Q4 2024 Addus HomeCare Corp Earnings Call

Operator: Hello and welcome to the Addus Homecare's 4th Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Did you need assistance? Please signal a conference specialist by pressing the star key followed by zero.

Hello, and welcome to the ATA, Tom carrier sports quarter, 'twenty 'twenty four earnings conference call. All participants will be in listen only mode did you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw from the question queue, please press star, then two. As a reminder, this conference is being recorded.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.

Dru Anderson: Drops in the question queue. Please press Star then jail as a reminder, this conference is being recorded I would now like to hand, the call to Dru Anderson. Please go ahead.

Dru Anderson: I would now like to hand the call to Dru Anderson. Please go ahead.

Dru Anderson: Thank you, good morning, and welcome to the Addis Homecare 4th Quarter 2024 Earnings Conference Call. To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP by going to the company's website and reviewing yesterday's news release.

Dru Anderson: Thank you good morning, and welcome to the out of home care fourth quarter 2024 earnings Conference call.

Speaker Change: To the extent any non-GAAP financial measure is discussed in today's call. You'll also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP by going to the company's website and reviewing yesterday's news release.

Dru Anderson: This conference call may also contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Addus' expected quarterly and annual financial performance for 2025 or beyond. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, discussions of forecasts, estimates, targets, plans, beliefs, expectations, and the like are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by important factors, among others, set forth in Addis filings with the Securities and Exchange Commission and in its fourth quarter 2024 news release.

Speaker Change: This conference call May also contain forward looking statements within the meaning of the private Securities Litigation Reform Act at 1995, including statements among others regarding <unk> expected quarterly and annual financial performance for 2025 or beyond.

Speaker Change: For this purpose any statements made during this call that are not statements of historical fact may be deemed to be forward looking statements without limiting the foregoing discussions of forecasts estimates targets plans beliefs expectations and the like are intended to identify forward looking statements.

You are hereby cautioned that these statements may be affected by important factors among others set forth in <unk> filings with the Securities and Exchange Commission and in its fourth quarter 2024 news release.

Dru Anderson: Consequently, actual operations and results may differ materially from the results discussed in the forward-looking statement.

Speaker Change: Consequently, actual operations and results may differ materially from the results discussed in the forward looking statements.

Dru Anderson: The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

Speaker Change: The company undertakes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise.

Dru Anderson: I will now turn the call over to the company's chairman and chief executive officer, Mr. Dirk Allison. Please go ahead, sir. Thank you, Dru.

I will now turn the call over to the company's Chairman and Chief Executive Officer, Mr. Dark Allison. Please go ahead Sir.

Speaker Change: Thank you drew.

Dirk Allison: Good morning and welcome to our 2024 fourth quarter earnings call. With me today are Brian Poff, our Chief Financial Officer, and Brad Bickam, our President and Chief Operating Officer. As we do on each of our quarterly calls, I will begin with a few overall comments and then Brian will discuss the fourth quarter results in more detail. Following our comments, the three of us would be happy to respond to any questions.

Speaker Change: Good morning, and welcome to our 2020 for fourth quarter earnings call with.

Speaker Change: With me today are Brian Poff, our Chief Financial Officer, and Brad Bickham, Our President and Chief operating officer as we do on each of our quarterly calls I will begin with a few overall comments and then Brian will discuss the fourth quarter results in more detail.

Speaker Change: Following our comments the three of us would be happy to respond to any questions.

Dirk Allison: Before I discuss our earnings, which we announced yesterday, let me express some thoughts related to the potential Medicaid program changes being discussed by the new administration and Congress. It is well documented that the new administration is actively pursuing spending cuts across virtually all areas of federal spending. This includes health care service spending, although I note the president recently indicated that Medicare and Medicaid would not be touched as part of the cut. Still, there are many proposals being floated, so I wanted to spend a few minutes sharing our view on some of them. As part of the congressional discussions concerning possible cuts to federal spending, the following have been listed, among others, as potential areas to reduce federal spending on Medicaid.

Speaker Change: Before I discuss our earnings, which we announced yesterday that May express some thoughts related to the potential Medicaid program changes being discussed by the New administration and Congress.

Speaker Change: It is well documented that the new administration is actively pursuing spending cuts across virtually all areas of federal spending.

Speaker Change: This is Kurt as health care service spending, although I know depressed recently indicated that Medicare and Medicaid would not be touched as part of the cash still.

Speaker Change: Still there are many proposals being floated so I wanted to spend a few minutes sharing our view on some of this.

Speaker Change: As part of the congressional discussions concerning possible cuts to federal spending.

Following have been listed among others as potential areas to reduce federal spending on Medicaid.

Dirk Allison: per capita caps. Lowering of the FMAP floor. Medicaid FMAP penalty for covering undocumented immigrants with state-only money. reverse or limit state-directed Medicaid payment. Limit Medicaid Provider Taxes. repealed the American Rescue Plan FMAT state incentive Medicaid work requirements and reversal of certain Biden administration rules such as nursing home staffing ratios and Medicaid access and enrollment rules. The aggregate federal savings of this list, if implemented, could be as high as $2.3 trillion over a 10-year period of time. However, it is believed that a number of these items on the list cannot be implemented concurrently. Also, the most recent House of Representatives budget resolution includes a health spending reduction of $880 billion over 10 years, rather than the $2.3 trillion, but provides no details regarding specific spending reductions.

Speaker Change: Per capita caps.

Laurie: Laurie that's math floor.

Laurie: Medicaid if matt penalty for covering undocumented immigrants, which state only money.

Laurie: Reverse or limit state directed Medicaid payments.

Laurie: And then Medicaid provider taxes.

Laurie: T O P American rescue plan, if not state incentives.

Laurie: Medicaid work requirements.

Laurie: The reversal of certain binding administration rules, such as nursing homes staffing ratios.

Laurie: And Medicaid access and enrollment rules.

Laurie: The aggregate federal savings are baseless, if implemented could be as high as $2 three trillion dollars over a 10 year period of time.

Laurie: However, it has slipped out a number of these items on the list cannot be implemented concurrently.

Laurie: So the most recent house of Representatives budget resolution.

Laurie: The health spending reduction of 880 billion over 10 years, rather than the 2.3 trillion dollars, but provides no details regarding specific spending reductions.

Dirk Allison: As you know, the population Addus serves is overwhelmingly older adults and people with disabilities, or in many cases, both. Most of the approaches that I just listed would not directly impact the population we serve, but there are a couple of items that I would like to address in more detail. per capita caps. This idea, discussed during the first Trump administration, would set an annual upper limit on federal payments per Medicaid enrollee. Each state's total federal funding would be limited to the product of the number of enrollees times the capped per enrollee spending amount. The payment spending caps could vary for the different Medicaid eligibility groups in each state.

Laurie: As you know the population to add a search is overwhelmingly older adults and people with disabilities or in many cases both.

Laurie: Most of the approaches that I just listed would not directly impact the population we serve but there are a couple of items I would like to address in more detail.

Laurie: Per capita caps. This idea discussed during the first Trump administration would set an annual upper limit on federal payments for Medicaid in Raleigh.

Laurie: Each state's total federal funding would be limited to the product that the number of enrollees times, the capped per enrollee spending amount.

The payments spending caps could vary but the different Medicaid eligibility groups in each state.

Dirk Allison: We understand that some proposals under discussion would only apply these spending caps to certain Medicaid-eligible populations and not across the board. We believe our populations are less likely to be among the CAP populations in those proposals. Lowering of the FMAP floor. Currently, the federal government reimburses states no less than 50% of the expenditures related to Medicaid. Some states are paid a higher percentage based on the relative per capita income of the state, but all states receive no less than the 50% floor payment. Reducing the floor to the FMAT funding formula would impact a number of states with relatively higher earning population as they will receive less matching funds.

Laurie: We understand that some proposals under discussion would only apply the spending caps to certain Medicaid eligible populations and not across the board.

Laurie: We believe our populations are less likely to be among the cap populations.

Laurie: Proposals.

Laurie: Lowering of the Aetna floor.

Laurie: Currently the federal government reimbursement states no less than 50% of the expenditures related to Medicaid.

Laurie: Some states are paid a higher percentage based on the relative per capita income up the state, but all states received no less than a 50% lower payment.

Laurie: Reducing the floor to the F&I funding formula what impact a number of states with relatively higher earning population as they were received less matching funds.

Dirk Allison: According to a July 2024 report by the Paragon Institute, the only states we serve that could be impacted by the lowering or removal of the MF4 would be California and Washington, which their combined Medicaid revenue represents approximately 2% of our total consolidated revenue. While proposed changes to federal Medicaid funding could shift additional costs to the states, we are optimistic that there is sufficient bipartisan support for the services we provide to avoid significant reductions at the state level. I believe it is important to remember that the services we offer reduce the overall cost to state Medicaid programs as the alternative is an increased frequency of Medicaid patients receiving more expensive institutional care.

Laurie: According to a July 2024 report by the Paragon Institute the only states we serve it could be impacted by the lowering of removal of the aetna or would be California and Washington.

Laurie: Which their combined Medicaid revenue represents approximately 2% of our total consolidated revenue.

Laurie: Well the proposed changes to federal Medicaid funding to shift additional costs to the states. We are optimistic that there is sufficient bipartisan support for the services, we provide to afford significant reductions at the state level.

Laurie: I believe it is important to remember that the services, we actually we offer reduce the overall cost to state Medicaid programs as the alternative is an increased frequency of Medicaid patients receiving more expensive institutional care.

Dirk Allison: Obviously, we cannot predict which, if any, of these measures will be implemented or the net effect of any changes. However, we believe passage out of committee and then the House are both tall orders and our government relations team believes passage in the Senate will be daunting even at this level of reduction. In fact, the Senate is pursuing its own budget resolution that contemplates significantly lower spending cuts to Medicaid program, again, with unknown results.

Laurie: Obviously, we cannot predict which if any of these measures will be implemented or the net effect of any changes. However, we believe passage out of committee and then the house are both tall orders and our government relations team believes passage in the Senate will be daunting, even if it's less.

Laurie: A reduction.

Laurie: In fact, the Senate is pursuing its own budget resolution that contemplates significantly lower spending cuts to Medicaid program again with unknown results.

Dirk Allison: I want to be sure you understand our thinking concerning any potential Medicaid reduction. Medicaid is a valuable state and federal lifeline to the extremely at-risk population that we serve, which, if cut, could lead to much higher total cost of care for both states and the federal government. At Addus, we are focused on our strategy of expanding our services to this population as it relates to home care, which we believe remains valuable to both our states, as well as Congress and this administration. We are encouraged by the bipartisan congressional comments opposing cuts to the Medicaid program.

Laurie: I want to be sure you understand our thinking concerning any potential Medicaid reductions med.

Laurie: Medicaid is a valuable state and federal lifeline to the extremely at risk population that we serve which if cut.

Laurie: Could lead to much higher total cost of care for both states and the federal government.

Laurie: And as we are focused on our strategy of expanding our services to this population as it relates to home care, which we believe remains valuable to both our states as well as Congress and this administration.

Laurie: We are encouraged by the bipartisan congressional comments opposing cuts to the Medicaid program.

Dirk Allison: As we continue to work with our contacts in Washington, we believe that, as a low-cost provider to the elderly and disabled, we are in a good position to minimize any effect which may occur from the budget proposal as presented by the House.

Laurie: As we continue to work with our contacts in Washington, We believe that has low cost provider to the elderly and disabled. We're in a good position to minimize any effects, which may occur from the budget proposal as presented by the house.

Dirk Allison: Now let me talk about the financial results we announced yesterday. Our total revenue for the 4th quarter of 2024 was $297.1 million, an increase of 7.5% as compared to $276.4 million for the 4th quarter of 2023. This revenue growth resulted in adjusted earnings per share of $1.38 as compared to adjusted earnings per share for the fourth quarter of 2023 of $1.32, an increase of 4.6%. Our adjusted EBITDA was $37.8 million, compared to $34.3 million for the fourth quarter of 2023, an increase of 10.3%.

Laurie: Now, let me talk about the financial results, we announced yesterday.

Laurie: Our total revenue for the fourth quarter of 2024 was $297 $1 million, an increase of seven 5% as compared to $276 $4 million for the fourth quarter of 2023.

Laurie: This revenue growth resulted in adjusted earnings per share of $1 38, as compared to adjusted earnings per share for the fourth quarter of 2023 and $1 32 and.

Laurie: An increase of four 6%.

Laurie: Our adjusted EBITDAR was 37 $8 million compared to $34 $3 million for the fourth quarter of 2023, an increase of 10, 3%.

Dirk Allison: This past year has been an exciting one for our company. We continue to be focused on our stated goal concerning growth and profitability as we demonstrated with the completion of our largest acquisition to date. For 2024, our total revenue was $1.2 billion, including just one month of Argentina personal care acquisition that closed on December 2, which is an increase of 9.1% as compared to the $1.1 billion for 2023. This revenue growth resulted in adjusted earnings per share of $5.26 as compared to adjusted earnings per share for 2023 of $4.58, an increase of 14.9%. Our adjusted EBITDA for 2024 was $140.3 million, as compared to $121 million for 2023, an increase of 15.9%.

Laurie: This past year and it's been an exciting one for our company. We continue to be focused on our stated go go concerning growth and profitability as we demonstrated with the completion of our largest acquisition to date.

Laurie: For 2024, our total revenue was $1 $2 billion, including just one month of Argentina personal care acquisition that closed on December 2nd which is an increase of nine 1% as compared to the $1 $1 billion for 2023.

Laurie: This revenue growth resulted in adjusted earnings per share of $5.26 as compared to adjusted earnings per share for 2023 or $4.58 an increase of 14, 9%.

Laurie: Our adjusted EBITDA for 2024 was $143 million as.

Laurie: <unk> to $121 million for 2023, an increase of 15.9%.

Dirk Allison: During 2024, we continue to experience consistent cash flow. As of the end of 2024, we had cash on hand of approximately $100 million. Following the close of our Gentipa PCS transaction on December 2, 2024 and borrowing of $233 million to fund this acquisition, the amount outstanding on our bank line of credit was approximately $223 million as of December 31, 2024. We continue to have a conservative leverage position at just under one times of adjusted EBITDA, allowing us the flexibility to continue to evaluate and pursue strategic acquisition opportunities.

Laurie: During 'twenty 'twenty four we continued to experience consistent cash flows.

Laurie: As of the end of 2024, we had cash on hand up approximately $100 million.

Speaker Change: Following the close Argentina piece, yes transaction on December 2nd of 2024.

Speaker Change: And borrowing of $233 million to fund this acquisition the amount outstanding on our bank line of credit was approximately $223 million as of December 31, 2024.

Speaker Change: We continue to have a conservative leverage position at just under one times adjusted EBITDA, allowing us the flexibility to continue to evaluate and pursue strategic acquisition opportunities.

Dirk Allison: Let me share with you an update on our Zativa personal care transaction, which I mentioned closed this past December. Following several months of joint planning with the Gentiva PCS team, we took over operations of this large PCS business with minimal disruption. Both teams did an excellent job of preparing for the December closing, understanding that Addus would need to provide most back-office services from day one. While we normally have additional time following the closing of a transaction to transfer certain back office systems, we did not have the runway in this case. However, with the detailed planning I just mentioned, we experienced a smooth process of moving this business into our Addus corporate structure.

Speaker Change: Let me share with you an update on Argentina personal care transaction, which I mentioned closed this past December.

Speaker Change: Following several months of joint planning with the Geneva Pcf's team, we took over operations of this large Pcs business with minimal disruption.

Speaker Change: Both teams did an excellent job of preparing for the December closing understanding that <unk> would need to provide most back office services from day one.

Speaker Change: While we normally have additional time following the closing of a transaction to transfer certain back office systems. We did not have the runway in this case.

Speaker Change: However, with the detailed planning I just mentioned, we experienced a smooth process of moving this business and tour at its corporate structure.

Dirk Allison: Recently, I had the opportunity to spend the day with Brad and the leadership team from our Acquired Santiba operation. The focus of the day was to help orient this new leadership team with the systems and methods of the legacy Addis operation. I was encouraged by both the enthusiasm and deep experience that our new team brings to Addis. It gives me a great deal of confidence in our ability to continue to take care of the many new consumers we added as a result of this acquisition while also meeting the financial goals we developed during the due diligence and transition planning process.

Speaker Change: Recently, I had the opportunity to spend the day with grab the leadership team from our acquired Gentiva operations. The focus of the day. What did you help Orient this new leadership team with the systems and methods of the legacy Arris operation.

Speaker Change: Encouraged by both the enthusiasm and deep experience that our new team brings to address.

Speaker Change: It gives me a great deal of confidence in our ability to continue to take care of the many new consumers. We added as a result of this acquisition. While also meeting the financial goals, we developed during the due diligence and transition planning process I want to officially welcome all of Argentina teammates to Atlas.

Dirk Allison: I want to officially welcome all of our Genteva teammates to Addis. Before I discuss our labor and operations, let me talk about the corporate office leave write-off we included in our results announced yesterday. Just prior to the 2020 pandemic, we had doubled the size of our corporate office footprint to support our corporate team and our potential future growth. After going remote for a number of weeks during the pandemic, our leadership team made the decision to utilize a modified remote work schedule for our Dallas team going forward, as many companies have. In addition, we found that after an acquisition, we were better able to keep key leadership if we allowed certain new members of our team to remain in their current location as opposed to requiring them to relocate to Dallas.

Speaker Change: Before I discuss our labor and operations, let me talk about the corporate cough asleep write off.

Speaker Change: <unk> in our results announced yesterday.

Speaker Change: Just prior to the 'twenty 'twenty pandemic, we had doubled the size of our corporate office footprint to support our corporate team and our potential future growth.

Speaker Change: After going remote for a number of weeks during the pandemic. Our leadership team made the decision to utilize a modified remote work schedule for our Dallas team going forward as many companies have.

Speaker Change: In addition, we found that after an acquisition we were better able to keep key leadership, if we allowed certain new members of our team to remain in their current location as opposed to requiring them to relocate to Dallas.

Dirk Allison: With our company's operation being spread over 20-plus states, it has allowed leadership to be closer to our field operations. We've seen this change in approach work extremely well for our corporate and operations staff. For this reason, we concluded there was excess space at our corporate offices.

Speaker Change: With our company's operation bring spread over 20, plus states and it's allowed leadership to be closer to our field operations we.

Speaker Change: We've seen this change in approach worked extremely well for our corporate and operations staff for this reason we concluded there was excess space at our corporate office.

Dirk Allison: After researching the limited opportunities in the sublease market, we determined it made sense to take a one-time write-off of approximately $4.9 million in our fourth quarter 2004 financial statements in order to accelerate the remaining costs related to this excess space.

Speaker Change: After researching the limited opportunities in the sublease market, we determined it made sense to take a one time write off of approximately $4 $9 million and our fourth quarter of 2000 and for financial statements in order to accelerate the remaining cost related to this excess space.

Dirk Allison: Now let me discuss certain areas of our operation. During the fourth quarter of 2024, we continued to experience solid caregiver hiring success, especially in our personal care segment. During the fourth quarter of 2024, we saw personal care hiring at 76 hires per day, up two hires per day when compared to the fourth quarter of 2023. Please note that the hiring numbers exclude our New York operations, which we divested, as well as the recently acquired GPS Gentiba PCS operations. Hiring is always more challenging in the fourth quarter of the year with both the Thanksgiving and Christmas holidays, so it is encouraging to see our hiring numbers remain in the mid-70s.

Now, let me discuss certain areas of our operation.

Speaker Change: During the fourth quarter 'twenty 'twenty four we continued to experience solid caregiver hiring success, especially in our personal care segment.

Speaker Change: During the fourth quarter of 2024, where you saw personal care hiring at 76 <unk> per day up two hours per day, when compared to the fourth quarter of 2023.

Speaker Change: Please note that the hiring numbers exclude our New York operations, which we divested as well as the released recently acquired G. P. S. Gen T, but tcs operation.

Speaker Change: Hiring is always more challenging in the fourth quarter of the year with both the Thanksgiving and Christmas holidays. So it is encouraging to see our hiring numbers remain in the mid seventies.

Dirk Allison: In addition to our strong hiring numbers, we continued the momentum in starts per business day, which we have seen over the past few quarters. With respect to our clinical service line, as has been consistent over the past few quarters, we continue to see improvements in the overall clinical labor environment, although we do believe that for the foreseeable future, clinical hiring will remain more challenging and geographically variable than what we see in our PCS segment. As we have over the past few years, we continue to utilize the funding we received from the American Rescue Plan Act, or ARPA.

Speaker Change: In addition to our strong hiring numbers, we've continued the momentum and starts per business day, which we have seen over the past few quarters.

Speaker Change: With respect to our clinical service line as has been consistent over the past few quarters, we continue to see improvements in the overall clinical labor environment. Although we do believe that for the foreseeable future clinical hiring will remain more challenging and geographically variable and what we see in our piece.

Speaker Change: <unk> segment.

Speaker Change: As we have over the past few years, we continued to utilize the funding we received from the American Rescue plan Act or ARPA.

Dirk Allison: During the fourth quarter of 2024, we received a small amount of additional ARPA funding while we utilized over $2.7 million, leaving approximately $11 million remaining in accessible funds. These funds are continuing to be used to help caregiver recruitment and retention efforts, as well as other opportunities to enhance our caregivers' experience and training. In our personal care segment, our services continue to receive favorable reimbursement support for many of the states in which we operate. We are confident that personal care services continue to deliver real value to state Medicaid programs as well as our managed care partners through a reduction in the overall cost of care.

Speaker Change: During the fourth quarter of 2024, we received a small amount of additional ARPA funding, while we utilized over $2 7 million, leaving approximately $11 million remaining inaccessible ponds.

Speaker Change: These funds are continuing to be used to help prepare member recruitment and retention efforts as well as other opportunities to enhance our caregivers experience and training.

Speaker Change: And our personal care segment, our services continue to receive favorable reimbursement support for many of the states in which we operate.

Speaker Change: We are confident that personal care services continued to deliver real value to state Medicaid programs as well as our managed care partners through a reduction in the overall cost of care and as we stated earlier puts us in a favorable position as various Medicaid changes are considered.

Dirk Allison: And as we stated earlier, put us in a favorable position as various Medicaid changes are considered. On January 1st, 2025, Illinois, our largest state for personal care services, enacted a 5.5% rate increase for personal care services, bringing the rate per hour to $29.63. We continue to appreciate the strong support that home and community-based services receive from the leadership of this state.

Speaker Change: On January 1st 2025, Illinois, our largest state for personal care services enacted a 5.5% rate increase for personal care services, bringing the rate per hour to $29 63.

Speaker Change: We continue to appreciate the strong support that home and community based services received from the leadership of this state.

Dirk Allison: Brian will give you more information on how we anticipate that this increase will positively impact our personal care financial performance for 2025.

Speaker Change: Brian will give you more information on how we anticipate that this increase will positively impact our personal care financial performance for 2025.

Speaker Change: Yeah.

Dirk Allison: Now let me discuss our same-store revenue growth for the fourth quarter of 2024. For our personal care segment, our same store revenue growth was 5.8% compared to the fourth quarter of 2023. During the fourth quarter of 2024, we saw personal care same store hours increased by 0.7% as compared to the same period in 2023. We saw a slight impact to our same store hours grow due to continued Medicaid redeterminations primarily in the northern part of Illinois. While this process has taken longer in Illinois, we believe this is nearing an end. It is encouraging that we continue to see improvement in our percentage of hours served compared to authorized hours as we show nice improvement over the fourth quarter of 2023.

Speaker Change: Now, let me discuss our same store revenue growth for the fourth quarter of 2024.

Speaker Change: For our personal care segment, our same store revenue growth was five 8% compared to the fourth quarter of 2023.

Speaker Change: During the fourth quarter of 2024, we saw personal care same store hours increased by <unk>, 7% as compared to the same period in 2023.

Speaker Change: We saw a slight impact to our same store hours growth due to continued Medicaid redetermination, primarily in the northern part of Illinois.

Speaker Change: While this process has taken longer in Illinois. We believe this is nearing an end. It is encouraging that we continue to see improvement in our percentage of our served compared to authorized Howard's as we showed nice improvement over the fourth quarter of 2023.

Dirk Allison: This continued improvement, along with the completion of the Medicaid redetermination process should help us as we focus on returning our same-store personal care hours growth rate to over 2%. Turning to our clinical operations, our hospice same-store revenue increased 7.8 percent when compared to the fourth quarter of 2023. Our total average daily census increased to 3,472 for the quarter, up from 3,381 for the same period last year. Our same-store average daily census increased 2.7% when compared to the same quarter last year. For the fourth quarter of 2024, our hospice medium length of stay was 26 days, as compared to 31 days for the third quarter of 2024, as we saw an increase in the number of short length of stay patients in the fourth quarter.

Speaker Change: This continued improvement along with the completion of the Medicaid Redetermination process.

Speaker Change: Should help us as we focus on returning our same store personal care hours broke right.

Speaker Change: Two over 2%.

Speaker Change: Turning to our clinical operations, our hospice same store revenue increased seven 8% when compared to the fourth quarter of 2023.

Speaker Change: Our total average daily census increased to 3472 for the quarter.

Speaker Change: Up from 3381 for the same period last year.

Speaker Change: Our same store average daily census, increased two 7% when compared to the same quarter last year.

Speaker Change: For the fourth quarter of 2024, our hospice medium length of stay was 26 days as compared to 31 days for the third quarter of 2024 as we saw an increase in the number of short length of stay patients in the fourth quarter.

Dirk Allison: Our stated target for this metric is mid to high 20s. Overall, while we are pleased by the improvement of our hospital segment this year, we have recently hired new operations and sales leadership to further accelerate improvement in this segment. We are in the final stages of an overall sales retaining, retraining project, which will conclude this month, and we expect to drive continued volume improvements as the current year progresses. Our home health segment, same store revenue, increased 1.6% when compared to the same quarter of 2023. We are pleased to see this segment segment of our business return to a positive same store revenue growth and anticipate this growth will continue in 2025.

Speaker Change: Our stated target this metric is mid to high twenties.

Speaker Change: Overall, while we are pleased by the progress of our hospital segment. This year, we have recently hired new operations and sales leadership to further accelerate improvement in this segment.

Speaker Change: We are in the final stages of an overall sales retaining retraining project, which will conclude this month and we expect to drive continued volume improvements as the current year progressed.

Speaker Change: Our home Health segment same store revenue increased one 6% when compared to the same quarter of 2023.

Speaker Change: We were pleased to see this segment of our business returned to a positive same store revenue growth and anticipate this growth will continue in 2025.

Dirk Allison: As we have previously discussed, our home health is an important partner to our hospice and personal care segments in the markets in which we have these overlapping services, which allow us to provide our patients with the optimal care continuum to ensure our patients have the access to the right care at the right time. as demonstrated by the Genteva personal care transaction. Acquisitions continue to be an important part of our growth strategy at Addus. Our targeted minimum annual revenue growth of 10% remains all gold even with the larger size of our revenue base. specifically for home health opportunities, we continue to see more small transactions coming to market at this point in time.

Speaker Change: As we have previously discussed our home health as an important partner to our hospice and personal care segments in the markets in which we have these overlapping services, which allow us to provide our patients with the optimal concur care continuum to ensure our patients have access to the right care.

Speaker Change: At the right time.

Speaker Change: As demonstrated by the Gentiva personal care transaction.

Speaker Change: Acquisitions continue to be an important part of our growth strategy at Atlas.

Speaker Change: Our targeted minimum annual revenue growth of 10% remains all gold even with the larger size of our revenue base.

Speaker Change: Specifically for home health opportunities, we continue to see more small transactions coming to market at this point in time we.

Dirk Allison: We feel this dynamic will continue until we know how CMS will handle annual home health rate rulemaking under the new administration, along with any visibility we can obtain regarding the potential revenue clawback. We will, however, continue to look for those potential home health transactions that fit our strategy of adding clinical services in our existing personal care market. Now that we have a strong presence in Texas, our team has started looking for both clinical and non-clinical acquisition opportunities in that state, which will allow us to start the process of statewide coverage in all three levels of home care.

Speaker Change: We feel this dynamic will continue until we know how CMS will handle annual home health rate rule, making hundreds of new administration.

Speaker Change: Along with any visibility we can obtain regarding the potential revenue clawback.

Speaker Change: We will however continue to look for those potential hormel transactions that fit our strategy of adding clinical services and our existing personal care markets.

Speaker Change: Now that we have a strong presence in Texas. Our team has started looking for both clinical and non clinical acquisition opportunities in that state, which will allow us to start the process a statewide coverage and all three levels of home care.

Dirk Allison: We are currently looking at certain smaller transactions which fit well with this strategy. While there are indications of a number of larger clinical service acquisition opportunities potentially coming to market later in 2025, we remain committed to maintaining our conservative approach to pricing and overall due diligence, which we feel has proven to be advantageous for us over the past several quarters.

Speaker Change: We are currently looking at certain smaller transactions, which fit well with this strategy.

Speaker Change: While there are indications of a number of larger clinical service acquisition opportunities potentially coming to market. Later in 2025, we remain committed to maintaining our conservative approach to pricing and overall due diligence, which we feel is prevalent proven to be advantageous for us over the past several.

Speaker Change: Quarters.

Dirk Allison: Before I turn the call over to Brian, I want to thank the Addus team for the care they are providing to our elderly and disabled consumers and patients. We all have come to understand that the majority of the elderly and disabled clients and patients want to receive care at home, which remains one of the safest and most cost-effective places to receive this care. We believe this heightened awareness of the value of home-based care is favorable for our industry and will continue to be a growth opportunity for our company. We understand and appreciate that our operations and growth are dependent on both our dedicated caregivers and other employees who work so incredibly hard providing outstanding care and support to our clients, patients, and their families.

Brian Poff: Before I turn the call over to Brian I want to thank the <unk> team for the care, they're providing to our elderly and disabled consumers and patients.

We all have come to understand that the majority of the elderly.

Brian Poff: Saba clients and patients want to receive care at home, which remains one of the safest and most cost effective places to receive this care.

Brian Poff: We believe this heightened awareness of the value of home based care is favorable for our industry and we will continue to be a growth opportunity for our company.

Brian Poff: We understand and appreciate that our operations and growth are dependent on both our dedicated caregivers and other employees, who worked so incredibly hard providing outstanding care and support to our clients patients and their families.

Brian Poff: With that, let me turn the call over to Brian.

Brian Poff: With that let me turn the call over to Brian.

Brian Poff: Thank you, Dirk. And good morning, everyone. Our fourth quarter financial results mark a strong finish to 2024 as we continue to deliver consistent profitable growth throughout the year. we achieved 7.5% top line growth and a 10.3% increase in adjusted EBITDA compared with the fourth quarter last year. of the year, revenues were up 9.1% and adjusted EBITDA increased 16% over 2023. Our personal care services segment was the key driver of our business with a solid 5.8% organic revenue growth rate over the same period last year. This growth trend has consistently tracked well above our normal expected range of three to five percent.

Brian Poff: Thank you Dirk and good morning, everyone.

Brian Poff: Our fourth quarter financial results marked a strong finish to 2024 as we continued to deliver consistent profitable growth throughout the year.

Brian Poff: We achieved seven 5% topline growth and a 10, 3% increase in adjusted EBITDA compared with the fourth quarter last year.

Brian Poff: For the year revenues were up nine 1% and adjusted EBITDA increased 16% over 2023.

Brian Poff: Our personal care services segment was the key driver of our business with a solid five 8% organic revenue growth rate over the same period last year.

Brian Poff: This growth trend has consistently tracked well above our normal expected range of 3% to 5% this year.

Brian Poff: These results were supported by strong hiring trends and favorable rate support for personal care services in some of our larger markets. As a reminder, going forward, we will benefit from the statewide reimbursement increase in Illinois, effective January 1, 2025, which will contribute approximately $23 million in annualized revenue with a margin in the low 20s, consistent with the 77% rule in the state.

Brian Poff: These results were supported by strong hiring trends and favorable rates support for personal care services in some of our larger markets.

Brian Poff: As a reminder, going forward, we will benefit from the statewide reimbursement increase in Illinois effective January one 2025, which will contribute approximately $23 million in annualized revenue with a margin in the low twenties, consistent with a 77% rule and the state.

Brian Poff: The consolidated results for the fourth quarter included one month of the personal care operations of Genceva, acquired on December 2, 2024, and excluded the company's previous operations in the state of New York as a result of our agreement to divest these operations and exit the state. However, during the fourth quarter, we did receive approximately $3.5 million in retroactive rating. from the state of New York as a result of our previous reimbursement rate. This revenue has been excluded from our adjusted results and same store metrics. We saw steady improvement in our hospice business in the fourth quarter, supported by the 2025 Hospice Reimbursement Rate Update, effective October 1st, 2024.

Brian Poff: The consolidated results for the fourth quarter included one month of the personal care operation substance Eva acquired on December <unk> 2024, and excluded the company's previous operations in the state of New York as a result of our agreement to divest these operations and exit the state.

Brian Poff: However, during the fourth quarter, we did receive approximately $3 $5 million in retroactive rate increases from the state of New York as a result of our previous reimbursement rate appeal.

Brian Poff: This revenue has been excluded from our adjusted results and same store metrics.

Brian Poff: We saw steady improvement in our hospice business in the fourth quarter supported by the 2025 hospice reimbursement rate update effective October one 2024.

Brian Poff: We achieved 7.8% organic revenue growth and higher average daily census, patient days and revenue per patient day compared with the fourth quarter last year. Hospice care accounted for 20.1% of our total revenue for the quarter. For our home health services, which is our smallest segment, accounting for 6.1% of our total revenue, we saw a return to positive organic revenue growth of 1.6% over the fourth quarter of last year. We believe home health continues to be complementary to our personal care and hospice service. In addition to organic growth, we have benefited from our recently acquired operations, and we remain focused on identifying additional acquisitions that will be accretive to our operations and support our ability to expand our market reach.

Brian Poff: We achieved seven 8% organic revenue growth and higher average daily census, patient days and revenue per patient day, compared with the fourth quarter last year.

Brian Poff: Hospice care accounted for 21% of our total revenue for the quarter.

Brian Poff: For our home Health services, which is our smallest segment accounting for six 1% of our total revenue. We saw a return to positive organic revenue growth of one 6% over the fourth quarter of last year.

Brian Poff: We believe home health continues to be complementary to our personal care and hospice services.

Brian Poff: In addition to organic growth we have benefited from our recently acquired operations and we remain focused on identifying additional acquisitions that will be accretive to our operations and support our ability to expand our market reach.

Brian Poff: The Gentiva acquisition was the largest in our history, adding approximately $280 million in annualized revenues and significantly expanding our market coverage. As we continue to look for acquisitions that align with our growth strategy, our primary objective is to find operations and markets where we can leverage our strong personal care presence and add clinical services so we can offer all three levels of home-based care. We also look for select opportunities to add new personal care markets where we can enter at scale. With support of a strong balance sheet, even after the Gentiva acquisition, we are well positioned to execute our acquisition strategy.

Brian Poff: The Gentiva acquisition was the largest in our history, adding approximately $280 million in annualized revenues and significantly expanding our market coverage as.

Brian Poff: As we continue to look for acquisitions that align with our growth strategy. Our primary objective is to find operations in markets, where we can leverage our strong personal care presence.

Brian Poff: Clinical services. So we can offer all three levels of home based care.

Brian Poff: We also look for select opportunities to add new personal care markets, where we can enter at scale.

Brian Poff: With the support of a strong balance sheet, even after the Gentiva acquisition, we are well positioned to execute our acquisition strategy.

Brian Poff: As Dirk noted, total net service revenues for the fourth quarter were $297.1 million, or $293.7 million excluding the retroactive New York rating The revenue breakdown, excluding New York, is as follows. Personal care revenues were $216.9 million, or 73.8% of revenue. Hospice care revenues were $59 million or 20.1% of revenue. and Home Health revenues for $17.8 million or 6.1% of revenue. Sequentially, from the fourth quarter 2024 revenue of $293.7 million excluding New York, we expect the first quarter of 2025 to benefit from both the Illinois rate increase and two additional months of Gentiva revenue, partially offset by one less business day in personal care and some seasonal impact from the winter storms we experienced in certain of our markets.

Brian Poff: As Derek noted total net service revenues for the fourth quarter were $297 1 million.

Brian Poff: <unk> $293 $7 million, excluding the retroactive New York rate increase the.

Brian Poff: The revenue breakdown, excluding New York is as follows personal care revenues were $216 $9 million or 73, 8% of revenue.

Brian Poff: Hospice care revenues were $59 million or 21% of revenue.

Brian Poff: At home Health revenues were $17 8 million or six 1% of revenue.

Brian Poff: Sequentially from the fourth quarter 2020 for revenue of $293 $7 million, Excluding New York, We expect the first quarter of 2025 to benefit from both the Illinois rate increase and two additional months of Gentiva revenue, partially offset by one less business day in personal care and some season.

Brian Poff: The impact from the winter storms, we experienced in certain of our markets.

Brian Poff: Other financial results for the fourth quarter of 2024 include the following. Excluding the impact of the retroactive New York rate increase, our gross margin percentage was 33.4%, essentially flat from the fourth quarter of 2023. As expected, we saw a positive impact sequentially from the third quarter of 2024 from the Medicare hospice rate increase and the divestiture of our lower margin New York business. Looking ahead to the first quarter of 2025, we expect our gross margin percentage to be negatively impacted by our annual merit increases and the normal annual reset of payroll taxes, as well as the mixed shift toward personal care from a full quarter of the Genteva operations and the Illinois rating.

Brian Poff: Other financial results for the fourth quarter of 2024 include the following.

Brian Poff: Excluding the impact of the retroactive New York rate increase our gross margin percentage was 33, 4% essentially flat from the fourth quarter of 2023 as.

Brian Poff: As expected we saw a positive impact sequentially from the third quarter of 2024 from the Medicare hospice rate increase and the divestiture of our lower margin New York business.

Brian Poff: Looking ahead to the first quarter of 2025, we expect our gross margin percentage to be negatively impacted by our annual merit increases and the normal annual reset of payroll taxes as well as the mix shifts toward personal care from a full quarter of the Gentiva operations and the Illinois rate increase.

Brian Poff: Cumulatively, we expect these items to contribute a decline sequentially in gross margin percentage of approximately 200 basis points compared to the fourth quarter of 2024, although we will see higher gross margin dollars with the first full quarter of the GenSIVA operations and the Illinois statewide rating. G&A expense was 24% of revenue compared with 22% of revenue for the fourth quarter a year ago, primarily as a result of higher acquisition expenses related to Gentiva, which included investment banking and professional fees of approximately $5.6 million. Adjusted G&A expenses for the fourth quarter of 2024 were 20.5%, a decrease from 20.6% in the comparable prior year quarter.

Brian Poff: Cumulatively, we expect these items to contribute a decline sequentially in gross margin percentage of approximately 200 basis points compared to the fourth quarter of 2024, although we will see higher gross margin dollars with the first full quarter of the GNC the operations and the Illinois state wide rate increase.

Brian Poff: G&A expense was 24% of revenue compared with 22% of revenue for the fourth quarter a year ago, primarily as a result of higher acquisition expenses related to Gentiva, which included investment banking and professional fees of approximately $5 6 million.

Brian Poff: Adjusted G&A expenses for the fourth quarter of 2024, or 25% a decrease from 26% in the comparable prior year quarter.

Brian Poff: As expected, we saw an increase sequentially from the third quarter in our adjusted G&A expense percentage as a result of the divestiture of the New York operations and their respective revenues no longer included in our financial results. The company's adjusted EBITDA increased 10.3% to $37.8 million, compared with $34.3 million a year ago. adjusted EBITDA margin was 12.9%, an increase from 12.4% for the fourth quarter of 2024, and higher sequentially from 11.8% the third quarter of 2024. As expected, the divestiture of our New York operations had a positive impact of approximately 90 basis points on our adjusted EBITDA margin percentage sequentially from the third quarter of 2020.

Brian Poff: As expected we saw an increased sequentially from the third quarter and our adjusted G&A expense percentage as a result of the divestiture of the New York operations and their respective revenues no longer included in our financial results.

Brian Poff: The company's adjusted EBITDA increased 10, 3% to $37 $8 million compared with $34 $3 million a year ago.

Brian Poff: Adjusted EBITDA margin was 12, 9% an increase from 12, 4% for the fourth quarter of 2024 and higher sequentially from 11, 8% the third quarter of 2024.

Brian Poff: As expected the divestiture of our New York operations had a positive impact of approximately 90 basis points on our adjusted EBITDA margin percentage sequentially from the third quarter of 2024.

Brian Poff: Adjusted net income per diluted share was $1.38 compared with $1.32 for the fourth quarter of 2020. The adjusted per share results for the fourth quarter of 2024 exclude the following. Gain on sale of assets related to the New York divestiture of $0.15. The impact of the lease impairment of 20... The impact of the retroactive New York rate increase of $0.14. acquisition expenses of $0.29 and non-cash stock-based compensation expense of $0.11.

Brian Poff: Adjusted net income per diluted share was $1 38, compared with $1 32 for the fourth quarter of 2023.

Brian Poff: The adjusted per share results for the fourth quarter of 2024 excludes the following.

Brian Poff: Gain on sale of assets related to the New York divestiture of 15.

Brian Poff: The impact of the lease impairment of 20.

Brian Poff: The impact of the retroactive New York rate increase of 2014.

Brian Poff: Acquisition expenses of 29.

Brian Poff: And noncash stock based compensation expense of a loan.

Brian Poff: The adjusted per share results for the fourth quarter of 2023 exclude the following. Impact of retroactive collecting bargaining agreements of $0.07. Acquisition expenses of $0.07. and non-cash stock-based compensation expense of $12,000. Our tax rate for the fourth quarter of 2024 was 25.5%, down sequentially from the third quarter as a result of our New York divestiture. as expected. For calendar 2025, we expect our tax rate to remain in the mid-20% range. DSOs were 34.9 days at the end of the fourth quarter of 2024, excluding the Gentiva acquisition, compared with 31.7 days at the end of the third quarter of 2024.

Brian Poff: The adjusted per share results for the fourth quarter of 2023 exclude the following <unk>.

Brian Poff: Impact of retroactive collecting bargaining agreements with <unk>.

Acquisition expenses of seven.

Brian Poff: And noncash stock based compensation expense of 12 <unk>.

Brian Poff: Our tax rate for the fourth quarter of 2024 was 25, 5% down sequentially from the third quarter as a result of our New York divestiture.

Brian Poff: As expected.

Brian Poff: For calendar 2025, we expect our tax rate to remain in the mid 20% range.

Brian Poff: Dsos were $34 nine days at the end of the fourth quarter of 2024, excluding the Gentiva acquisition compared with $31 seven days at the end of the third quarter of 2024, we.

Brian Poff: We have continued to experience consistent cash collection from the majority of our payers. Our DSOs for the Illinois Department of Aging for the fourth quarter were a more normalized 40 days, compared with 32.5 days at the end of the third quarter. Our net cash flow from operations was $10.4 million for the fourth quarter and $116.4 million for the full year 2024. As expected, we saw a lesser benefit from working capital changes in the fourth quarter sequentially from the third quarter. During the fourth quarter of 2024, we received $320,000 in ARPA funding, which we believe is our last currently scheduled disbursement.

Brian Poff: We have continued to experience consistent cash collection from the majority of our payers our dsos for the Illinois Department of aging for the fourth quarter were a more normalized 40 days compared with $32 five days at the end of the third quarter.

Brian Poff: Our net cash flow from operations was $10 $4 million for the fourth quarter at $116 4 million for the full year 2024.

Brian Poff: As expected we saw a lesser benefit from working capital changes in the fourth quarter sequentially from the third quarter.

Brian Poff: During the fourth quarter of 2024, we received $320000 in ARPA funding, which we believe is our last currently scheduled disbursement.

Brian Poff: We utilized approximately $2.7 million in ARPA funds during the fourth quarter, and we have approximately $11.2 million in funds remaining to be utilized. As of December 31st, 2024, the company had cash of $98.9 million, with capacity and availability under our revolving credit facility of $577.7 million and $346.6 million, respectively. As previously disclosed, during the fourth quarter, we entered into an amended and restated credit agreement to increase our revolving credit facility from $600 million to $650 million and extend the maturity date through July 2021. With our consistently strong cash flow, we have already been able to make payments on a revolver subsequent to the Genteva acquisition, with a $10 million reduction in late December and an additional $10 million reduction to date in the first quarter of 2025.

Brian Poff: We utilized approximately $2 $7 million in ARPA funds during the fourth quarter, and we have approximately $11 $2 million of funds remaining to be utilized.

Brian Poff: As of December 31, 2024, the company had cash of $98 $9 million with capacity and availability under our revolving credit facility of $577 $7 million and $346 $6 million respectively.

Brian Poff: As previously disclosed during the fourth quarter, we entered into an amended and restated credit agreement to increase our revolving credit facility from $600 million to $650 million and extend the maturity date through July 2028.

Brian Poff: With our consistently strong cash flow, we have already been able to make payments on our revolver subsequent to the Gentiva acquisition with a $10 million reduction in late December and an additional $10 million reduction to date in the first quarter of 2025.

Brian Poff: We have a capital structure that supports our ability to continue to invest in our business and pursue our strategic growth initiatives, including acquisition. We will continue to selectively pursue acquisitions in 2025 to complement our organic growth and align with our strategy. At the same time, we expect to maintain our disciplined capital allocation strategy. continue to diligently manage our net leverage ratio through ongoing debt reduction. With a current net leverage of just under one time, we are well positioned as we head into 2025.

Brian Poff: We have a capital structure that supports our ability to continue to invest in our business and pursue our strategic growth initiatives, including acquisitions. We will continue to selectively pursue acquisitions in 2025 complement our organic growth and aligned with our strategy.

Brian Poff: At the same time, we expect to maintain our disciplined capital allocation strategy and continue to diligently manage our net leverage ratio through ongoing debt reduction.

Brian Poff: With a current net leverage of just under one times, we are well positioned as we head into 2025.

Brian Poff: This concludes our prepared comments this morning, and thank you for being with us. I'll now ask the operator to please open the line for your questions. Thank you.

Brian Poff: This concludes our prepared comments this morning, and thank you for being with US I'll now ask the operator to please open the line for your questions.

Brian Poff: Thank you we will now begin the question and answer session.

Operator: We will now begin the question and answer. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, you may press star, then two.

Brian Poff: I'll ask a question you May press Star then one on your telephone keypad.

Brian Poff: If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question you May Press Star then two.

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

Brian Poff: At this time, we will pause momentarily to assemble our roster.

Joanna Gajuk: Today's first question comes from Joanna Gajuk with Bank of America. Please go ahead. Oh yes, hi, how are you? Thanks so much for taking the question here. So I guess maybe first on the court, a couple of number of questions. In terms of the average revenue per hour in the court before, right, it was down sequential, so I assume that's the Gentiva deal impact there. So as we think about kind of the run rate, including fully Gentiva for three months, you know, we're coming up with, call it $25, $25.50 per hour versus the legacy Addus of $28.

Speaker Change: Today's first question comes from Joanna <unk> with Bank of America. Please go ahead.

Joanna: Oh, Yes, hi, how are you. Thanks, so much for taking the question here.

Speaker Change: So I guess maybe first.

Joanna: On the quarter a couple of number questions.

Joanna: In terms of the average revenue per hour in the quarter Q4, right. It was to ask the question. So I assume that the <unk> deal are impacted there.

Joanna: As we think about kind of the run rate, including fully gentiva for three months.

Joanna: You know, we're coming up with call. It 25, $25 50 diaper.

Joanna: Our versus just a legacy out of sub 28, so as it had the ballpark because I understand the Texas.

Brian Poff: So is it in the ballpark? Because I understand that Texas average hourly rate is much lower. So I just want to confirm kind of the math we're doing here. Yeah, Joanna, I think that's right. Texas is a lower bill rate. We had one month in Q4. We'll have a whole quarter in Q1. So I definitely wouldn't anticipate that to impact that and bring that just average per hour down. So the reimbursement in Texas is a little under $17 an hour. So it definitely is a little different profile, as we've talked about previously. Now, we will see a little bit of offset to that because we are getting the five and a half percent increase in Illinois, which is our largest state.

Speaker Change: I would like all of the latest is much lower so I just wanted to confirm kind of the math week delay here.

Speaker Change: Yeah, Duane I think Thats right, Texas, a lower bill rate, we had one month in Q4, we'll have a full quarter in Q1, so I definitely wouldn't anticipate that to impact that and bring that just average per hour down so the reimbursed where and in Texas, a little under $17 an hour. So it definitely is a little different profile as we've talked about previously that we will see a little bit of <unk>.

Offset to that because we are getting the five 5% increase in Illinois, which is our largest state. So net net there will be kind of a plus and minus there. So I would expect to see a probably slightly down as a result of that but thats.

Brian Poff: So, you know, net net, there will be kind of a plus and minus there. So I would expect to see it probably slightly down as a result of that.

Brian Poff: But that's the kind of progression Q4 into Q1. Okay, thank you. And another, I guess, number of question here. So in the quarter, you said the organic I guess volumes in your personal coverage, did I get that right? Was it up slightly? Could you, I guess, remind me that number? And I guess, how does it compare versus your third quarter? Because I think in third quarter, the growth was maybe comparable, like 0.6 percent or something like that, organic census. Yeah, I think if you look at just personal care hours, quarter over quarter, we were up slightly, or year over year, we were up just under 1%.

Speaker Change: Kind of progression Q4 into Q1.

Speaker Change: Okay. Thank you and another.

Speaker Change: A number of question here in the quarter, you said Oh ganic.

Speaker Change: I guess volumes.

Speaker Change: Personal care was that did I get that right with it.

Speaker Change: Slightly could you I guess remind me that number and I guess, how does it compare versus your third quarter, because I think in third quarter are the growth with maybe.

Speaker Change: Like feel 0.6% or something like that organic census.

Speaker Change: Yes, I think if you look at personal care hours.

Speaker Change: Quarter over quarter, we were up slightly our.

Speaker Change: Our year over year, we were about just under 1%.

Brian Poff: Down slightly sequentially is basically flat. And if you look at just kind of volumes and PCS and Q4 and what impacted there, you know, we've talked about the redeterminations, we saw a spike in discharges in October, started seeing that number decrease steadily through the remainder of the fourth quarter in November and December. January, again, saw a little deceleration there in discharges. So we believe that the redetermination process is largely done, if not completely done. And we're starting to see admission volume start to tick up, at least we did in January. So optimistic that, you know, when we look at just volume growth and PCS for 2025, you know, we've talked about our long term goal of 3 to 5% revenue increase, I think we'll be at kind of the high end of that range again.

Speaker Change: Down slightly sequentially was basically flat.

Speaker Change: And if you look at just kind of volumes in Dcs in Q4, and what impacted there we've talked about the redetermination as we saw a spike in discharges in October started seeing that number decreased steadily through the remainder of the fourth quarter and ended in November and December January.

Speaker Change: Again saw a little deceleration there and discharges so we believe that the.

Speaker Change: Redetermination process is largely non it's not completely done.

Speaker Change: And we're starting to see admission volume.

Speaker Change: Start to tick up or at least we did in January so optimistic that when we look at just volume growth in Dcs for 2025, we've talked about our long term goal of 3% to 5% revenue.

Speaker Change: Increase I think we'll be at kind of at the high end of that range again.

Brian Poff: Oh, I'm sorry. So you're talking about for the full year, 25 to be towards the higher end. Correct. Right. Okay. And then I guess you alluded to like growing volumes, maybe 2%. So I'm just trying to bridge, you know, how you're going to get from like, call it, you know, a little bit less than one, I guess, to 2%. Because I want to say you also talk about PVC, about using your new scheduling app and I guess improving utilization there and average fill rate. So can you kind of walk us through maybe, you know, kind of the build, how are you going to get the 2% growth in organic volumes?

Speaker Change: Oh I'm, sorry, so you're talking about for the full year of 25 to be towards the higher end.

Speaker Change: Correct.

Speaker Change: Right, Okay, and then I guess that you alluded to like growing volumes, maybe 2%. So I'm just trying to fix you know how you're going to get from let's call. It you know literally less than one I guess to two 2% because I don't want to say you also talk about PVC about using your in your scheduling up in I guess improving utilization there.

Speaker Change: And our average off of late so can you kind of walk us through maybe you know kind of the belt.

Speaker Change: How are you going to get the 2% growth in organic volumes.

Brian Poff: Yeah, I mean, I think if you see one, we see that the redetermination process is largely done. So, you know, we're not seeing the discharge rate is coming down to a more normalized level. We're also starting to see admission volumes tick up, which tells me that the referral sources are now, you know, more focused on new clients rather than looking at redetermination. So, I think just on the volume side from the referral side, we're starting to see that number come up. As you point out, we have done a lot of things with our caregiver application.

Speaker Change: Yes, I mean, I think if you see one we see that the redetermination process is largely done. So we're not seeing the discharge rate is coming down to a more normalized level. We're also starting to see admission volumes tick up which tells me that the our referral sources are now.

Speaker Change: We're focused on new clients, rather than looking redetermination. So I think I'll just on the volume side from the referral side, we're starting to see that number come up as you point out we have done a lot of things with our caregiver application. We're continuing to roll that out is fully rolled out in the state of Illinois, where we began.

Brian Poff: We're continuing to roll that out. It's fully rolled out in the state of Illinois, where we began to roll out in New Mexico. And, you know, optimistic that we'll see some continued growth through that process, helping us with our service percentage. So, I think optimistically, you know, we're shooting for that, you know, two to two and a half percent hours growth. And I, you know, I think Brian alluded to in his comments that, you know, we saw a little bit of challenges volume wise, you know, in Q1 related to weather or, you know, in January.

Speaker Change: The rollout in new Mexico.

Speaker Change: And optimistic that we will see some continued growth through that process are helping us with our service percentage. So I think optimistically, we're shooting for that two to two 5% hours growth.

I think Brian alluded to in his comments that we saw a little bit of challenges volume wise in.

Speaker Change: In Q1 related to weather or you know in January.

Joanna Gajuk: You know, that's kind of normal. It kind of depends on when a snowstorm hits. If it's a weekend, good. If it's a Monday, not so good. So, you know, we saw a little bit of challenges there early in January, but again, January numbers look pretty good in spite of that. Thank you, and if I may...

That's kind of normal kind of depends on when a snow storm hits, if it's a weekend good if there's a monday not so good.

Speaker Change: Saw a little bit of challenge there early in January but again January numbers look pretty good in spite of that.

Speaker Change: Thank you and if I may.

Dirk Allison: Thank you for the comments at the start of the call around the potential, you know, reforms which we don't know, you know, which items like is going to be finalized and, you know, you mentioned two of them, you know, our interpretation was, you know, there's some support for the work requirements as well. So can you talk a little bit about, you know, how that would, if at all, impact your business if that was to happen, you know, nationwide? Thank you. Yeah, I mean, we don't see any direct impact from that. If you think about the clients we serve, you know, they're majority elderly, in many cases also disabled.

Speaker Change: Thank you for the comments at the start of the call around the potential.

Speaker Change: Now performance, which we don't know.

Speaker Change: What which items that he is going to be finalized and <unk>.

Speaker Change: You've mentioned two of them.

Speaker Change: You know our interpretation was seen or there is some support for the work requirements as well. So can you talk a little bit about how that would if at all.

Speaker Change: <unk> business is Dallas to happen.

Speaker Change: <unk>. Thank you.

Speaker Change: Yeah, I mean, we don't.

See any direct impact from that if you think about the clients we serve their I havent majority elderly in many cases also disabled. So work requirement would have a negligible direct effect.

Dirk Allison: So, you know, work requirement would have a negligible direct effect. If anything, it might actually potentially add some caregivers availability to us. So we don't see any negative to our, you know, kind of primary clients that we take care of.

Speaker Change: If anything it might actually potentially add some caregivers availability to us so we don't see any negative to our.

Speaker Change: Our primary clients that we take care of.

Brian Hendrix: The next question comes from Brian Hendrix with RBC Capital Markets. Please go ahead.

Brian Poff: The next question comes from Brian <unk> with RBC capital markets. Please go ahead.

Mike Murray: Hi, this is Mike Murray on for Ben. Thanks for taking my question. I wanted to drill down a little bit more into the Texas market. There's a sizable difference between health care minimum wage and the state minimum wage. You've obviously had a lot of success driving volumes with rate. Do you think you could outgrow your long term personal care growth target of three to five percent given this delta and the attractive demographics in Texas? Thanks. Well, I think as you as we have said many times, entering into the state of Texas was a goal of ours for a long period of time due to the growth in the state, both in just general population and the elderly growth.

Mike Murray: Hi, This is Mike Murray on for Ben Thanks for taking my question I wanted to drill down a little bit more into the Texas market.

Speaker Change: Sizable difference between health care and minimum wage and the state minimum wage.

Speaker Change: You've obviously had a lot of success driving volumes with rate do you think you could outgrow your long term personal care growth target of three 2% to 5% given this delta and be attractive demographics in Texas. Thanks.

Speaker Change: Well I think as U S equity have said many times entering into the state of Texas was a goal of ours for a long period of time due to the growth in this state.

Speaker Change: Both and just general population in the elderly crowd so.

Dirk Allison: So What we really believe will happen is it can allow us to remain near the top of that three to five percent at this point in time. Now, whether or not we're able to exceed that due to the Texas market, we'll have to wait and see because we're still relatively new to it. But we do think it is very much a positive for our same store growth.

Speaker Change: What we really believe will happen is it can allow us to remain near the top of that 3% to 5% at this point in time, now whether or not we're able to.

Speaker Change: Exceed that due to the Texas market will have to wait and see us were still relatively new to us, but we do think it is very much a positive for our same store growth.

Mike Murray: Thank you.

Speaker Change: Thank you I just have a quick follow up.

Dirk Allison: I just have a quick follow-up or a different question. So, ClassFits saw continued admission pressure which led to a sequential decline in census. I appreciate that you're putting in a new operations and sales leadership in this segment, but I wanted to see if you could walk us through the drivers of the softness. Are you seeing lower admissions from certain referral sources? Are you seeing increased competition? Any color would be helpful.

Speaker Change: Or a different question. So cautious saw continued admission pressure, which led to a sequential decline in census, I appreciate that youre, putting in a new operations and sales leadership in this segment, but I wanted to see if you could walk us through the drivers of the softness are you seeing lower admissions from certain referral sources are used.

Speaker Change: <unk> increased competition any color would be helpful. Thank you.

Dirk Allison: Thank you. Yeah, on the admission volume, not overly concerned, we did, you know, as we mentioned, we've, you know, really revamped ourselves and marketing team, we've been going through ongoing sales training that started up in Q4, actually, by the tail end of Q3, we're wrapping that up, or just wrapped it up this past week. So sales team has been fully retrained. You know, we're this new sales leadership, I feel optimistic. And if you look at, you know, really, our January numbers were actually pretty strong from an admission standpoint. So not a real concern there. You know, you do have in hospice, you know, traditionally, and kind of pre COVID, there was a little bit of seasonality.

Speaker Change: Yeah on the admission volume are not overly concerned we did a you know as we mentioned we've really revamped.

Speaker Change: Vamped, our sales and marketing team, we've been going through ongoing sales training that started up in Q4 actually by the tail end of Q3, we're wrapping that up just wrapped it up this past week. So sales team has been fully retrained.

Speaker Change: This new sales leadership I feel optimistic and if you look at you know really our January numbers were actually pretty strong from an emission standpoint, so not real concerned. There you know you do have in hospice you know traditionally in kind of pre COVID-19, there was a little bit of seasonality when you looked at admission.

Dirk Allison: When you looked at admission volumes in ADC, Q4 tended to be kind of a, you know, one of your, your, your tighter or more challenging quarters just because of the holidays. And then you come out of that, and you know, your Q1 looks pretty good. So optimistic that the changes that we've made in the sales leadership will pay dividends for us in 2025. And that's when, when we look at kind of where we think we'll land, we've talked about, you know, five to 7%, as our target on the hospice side, I'm optimistic that we'll be towards the higher end there for 2025.

Speaker Change: Volumes in ADC Q4 tended to be kind of a you know one of your.

Speaker Change: Tighter or more challenging quarters, just because of the holidays.

Speaker Change: And then you come out of that in your Q1 looks pretty good so.

Speaker Change: Optimistic that the changes that we made in the sales leadership will pay dividends for us in 2025, and that's when the when we look at kind of where we think we'll land we've talked about 5% to 7% as our target on the hospice side I'm optimistic that will be towards the higher end there for 2025.

Dirk Allison: Awesome.

Dirk Allison: Thank you so much.

Speaker Change: Awesome. Thank you so much.

Brian Tanquilut: The next question comes from Brian Tanquilut with Jeffreys. Please go ahead. Hey, good morning.

Brian Poff: The next question comes from Brian <unk> with Jefferies. Please go ahead.

Speaker Change: Hey, good morning, maybe just a follow up on the questions on policy.

Dirk Allison: Maybe, Dirk, just to follow up on the questions on policy, you know, as we think about the potential for changes to the FMAP, how are you thinking about how that could impact you, given, number one, the geographic footprints that you have, and then maybe the flip side of this, any case studies that you can point to where in states where maybe they've block granted Medicaid, you know, kind of like, what have the states done in terms of adapting to that, maybe using more home health and, you know, just measures like that, that you can point us to?

Speaker Change: As we think about the potential for changes to the App map. How are you thinking about how that could impact you given number one the geographic footprint that you have and then maybe the flipside of this any case studies that you can point to where.

Speaker Change: States, where maybe they block oriented Medicaid kind of like what is the state has done in terms of adapting to that maybe you're using more home health and then yes, just measures like that that you can point of view. So that we can frame how to think about your exposure to Medicaid risk.

Dirk Allison: So that we can frame how to think about, you know, your exposure to Medicaid risk if Congress changes the program. Thanks. Yeah, well, you know, if there's a reduction in FMAT or quite honestly, FMAT match or block grants, we believe and have consistently believed and stated that Addus is in the right place in the Medicare environment. We are the company, we're the low-cost provider, we're in the home, we're not in the institutions. We have demonstrated over the last four or five years with our value-based care approach in two or three of our markets that we're able to lower the cost to the state or to the particular Medicaid payer in that market, whether it be fewer e-room visits, whether it be readmits to hospitals, trying to keep patients out of the hospitals, and quite frankly, as you're aware, we're much less expensive for our general population base if we're able to keep them in their home as opposed to them ending up in a nursing facility, which is going to have to be paid at that higher cost by the state.

Speaker Change: Congress changes to the program.

Speaker Change: Yeah, well yeah.

Speaker Change: If there's a reduction in it Matt or quite honestly that perfect match or block grants.

Speaker Change: We believe and have consistently late and stated that that is in there.

Speaker Change: Right place and the Medicare environment, we are at the company, we're the low cost provider in the home or not and the institutions.

Speaker Change: We have demonstrated over the last four or five years with our value based care approach and two or three of our markets.

We're able to lower the cost to the state or to the particular Medicaid payer in that market whether it be.

Speaker Change: Fewer E room visits whether it be readmitted to hospitals trying to keep patients I've also seen quite frankly as you're aware, we're much less expensive for our general population base, if we're able to keep them in their home as opposed to them ending up in a nursing facility, which is going to have to be paid at that higher cost.

Speaker Change: By the state. So again, we're watching all of the issues I mentioned earlier as it relates to Medicaid we've been working very closely with our state and federal lobbyist as to what May happen, but at this point, we're pretty positive on the fact that whatever change may or may not happen through Medicaid parishes in the REIT.

Dirk Allison: So again, we're watching all of the issues I mentioned earlier as it relates to Medicaid. We've been working very closely with our state and federal lobbyists as to what may happen, but at this point, we're pretty positive on the fact that whatever change may or may not happen through Medicaid, Addus is in the right place and we believe we'll be able to handle those changes. I appreciate that.

Place and we believe we will be able to handle those changes.

Speaker Change: And I appreciate that and then maybe just as a follow up to Joanna. This question on on volumes or are we right in thinking that you are still there's still a supply demand imbalance here and that youre not filling essentially every order so as you ramp up hiring that.

Dirk Allison: And then maybe just as a follow-up to Joanna's question on volumes, are we right in thinking that there's still a supply-demand imbalance here and that you're not filling essentially every order? So as you ramp up hiring, we should see some volume growth that gets at least to that 2% number that you mentioned. Is that the right way to frame that? Yeah, I think you know, in most in most of our markets, you know, we have that imbalance. And so there's just there's an opportunity to the extent that we're better able to leverage our existing workforce to give them more hours, which is a really where a lot of our focus is on now.

We should see some volume growth that gets you at least at that 2% number that you mentioned is that the right way to frame that.

Speaker Change: Yes. Thank you.

Speaker Change: Most of our markets.

Speaker Change: We have that imbalance and so there's just a there is an opportunity to the extent that we're better able we're able to leverage our existing workforce to give them more hours, which is really where a lot of our focus is on now I think we're in a pretty good spot hiring and where I really want to see our teams do better is actually getting more hours out of our existing.

Dirk Allison: I think we're in a pretty good spot hiring and where I really want to see our teams do better is actually getting more hours out of our existing workforce. So it's a lower cost way to do business that also should help with turnover rates, because that's really the number one reason why caregivers leave us is, you know, ironically, that they can't get all the hours that they want. And so that's where we're really focusing our attention. And I think there's opportunity to help us get to that two, two and a half percent hours growth consistently.

Speaker Change: Workforces as a lower cost way to do business that also should help with turnover rates because thats really the number one reason why caregivers leave us as you know ironically that they can't get all the hours that they work and so that's where we're really focusing our attention and I think there's opportunity to help us get to that two to two 5% hours growth consistently.

Dirk Allison: Awesome. Thanks, Brad.

Speaker Change: Awesome. Thanks, Brad.

Dirk Allison: The next question is from Tao Qiu with Macquarie, please go ahead. Hey, good morning. Thank you for taking my question. Just to follow up on Medicaid, thinking about the mechanics here, if the 2025 budget contains certain cuts to the federal share of Medicaid dollars, when do you think that will hit your state reimbursement? Is it a later 2025 event or more of a 2026 event? And I think you also mentioned that state lawmakers could step in to soften the blow, given the value proposition. Curious, what are the discussions there today? Yeah, I think as far as when it would hit, I don't think it would affect 2025 at all.

Speaker Change: The next question is from Cao Chu with Macquarie. Please go ahead.

Cao Chu: Hey, good morning. Thank you for taking my question just to follow up on Medicaid thinking about the mechanics here. If the 2000 22025 budget contains certain cuts to the federal shale Medicaid.

Speaker Change: When do you think that will hit your state reimbursement later, 2025 and or more of a 'twenty 'twenty 60 bed.

You also mentioned that state lawmakers could stepping to soften the blow given the value proposition curious what are the discussions there today.

Speaker Change: I think as far as when it would hit.

Speaker Change: I don't think it would affect 2025 at all it would be years after that.

Tao Qiu: It would be years after that, that I think anything that might be changed with Medicaid would come into effect. Yeah, I think a lot of states are currently in their budget process. And so, you know, I agree with Dirk.

Speaker Change: I think anything that might be changed with.

Speaker Change: With Medicaid would come into effect I think a lot of states are currently in their budget process and so.

Speaker Change: No I agree with dark I think really if you saw pressure on state budgets is probably more of a 2026 item than a 2025 item.

Brian Poff: I think really if you if you saw pressure on state budgets is probably more of a 2026 item than a 2025 item for them. Got it. Thanks for the correct clarity.

Speaker Change: For them.

Speaker Change: Got you thanks for the correction clarity.

Brian Poff: So Brian, you talk about the expected 200 basis point margin decline from the fourth quarter to the first quarter. How much of that is attributed to Gentiva? I'm wondering what the margin profiles today and how much cost synergies you can extract following the system integrations that you have. Yeah, I think if you think about it out, you know, with Tiva, Texas being the largest piece of that the other their gross margins are kind of in that low 20s. So that's definitely going to be impactful as part of the mix with the initial two months, you know, we typically are going to see, you know, the normal every year, annual reset of payroll taxes and merits and those kind of things, you know, probably, you know, a little over 100 basis points for us just sequentially.

Speaker Change: So Brian you talk about the expected 200 basis point margin decline from the fourth quarter to the first quarter. How much of that is attributed to Jen <unk> I'm wondering what the margin profile today and how much cost synergies you can extract pulling the system integrations that you have.

Speaker Change: Yeah, I think if you think about it.

Speaker Change: The Texas being the largest piece of that their gross margins were kind of in that low twenty's. So that's definitely going to be impactful as part of the mix with the additional two months, we typically youre going to see the normal every year annual reset of payroll taxes, and merit and those kind of things.

Speaker Change: Probably you know a little over 100 basis points for us just sequentially. So.

Brian Poff: So it's probably just under 100 basis points, it's probably just a mixed shift overall.

Speaker Change: So it's probably just under 100 basis points, probably just a mixed shift overall.

Brian Poff: And lastly, if I may, the hospice revenue per patient day grew 5.6% year-on-year, which is higher than the Medicare rate increase in October. What's contributing to that strengthening rate in hospice revenue? Yeah, I think in the quarter, so we got the hospice rate increase, which is obviously the larger component there. Outside of that, we had probably just a little bit of mixed shift, but we also had, I think, a positive impact in the quarter from the implicit price concession in hospice. They performed very well, and I think that was the other difference in what you saw year over year in Q4.

Speaker Change: Got you and lastly, if I may the hospice revenue per patient day grew five 6% year on year, which is higher than the Medicare rate increase in October.

Speaker Change: Shipping to dice strengthening rate hospice.

Speaker Change: Yes, I think in the quarter. So we got the hospice rate increase which is obviously the larger component. There also that we had probably just a little bit of mix shift, but we also had I think a positive impact in the quarter from the implicit price concession in hospice. They performed very well and I think that was the other difference in what you saw year over year.

Speaker Change: Q4.

Brian Poff: Great, thank you.

Speaker Change: Great. Thank you.

Brian Poff: The next question comes from Andrew Marquette-Bocklaze. Please go ahead. Good morning, this is Eben on for Andrew. How is the integration of GenSiva progressing? Is there any timeline you can share to achieve mature EBITDA margins? And does this acquisition impact free cash flow conversion and the pace of deals for 2025?

Speaker Change: The next question comes from Andrew Mok with Barclays. Please go ahead.

Speaker Change: Good morning, this is evan on for Andrew.

Speaker Change: How is the integration of GNP, but progressing is there any timeline you can share to achieve mature EBITDA margins and does this acquisition impact free cash flow conversion in the pace of deals for 2025.

Brian Poff: Yeah, I'll start with just talking about the pace of integration. You know, as Dirk mentioned, you know, this was not our typical integration, even though it was our largest transaction to date. There were a lot more functions we took over day one, the biggest of which was really payroll and benefits. And hats off to the team, both internally at the support center and then also looking at the Gentiva team. They did a remarkable job in making that happen and go very smooth, surprisingly smooth process on that integration. Really, if you look at just kind of pace of integration, we're steadily kind of working through the other items, not as heavy of a lift as the payroll and benefits.

Speaker Change: Yes, I'll start with just talking about the pace of integration.

Speaker Change: As Doug mentioned this is not our typical integration, even though is our largest transaction to date, where there were a lot more functions. We took over day, one the biggest of which was really payroll and benefits.

Speaker Change: And hats off to the team both internally at the support Center and then also looking at the Geneva team. They did a remarkable job in making that happen and go very smooth surprisingly smooth.

Speaker Change: Process on that integration really if you look at just kind of pace of integration. We are steadily working through the other items not as heavy of a lift as the payroll and benefits the probably the biggest one that will be out there is converting their billing and scheduling system.

Brian Poff: The probably the biggest one that will be out there is converting their billing and scheduling system. We're waiting till we get home care home base that we've been working with over the past several years, developing a new product, this personal care focus before we roll that out to the Gentiva team. So that's probably more like, you know, an 18 month time frame before they come on the docket. They'll be kind of back in loaded on that process. So that's probably the biggest remaining integration item.

Waiting till we get homecare homebase that we've been working with over the past several years developing a new product.

Speaker Change: Personal care focus before we roll that out to the GNC. The team. So that's probably more like 18 months.

Speaker Change: I am frame before they come on the docket there'll be kind of backend loaded.

Speaker Change: On that process. So that's probably the biggest remaining integration item, but again its pretty far off in the future.

Brian Poff: But again, it's pretty far off.

Brian Poff: It is real quick on the cash flow. So I think, you know, out of the gate early on, I think we've had a pretty good transition as far as billing practices and over into our system. So, as Brad mentioned, we've not changed their billing systems. A lot of that's going to remain pretty static. So no real impact there. I think conversion on cash flow is going to remain pretty consistent. A couple little things as we kind of review some of the enrollment changes, but nothing material. So I think we're actually very pleased with how that's progressed for the first two and a half months of the acquisition.

Speaker Change: Just real quick on the cash flow. So I think you know out of the gate early on I think we've had a pretty good transition as far as the billing practices and over into our system. So.

Speaker Change: As Brad mentioned, we have not changed their billing systems, a lot of that center remain pretty static.

Speaker Change: The real impact there I think conversion on cash flow I was going to be pretty consistent a couple of little things as we kind of move through some of the enrollment enrollment changes, but nothing material I think we're actually very pleased with how that's progress for the first two and a half on some of the acquisition.

Brian Poff: For more information visit www.FEMA.gov And just a quick follow-up on Gentiva, the $5.6 million in investment banking and professional fees during the quarter, was that included in the $7 million worth of acquisition expenses? Thanks. that is included in that $7 million. So those are the larger components of why it was $7 million during the quarter and all in their acquisition costs. Thanks for the call.

Speaker Change: And just a quick follow up on the Gentiva, the $5 6 million in investment banking professional fees. During the quarter was that included in the $7 million worth of acquisition expenses.

Speaker Change: That is included in that $7 million. So those are the larger components of why it was $7 million during the quarter and all in acquisition costs.

Speaker Change: Thanks for the color.

Scott Fidel: The next question is from Scott Fidel with Stevens, please go ahead. Hi, thanks. Good morning.

Speaker Change: The next question is from Scott Fidel with Stephens. Please go ahead.

Scott Fidel: Hi, Thanks. Good morning first question just wanted to pick up on some of the comments you had made around.

Dirk Allison: First question, just wanted to pick up, Dirk, on some of the comments you had made around, you know, still wanting to prioritize pursuing acquisition opportunities where there's scaled personal care assets still out there. Can you maybe – can the team maybe give us, you know, some flavor on sort of, you know, that pipeline in terms of, you know, how many, you know, of those types of properties, you know, may be out there as an opportunity for M&A? And then from a timing perspective, I know you're recommitting, you know, to your core M&A strategy with all the comments that you made today and in the press release last night.

Speaker Change: Still wanting to prioritize.

Scott Fidel: Pursuing.

Scott Fidel: Acquisition opportunities, where they are scaled for.

Speaker Change: Personal care assets still out there can you maybe you can maybe give us some flavor on sort of that pipeline in terms of how many of.

Scott Fidel: Those types of properties.

Speaker Change: May be out there as an opportunity for.

Speaker Change: For M&A, and then from a timing perspective.

Speaker Change: I know you're Recommitting to your core M&A strategy with all the comments that you've made today.

Today in the press release last night.

Dirk Allison: From a timing perspective, though, would you want to see ultimately how, I guess, the sort of the legislative, you know, process does play out in Washington just to get visibility on, you know, ultimately if there are changes to Medicaid reimbursement, you know, how those could flow through? Or would you – if an opportunity strikes, I guess, ahead of that, would you pursue that, you know, still while, I guess, the legislative sausage making is still playing out in Washington? Yeah, I think the legislative potential changes on Medicaid, we believe, as I said earlier, we'll be able to handle those as a company because of our position in the market.

Speaker Change: From a timing perspective would you want to see ultimately how are you.

Speaker Change: Yes.

Speaker Change: Sort of the legislative.

Speaker Change: <unk> does play out in Washington, just to get visibility on ultimately if there are changes to Medicaid reimbursement, how those could flow through or or would you. If an opportunity strikes I guess out of that would you pursue that still still while I guess the legislative sausage, making is still playing out in Washington.

Yes, I think the legislative potential changes on Medicaid, we believe as I said earlier, we will be able to handle those as a company because of our position.

Dirk Allison: So we are not changing our strategy or potential timing on deals based on that. Now, obviously, we'll stay aware of that. We'll continue to look at what that might be. But we are in the process now of looking at opportunities that could further not only our personal care strength in the various states, but also adding all three levels of care in markets out there that might be available to us. And so as far as the number of things we're seeing, there's a number of smaller deals out there. I think that's what you're going to see probably for the majority of 2025.

Speaker Change: In the market. So we are not changing our strategy or potential timing on deals.

Speaker Change: Based on that now obviously will stay aware of that we will continue to look at what that might be but we are in the process now of looking at opportunities that can further our not only our personal care strength in various states, but also adding all three levels of care and markets out there that might be available to us and so.

Speaker Change: As far as the number of things, we're saying Theres a number of smaller deals out there I think thats, what youre going to see probably for the majority of 2025 I do think based.

Dirk Allison: I do think based on some of the recent discussions we've had, there are some larger transactions coming out potentially towards the end of 2025. Some of those are in the clinical care area where pricing may be difficult for us, but it is something we will continue to look at. So I think overall, I would say our strategic goal with our development, our acquisitions, meaning our 10% target, is still in effect today. And the potential changes from the Medicaid, any Medicaid changes, are not a concern of ours today. Okay, got it.

Speaker Change: Based on some of the recent discussions we've had there are some larger transactions coming out potentially at the end towards the end of 'twenty five some of those are in the clinical care area, where.

Speaker Change: Pricing may be difficult for us, but it is something we will continue to look at so I think overall I would say our strategic.

Speaker Change: Goal with our development or acquisitions meeting, our 10% target is still in effect today and the potential changes from the Medicaid any Medicaid changes are not a concern of ours today.

Speaker Change: Okay got it and then as a follow up question.

Brian Poff: And then as a follow-up question, just wanted to go back to margins and, Brian, appreciate, you know, some of the color on sequential, you know, good guys and bad guys on margin for the first quarter. Thought it might be helpful to just maybe to expand it out, you know, in terms of your thinking for the full year, you know, and any things you'd want to call out as we think about modeling, you know, either from a positive or negative perspective in terms of, sort of, I guess, you know, the integration of Gentiva, does that provide sort of a ramping dynamic on margins to some degree, you know, improvements in hospice, same-store growth that Brad had mentioned, you know, normal seasonal factors.

Speaker Change: Wanted to go back to margins and Brian I appreciate some of the color on sequential.

Speaker Change: Good guys and bad guys on margin for the first quarter totaled might be helpful to just maybe to expand it out in terms of your thinking for the full year.

Speaker Change: And anything that you'd want to call out as we think about modeling either from a positive or negative perspective in terms of sort of I guess the integration of Gentiva does that provide sort of a ramping dynamic on margins to some degree.

Speaker Change: Improvements in hospice.

Speaker Change: Same store growth that Brad had mentioned normal seasonal factors just thought anything you could throw at us.

Brian Poff: Just thought, you know, anything you could throw at us, you know, to help, you know, sort of provide more details on how you see margins sort of playing out over the rest of the year and then even from a year-over-year perspective in 25 versus 24. Thanks. Yes, and I'll preface it just thinking about the business that we have today, obviously, you know, any additional acquisitions, particularly in the clinical services space is probably going to change that mix a little bit. But that put to the side, I think our normal seasonality that we expect as we kind of look at gross margins down to EBITDA, Q1 is always our low watermark with payroll tax resets and merits and everything along those lines.

Speaker Change: Ill provide more details on how you see margins sort of playing out over the rest of the year and then even from a year over year perspective, and $25 24 banks, yes.

Speaker Change: Yes, Scott I'll preface said just thinking about the business that we have today, obviously, you know any additional acquisitions, particularly in the clinical services space is probably going to change that mix, a little bit but that put to the side I think our normal seasonality that we expect as we kind of look at gross margins down down to EBITDA Q1 is always our low watermark with payroll tax.

Speaker Change: Sets and merits and everything like along those lines, we usually see a little bit of lift into Q2, I think it has typically been historically, 30% 40 basis points into Q2 improvement Q2 to Q3, usually pretty flat nothing really kind of moving the needle there and then Q4 is usually our best quarter of the year, when we get our hospice rate increase them, which as you know today.

Brian Poff: We usually see a little bit of lift into Q2. I think it's typically been, you know, historically 30, 40 basis points into Q2 improvement. Q2 to Q3, usually pretty flat, nothing really kind of moving the needle there. And then Q4 is usually our best quarter of the year. We get our hospice rate increase then, which is today about 20% of our business. But we also kind of get some additional relief on some of those payroll tax caps in Q4 as well. So, you know, it's kind of a step up kind of through the year has been what we typically historically have seen and what we would expect this year, again, in the absence of any further acquisitions, which might change the mix slightly.

Speaker Change: 20% of our business, but we also kind of get some additional relief on some of those payroll tax caps.

Speaker Change: Q4, as well so it's kind of a step up kind of through the year has been what we typically historically, we've seen and what we would expect this year again in the absence of any further acquisitions with might change the mix slightly.

Brian Poff: Great. You know what, I'm going to try to sneak one more in here if I could. Just appreciate the update just on the debt pay down. Brian, is there any type of placeholder? You know, I know obviously this could be contingent on M&A, but, you know, if we're thinking about, you know, sort of utilizing free cash flow and to pay down debt, any type of marker you'd want to give us on maybe what, you know, for 25 could be a sort of a good bogey for full year debt pay down? Yeah, if you think about just, you know, kind of our typical conversion rate from operating cash flow, we usually see that kind of in that, you know, mid 70s of gap EBITDA.

Speaker Change: Greg I'm going to try to sneak one more in here if I could just.

Speaker Change: I appreciate the update just on the debt Paydown.

Speaker Change: Brian is there any type of placeholder I know obviously this can be contingent on M&A, but if we're thinking about sort of utilizing free cash flow to pay down debt any type of market that you'd want to give us on maybe what you now for 25 could be sort of a good bogey for full year debt paydown.

Speaker Change: Yes, if you think about just you know kind of our typical conversion rate from operating cash flow, we usually see that kind of in that you know mid seventy's of GAAP EBITDA should we think about you know projections for this year, you know that would anticipate us being at the kind of that 100 $520 million and free cash flow for this year. So the absence of M&A.

Brian Poff: If you think about, you know, projections for this year, you know, that would anticipate us being in kind of that $115, $120 million in, you know, free cash flow for this year. So, you know, in the absence of M&A, you know, and working cap changes, you know, a lot of that would be, you know, targeted toward debt repayment. Again, there could be some timing differences quarter to quarter, you know, but that would be kind of how we would see it for the whole year. So you can kind of break that down and do that to kind of see, you know, what the potential is there.

Speaker Change: And working cap changes you know a lot of that would be targeted toward debt repayment again, there could be some timing differences quarter to quarter.

Speaker Change: But that would be kind of how we would see it for the full year. So you can kind of break that down in D. C.

Speaker Change: See what the potential is there so coming out of the year at $220 million in debt.

Brian Poff: So coming out of the year at $220 million in debt, you know, I mentioned we've already paid down $10 million this quarter on the revolver. But, you know, obviously opportunities to continue to lighten that load through cash flow in the absence of M&A. But again, our preference and our focus is on, you know, continuing to utilize our balance sheet on the M&A front.

Speaker Change: We've already paid down $10 million this quarter on the revolver.

Speaker Change: Obviously opportunities to continue to lighten that load through cash flow in the absence of M&A, but again, our preference and our focus is on continuing to utilize our balance sheet on the M&A from.

Ryan Langston: Okay, great. Thank you.

Speaker Change: Okay, great. Thank you.

Dirk Allison: The next question will come from Jared Haase of William Blair. Please go ahead. Hey, good morning. Thanks for taking the questions and appreciate all the all the color thus far. You know, maybe just on the on the policy environment. Yeah, I'm wondering with the backdrop of, let's call it trying to drive more efficiency in payments. Do you think that can catalyze an acceleration of value based or accountable care type reimbursement models from, you know, for home care, you know, looking at your state managed care partners? Just curious if you see any kind of incremental lift from that.

Speaker Change: The next question will come from Jared Haas with William Blair. Please go ahead.

Jared Haas: Hey, good morning, Thanks for taking the questions and appreciate all the color thus far.

Jared Haas: Maybe just on the on the policy environment I'm wondering with the backdrop of let's call. It trying to drive more efficiency in payments do you think that can catalyze an acceleration of value based or accountable care type of reimbursement models from for homecare looking at your state managed care partners. Just curious if you see any kind of incremental lift from that.

Dirk Allison: Well, I think it certainly could. I mean, certainly as federal government's looking at efficiencies throughout the various departments, states may look at that also. And for us, that's one of the reasons why we feel like it puts us in a great position. With our value-based care approach over the last four or five years, as I mentioned earlier, we have demonstrated that through our abilities, we've been able to work with either the states or with the managed Medicaid providers to reduce their cost. And again, if you're talking about an environment where you're really looking at efficiencies and how do you get rid of waste, that is a way you can do it is in a low-cost environment.

Jared Haas: Well I think it certainly could I mean sharply as our federal governments looking at efficiencies throughout the various departments.

Jared Haas: You may look at that.

Jared Haas: Also and for US that's one of the reasons why we feel like it puts us in a great position with our value based care approach over the last four to five years as I mentioned earlier.

Jared Haas: We have demonstrated that through our abilities, we have been able to work with either the states or with the managed Medicaid providers.

Jared Haas: To reduce their cost and again, if you're talking about an environment, where you're really looking at efficiencies and how do you get rid of waste.

Jared Haas: That is a way you can do it.

Jared Haas: And a low cost environment, if we can make sure that we're able to do what we do in a value based approach to reduce cost overall that should be very valuable to our state partners.

Dirk Allison: If we can make sure that we're able to do what we do in a value-based approach to reduce cost overall, that should be very valuable to our state partners. Got it. That makes a lot of sense.

Speaker Change: Got it that makes a lot of sense and then maybe just one more follow up here on the labor environment.

Dirk Allison: And then maybe just one more follow-up here on the labor environment. I think you alluded to expecting the clinical labor environment to remain more challenging relative to PCS. Just wanted to unpack that a little further in terms of what specifically you're seeing. Is that largely just reflective of the rate environment, making it hard to sort of pay the wages that you need to pay? Is there any other competitive dynamics that you're seeing from other players in this space in terms of attracting and retaining talent? No, I mean, I think it's really just looking at, you know, and it's been well documented that there is a shortage and that shortage is continuing to build on clinical staff when you look at nurses in particular.

Speaker Change: Thank you you alluded to expecting the clinical labor environment to remain more challenging relative to Tcs just wanted to unpack that a little further in terms of what specifically you are seeing is that largely just reflective of the rate environment, making it hard to sort of pay the wages that you need to pay is there any other competitive dynamics that you're seeing from others.

Speaker Change: Players in this space in terms of attracting and retaining talent. Thanks.

Speaker Change: No I mean, I think it's really just looking at it and it's been.

Speaker Change: Well documented that there is a shortage in that shortages continuing to build on clinical staff. When you look at nurses.

Speaker Change: In particular, so I was really looking at just competition with institutional providers, who may be able to pay in a position to pay a higher wage.

Dirk Allison: So it's really looking at just competition with, you know, institutional providers who may be able to fit in a position to pay a higher wage. You know, the nice thing that we're able to offer to nurses is one flexibility and that opportunity to have kind of the one on one care. With patients and some nurses will are more than happy to kind of sacrifice a little extra money. They might make working a shift at a hospital to have that one on one opportunity and greater scheduling flexibility, honestly, working for us. But it's just a dynamic that I think the health care industry will be facing, you know, for the foreseeable future versus on the personal care side.

Speaker Change: The nice thing that we're able to offer.

Speaker Change: The nurses as one flexibility and that opportunity to have kind of a one on one care with patients and some nurses will are more than happy to kind of sacrifice a little extra money. They might make working has shifted a hospital to have that one on one opportunity and fly and greater scheduling flexibility honestly working for us but it's.

Speaker Change: Just the dynamic that I think the health care industry will be facing.

Speaker Change: You know for the foreseeable future versus on the personal care side, we feel like we're in a pretty good spot there from a labor standpoint.

Operator: We feel like we're in a pretty good spot there from a labor standpoint. Okay, great, thank you. As a reminder, to ask a question, you may press star, then 1.

Speaker Change: Okay, great. Thank you.

Speaker Change: As a reminder to ask a question you May Press Star then one the next question today comes from Matthew Gillmor with Keybanc. Please go ahead.

Matthew Gillmor: The next question today comes from Matthew Gillmor with KeyBank. Please go ahead. Hey, guys. I've just got one question left, but it's got two parts. For the improvement in the percent of hours per service and personal care that Dirk mentioned, I believe you made some system and process improvements that are helping to drive that metric. But the first part is, can you just give us a sense for how much room there is to go there? And then the second part is, as the redetermination impact fades, does the penetration in number of hours just naturally come down because you're using your labor capacity for new patients, or is this improvement in penetration purely additive to your growth?

Speaker Change: Hey, guys I've just got one question left but it's got two parts for the improvement and the percent of hours per service and personal care that Derek mentioned I believe you made some system and process improvements that are helping to drive that metric, but the first part is can you just give us a sense for how much room. There is to go there.

Speaker Change: And then the second part is as the Redetermination impact fades does the penetration or number of hours, just naturally come down because youre using or labor capacity for new patients or is this improvement in penetration surely additive to your growth.

Brad Bickam: Yeah, I think, you know, if you look at the things that we're doing, you know, from our caregiver application to help caregivers actually kind of have greater visibility on when they're, if they're scheduled to, you know, essentially kind of come up short against the authorized hours, and it allows them flexibility to work with their client to schedule those hours to make those up. I think there is, we have further room to grow in that respect. I mean, I've been very pleased with the, the buy in from caregivers who have actually, you know, downloaded the app and are actively using it.

Speaker Change: Yes, I think if you look at the things that we're doing.

Speaker Change: From our caregiver application to help caregivers actually kind of have greater visibility on when there is.

Speaker Change: If theyre scheduled to essentially kind of come up short against the authorized hours and it allows them the flexibility to work with their clients to schedule those hours to make those up.

Speaker Change: There is a we have further room to grow in that respect I mean, I've been very pleased with the buy in.

Speaker Change: From caregivers, who have actually you know downloaded the app and are actively using it you know that was one of my Big concerns was you know if you build it will they come and I think we've made it.

Brad Bickam: You know, that was one of my big concerns was, you know, if you build it, will they come and I think we've made it useful to them as a tool and they see the value in it. So I think there's continues to be opportunity to increase our service percentage, which has the number of hours we serve against the authorization. And when you look at that, I mean, I think that that is actually additive to our growth. Because those are hours that otherwise we probably wouldn't have scheduled, you'd like to think our service coordinators would be kind of, you know, all, you know, monitoring that closely.

Speaker Change: Useful to them as a tool and they see the value in it.

Speaker Change: Theres got continues to be opportunity to increase our service percentage, which asked the number of hours, we serve against the authorization and when you look at that I mean, I think that that is actually additive to our growth.

Speaker Change: Because those are ours or otherwise, we probably wouldn't have scheduled he would like to thank our service coordinators would be kind of.

Speaker Change: Ill monitoring that closely but I think having the caregivers actually have that visibility will actually allow us to greater leverage our existing workforce and increase that service percentage, which is capturing hours, we otherwise wouldnt serve.

Brad Bickam: But I think having the caregivers actually have that visibility will actually allow us to greater leverage our existing workforce and increase that service percentage, which is capturing hours we otherwise wouldn't serve. That's great. Thanks, Brad.

Speaker Change: That's great. Thanks, Brad.

Dirk Allison: The next question comes from Konstantin Davidas with Citizens. Please go ahead. Hi, thanks. Just a couple quick ones. I guess first, I just wanted to be sure I heard you right, but it sounded like, Dirk, in your prepared remarks, you see some continued PCS sort of M&A opportunities in Texas. And I just wonder if you could expand on that, just given you're already the largest provider there and obviously, you know, the relative rate and margin differential in that state. Yeah, well, first off, Texas is a profitable state, even with the lower hourly rate, just due to the rate we pay caregivers, we still have a nice margin in that state.

Speaker Change: The next question comes from constant team Davita with citizens. Please go ahead.

Davita: Hi, Thanks, just a couple quick ones I guess first just I just wanted to be sure I heard you right, but it sounded like <unk> in your prepared remarks, you see some continued PCF sort of M&A opportunities in Texas and I was just wondering if you could expand on that just given you're already the largest provider there and obviously the relative rate.

Speaker Change: And margin differential in that in that state.

Speaker Change: Yes, well first off Texas is a profitable state even with the lower.

Speaker Change: How are the rate just due to the rate we pay caregivers, we still have a nice margin in that state and talking about the size. We are the largest but even the top four providers are less than 20% of the market.

Dirk Allison: Talking about the size, we are the largest, but even the top four providers are less than 20% of the market. We're about 5% of the market, so we still have a lot of opportunity to grow our coverage across the state. And it's something that when we looked at the Geneve transaction, we knew it was going to be an added benefit to the company. So once that actually was completed and we got them on board, our development team is now actively looking at other opportunities in all three levels of care in the state. And certainly, personal care is part of that focus that we're looking at.

Speaker Change: We're about 5% of the market. So we still have a lot of opportunity to grow our coverage across the state and it's something that when we looked at the Geneva transaction. We knew was going to be an added benefit to the company. So once that actually was completed and we've got them on board. Our development team is now actively looking at other opportunities.

Speaker Change: And all three levels of care and the state and certainly personal care is part of that focus that we're looking at.

Dirk Allison: And do you guys have any visibility into sort of process for rate lift in Texas? Just wondering if you can talk about the dialogue there and anything that might happen either this year or next. Yeah, I mean, I think if you look at the rate in Texas and possibilities there, there is a you know, there's discussions right now at the the legislative session. The legislature is in session. There is a proposal to increase funding for personal care services. So we're monitoring that closely. Not a lot of clarity there yet, other than we think that we feel pretty good.

Speaker Change: And do you guys have any visibility into sort of process for rate lift in Texas. Just wondering if you can.

Speaker Change: Talk about the dialogue, there and anything that might happen either this year or next.

Speaker Change: Yes, I mean, I think if you look at the rates in Texas and possibilities there.

Speaker Change: There is a.

Speaker Change: There's discussions right now with the.

Speaker Change: Legislative session of the legislature is in session. There is a proposal to increase funding for personal care services. So we're monitoring that closely.

Speaker Change: Not a lot of clarity there yet other than we think we feel pretty good there might be some upside, but don't really have it quantified.

Dirk Allison: There might be some upside, but don't really have it quantified right now at this point. Still a lot of work to be done in the legislature. Great.

Speaker Change: Right now at this point still a lot of work to be done in the legislature.

Brian Poff: And then just one housekeeping on the on the corporate office lease. Is there any lease expense savings tied to that in twenty five? No, it should it should be flat constant. So we've actually had a kind of a full rate sublet for the last couple of years since COVID that's expiring. That's kind of what put us in a position to go ahead and accelerate and do the impairment. So there shouldn't be any, any impact on the P&L side. Thank you.

Speaker Change: Great and then.

Speaker Change: Just one housekeeping on the.

Speaker Change: On the corporate office lease is there any.

Speaker Change: Lease expense savings tied to that.

Speaker Change: 25.

Speaker Change: No. It should it should be like I say, so we've actually had a kind of a whole rig sublet for the last couple of years since Covid, that's expiring thats kind of what put us in a position to go ahead and accelerated due to the impairment. So there shouldn't be any impact on the P&L side.

Speaker Change: Thank you.

Brian Poff: The next question comes from Ryan Langston with TD Cohen. Please go ahead. Thanks. Thanks for squeezing me in. Just a couple of quick ones. Um, I think you said there was some storm impact maybe in the first quarter. Can you help us maybe think about the quantification of that? And then just wondering, is there any impact in the first quarter we should think about from this elevation? Seeing either from employee's ability for hours or just hours that you're booking with your clients. Thanks. Yeah, storm impact. I mean, I think if you think it seems like an eternity ago, but it was early January, we had some pretty significant storms that rolled through, snow and ice hitting us in some areas that don't handle it as well.

Speaker Change: The next question comes from Ryan Langston with TD Cowen. Please go ahead.

Ryan Langston: Thanks, Thanks for squeezing me in just a couple of quick ones.

Ryan Langston: I think you said there was some storm impact maybe in the first quarter can you help us maybe think about the quantification of that and then just wondering is there any impact in the first quarter. We should think about from this elevated flu season that we're seeing either from employees ability for hours or just hours that youre booking with your clients.

Ryan Langston: Yes, the storm impact I mean, I think if you did the thing it seems like an eternity ago, but it was early January we had some pretty significant storms that rolled through our snow and ice sitting as an ism areas that don't handle it as well so we saw some negative impact there.

Brian Poff: So we saw some negative impact there. You know, and certainly, if you know, on the personal care side, you know, we get paid for hours served, and if we missed the visit, we try to reschedule, but there's certainly some challenges there. So there was a little impact in January, but, you know, overall feel pretty good about, you know, where we stand in February going into March on the personal care side. You know, from the flu season, you know, anecdotally, you know, there's certainly a lot of people have been out of the office sick, but haven't heard really any major impacts there.

Ryan Langston: And certainly on the personal care side, we get paid for our served and if we miss the visit we try to reschedule, but theres certainly some challenges there.

Ryan Langston: So there was little impact in January but overall feel pretty good about where we stand in February going into March.

Ryan Langston: The personal care side.

Ryan Langston: From the flu season.

Ryan Langston: <unk>.

Ryan Langston: A lot of people who've been out of the office of <unk>.

Ryan Langston: Thick, but haven't heard really any major impacts there.

Brian Poff: And again, I think we've gotten accustomed to kind of working through those types of issues, you know, when you think about seems like a lifetime ago, but COVID and everything else, and we were able to weather those events pretty well.

Ryan Langston: Again, I think we've gotten accustomed to you're kind of working through those types of issues.

Ryan Langston: And you think about it seemed like a lifetime ago with Covid and everything else and we were able to weather those events pretty well.

Brad Bickam: Okay, just last one, PCS turnover, I maybe I missed it if I did, sorry, but can you remind us where you're running actually on turnover in that division? And I guess either any different, you know, just in terms of that side of the business. Thanks. Yeah, I mean, we run around 50-55%, which is a little, you know, better than the industry average. And again, I think some of the things that we're doing, we're optimistic that we'll be able to reduce that number further. Yeah, with respect to Gentivo, I think, don't have their numbers in front of me, but, you know, don't see any differences in their workforce than ours.

Okay, just last one tcs turnover, maybe I missed it affected sorry, but can you remind us where youre running actually on turnover in that division and I guess any different.

Ryan Langston: Just in terms of that side of the business. Thanks.

Ryan Langston: We run around 50%, 55%, which is a little better than the industry average and again I think some of the things that we're doing we're optimistic that we'll be able to reduce that number.

Ryan Langston: Further.

Ryan Langston: With respect to <unk> I think.

Ryan Langston: Don't have their numbers in front of me, but.

Ryan Langston: Don't see any differences in their workforce and then also their turnover rate probably consistent that being said they do have a lot of preferred workers, so probably 70% of their Texas workforce preferred workers and you typically see a lower turnover rate there.

Brad Bickam: So their turnover rate, probably consistent. That being said, they do have a lot of preferred workers. So probably 70% of their Texas workforce is preferred workers, and you typically see a lower turnover rate there.

Operator: At this time, there are no further questions.

Ryan Langston: At this time there are no further questions I would like to turn the call back over to Dirk Allison for closing remarks.

Dirk Allison: I would like to turn the call back over to Dirk Allison for closing remarks. Thank you, Operator. We want to thank each of you for taking time to join us today on our earnings call. I hope you all have a great week. Goodbye.

Dirk Allison: Thank you operator, we want to thank each of you for taking time to join US today on our earnings call I Hope you all have a great weight goodbye.

Operator: The conference is now concluded. Thank you for participating. You may now disconnect your line.

Speaker Change: The conference has now concluded. Thank you for participating you may now disconnect your lines.

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