.
Matt: There is much work remaining but the takeaway is that we remain on track with the process of operating completely independently from select medical by the time, our TSA with select and in late 2026.
Matt: With that I'll turn it back to Keith to provide an update on the Nova transaction. Thanks, Matt.
Speaker Change: Our acquisition of <unk> medical centers for $265 million was officially closed on March one.
Speaker Change: To give a brief recap of the business Nova is a leading provider of occupational health services that is aligned with Concentrix clinical philosophy service offering growth strategy and mission.
Speaker Change: Novo operates 67 occupational health centers across five states that are very similar to consensus 46 centers are in Texas with the remaining centers located in Georgia, Wisconsin, Tennessee and Indiana.
Speaker Change: All of those locations are in attractive areas with a footprint that is complementary to our own the overseas over 3500 patients per day and generates approximately $130 million in annual revenue and $28 3 million of pro forma adjusted EBITDA. The EBITDA figure is.
Speaker Change: <unk> of $21 3 million of trailing 12 month, adjusted EBITDA, plus an additional $7 million in projected an annualized synergies that we expect to capture by Q1 2026.
Speaker Change: For clarity, we do not expect to generate the full $28 3 million over the next 12 months is synergies will be phased in over time and there will be one time integration cost associated with capturing those synergies over the remainder of 2025.
Speaker Change: We expect to continue capturing incremental synergies past year, one and ultimately achieve an effective multiple on the transaction of less than seven five times by year three.
Speaker Change: We expect the transaction to be immediately accretive in the first year of operation. We have a proven history of successfully executing on acquisitions of all sizes and we are already progressing well on our transition plans to integrate the novo practices and colleagues into Concentrix, we would like to once again extend our graph.
Speaker Change: Got it too to Novus leaders and entire team as we are extremely excited to have them join the concentric family.
I'd now like to touch on the funding for the Nova transaction, our broader company financing and our current leverage the Nova transaction was funded with an approximate $102 million incremental term loan of $50 million draw on our revolver and the remaining with cash on hand.
Speaker Change: We repriced our term loan b of $950 million inclusive of the approximate $102 million incremental at Sulphur plus 200 down from sofa, plus $2 25 with.
Speaker Change: With a 25 basis point step down at net leverage of less than three to five times.
Speaker Change: In addition, we upsized our revolver capacity from 400 million to $450 million and repriced its sofa, plus 200 down from sofa plus $2 50.
Speaker Change: We're very happy with these outcomes and the economic benefits in 2025 and beyond inclusive of the Nova transaction, our pro forma net leverage ratio is three nine times the same level as the time of our IPO.
Speaker Change: We have a target goal of approximately 3.0 times net leverage within the next 18 to 24 months.
Speaker Change: I'll now turn it back to Matt to add some additional comments as it relates to our previously provided company outlook for 2025.
Matt: Okay. Thanks, Keith regarding Nova all I would add is that our team is very excited about the integration efforts and the opportunities that exist.
Matt: It will take time, but we have a proven playbook and we're looking forward to adding the Nova centers to our network of locations across the country.
Matt: When the integration is complete we expect a consistent delivery of care and a consistent approach to doing business with our customers.
Matt: We've talked a lot about our value proposition and the investments, we're making in the occupational health services industry and now we will be able to drive an even greater impact with more medical centers.
Matt: And to round out our call in advance of questions. We want to share additional commentary on the 2025 guidance, we outlined back in January including some of the underlying assumptions in the contribution from our core business versus the <unk> acquisition.
Matt: In total we expect to deliver approximately $2 1 billion in revenue in 2025, an approximate 10, 5% increase over 2024.
Matt: Core business revenue projection includes the impact of all known fee schedule changes, including Florida.
Matt: It also assumes relative improvement in the recent employer services volume trends over the course of the year.
Matt: As well as maintaining the recent growth trends of our work comp visit volumes.
Matt: For adjusted EBITDA, we expect to deliver a total of $410 million to $425 million in 2025, an increase of approximately 11% over 2024 at the midpoint of the range.
Matt: The projected adjusted EBITDA for the core business includes the estimated separation costs from select medical.
Matt: As it relates to Nova and its contribution in 2025 first we assume 10 months of Nova within our adjusted EBITDA outlook.
Matt: Second as Keith noted the integration efforts will take time with synergies phasing in over time.
Matt: Third there will be a fair amount of transition related expenses, both at the center level and within G&A.
For these reasons calculating novo's contribution to consensus 2025 guided adjusted EBITDA is not as simple as taking 10 12 of $28 3 million, which is a figure that annualized synergies.
Matt: That we expect to realize by the end of year one.
Matt: We expect <unk> actual contribution to consensus 2025, adjusted EBITDA to be 15 plus million.
Matt: We feel that it is important to clarify this as we want to ensure that we're clearly communicating the strength, we see in our core pre no the business in 2025.
Matt: For capital expenditures, our outlook of $80 million to $90 million includes a material amount of onetime spend for the Nova centers.
Matt: Capex for the core business is fairly close to our spend in 2024.
Matt: And finally for our.
Matt: Our net leverage ratio, we expect to end the year at approximately three five times.
Matt: In summary, we feel good about our core business outlook in 2025, and layering on Novo will bring many opportunities with time needed to execute but overall, we are very excited.
Keith New: Back to you Keith to close out the call.
Keith New: Thanks, Matt it's an exciting time for <unk> and we believe we are very well positioned to further our success. This concludes our prepared remarks and we thank everybody for the time today would like to turn it back over to the operator to open the call for questions.
Speaker Change: Certainly at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Speaker Change: Your first question for today is from Benjamin Rossi with J P. Morgan.
Benjamin Rossi: Hey, good morning. Thanks for the question. So regarding the Novae integration you mentioned, some trades about Nova that make for an easier integration here, including overlapping services offer their facility sizes and then their favorable margin profile just regarding integration how do you approach larger transactions like Nova.
Speaker Change: And then what are you baking into your 2025 expectations regarding integration costs here I think you mentioned capex, including some one time spend.
Speaker Change: I would say four four expectations for larger transactions.
Speaker Change: <unk> had several of these over the years and the.
Speaker Change: Learn how to do them very well.
Speaker Change: The size and the footprint that we're at these days allows these things to be very accretive to us once we get through the.
Speaker Change: Process of integrating.
Speaker Change: Deploying our systems our people, we've got a footprint with Nova that is very overlapping so the infrastructure that will support those centers in those five states is already there are people on the ground today we're.
Speaker Change: We're not having to deploy them from other states.
Speaker Change: So it should go fairly well for us based on our history of integration of these type entities.
Speaker Change: This is probably the.
Speaker Change: The second the third largest we've done U S. Healthworks by far the largest we integrated a similar sized company called <unk>.
Speaker Change: Based on the northeast back in the early two thousands and no that would be about the similar type size of that.
Speaker Change: Then I would just add hey, good morning, its Matt yes.
Speaker Change: We've been planning for this integration for six plus months, we've got a good playbook and we will do.
Speaker Change: Similar to what we do on all of the small fold ins and add ons.
Speaker Change: We will follow that but just obviously larger scale here, but we did this in 2018 with U S Healthworks and we're going to basically repeat our process there.
Speaker Change: Got it thanks for the commentary there and then just as a follow up just on your deleveraging pathway. You know following the Nova closed who mentioned the three nine times pro forma net leverage you are expecting to take that down about a effectively a half turn decrease in 'twenty five and another half turn in 26 can you just kind of walk us through your paths.
Speaker Change: Way here, and how you're kind of contemplating through earnings growth and debt pay down with maybe some of your incremental M&A in your de Novo activity along the way.
Speaker Change: Sure Yeah, I think the story is very similar to the story at the time of the IPO.
Speaker Change: We were at three nine times Levered back in July we de Levered 2346 times at the end of 'twenty four.
Speaker Change: Now with this Nova transaction, where backup it's three nine and our guidance.
Speaker Change: Is that we'll get to three five times by the end of the year.
Speaker Change: And then we will have we're still targeting that roughly three times net leverage or below within the first 18 to 24 months. So it'll be a combination of cash flow generation, but also some EBITDA growth as well that I might I might add to that.
Speaker Change: Based on the nature and the seasonality in <unk>.
Speaker Change: <unk> of our business the slower months are typically fourth quarter and first quarter. So our cash flow coming off those months is a little less than what happens as we get through the summer months, which are busy.
Months of the cash flow in the second half of the year accelerates, so theres a little bit of.
Speaker Change: The seasonality in the cash flow so we would anticipate.
Speaker Change: It's an acceleration as we kind of get to the summer and start building some of those revenue months.
Speaker Change: Got it thanks for the commentary here I appreciate it.
Speaker Change: Your next question is from Ben Hendrix with RBC.
Hi, This is Michael <unk> with 67 centers Novo was one of your largest competitors you've noted before that any one of your largest peers could be an acquisition target are there any particular regions that you're targeting for your next major acquisition, where you would say you're underpenetrated in a favorable.
Speaker Change: Reimbursement markets.
Speaker Change: No.
Speaker Change: Say that.
Speaker Change: We really cast the net far and wide at this point in time wherever the opportunities are we're interested in it so.
Speaker Change: So there isn't any real specific region.
Speaker Change: So to speak from that perspective.
Speaker Change: Yeah, and I would just add.
Speaker Change: We're looking to continue to grow our footprint with their occupational health centers and pretty much every state across the country, but we're also looking to expand our onside portfolio as well so theres opportunities there in the future.
Speaker Change: Okay. Thank you and just switching gears.
Speaker Change: Just with with all the tariff talk how do you assess the exposure of your employer clients to tariffs and do you see any meaningful impact to volumes or employment overall, given these headwinds. Thanks.
Speaker Change: No at this point, we don't.
Speaker Change: <unk>.
Speaker Change: There's a lot of uncertainty around them really.
Speaker Change: For all businesses to see how this plays out but.
Speaker Change: We are.
Speaker Change: You know at this point I would based on the nature of our business and what we're doing I don't really see much of a headwind from it.
Speaker Change: Alright, thank you.
Your next question for today is from Jami, Paris with Goldman Sachs.
Jami: Hey, Thank you good morning.
Speaker Change: Keith you talked a little bit about just the economic drivers of the business and that that being tied to employment growth.
Speaker Change: I'd love to get a better sense of how you got to the comments on guidance for 2025, which I think included in improved employer services growth and maybe more sustainable growth trends in the workers comp business.
Speaker Change: Is that being underpinned by just broad view on the economy or a more micro approach based on hiring plans at your customers new customer wins, new openings et cetera, We just love a little more color on how youre thinking about the volume trends progressing from here.
Speaker Change: Yeah, It's a combination of several things I think as we went through 2020 for a lot of uncertainty.
Speaker Change:
With the.
Speaker Change: Election results that was.
Speaker Change: Holding employers back to some extent relative to their growth through hiring plans.
Speaker Change: We've seen some better trends as I mentioned early here in 2025 on the employer services.
Speaker Change: I think theres still some uncertainty out there as we've read every day.
Speaker Change: We continue to watch that and play it out, but where we're happy.
Speaker Change: Early what we've seen in 2025 relative to some of the year over year comps that we've seen with some of the employer services visits at this point in time versus what we've seen in the past.
Speaker Change: Okay.
Speaker Change: And then Ken maybe for Matt can you talk about P&L considerations for 2025, and I guess three pieces I'd like to hear a little bit more about what one is gross margins just given the strong performance in the fourth quarter and the second is is G&A also given that the $8 4 million step ups.
Speaker Change: Sequentially that you saw in the fourth quarter. It looks like there's historically been some seasonality there, but anything you can tease out and whether that's a good indicator for G&A and 25, and then lastly, just the <unk>.
Speaker Change: Timing and how we think about this.
Speaker Change: Select medical TSA is rolling off versus the stand alone costs, which I think you've previously size about 13 million. So any any help on the <unk>.
Speaker Change: Line items, so the P&L for 2025 would be great.
Jamie: Yeah sure Jamie So I think three parts to your question.
Speaker Change: Cost of services G&A and then.
Speaker Change: TSA cost.
Speaker Change: In our guidance.
He assumed very consistent levels of cost of service and G&A. If you look at our full year 'twenty four over full year 'twenty three.
Speaker Change: Both of those we're very stable there was some seasonality in Q4.
Speaker Change: Particularly on the G&A side.
Speaker Change: And that's pretty typical Q4 of them are closing out the year. This year, we had some transaction costs and the G&A number we also accelerated some long term.
Speaker Change: Cash compensation plans as we replace that with public company stock grants and I think we've talked about that in the past so that was a little bit of a driver here in Q4.
Speaker Change: Other than that we see stable cost for both cost of services and G&A.
Speaker Change: Through through 25.
Speaker Change: On your question on select TSA.
Speaker Change: The total estimate by the end of the TSA Hasnt changed and its in line with the numbers you just quoted.
We're gonna have basically have less than that in 'twenty five.
Speaker Change: Maybe two thirds of that number or so roughly.
Speaker Change: And then we will finish out the TSA costs, the incremental cost will be in.
Speaker Change: 26.
Okay, great. Thank you for the color.
Speaker Change: Yeah.
Speaker Change: Your next question is from Stephen Baxter with Wells Fargo.
Stephen Baxter: Hi, Thanks, a follow up on earlier question about the employer services, but as I was trying to understand when you say improvement like any kind of context, you can give us on how much improvement you're expecting like I'm trying to understand whether the exit rate embedded in your guidance for employer services is closer to what you would view as maybe.
Stephen Baxter: Normalized growth for employer services or whether it's still something you know a little bit more modest than that and then I have a follow up or two thank you.
Matt: Yes, sure Steve It's Matt.
Speaker Change: Here's what I would say, we don't want to comment too much on.
Speaker Change: The 25 numbers that we haven't reported yet, but we felt it was important to note that we are seeing improving trends employer services.
Speaker Change: As we get a lot of questions about that visit category.
Speaker Change: The last three quarters have been in the minus four minus 5% range.
Speaker Change: And we're seeing.
Speaker Change: Something thats, a decent bit better here in January and February.
Speaker Change: So what's implied in our guidance and our assumptions for.
Speaker Change: 25 is those those trends will continue and then they would get to flat year over year, and then slightly positive growth later in the year.
Speaker Change: Hopefully that helps.
Speaker Change: That helps a lot. Thank you and then just in terms of the you know the right side of the business. Obviously when you have a large update in our workers' comp business in Florida, but maybe if we think about rate updates that youre seeing sort of on a normalized.
Speaker Change: Ms basis, or maybe excluding Florida would love just to hear a little bit of color about how those look versus what you've seen in the past couple of years and then the same type of question for employer services any kind of change in trend on the right side, we should be thinking about thank you.
Speaker Change: I would say both of those are slightly elevated over long term.
Speaker Change: Periods of time.
Speaker Change: He is inflation.
Continues to be higher than than longer periods of time, a lot of our work comp rate increases are tied to that either CPI or EMEA.
Speaker Change: Adjustments in our employer services pricing follows that same approach so.
Speaker Change: Even if you were to exclude the.
Speaker Change: Outsized, Florida rate increase we're still expecting a very good year for both work comp in employer services right and 25.
Speaker Change: And this is Keith I would say that.
Keith New: We would anticipate something little bit stronger than what we've been seeing on the core over from the last year or so.
Keith New: Okay got it thank you.
Speaker Change: Your next question is from Justin Bowers with Deutsche Bank.
Justin Bowers: Hi, good morning, everyone. So a lot of a lot of milestones of activity over the last six months can you just refresh us on the long term growth algo.
Justin Bowers: Of the business in terms of like volume price same store.
Justin Bowers: For those new to the story.
Justin Bowers: Sure Good morning, Justin.
Justin Bowers: Yeah, we included.
Justin Bowers: Page in our investor deck, if anyone wants a reference but.
Justin Bowers: Stories very consistent to what we've talked about historically.
Justin Bowers: From a revenue growth standpoint mid to high single digit growth.
Speaker Change: Our oaken down by low single digit as it grows at our centers.
Justin Bowers: Plus or minus 3% rate growth.
Speaker Change: <unk>, both the visit main visit categories.
Justin Bowers: And then we'll continue to do M&A.
Justin Bowers: M&A.
Justin Bowers: In that number.
Justin Bowers: The mid to high single digit growth rate is just our core de novo and M&A strategy as it does not include anything more sizable. So those are really the three components that drive our long term revenue outlook.
Justin Bowers: Okay, and then in terms of development activity. So in the prepared remarks, you mentioned, one Hock Health Center and it's just come online in January and then five leases.
Justin Bowers: And then also 10 homesite health centers coming online is there additional development activity and the guide ex the Nova deal or is that sort of a good jump off point for the year.
Justin Bowers: No included in the guide is is only the.
Justin Bowers: The one center, we launched the five centers, we have signed leases that we planned to open this year.
Justin Bowers: And then just normal growth for our onsite business. There is theres no theres no additional M&A in that guide.
Speaker Change: Okay, and then last just a quick just a quick follow up in terms of payer mix how much.
Justin Bowers: With government pay exposure.
Justin Bowers: You have Medicare Medicaid et cetera.
Justin Bowers: It's roughly 1% less than 1% from the Medicare Medicaid perspective.
Justin Bowers: Next next to nothing we just have some sprinkling of it out there.
Justin Bowers: That we've picked up through transactions over the years, but we don't do any active marketing or solicitation of those visits.
Justin Bowers: Okay got it thank you.
Speaker Change: Your next question for today is from Joanna could you with bank of America.
Joanna: Hey, good morning, Thanks for taking my questions. So a couple of follow ups first.
Joanna: The Florida I laid out that I don't know if I call you actually helping us quantify as to how much I guess is that left from the strength in Florida.
Joanna: And the guidance.
Speaker Change: Hey, Joanna.
Speaker Change: Yeah, Florida, I think as we've mentioned on previous calls that went into place one 125 now.
Speaker Change: We're always already seeing that early this year, obviously we.
Speaker Change: We're not going to quantify the rate increases on a state by state basis, but all of that and all other states are all included in our total guidance for 25.
Speaker Change: Oh right is there and any other states, Florida that had has not abated.
Speaker Change: Please schedule for several years or Dallas still when they want it really.
Speaker Change: But that was the only one that we would anticipate this year. The majority of all the others have been on somewhat of a regular basis.
Speaker Change: As we've mentioned in the past the majority of our states are on a regular basis of either automatic fee escalators that go into play every year typically January one or they will review it and make some adjustments to it.
Speaker Change: Periodically but.
Speaker Change: It was probably the largest at this point in time there are several others we're working on.
Speaker Change: Hopefully in the future, we might get something but I wouldn't.
Speaker Change: Dissipated being like on the magnitude of a Florida.
Speaker Change: Alright, and the last one on that topic later, I guess with that laid out there in Florida. He schedule I'll say to me I guess you know when you get these rates to a point, where the margins are kind of comparable to other markets.
Speaker Change: Hmm.
Speaker Change: I'm mean that you'll have some active plans to add more locations in that state.
Speaker Change: Yeah absolutely.
Speaker Change: Some of the de Novo projects that Matt just mentioned earlier had been in Florida, a couple of in Orlando.
Speaker Change: Miami Fort Myers, just over the last several months editions are definitely M&A activity evaluating that in Florida. So it's made it much more attractive state for us to deploy capital in at this point in time.
Speaker Change: Thank you so much for taking the question.
Speaker Change: We have reached the end of our question and answer session and I will now turn the call over to Keith for closing remarks.
Keith New: I appreciate everybody joining us today and.
Speaker Change: That concludes our remarks.
Speaker Change: Thank you.
Speaker Change: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.