Q1 2025 U.S. Physical Therapy Inc Earnings Call

Unknown Executive: Honking Good day, everyone, and thank you for standing by.

Good day, everyone and thank you for standing by welcome to the U S. Physical therapy first quarter 2025 conference call.

Unknown Executive: Welcome to the U.S. Physical Therapy first quarter 2025 conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. In order to ask a question during the session, please press the star key followed by the number one on your telephone. Please be advised that today's conference is being recorded.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session in order to ask a question. During this session. Please press the star key followed by the number one on your telephone. Please be advised that today's conference is being recorded if you require further assistance. Please press.

Unknown Executive: If you require further assistance, please press star then zero.

Chris Reddy: Star then zero I would now like to turn the call over to Chris Reddy, Chairman and CEO. Please go ahead Sir.

Christopher Reading: I'd now like to turn the call over to Chris Redding, chairman and CEO. Please go ahead, sir. Good morning, everyone, and welcome to our U.S. Physical Therapy first quarter 2025 call.

Chris Reddy: Good morning, everyone and welcome to our U S physical therapy first quarter 2025.

Christopher Reading: With me, as usual, on the phone this morning, Carey Hendrickson, our Chief Financial Officer, Rick Binstein, our Executive Vice President and General Counsel, Eric Williams, our President and Chief Operating Officer, Graham Reeve, our Chief Operating Officer West, and Jason Curtis, our Senior Vice President, Finance and Accounting.

Chris Reddy: With me as usual on the phone this morning, Carey Hendrickson, our Chief Financial Officer, Rick been stealing our executive Vice President General Counsel, Erik Williams, our President and Chief Operating Officer, Graham Reeve, Our Chief operating Officer, West, Jason Curtis Senior Vice President Finance and accounting.

Jason Curtis: Before we start the call today, I'll ask Jason to cover a brief disclosure, and then we'll get going. Thank you, Chris. The presentation includes forward-looking statements which involve certain risks and uncertainties. These forward-looking statements are based on the company's current views and assumptions. The company's actual results may vary materially from those anticipated. Please see the company's filings with the Securities and Exchange Commission for more information. This presentation also contains certain non-GAAP measures as defined in Regulation G, and the related reconciliations can be found on the company's earnings release and the company's presentations on our website.

Chris Reddy: Before we start the call today I'll ask Jason to cover a brief disclosure and then we'll get going.

Chris Reddy: Thank you Chris.

Chris Reddy: <unk> includes forward looking statements, which involve certain risks and uncertainties. These forward looking statements are based on the company's current views and assumptions. The company's actual results may vary materially from those anticipated. Please see the company's filings with the Securities and Exchange Commission for more information.

Chris Reddy: This presentation also contains certain non-GAAP measures as defined in regulation G and the related reconciliations can be found on the company's earnings release and the Companys presentations on our website.

Speaker Change: Thanks, Jason So I'm going to do this call. This morning, a little bit differently than I generally do it I've done. This a few times rather than read prepared remarks, I'm going to walk through this in a little bit more fluid.

Christopher Reading: Thanks, Jason. So I'm going to do this call this morning a little bit differently than I generally do it. I've done this a few times. Rather than read prepared remarks, I'm going to walk through this in a little bit more fluid way. I think I can tell the story a little bit better. So if you'll hang with me. You know, we started this quarter out, and we had some tough weather to begin. And by the end of it, it was still the best first quarter on a visit per clinic per day perspective than we've ever produced.

Chris Reddy: I can tell the story a little bit better so.

Speaker Change: So it's if you hang with me.

Speaker Change: You know we started this quarter out and we had some tough weather to begin.

Speaker Change: And by the end of it was still the best first quarter on a on a visit per clinic per day perspective than we've ever produced and that was against a year last year, which was uniformly very strong behind last years 12 months, what are the best highest months.

Christopher Reading: And that was against the year last year, which was uniformly very strong. Nine out of last year's 12 months were the best highest months that we've ever experienced. So January, again, a little slower than we would have liked at 29.4. Moved up in February, still weather impacted, unfortunately, at 31.4. And then we finished really strong in March at 33.2 visits per clinic per day. And that really is continued as we've gone forward.

Speaker Change: <unk> that we've ever experienced so January again little slower than we would've liked to 29.4 moved up in February still weather impacted Unfortunately at 31.4, and then we finished really strong at March 33.2 visits per clinic per day.

Speaker Change: And that really has continued as we've gone forward.

Christopher Reading: Remember, for us, Q1 is the lightest volume quarter, typically, of the year.

Speaker Change: Remember for US Q1 is our lightest volume quarter typically it would be here.

Christopher Reading: I want to talk a little bit about Metro Physical Therapy for a minute. I just got back, I spent last weekend, the end of last week and part of the weekend with the Metro team. Metro was our largest acquisition that we completed in November. They had a similar visit progression, I just mention it just because they're our biggest partnership now. We started out a little slow in January, 44 visits per clinic per day, still outstanding. By the end of March, by March, we finished at around 50 visits per clinic per day there. Again, I mentioned I was in with them this weekend.

Speaker Change: I wanted to talk a little bit about metro physical therapy for a minute.

Speaker Change: Just got back I spent last weekend at the end of last week and part of the weekend with the Metro team Metro was our largest acquisition that we completed in November they had a similar visit progression I'll just mention it just because there.

Speaker Change: Our biggest partnership now we started out a little slow in January 44 visits per clinic per day still outstanding at the end of March by March. We finished at around 50 visits per clinic per day there.

Again, I mentioned that was in about with them this week and they had a leadership.

Christopher Reading: They have an annual leadership team meeting that they do, an off-site meeting, and I was able to go and spend a few days with the team. I'd met the executive team and spent a lot of time with them and, of course, the owner, Michael Marrison, a lot of time with him. I got to meet the rest of the folks, 80-some people running their clinics and supporting those facilities, people like Dan and Phil and Joe and Rachel, Jenna, Melissa, John on the operations side of things, Victoria, who did just a phenomenal job with this meeting. I can't tell you, I came out of that meeting just so impressed and encouraged.

They have an annual leadership team meeting that they do an off site meeting and I was able to go and spend a few days with the team and met the executive team and spent a lot of time with them and of course, the owner Michael Medicine, a lot of time with him.

Speaker Change: Got to meet the rest of the folks 80, some people running their clinics and supporting those facilities.

Speaker Change: Dan and Phil and Joe and Rachel.

Melissa John: I'm Melissa John on the operation side of things, Victoria, who did just a phenomenal job with this meeting I can't tell you I came out of that meeting just so impressed and encouraged.

At the talent and the team and the Mentorship and the leadership and the direction of that partnership.

Christopher Reading: The talent and the team and the mentorship and the leadership and just the direction of that partnership, just really, really strong.

Melissa John: Really really strong.

Christopher Reading: Another thing I'll call out for the quarter. You know, when you look at our numbers, Carey's going to go over them in a good bit of detail. Our margin for the quarter was okay, but if you look at our margin progression, particularly where we ended up in March, March was a 21-day month for us this quarter, average month, you know, over the course of the year. We ended up with nicely above a 20% margin in March. And we've got to continue that. We're working very hard with the ops team, directly involved with our top 40 partnerships on trying to move the needle directionally where we need it to be.

Melissa John: The other thing I'll call out for the quarter.

Melissa John: Now when you look at our numbers carry is going to go over them in and a good bit of detail on margin for the quarter was okay.

Melissa John: But if you look at our margin progression, particularly wherever you ended up in March March was a 21 month for US This quarter average month, you know over the over the course of the year.

Melissa John: We ended up with a nicely above a 20% margin in March and now we've got to continue that we're working very hard with the ops team directly involved with their top 40 partnerships on trying to move the needle directionally, where we need it to be.

Christopher Reading: You guys are familiar with the headwinds that we faced. We're making progress. We expect to make continued progress. I feel better about that than I have in some time.

Melissa John: You guys are familiar with the headwinds that we faced.

Melissa John: We're making progress we expect to make continued progress.

Melissa John: I feel better about that and I have in some time.

Christopher Reading: On the rate side, our team's been really busy. They've done a really good job. You know, we've got rate up nicely, over $2 a visit, despite the Medicare rate cut this year, which is about 2.9%. I mean, you look at the aggregation of those rate cuts beginning in 2021, so this is our first 50-year. Now, reductions, the accumulated reductions, if you apply it to our revenue this year and our Medicare business, it's a $20 million, approximately a $20 million profit impact. And even with that, we're finding a way to grow, we're taking us some time, obviously, you know, these that are happening every year, and we believe this will be the last year, they're not easy to overcome, and yet we've been making progress.

Melissa John: On the right side, our teams have been really busy.

Melissa John: They've done a really good job you know we've got we've got rate up nicely over $2 a visit despite the Medicare rate cut this year, which is about 2.9%.

Melissa John: Look at the aggregation of those rate cuts beginning in 'twenty 'twenty. One. So this is a 50 year now reductions.

Melissa John: Accumulated reductions if you apply it to our revenue this year in our Medicare business, it's $20 million approximately $20 million profit impact.

Melissa John: And even with that we're finding a way to grow.

Melissa John: It's taken us some time, obviously you know that.

Melissa John: They're happening every year and we believe this will be the last year there.

Melissa John: They're not easy to overcome and yet we can make some progress.

Christopher Reading: Our payer contracting team has done a wonderful job. Our work comp focus contracting group, and Carey will cover those details, have done just a wonderful job. And we're working with a new group that's really helped give us some intelligence on a market-by-market, city-by-city, even clinic-by-clinic basis. I just want to give a shout-out to them, the team at Payerology, Mitch and his team, a wonderful job for us and with us, helping to address some of these market challenges. And we are making progress, so I'm very encouraged by that. This quarter, adjusted EBITDA is up 16.5%, again, in spite of these headwinds.

Speaker Change: Our payer contracting team has done a wonderful job.

Speaker Change: Our our work comp focus contracting group Cary will cover those details have done just a wonderful job, we're working with a new group, that's really help give us some intelligence on.

Speaker Change: Market by market city by city, even clinic by clinic basis.

Speaker Change: Let me give a shout out to them the team at payer all of G O.

Speaker Change: Mitch and his team are wonderful job.

Speaker Change: For us and with us helping to address some of these market challenges.

Speaker Change: We are making progress so I'm I'm I'm very encouraged by that.

Speaker Change: This quarter adjusted EBITDA is up 16.5%.

Speaker Change: And in spite of these headwinds so.

Christopher Reading: So, and again, the first quarter, not usually our best quarter. In fact, it's usually our lightest quarter.

Speaker Change: In the first quarter not usually our best quarter in fact, it's usually our lightest quarter. So we're ahead of where we thought we would be largely on the performance of March and we continue to see you know a great deal with volume demand as we look forward.

Christopher Reading: So, we're ahead of where we thought we would be, largely on the performance of March, and we continue to see, you know, a great deal of volume demand as we look forward.

Christopher Reading: On the injury prevention side, I can't say enough about, you know, that group. And when we talk about injury prevention in general, we generally talk about it as a unit. We've really got two partnerships within that section of our business. And remember, we started this with a very, very small acquisition, one of our teams back in early 2017. You know, this has grown dramatically over the years. This year, again, coming off a great year last year, where I didn't get a chance to look it up this morning, but we grew somewhere in the mid-20s on a revenue and similar profit basis.

Speaker Change: On the injury prevention side.

Speaker Change: Can't say enough about you know that group in and when we talk about the injury prevention in general we generally talk about it as a unit we've really got two partnerships within that section of our business and remember we started this with a very very small acquisition.

Speaker Change: One of our teams back in early 2017.

Speaker Change: This has grown dramatically over the years this year again coming off a great year last year, where I D.

Speaker Change: Didn't get a chance to look it up this morning, but we grew somewhere in the mid twenties on AR.

Speaker Change: On a revenue line.

Speaker Change: Similar profit basis this.

Christopher Reading: This year, revenue up, or this quarter, revenue up quarter over quarter, year over year, 29%, profit up the same. You know, our growth is both organic, meaning existing clients, but new locations. That part of the business has been very strong. Last year, we had an acquisition, which has done well, and that's been part of our story over the period of time.

Speaker Change: This year revenue up for this quarter revenue up quarter over quarter year over year, 29% profit up the same.

Speaker Change: You know our growth is both organic meaning existing clients, but new locations that part of the business. It's been very strong last year, we had an acquisition, which has done well and that's been part of our story over the period of time and then both of our partnerships.

Christopher Reading: And then both of our partnerships, and I'll just give a shout out to our second of our more recent acquisitions in the injury prevention subset. You know, we started out and they had, this is going back a few years, I think, late 2022. We did the deal. My memory's right. And we just at the outset lost a, you know, a fairly large auto manufacturer contract. So, you know, we backed up to begin, which is always a hard way to start. The team is really really demonstrated a lot of grit and tenacity, and that's paying off over time.

Speaker Change: And I'll, just give a shout out to our second bar.

Speaker Change: One of our more recent acquisitions and the injury prevention subset.

Speaker Change: You know we started out and they had this is going back a few years I think late 2022, we did that deal my Memory's right.

Speaker Change: We just at the outset lost a you know a fairly large auto manufacturer contract.

Speaker Change: You know, we backed up to to begin which is always a hard way to start the team is really good.

Speaker Change:

Speaker Change: Really demonstrated a lot of grit and tenacity and that's paying off over time.

Christopher Reading: And we recently added some really large contracts. We have another one that will come on sometime soon. We're going to get the final. We've gotten herbal on it with a fantastic company, a lot of locations, really, really good competitive process. And so they're making great things happen as well. And even though and we added back in the fourth quarter large auto manufacturer contract that brought our margins down a little bit, just because margins a little tighter on that subset of the business. Even with that, our margins were really pretty good this quarter across that across that entire injury prevention front.

Speaker Change: And we recently added some really large contracts. So we have another one that will come on.

Speaker Change: Sometime soon we didn't get to find them, we've gotten horrible on it with a fantastic company a lot of locations.

Speaker Change: Really really good competitive process.

Speaker Change: And so they're making great things happen as well.

Speaker Change: And even though and we added back in the fourth quarter large auto manufacturer contract.

Speaker Change: Our margins down a little bit just because of the margins a little tighter on that subset of the business even with that our margins were really pretty good this quarter are across that across that entire injury prevention front.

Christopher Reading: On the development side of the business in the quarter, we got another nice outpatient deal done. This marks our third in the state of Wyoming, really high net rate state with a great partner. So excited about that. We also just announced a most recent acquisition again with the Metro team. We got to meet James. James leads a group It's involved in delivery of care at home, which is something that Metro did historically and that we're introducing to our partners across the country. And so we're excited about that acquisition.

Speaker Change: On the development side of the business in the quarter.

Speaker Change: We got another nice outpatient deals done this marks a third in the state of Wyoming really heightened that rates state with a great partner. So we're excited about that we also just announced our most recent acquisition again with the Metro team they've got to meet James James Leagues.

Speaker Change: Our group.

Speaker Change: It's involved in delivery of care at home.

Speaker Change: Which as you know something that Metro did historically and that we're introducing to our partners across the country and so we're we're excited about that acquisition.

Christopher Reading: Additionally, for the quarter, either in combination between the acquisition in Wyoming or the organic openings, we added 14 centers this quarter, which is a good start for the year. And I think clinics that have a lot of opportunity as we go forward. We've got a number of deals in diligence right now. And we're hopeful that those will all get across the finish line and make for a good year to come.

Speaker Change: Additionally for the quarter either in combination between the acquisition in Wyoming.

Speaker Change: The organic openings, we added 14, 14th centers this quarter, which is a good start for us for the year and I think clinics that have a lot of opportunity as we go forward.

Speaker Change: Got a number of deals in diligence right now and we're hopeful that those will all get across the finish line and make for a good a good year to come.

Speaker Change:

Christopher Reading: I wouldn't be right if I didn't, and I should have started out this way. And I want to thank our team, our partners, our clinicians around the country, people that provide care. You do such a phenomenal job. Truly, I talk about it. For those of you who haven't ever, you've been lucky enough not to have ever had a serious injury, you know, when that happens to you, your world kind of goes upside down. Our clinicians are in the clinics every day, an hour or so at a time with our patients. A lot of interactions, you know, they're helping these people get their lives back, and they're doing just a phenomenal job.

Speaker Change: I wouldn't I wouldn't be right, if I didnt and it shouldn't started out this way and.

Speaker Change: And I want to thank our team our partners our clinicians around the country people that provide care to do such a phenomenal job truly I'd talk about it I.

For those of you who haven't ever you've been lucky enough not to have never had a serious injury.

Speaker Change: So when that happens to your world kind of goes upside down our clinicians are in the clinics every day and hour so at a time without patients.

Speaker Change: Do well over 6 million visits this year a lot of interactions there.

Speaker Change: They're helping these people get their lives back and they're doing just a phenomenal job demand wouldnt be as high as it is without that.

Christopher Reading: Our demand wouldn't be as high as it is without that. So I need to thank them. I need to thank our operations team and our support groups, and again, contracting and work comp, and just all the groups working together. Our IT infrastructure team helps us with so many things. It's been, you know, these have been more. More years with Headwind than I can remember in a long time and yet they found a way to stay focused and to deliver for our partners and our partners to deliver for our patients and they've just done a phenomenal job.

Speaker Change: Thank them, neither thank our operations team and our support groups and began contracting work.

Speaker Change: Work comp and just all of the groups working together, our I T infrastructure team drops us with so many things.

Speaker Change:

Speaker Change: He's been you know you said Ben.

Speaker Change: More more.

Speaker Change: More years with headwind than I can remember in a long time and they've got they found a way to stay focused.

Speaker Change: Deliver for our partners and our partners to deliver for our patients.

Speaker Change: Maybe just a phenomenal job so despite the obstacles.

Christopher Reading: So despite the obstacles. We know we have more work to do. We're on it though. I'm encouraged.

Speaker Change: We know we have more work to do we're on it Oh I'm encouraged.

Christopher Reading: For some of you, I'm guessing that you would expect and hope for us to update guidance. I'm hopeful that we'll get there. I'd like to get a couple more months under our belt before we do that. Clearly, we know we're ahead of where we projected our own internal numbers to be at this point. Give us a couple more months to kind of. Get comfortable with what that looks like and where that's headed, and hopefully we'll be back sometime either before or by the second quarter and give you a reference point on guidance.

Speaker Change: For some of you I'm guessing that you would expect and hope for us to update guidance.

Speaker Change: You know I'm I'm hopeful that we'll get there I'd like to get a couple more months under our belt before we do that clearly we know we're ahead of where we projected our own internal numbers to be at this point give.

Speaker Change: Give us a couple more months to come.

Speaker Change: You get comfortable with what that looks like and where that's headed.

Speaker Change: And and hopefully won't be back you know sometime either before or by the by the second quarter and give you a rough.

Speaker Change: Our reference point on guidance.

Christopher Reading: That concludes my comments.

Speaker Change: That concludes my.

That concludes my my comments Kerry if you would go ahead and go ahead and cover the financials in a little bit more detail.

Carey Hendrickson: Carey, if you would go ahead and cover the financials in a little bit more detail. Sure will do. Thank you, Chris.

Kerry: Tara will do thank you, Chris and good morning, everyone.

Carey Hendrickson: And good morning, everyone. Like Chris, I was really encouraged by our performance in the first quarter, and particularly how we finished the quarter. It really sets the foundation, I think, for a good year to follow. So really pleased about that. After some headwinds to start the year from weather, which is normal in the first quarter, our volumes really picked up nicely. Net rate increased from the fourth quarter despite the Medicare rate reduction that went into effect at the beginning of the year. Our IIP business continued to grow at a double-digit rate even before acquisitions. Our EBIT dollar increased by $2.8 million over the prior year.

Speaker Change: Chris I was really encouraged by our performance in the first quarter, particularly how we finished the quarter it really sets.

Speaker Change: The foundation I think for a good year to follow so really pleased about that after some headwinds to start the year from weather, which is normal in the first quarter of volumes really picked up nicely.

Speaker Change: Rate increased from the fourth quarter. Despite the Medicare rate reduction that went into effect at the beginning of the year.

Speaker Change: <unk> business continued to grow at a double digit rate, even before acquisitions, our EBITDA increased by $2 $8 million over the prior year.

Carey Hendrickson: And then using minority-adjusted revenues to align with our adjusted EBIT dollar, which is also after minority interest, our adjusted EBIT dollar margin improved from 13.2% in the first quarter of 24 to 13.7% in the first quarter of 25.

Speaker Change: And then you think minority adjusted revenues to align with our adjusted EBITDA, which is also after minority interest our adjusted EBITDA margin improved from 13, 2% in the first quarter of 24 to 13, 7% in the first quarter 'twenty five so all in all I think a really positive start to the year.

Carey Hendrickson: So all in all, I think a really positive start to the year. Our average visits per day in the first quarter were a record high for any first quarter in our history at 31.4. We lost about 26,000 visits due to weather in the first quarter. A good chunk of that was in January, about 16,000 in January, about 9,000 in February, and then just a smattering in March. But the underlying volume in the business was strong, so our average daily volumes picked up really nicely as we got on the other side of the weather events in the early part of the first quarter, so that our average visits per day grew from 29.4 in January to 31.4 in February, and then 33.2 in March.

Speaker Change: Our average visits per day in the first quarter were a record high for any first quarter in our history at 31, four we lost about 26000 visits due to weather in the first quarter a good chunk of that was in January about 16000 in January about 9000 in February and then just a smattering in March but the underlying volume in the business was strong.

Speaker Change: Long so our average daily volumes ticked up really nicely as we got on the other side of the weather events in the early part of the first quarter. So that our average visits per day grew from $29 four and January 31, four in February and then 33.2 in March.

Carey Hendrickson: Our net rate for the first quarter was $105.66. That was a really good mark, particularly when you think about the fact that we had the Medicare rate reduction that went into effect at the beginning of the year. That was almost 3 percent, 2.9 percent. So our net rate was $2.29 per visit ahead of the first quarter of last year, and it was $0.93 ahead of the fourth quarter of last year, even with that Medicare rate cut at the beginning of this year. So with that as a backdrop, we feel particularly good about our increases versus the first and fourth quarters of last year in net rate.

Speaker Change: Our net rate for the first quarter was $105.66 that was that was there.

Speaker Change: A good really good mark, particularly when you think about the fact that we had the Medicare rate reduction that went into effect at the beginning of the year that was almost 3% two 9%.

Speaker Change: So our net rate was $2.29 per visit ahead of the first quarter of last year and it was 93 cents ahead of the fourth quarter of last year, even with that Medicare rate cut at the beginning of this year, so with that as a backdrop, we feel particularly good about our increases versus the first and fourth quarters of last year and that rate.

Carey Hendrickson: We continue to benefit from our strategic priority of increasing reimbursement rates through contract negotiations with commercial and other payers, and then also our focus on growing our workers' comp business. As Chris noted, we put a lot of effort into building our workers' comp business over the last couple of years, and we're really starting to see that come through. We've seen a really nice progression of workers' comp as a percent of our revenue. In the first quarter of 23, going back two years ago, workers' comp was 9.3% of our revenue mix. It moved up to 10.0% in the first quarter of last year, and then this year in the first quarter was 10.9%.

Speaker Change: We continue to benefit from our strategic priority of increasing reimbursement rates to your contract negotiations with commercial and other payers.

Speaker Change: And then our also our focus on growing our workers' comp business.

Speaker Change: As Chris noted, we put a lot of effort into building our workers' comp business. The last couple of years.

Speaker Change: Really starting to see that come through we've seen a really nice progression of workers comp as a percent of our revenue mix.

Speaker Change: In the first quarter of 'twenty, three going back two years ago Workers' comp was nine 3% of our revenue mix. It moved up to 10.0% in the first quarter of last year and then this year in the first quarter was 10, 9%. That's the highest that's been since 2020. So we feel really good about how that's coming along well.

Carey Hendrickson: That's the highest that's been since 2020, so we feel really good about how that's coming along. We're also, of course, focused on maximizing our cash collections through improvements in our revenue cycle management, and then we're going to remain focused on the rate-enhancing initiatives, of course, throughout the rest of the year. Our physical therapy revenues were $156.4 million in the first quarter of 2025, which was an increase of $22 million, or 16.4% from the first quarter of 2024. That was driven by our higher net rate and the acquisitions that we've completed since the first quarter of last year, particularly our November 2024 acquisition, Metro, which Chris noted, which added almost $17 million of revenue to our first quarter.

Speaker Change: Also of course focused on maximizing our cash collections through improved.

Speaker Change: Improvements in our revenue cycle management, and then we're going to remain focused on the right enhancing initiatives of course throughout the rest of the year.

Speaker Change: Our physical therapy revenues were $156 $4 million in the first quarter of 2025, which was an increase of $22 million or 16, 4% from the first quarter of 2024.

That was driven by our higher net rate and the acquisitions that we've completed.

Speaker Change: The first quarter of last year, particularly our November 2020 for acquisition Metro, which Chris noted, which added almost $17 million of revenue to our first quarter.

Speaker Change: Our physical therapy operating cost were $139 million, which was an increase of $26 million over last year, that's about 18, 6%.

Carey Hendrickson: Our physical therapy operating costs were $130.9 million, which was an increase of $20.6 million over last year. That's about 18.6%. Our salaries and related costs per visit was $63.53 in the first quarter of 25. That was up 3.4% from $61.42 in the first quarter of 24. However, if you look at it on a comparable basis, excluding our 2024 acquisitions, which happen to have a higher average salary and related costs per visit than the rest of our company, the increase was just 1.4% over the first quarter of last year. So, a more modest increase when you look at it on that.

Speaker Change: Our salaries and related cost per visit was $63 53 in the first quarter of 'twenty five that was that.

Speaker Change: At three 4% from $61.42 in the first quarter 'twenty four.

Speaker Change: If you look at it on a comparable basis, excluding our 2024 acquisitions, which happened to have a higher average salaries and related cost per visit than the rest of our call.

Speaker Change: The increase was just one 4% over the first quarter of last year. So I'm a more modest increase when you look at it on that basis. Our total operating cost that it was a similar story they were $89 28 per visit compared to $85 50 in the first quarter of last year that was an increase of four.

Carey Hendrickson: Our total operating cost was a similar story. They were $89.28 per visit compared to $85.50 in the first quarter of last year. That was an increase of 4.4%. If we exclude the acquisitions, the total operating cost per visit increased 3%. So that was also a more modern. Our physical therapy margin was 16.3% in the first quarter of 2025, which compared to 17.9% in the first quarter of last year. As Chris noted, though, our margin was north of 20% in March, which was really nice to see. Our IIP team produced excellent growth again in the first quarter.

Speaker Change: 4% exclude the acquisitions the total operating cost per visit increased 3%.

Speaker Change: So that was.

Melissa John: Also on a more modest increase when you look at it without acquisitions, our physical therapy margin was 16, 3% for the first quarter of 2025, which compared to 17, 9% in the first quarter of last year as Chris noted our margin was north of 20% in March which was really nice to see.

Melissa John: Our IP team produced excellent growth again in the first quarter. Chris noted they were at 28, 8% revenue over last year.

Carey Hendrickson: Chris noted they were up 28.8% in revenue over last year, 29.1% up in operating income over last year. If you exclude the IIP acquisition that we had in the second quarter of 2024, our IIP revenues were still up 15.1%. with our gross profit of 13.1 And then our first quarter industrial engine prevention margin was 20.4%, which is the same as it was in the first quarter of last year. So another really, really good start to the year for IIP. Our corporate office costs were in line for the first quarter of 2025. They were 8.8% of our net revenue, which is down from 9% of revenue in the first quarter of last year.

Melissa John: Nine 1% up in operating income over last year. If you exclude the IP acquisition that we had in the second quarter of 2024.

Melissa John: IP revenues were still up 15, 1% with our gross profit up 13, 1%.

Melissa John: And then our first quarter industrial injury prevention margin was 24%, which is the same as it was in the first quarter of last year. So another really really good start to the year for IP.

Melissa John: Our corporate office costs were in line for the first quarter of 'twenty five they were eight 8% of our net revenue, which is down from 9% of revenue in the first quarter of last year and our operating results were $7 $3 million in the first quarter of 2025, which compares to $7 $7 million in the first quarter of 'twenty four.

Carey Hendrickson: And then our operating results were $7.3 million in the first quarter of 2025, which compared to $7.7 million in the first quarter of 2020. Our balance sheet continues to be in an excellent position. We have $129.4 million of debt on our term loan with a swap agreement in place that places the rate on that term loan at 4.7 percent, a very favorable rate. That rate will extend through the middle of 2027, and then in addition to the term loan, we have a $175 million revolving credit facility, which had just $28 million drawn on it at March 31, 2025.

Melissa John: Our balance sheet continues to be in an excellent position, we have $129 $4 million of debt on our on our term loan with a swap agreement in place that places the rate on that term loan at four 7%.

Melissa John: Favorable rate that rate will extend through the middle of 2027.

Melissa John: And then in addition to the term loan we have a $175 million revolving credit facility, which had $28 million drawn on it at March 31, 2025, our cash balance at the end of March was $39 $2 million and acquisitions will continue to be our primary focus of capital allocation and our capital structure is well.

Carey Hendrickson: For more information visit www.fema.gov Our cash balance at the end of March was $39.2 million, and acquisitions will continue to be our primary focus of capital allocation, and our capital structure is well-positioned.

Melissa John: <unk> for it.

Carey Hendrickson: So as I noted at the beginning of my remarks, we feel really good about our first quarter results, and we're very hard at work executing on our plans to grow revenue in EBITDA in 2025 and beyond.

Melissa John: So as I noted at the beginning of my remarks, we feel really good about our first quarter results and we're very hard at work executing on our plans to grow revenue and EBITDA in 2025 and beyond.

Christopher Reading: And with that, I'll turn the call back to Chris. Yeah, thanks, Jared. Great job.

Chris Reddy: With that I'll turn the call back to Chris.

Chris Reddy: Yeah, Thanks, Gary Great job.

Unknown Executive: Operator, let's go ahead and open it up for questions. Thank you. At this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2.

Chris Reddy: Let's go ahead and open it up for questions.

Speaker Change: Thank you at this time I would like to ask a question. Please press star and one on your telephone keypad you may remove yourself from the queue at any time by pressing star to once again that is star. One if you would like to ask a question and we'll take our first question from Joanna <unk> with Bank of America. Your line is open.

Joanna Gajuk: Once again, that is star and 1 if you would like to ask a question, and we'll take our first question from Joanna Gagunk with Bank of America. Your line is open. Hi, good morning, this is Joanna Gajuk. Hi, how are you? Thanks so much for taking the question.

Joanna Gacek: Hi, Good morning, Joanna Gacek, Hi, how are you. Thanks, so much for taking the question so.

Speaker Change: I guess.

Christopher Reading: So, I guess, maybe first, the question on mature clinic revenue is actually down year over year. So what was the regarding volume inside that negative number? Sounds like it was negative because pricing was positive. So how much I guess was the weather in that number, which I guess you gave some stats and I assume there's calendar impact into revenue as well, right, because one fewer day. So can you walk us through that? Thank you. Let me go ahead and start, Carey. You can fill in the gap. So, you know, the weather, we got hit particularly hard.

Speaker Change: Maybe first on the question on <unk>.

Sure Clinic revenue was actually down year over year. So what was that regarding fall inside that negative number it sounds like it was negative.

Speaker Change: It sounds like pricing was positive so how much I guess with the weather in that number which I guess you gave some stats and it's been this calendar impact equal revenue go away because the one fewer day. So can you walk us through that thank you.

Speaker Change: Yeah. Let me go ahead and start care you couldn't go yeah. So.

Speaker Change: No the the whether we got hit particularly hard we always have with the first quarter, we got hit particularly hard in some of our really long established largest partner markets markets like Nashville, where we have close to 80 service locations in North Texas.

Christopher Reading: We always have weather in the first quarter. We got hit particularly hard in some of our really long established largest partner markets, markets like Nashville, you know, where we have close to 80 service locations, North Texas, and really all of Texas. We had a week of weather that was just very uncommon for us, extraordinary cold and winter weather. And so in those markets, you know, in some of those markets, you know, we were down for multiple days, closed in a row, either without power or without people being able to reliably, you know, come to the facility.

Speaker Change: And really all of Texas, we had a week or whether that was just very uncommon trough extraordinary cold winter.

Speaker Change: Winter weather.

Speaker Change: So in those markets.

Speaker Change: Some of those markets.

Speaker Change: We were we were down for multiple days closed in a row, neither without power or or without people being able to reliably come to the facility. So that had the biggest impact.

Carey Hendrickson: So that had the biggest impact. You know, our demand particularly remains high. We expect that to bounce back with demand both in March and forward. You know, that was really a good indicator of what we think this year could look like. Obviously, we have to deliver on that, but not particularly concerned about demand right now. Okay, because I want to ask, you know, Oh, yes. Go ahead, Carey. I don't know. Did you have any? No. I'm just saying I agree. Nothing to add, really. It was a lot of the weather impact that we had in the first quarter happened to be at armature clinics, and that's what caused that.

Speaker Change: And particularly remains high.

Speaker Change: We expect that to bounce back.

Speaker Change: With demand both in March and forward.

Speaker Change: That was really a good indicator of what.

Speaker Change: What we've seen this year could look like.

Speaker Change: Obviously, we have to deliver on that but I'm, not particularly concerned about demand right now.

Speaker Change: Okay.

Speaker Change: No.

Speaker Change: Oh, Yes go ahead, sorry, I don't know what did you have any no I'm, just saying I agree that nothing to add really just it was a.

Speaker Change: A lot of the weather impact that we had in the first quarter it happened to be at our mature clinics and that's what caused that to be a lot.

Carey Hendrickson: A little, a little weaker than the rest.

Speaker Change: A little weaker than the rest of the group.

Speaker Change: Okay, and I guess staying on the topic of volumes and I guess as it relates to the economy.

Christopher Reading: Okay, and I guess staying on the topic of volumes, and I guess as it relates to economy, so, you know, sounds like based on this March stat, doesn't seem like you're seeing anything right now. But can you remind us, you know, how in the past, your business has been through, you know, an economic downturn? It seems like market is, you know, worried a little bit about that. Yeah, you know, there's definitely talk about, you know, whether and if we dip into a recession. You know, the thing that we would point to is, is back in 2008, 2009, Time frame, you know, where it was very difficult.

Speaker Change: It sounds like based on the March start.

Speaker Change: It doesn't seem like you see anything right now, but can you remind us you know how in the past your business has been to a you know.

Speaker Change: And economic downturn, it seems like market at a weighted a little bit about that.

Speaker Change: Yeah, you know, there's there's definitely talk about.

Speaker Change: Whether and if we dip into a recession.

Speaker Change: You know the thing that we would point to is back.

Speaker Change: 2008 2009.

Speaker Change: Timeframe.

Speaker Change: It was very difficult, we make some adjustments and we have a playbook from that point in time on what we what we did so ahead of that too to get us through that period and we had.

Christopher Reading: We made some adjustments then, we have a playbook from that point in time on what we did ahead of that to get us through that period, and we had, again, significant earnings growth. We had a little bit of an impact on our same store volume. We were negative, and this is going back a long way. So, from memory, a couple percent maybe on same store, but we continued to acquire facilities. We continued to grow. We continued to make improvements in the business other places, and we really positioned ourselves by doing some things within our sales team to come out of that in a really strong fashion.

Speaker Change: Again significant earnings growth, we had a little bit of an impact on our same store volume we were negative and this is going back a long way so from memory a couple of percent maybe on same store, but.

Speaker Change: We continued to acquire facilities, we continue to grow we continue to make improvements in that business. Other places it can be.

Speaker Change: Really positioned ourselves by doing some things within our sales team to come out of that and really strong fashion. So not saying that you know any of it is easy I would rather.

Christopher Reading: So, not saying that, you know, any of it is easy. I would rather us not face a recession. We don't know whether we will or not, but I think demand pretty significant right now. Staffing continues to be a bit tight, and so I think we'll be okay. But we have a playbook. We've been there before, and it's been dusted off.

Speaker Change: US not face a recession.

Speaker Change: Don't know, whether we will or not but.

Speaker Change: I think demand.

Speaker Change: It's pretty significant right now staffing continues to be a bit tight and so.

Speaker Change: I think we'll be okay, but we have a playbook we've been there before.

Speaker Change: You know, it's it's been dust it off.

Speaker Change: And to your point on the staffing would you say that that there that would be expectation for staffing to get a little bit better. If there is a economic slowdown have you seen it in the past.

Christopher Reading: And to your point on staffing, would you say that there will be expectation for staffing to get a little bit better if there is an economic slowdown? Have you seen it in the past? I'm sorry, I missed the word. An expectation on what, Joanna? In a recession, yeah, in a recession, would staffing be better, I guess, easier for you to staff? I mean, hard to say, you know, different times, different reasons, you know, different, different economy even, you know, look, I can't, I can't accurately say whether we're going to dip into something or not. And then for me to, to, you know, to try to predict what staffing will be like in that period, generally speaking, when there's a downturn, people belt tighten.

Speaker Change: I'm, sorry, I missed the word and expectation on watch.

Speaker Change: That said yeah, you know what question what that what staffing be better I guess easier to staff.

Speaker Change: Yes.

Speaker Change: As an offset to volumes yeah.

Speaker Change: Hard to say you know.

Speaker Change: [laughter] different times different reasons.

Speaker Change: All the different different economy even.

Speaker Change: You know I look.

Speaker Change: I can't I can't accurately say, where they were kind of dip into something or not.

Speaker Change: And then for me the two.

Speaker Change: To try to predict what staffing will be like in that period.

Speaker Change: Generally speaking when there's a downturn people belt tightening.

Speaker Change: We didn't.

Joanna Gajuk: We didn't in, interestingly, in the last What you would call major recession, we kept everybody intact and we were able to grow through it. So, but there was more availability of people the last time through, whether that'll hold true this time or not. This is, I mean, anybody's guess, but I think we're, we're in a pretty good spot right now. Great, thank you. I'll go back to the queue. Thank you.

Speaker Change: Interestingly in the last 40.

Speaker Change: What you would call major recession, we kept everybody intact, and we were able to grow through it so.

Speaker Change: Hum.

Speaker Change: There was more availability of people the last time through whether that will hold true this time or not.

Speaker Change: I mean, anybody's guess, but I think we're in a pretty good spot right now.

Speaker Change: Great. Thank you I'll go back to the queue.

Speaker Change: Thank you.

Benjamin Rossi: We'll take our next question from Benjamin Rossi with J.P. Morgan. Your line is now open. Great. Thanks for the question. So just thinking about the IIP. There's certainly a bright spot there with both revenue and gross profit. What are you seeing as some of the drivers within that segment? And in thinking about that segment more broadly with your interest in IAP, how would you describe some of the growth vectors across that space in terms of volume? And then what do you see as the potential runway, then, within IAEA?

Speaker Change: We'll take our next question from Benjamin <unk> with Jpmorgan. Your line is now open.

Speaker Change: Great. Thanks for the question. So just thinking about the I T outperformance certainly a bright spot there with both revenue and gross profit up nearly 30% while your gross margin remains intact year over year.

Speaker Change: What are you seeing as some of the drivers within that segment and in thinking about that segment more broadly with your interest in IP. How would you describe some of that growth vectors across that space in terms of volumes and rates and then what do you see as the potential runway then within IP.

Speaker Change: Yes, Ben those are all great questions and I'll do my best but Ips is a little bit hard.

Christopher Reading: Yeah, Ben, those are all great questions, and I'll do my best, but IP is a little bit hard for me to answer in terms of what the universe looks like. And, you know, I can break out that because we report it, you know, what kind of our organic, non-acquired revenue is. And there's a part of the business that continues to be fueled by that. And what underpins that is really the fact that it works. You know, these companies that bring us on, a new company, let's say, they usually give us the worst problem. And our team is able to deliver a result, which is generally around injury prevention and a measurable reduction in Reported injuries, which helps on their work comp, insurance rates and claims, keeps people at work, employees are happier and healthier, and there's a pretty significant return in terms of what they pass and what they're saving.

Speaker Change: For me to answer in terms of what the universe looks like in <unk>.

Speaker Change: Now I can breakout I can break out that.

Speaker Change: Because we report it you know what kind of organic non acquired revenue is in and Theres a good part of the business.

Speaker Change: Continues to be fueled by that and B.

Speaker Change: What underpins that is really the fact that it works.

Speaker Change: These companies to bring us on the New company, let's say you usually give us the worst problem.

Speaker Change: And our team is able to deliver result, which which is generally.

Speaker Change: All around injury prevention and.

Speaker Change: And a measurable reduction in.

Speaker Change: <unk>.

Speaker Change: Reported injuries, which which helps them that you know some don't work comp insurance rates and claims keeps people at work employees are happier and healthier.

Speaker Change: And there's a pretty significant return in terms of what they pay us.

Speaker Change: And in what they're saving so then we get the next two or three worst issues sites locations.

Christopher Reading: So then we get the next two or three worst issues, sites, locations. And then it goes from there. And so there's a good organic, good, healthy organic element. I don't know that they're massive. I mean, in some of these contracts, and it varies, and it varies enough that on the rate side, that it isn't uniform, and I'm not able to give you just a completely uniform answer. Where we can, we build in rate escalators, and where the processes are really competitive. You know, these contracts go for a year at a time, and then have renewal provisions, and they're very sticky, so they don't, they tend not to go away very rarely, unless there's a big economic or big section of the economy which is impacted or the company's impacted in some kind of way.

Speaker Change: And then it goes from there and so there's a good organic food healthier organic element.

Speaker Change: I don't know that there are massive I mean in some of these contracts and it varies and it varies enough that.

Speaker Change: On the right side.

Speaker Change: It isn't uniform.

Speaker Change: I'm not able to give you just a completely uniform answer wherever we can we built in rate escalators.

Speaker Change: And what are the processes are really competitive you know these contracts go for a year at a time and then have renewal provisions and they're very sticky. So they don't they tend not to go away very rarely unless there's a big economic or.

Speaker Change: Big section of the economy, which has impacted the company's impact it in some kind of way.

Eric Williams: And then we negotiate over time increases as we need to, and by and large, you've seen our margins be relatively steady in there with some mixed adjustment for the auto industry, which tends to be much larger customers, much larger footprint in terms of number of employees, and, you know, large magnitude in terms of contract dollars, but slightly smaller margins. Many are. Many good companies that we've been with for a long time are. Many companies aren't, and it's not like the same universe where you can count how many outpatient physical therapy clinics there are, estimate, you know, size of the market.

And then we negotiate overtime increases.

Speaker Change: Me too.

Speaker Change: By and large <unk> seen our margins to be relatively steady and there was some.

Speaker Change: Mix adjustment for the auto industry, which tends to be.

Speaker Change: Much larger customers much larger footprint in terms of number of employees in <unk>.

Speaker Change: You know large magnitude in terms of contract dollars, but slightly smaller margin there, but margins have been pretty steady and then when you look at the entirety of the market, that's where it gets a little Marquis.

Speaker Change: Because the majority of the companies out there aren't doing this many of our many good companies that we've been with for a long time are.

Speaker Change: Many companies are and it's not like the same universe, where you can count how many outpatient physical therapy clinics. There are estimate you know.

Eric Williams: This is a little bit different.

Speaker Change: So is that the market this is a little bit different.

Eric Williams: And I think there's more of a greenfield opportunity that exists in this business than exists a lot of places. Less on the acquisition front, probably, less companies, potential companies to acquire, but more, certainly more greenfield opportunity, in part because of work. That makes sense. I certainly appreciate the commentary.

Speaker Change: I think there's more of a greenfield opportunity that exists in this business that exists a lot of places less on the acquisition front, probably less companies potential.

Speaker Change: Potential companies to acquire but more certainly more greenfield opportunity in part because it works.

Speaker Change: That makes sense certainly appreciate the commentary just quick follow up there on the rate escalators. It does contain automatic inflation adjustments.

Eric Williams: Just a quick follow-up there. On the rated escalators, do those contain automatic inflation? Yeah, I can't tell you whether I know for sure or not. I don't know that they're indexed against an inflation, you know, index per se, or whether they're fixed dollar adjustments. We can follow back up and see. Again, I'm not suggesting either that that's a preponderance of our contracts that are out there in the injury prevention side that have automatic escalators. I think they're probably a lesser amount of those than just having to, you know, renegotiate once you've proven yourself. Chris, that's right.

Speaker Change: Clarification.

Speaker Change: Yeah, I can't tell you, whether I'm I know for sure or not I don't know that they're indexed against an inflation index.

Speaker Change: <unk> per se.

Speaker Change: They're fixed dollar adjustment.

Speaker Change: Can follow back up and see again.

Speaker Change: I'm not suggesting you do that that's the preponderance of our contracts that are out there.

Speaker Change: Injury prevention side that have automatic escalators I think they're probably.

Speaker Change: A lesser amount of those than just having two.

Speaker Change: Renegotiated once you've proven yourself.

Chris Reddy: Chris that's right.

Eric Williams: Yeah, this is Eric. The escalators there are now built into an inflation index. You know, there's percentages that are added into some of those contracts, and they are renegotiated as those contracts do come up. And we certainly take a look at cost structure at that point. And certainly with a lot of these relationships that we have with, you know, employers, distribution companies, the folks that are driving the injury, you know, prevention business, there's a lot of product line expansion, you know, service line expansion that happens. And so as that comes up real time, we have an opportunity to sit there and adjust pricing to take some of those other things into consideration.

Eric: Yeah. This is Eric are there the escalators. They are now built into an inflation index. You know theres percentages that are added into some of those contracts and they are renegotiated is as those contracts do come up and we certainly take a look at cost structure at that point.

Chris Reddy: Certainly with a lot of these these relationships that we have with <unk>.

Chris Reddy: Employers distribution companies to folks that are driving the injury prevention business. There's a lot of product line expansion service line expansion that happens and so as that comes up real time, we have an opportunity to sit down and adjust pricing to take some of those other things that a consideration.

Chris Reddy: Great I appreciate the additional commentary there. Thank you.

Benjamin Rossi: Appreciate the Thank you. Thank you.

Chris Reddy: Thank you David Thank you.

Brian Tanquilut: I'll take our next question from Brian Tanquilut with Jeffreys, your line is now open. Hey, good morning, guys. Congrats on the quarter.

Speaker Change: We'll take our next question from Brian Tim Quillin with Jefferies. Your line is now open.

Speaker Change: Hey, good morning, guys, congrats on the quarter and Chris I appreciate the the candidate prepared remark, Nick candid remarks, instead of prepared remarks.

Brian Tanquilut: And Chris, I appreciate the, the candid prepared remark, candid remarks instead of prepared remarks. Um, so maybe as I think about the improvement that you see in the business here, I mean, do you think this is just durability of demand that you're seeing? And the fact that you're driving a little more productivity out of your clinicians and recruiting and recruiting and retention stabilizes that? Is that a good way of thinking about where you think the business is inflecting from at this Yeah, so I think again, demand strong recruiting, we've made a lot of investments in, and our partners are focused on it along with our corporate support team.

Speaker Change: So maybe as they think about the improvement that you see in the business here I mean do you think this is just durability of demand you're seeing and the fact that you're getting.

Speaker Change: A little more productivity out of your clinicians and recruiting is evergreen and retention. It stabilize at that is that a good way of thinking about where you think the business is inflicting from them at this point.

Speaker Change: Yeah. So I think again demand is strong.

Speaker Change: Recruiting we've made a lot of investments in our partners are focused on along with our corporate support team and those investments I think we're seeing and the pay off we've also invested in.

Christopher Reading: And those investments, I think we're seeing begin to pay off. We've also invested in school relationships and bringing value-added, you know, programmatic things to the PT schools and therefore to the students. We focused hard on our student internship program and making sure that our partnerships and our locations are plugged in the right way because that's the farm team as it is for, you know, new potential hires. So all those things kind of working together for us right now. You know, I.

Speaker Change: Our school relationships and bringing value added.

Speaker Change: Programmatic things to the P. P schools and therefore to students we focused hard on our student internship program and making sure that partnerships are all locations are plugged in the right way because that's that's the farm team as it as it is for you.

Speaker Change: Potential hires.

Speaker Change: So all those things kind of working together.

Speaker Change: Right now.

Speaker Change: You know I I.

Christopher Reading: Again, the team's worked hard at it, it's not been one particular thing, but it's still not easy, but it's moving in the right direction.

Speaker Change: The teams worked hard at it.

Speaker Change: It's not been it's.

Speaker Change: It's not one particular thing but.

It's still not easy, but it's it's it's moving in the right direction.

Speaker Change: Got it and then Chris just curious what Youre hearing in terms of I know you're very involved in the lobbying for.

Brian Tanquilut: Chris, just curious what you're hearing in terms of, I know you're very involved in lobbying for the industry, so just curious what you're watching for in terms of potential positives there, or, you know, as you try to, Get the Physician Payment Rates Pushed High. Yeah, so we've spent a lot of time when I say we, you know, there's an organization that I was involved in about 10 years ago to help create called the Alliance for Physical Therapy Quality and Innovation, kind of a mouthful, but APTQI, and along with the APTA and other groups, including groups within the AMA or the AMA itself, we've been spending a lot of time in Washington.

Chris Reddy: For the industry. So just curious what you're watching for it.

Speaker Change: Central positives there you know.

Speaker Change: As he tried to yeah.

Speaker Change: Get the physician payment rates are pushed higher.

Speaker Change: Okay.

Speaker Change: Yes. So we've spent a lot of time when I say we.

Speaker Change: There's an organization that I was involved in about 10 years ago to help create cold.

Speaker Change: Reliance for physical therapy quality and innovation.

Speaker Change: A mouthful, but a P T T y.

Speaker Change: And along with the Apta and other groups.

Speaker Change: <unk> groups within the area.

Speaker Change: Or the end of May itself.

Speaker Change: We've been spending a lot of time in Washington, We've had a lot of congressional dinners. Most recent of which was with Susan Collins, a week or so ago I was up there just a few weeks ago.

Christopher Reading: And we've had a lot of congressional dinners, most recent of which was with Susan Collins a week or so ago. I was up there just a few weeks ago where we had about a dozen meetings, particularly with key congressional members in key committees. And I can tell you uniformly, there's nobody that we've talked to really in the last couple of years who sees these cuts that were kind of put upon us somewhat as a mistake. As a part of the code set that they thought they were extracting savings from orthopedic surgery and physical medicine procedure based folks, we kind of got caught up in that as a bit of an afterthought, been really significant negative impact.

Speaker Change: Where we had about a dozen meetings.

Speaker Change: Particularly with key congressional members in key committees.

Speaker Change: And I can tell you uniformly there's nobody that we've talked to really in the last couple of years, who sees these cuts that were kind of put upon us somewhat as a mistake because it's.

Speaker Change: As a part of the code set that they thought they were.

Speaker Change: Extracting.

Speaker Change: Savings from orthopedic surgery, and physical medicine procedure base folks kind of got caught up in that.

Speaker Change: As a bit of an afterthought.

Speaker Change: Really significant negative impact nobody we've talked to Brian in a long time thinks that.

Christopher Reading: Nobody we've talked to Brian in a long time thinks that. that those should have happened, or given the fact that they can't, you know, and haven't undone it, that they should continue. We have a couple proposals right now. We have a bill, which we know is a saver, which is called the SAFE Act. It helps with balance and fall prevention screening among our seniors as part of their annual health benefit. There is a program in the state of Maryland called Equip, which is in conjunction with CMS. and that program utilizes physical therapists the same way the Department of Defense.

Speaker Change: Those should have happened or given the fact that we can't you know and I havent done it that they should continue we have a couple of proposals right now we have a bill.

Speaker Change: <unk>, which we know is the fever.

Speaker Change: Which is called the Safe Act helped.

Speaker Change: It helps with balance and fall prevention screening among our seniors as part of their annual health benefit.

Speaker Change: There is a program in the state of Maryland called Quip.

Speaker Change: Which is in conjunction with CMS.

Speaker Change: And that program utilizes physical therapist, the same way that the department of defense.

Christopher Reading: utilizes PTs in those circumstances, both in Maryland and DOD, PT is in charge of the musculoskeletal case. Not an orthopedic surgeon, not a primary care doctor, but the physical therapist. And what we're finding in With tens of thousands of patients in the state of Maryland, the early results really were coming up on a year here pretty soon, is that there's a 10 to 15 percent case savings when a physical therapist manages the case. And we're not talking about just PT savings, we're talking about the entirety of the case. So it's large dollars. And I know, I haven't done the math personally, but our Liberty Partners group, our lobby group, has estimated that if you took the results from Maryland, this will take a while for us to get traction with this, but we have a good study right now where if you took that Maryland result and you spread it to all 50 states, it would be enough, approximately enough, Pay for the Proposed Physician Fee Schedule Fix.

Speaker Change: Utilizes P Ts and in those circumstances, both in Maryland, and D O D.

Speaker Change: P T as in charge of the musculoskeletal case, I don't know what the peak surgeon at a primary care doctor, but the physical therapist.

Speaker Change: And what we're finding in our.

Speaker Change: With tens of thousands of patients in the state of Maryland. The early results really were coming up on a year here pretty soon is that theres, a 10% to 15% case savings when a physical therapist manages the case.

Speaker Change: I'm talking about just P. T savings, we're talking about the entirety of the case towards large dollars.

Speaker Change: And I know I haven't done the math personally but are.

Speaker Change: Liberty Partners group or <unk>.

Speaker Change: Robbie Group has estimated that if you took the results from Arrow and this is this is this will take a while for us to get traction with this but we have a good study right now where if you took that Maryland result, when you spread it to all 50 states it would be enough proximately enough.

To pay for the proposed physician fee schedule fix with the medical economic index adjustment factors, which is about 100 billion dollar spend.

Christopher Reading: with the Medical Economic Index Adjustment Factors. There's about a $100 billion spend. And that's just with musculoskeletal savings alone. So, again, we're spending a lot of time on it. My brothers and sisters at APTQI, they've devoted a lot of time, money, and resources to being there, and we're all very focused on it.

Speaker Change: And that's just with musculoskeletal savings alone so.

Speaker Change: Again, we're spending a lot of time on my brothers and sisters that <unk> devoted a lot of time money and resources to being a and <unk>.

Speaker Change: We're all very focused on the Tms obviously, it doesn't come out with their final rule for their proposed rule I'm sorry until middle of July.

Christopher Reading: CMS obviously doesn't come out with their final rule, or their proposed rule, I'm sorry, until middle of July, and so we have a little time to wait. But I'm hopeful that this is in the rearview mirror, and we get to something that's more reasonable, because... It's not sustainable, frankly, and they're picking on the wrong people, unfortunately.

Speaker Change: So we have a little time to wait but I'm hopeful that this is in the rearview mirror and we get to something that's more reasonable because.

Speaker Change: It's not sustainable frankly in the picking on the wrong people. Unfortunately.

Chris Reddy: I appreciate that Chris Thank you so much.

Brian Tanquilut: Appreciate that, Chris. Thank you so much. Thanks, Brian.

Chris Reddy: Thanks, Brian.

Larry Solow: Thank you. I'll take our next question from Larry Solow from CJS Securities. Please go ahead, your line is now open. Great. Thanks for all that color on the pricing there too, Chris.

Speaker Change: Thank you we'll take our next question from Larry Solow from.

Speaker Change: P. J S Securities. Please go ahead. Your line is now open.

Larry Solow: Great. Thanks, Thanks for all that color on the on the pricing there too Chris that's helped at all.

Carey Hendrickson: Let's hope that all holds up and forget just being flat, you get some actual benefit to share. On the commercial side, obviously, I think the overall rates were up a little over 2% this quarter, and that was with a 1% headwind, I guess, from Medicare. So just give us a little more color on that. I guess commercial was up over 3% this quarter, part of that due to the workers' comp or anything. Yeah, I appreciate it. Yeah, we had a nice increase in commercial. It was up about 2%. Workers' comp rate, which we've been working on at the same time as the visits, that was up actually about 10%.

Larry Solow: Pulse holds up and forget just being flat you get some actual benefit this year.

Larry Solow: I'm not clear on that.

Larry Solow: Yeah, absolutely on the on the commercial side.

Larry Solow: I think the overall rates were up.

Larry Solow: Little over 2% this quarter.

Larry Solow: And that was about one.

Speaker Change: One peso husband, I guess I'm not problematic Medicare. So just can you give us a little more color on that I guess commercial was up over 3% this quarter part of that due to the workers comp or anything.

Barbara: I am Barbara <unk>.

Barbara: Yeah. Appreciate it yes, we had we had a nice increase in commercial it was it was up about 2% worker's comp workers' comp rate, which we've been working on at the same time as the visit we.

Barbara: That was up actually about 10% of that rate was up that much over the first quarter of last year and up a little up about three or 4% over the fourth quarter of 2024.

Carey Hendrickson: That rate was up that much over the first quarter of last year, and up about 3% or 4% over the fourth quarter of 2024. So we really saw a lot of really good movement there on rate and workers' comp. Commercial was up, like I said. Medicare was very stable. Actually, it was up just slightly. It was up slightly despite the 2.9 percent Medicare rate reduction. So, you know, that was a good place to be too. So, really, just overall strength in the rates. Yeah, so I hope that helps. Yeah, no, absolutely.

So we really saw a lot of really good movement there on rate in workers comp.

Barbara: Was that like I said.

Barbara: Our.

Barbara: Medicare was very stable actually.

Barbara: Just slightly it was up slightly despite the 2.9% Medicare rate reduction so.

Barbara: That was a good place to be too so really just overall strength in the rates.

Barbara:

Barbara: Yeah, So yeah, I hope that helps.

Barbara: Yeah, absolutely and then on the on that.

Carey Hendrickson: And then on the visits, just come back to the volumes and the visits per day, obviously very strong on an average basis. And I guess some of that benefit. is due to the closing of some underperforming clinics last year. So, on a same apples-to-apples basis, was same clinic volume, I guess, down year-over-year? Sounds like a little bit. Yeah. Although it obviously kind of inverted from a slow start to a positive in March and April, it feels like. Is that a good way to read it? Yes, it is. So, yeah, same clinic affected by the weather, more so than the rest of our business.

Barbara: Just coming back to the volumes.

Barbara: And the visits per day, obviously very strong on an average basis.

Barbara: Some of that benefit.

Barbara: It's due to the closing of some underperforming clinics last year.

Barbara: What was that on a same apples to apples basis.

Barbara: Same clinic volume I guess down year over year, it sounds like a little bit.

Barbara: Yeah.

Barbara: Although although it obviously kind of inverted from a slow start to.

Barbara: A positive in March and April it feels like it's a good way to read it.

Barbara: Yes. It is so yes same clinic.

Barbara: By the weather more more so than the rest of our business and that so that was down in January and then again in February but then.

Carey Hendrickson: And that – so that was down in January and then again in February, but then was positive in March from a volume perspective. And, you know, so kind of things settled out in March, and I think we're going to be in a better, we're going to be in a really good place for that for the rest of the year, I think, on a mature clinics from a volume. Okay, so you still believe you'll grow same strength or volume for the year? Yes, I do believe we'll say gross SAMHSA volume. Now that we're through January and February, we expect us to do really well on volumes.

Barbara: Positive in March from a volume perspective.

Barbara: And so kind of things settled out in March and I think we're gonna be in a better we're going to get a really good place for that for the rest of the year I think on a mature clinics from a volume standpoint.

Barbara: Okay. So you still believe you'll grow same center volume for the U S.

Barbara: Yes, I do believe we'll grow same store volume, but we're just now that we're through January and February we I expect us to do really well on volumes for them right and I imagine March I don't know March April.

Carey Hendrickson: Right. And I imagine March, I don't know, March, April, March volumes were up on the same center basis, I gather. Okay.

Barbara: March volumes were up on a same center basis I gather.

Barbara:

Barbara: Okay, and then just on the margin side of things. So you haven't really nice progression as you mentioned.

Carey Hendrickson: And then just on the margin side of things, so you had a really nice progression, as you mentioned, through the quarter. I guess the year-over-year decline, is that driven more by, it feels like more by the acquisitions. You acquired some lower margin, a little bit lower margin stuff on the acquisition front. And maybe does the, as Joanna mentioned, does the leap year and the one less day, does that maybe hurt your revenue more than your costs? Or, you know, is there any, does that skew your numbers at all? Yeah, a little bit. I mean, we do have one less day of revenue in the quarter, but the costs are relatively the same on a month-to-month basis, so that does impact a little bit.

Barbara: Through the quarter.

Barbara: I guess, that's the year over year decline.

Barbara:

Barbara: Is that driven more by it feels like more by the acquisitions.

Barbara: <unk> had some lower margin little bit lower margin stuff.

Joanna Gacek: On the acquisition front and maybe does the as Joanna mentioned does the leap year.

Speaker Change: One less day does that maybe hurt your revenue more than your costs or is there any does that skew your numbers at all.

Speaker Change: Yeah, a little bit I mean, we did have one less day of revenue in the quarter, but the costs are relatively the same on a month to month based on the month to month basis. So that does impact a little bit I think the bigger piece of it is that you know we had some cost increase that that came about the middle of last year.

Carey Hendrickson: I think the bigger piece of it is that we had some cost increase that came about the middle of last year, and so still absorbing that in the first quarter is, you know, so that kind of caused that margin to go down. But like Chris said, and I noted, we were really encouraged by March, and we're focused. Believe me, margin is a focus for us, and so we're really working on that's why we're working so well. We would do this anyway because it's good business. We're working on that net rates, try to continue to increase that and then stabilize our operating costs as well.

Speaker Change: And so we're still absorbing that in the first quarter is okay.

Speaker Change: Yeah, so that that kind of caused that margin to go down but like Chris said I noted we were really encouraged by March and we're focused.

Speaker Change: Believe me margin is a focus for us and so we're really working on and that's why we're working so well when we did this anyway because it's good business. We're working on that net rates trying to continue to increase that and then stabilize our operating costs as well. So we can see margin growth from net net rate growth.

Carey Hendrickson: So we can see margin growth from that. Yeah, Larry, I would say, yeah, yeah, go ahead, please. Yeah, just, just real quickly, you know, particularly January and February, Metro, which required, I think, beginning, beginning November, Metro had particularly low margin, you know, weather impacted months in January and February, and then bounced back in April. And so certainly that acquisition skewed the quarter a little bit. I expect that to stabilize as the year goes on, but a little bit lower than our core. Gotcha. No, that's fair. Obviously, now that's a big piece of your business, relatively speaking.

Speaker Change: Yes.

Speaker Change: Yeah, Yeah go ahead place.

Speaker Change: Just real quickly you know, particularly January and February Metro, which required I think beginning beginning November metro had particularly low margin you know weather impacted months in January and February and then bounce back in April and so certainly that acquisition skewed the quarter.

Speaker Change: A little bit.

Speaker Change: I expect it to stay at 50 year goes on but a little bit lower but in our core.

Speaker Change: Got you no. That's fair obviously now that's a big piece of your business relatively speaking Chris you had mentioned you know again you had last year I guess just about.

Christopher Reading: And, Chris, you had mentioned, you know, at the end of the year, last year, I guess, just about kind of putting a little bit more focus on trimming some excess costs where you can across the clinics. I know it's a, I'm sure it doesn't happen overnight, but any update on that kind of initiative? I mean, just because I've been here for a long time and I know the partners pretty well, I've gotten directly involved with our Ops team and we're working our way through it. should be done next week ahead of our board meeting, but our top 40 partnerships, which make up, frankly, roughly 75 or 80% of our earnings, and looking at a comparative set of very important measures, everything from volume to rate.

Chris Reddy: Kind of putting a little bit more focus on.

Chris Reddy: Trimming some excess costs, where you can across the clinics.

Chris Reddy: I know I'm.

I'm sure it doesn't happen overnight, but any update on that.

Chris Reddy: Kind of initiative.

Chris Reddy: Yeah, we've we've taken a dip.

Chris Reddy: Yeah.

Chris Reddy: And.

Chris Reddy: I mean, just because I've been here for a long time and the other partners pretty well I've gotten directly involved with our ops team.

Chris Reddy: And we're working our way through.

Chris Reddy: It should be done next week ahead of a board meeting, but our top 40 partnerships, which make up frankly, roughly 75% of our earnings and looking at the comparative set of very important measures everything from volume too.

Chris Reddy: Right.

Christopher Reading: to rate per hour across certain employee subsets, growth in FTEs, productivity, a number of things, all on one sheet. Call with the partner. The reason we're looking at 2021 is we came out of the pandemic that first year, not that we were fully done with it, but in 21, and volume bounced back to where it had been, and we were nicely lean men, not overly lean, but kind of where we, in shape, where we should have been. And so we're looking at a comparison over time. Again, across our largest partnerships, and we're really getting an understanding, a bilateral understanding with our partners on what's happened, what is, you know, what we can't completely control, we're kind of pushing aside, but we're focusing on what we can control.

Chris Reddy: To rate per hour across certain employee subsets.

Chris Reddy: Growth in Ftes productivity, a number of things all on one sheet.

Chris Reddy: Call with the partner the reason, we're looking at 2021 as we came out of that.

Chris Reddy: Came out of the pandemic that first year not that we were fully done with it but in 'twenty one.

Chris Reddy: And volume bounce back to where it had been and we were we were nicely lean men not overly right, but kind of where we can shape, where we should've been.

Chris Reddy: And so we're looking at a comparison over time.

Chris Reddy: And across our largest partnerships in.

Chris Reddy: And we're really getting in.

Chris Reddy: And understanding a bilateral understanding with our partners on what's happened.

Chris Reddy: What is as you know.

Chris Reddy: What we can't completely control, what kind of pushing aside but we're focusing on what we can control and we're creating a plan with a follow up that's either monthly or quarterly depending upon the nature and the width and breadth to be opportunity in the amount of adjustment to make.

Christopher Reading: And we're creating a plan with a follow-up that's either monthly or quarterly, depending upon the nature and the width and breadth of the opportunity and the amount of adjustment we need to make. And then we're also looking at what we need to do from a corporate support perspective to help them better address whatever the issues are that need to be addressed. And so this has become a very, very important exercise that, you know, I kind of call it pulling on the rope. We're going to keep pulling on this until we get it to where it needs to be, and we're not going to let go until we get there.

Chris Reddy: And then we're also looking at what we need to do from a corporate support perspective to help them better address whatever the issues are that need to be addressed and so.

Chris Reddy: This has become a very very.

Chris Reddy: Porting.

Speaker Change: Exercise that you know I kind of call it pulling on the rope, we're going to keep pulling on this until we get it to where it needs to be and we're not going to let go until we get there and so everybody's on board partners have been great.

Christopher Reading: And so everybody's on board. Partners have been great. You know, it's, it's, uh, but it's a work in progress. Gotcha.

Chris Reddy: You know it's it's.

Chris Reddy: Uh huh.

Chris Reddy: Work in progress.

Chris Reddy: Gotcha, Okay great.

Jared Haase: Okay, great. I appreciate all that calling. Thanks. Thank you.

Chris Reddy: Got it all that call attacks.

Speaker Change: Thank you we'll take our next question from Jared Haas with William Blair. Your line is now open.

Jared Haase: We'll take our next question from Jared Haase with William Blair, your line is Good morning. Thanks for taking all the questions. Chris, you talked a little bit about the leadership meetings with the team at Metro in your remarks at the top of the call. I wanted to double click on that a little bit further. I guess what were some of the biggest learnings that you picked up on, maybe in terms of what's working well with that business? And then I guess this is somewhat related to your remarks on the last question there, but I guess I'm wondering if there's anything specific you picked up from them that could be translated across the other partnerships?

Jared Haas: Thanks, Good morning, Thanks for taking all the questions.

Jared Haas: And Chris you talked a little bit about the leadership meetings with the team at that child in your remarks at the top of the call.

Speaker Change: Can you double click on that a little bit further I guess what were some of the biggest learnings that you picked up on it maybe in terms of what's working well with that business and then I guess, it's just somewhat related to your remarks on the last question there, but I guess I'm wondering if there's anything specific you picked up from them that could be translated across the other partnerships.

Christopher Reading: Yeah, for sure. First of all, just a great team, great leadership team. Really can do group. I mean, you know, It's easy when you have a lot of headwind over a period of time to kind of succumb a little bit and do the woe is me thing. And I didn't see any of that with them. They're very focused on their growth plan. I have a very tangible growth plan in terms of acquired and organic openings. I was really impressed. Those names that I rattled off, their senior operating team, along with their exec team whose names I didn't rattle but who I know really well.

Jared Haas: Yeah for sure.

Speaker Change: First of all it's just a great team great leadership team.

Speaker Change: Really can do group I mean, you know it.

Speaker Change: It's it's easy when you have a lot of headwind over a period of time to kind of come a little bit and.

Speaker Change: And do the Woe is me thing.

Speaker Change: I didn't see any of that.

Speaker Change: Very focused on the growth plan.

Speaker Change: I have a very tangible gross claim in terms of acquired and organic openings I was really impressed those names that I rattled off there.

Speaker Change: Their senior operating team.

Speaker Change: Along with their exact team, whose names I didnt write all but who I know really well I got to meet their their senior leadership there.

Christopher Reading: I got to meet their senior leadership. The mentorship, the way they guide people back home, the stories and just the values and the vision and how it all comes together, no surprise that they've got some of the biggest clinics that I've seen. You know, anywhere. I mean, the visits per clinic per day right now are around 50. I mean, they're doing a fantastic job and they've taken kind of a cradle to grave approach, meaning everything from pediatrics all the way through to elder care and home care. We recently had a partner meeting that Eric and Graham pulled together, the team pulled together.

Speaker Change: The Mentorship the way they guide people back home.

Speaker Change: The stories.

Speaker Change: Just the values and the vision and how it all comes together.

Speaker Change: Surprise that they've got some of the biggest clinics that I've seen.

Speaker Change: You know anywhere I mean, the visits per clinic per day right now around 50, I mean, they're doing a fantastic job and they've taken kind of a cradle to grave approach, meaning everything from pediatrics, all the way through to al.

Speaker Change: <unk> care and.

Speaker Change: In home care, we recently had a partner meeting that Eric and Graham pulled together the team pulled together and and Michael Harrison Who's Who's the founder and CEO.

Christopher Reading: And Michael Merson, who's the founder and the CEO. of Metro was part of that, along with some of our other large partnerships. And my thing about our company is when it comes to delivery and the kind of programs that are offered, They're not all exactly the same because it really is determined by the partner and their experience and the community demand and where they see it fit, but Metro's done a great job on the home care side, which is a bit unique for us. They typically have PT, OT, and speech in all their facilities, which is a little bit unique.

Of a metro.

Speaker Change: Was part of that along with some of our other large partnerships. The nice thing about our company is.

Speaker Change: When it comes to could we agree.

Speaker Change: And the kind of programs that are offered.

Speaker Change: They're not all exactly the same because it really really is determined by the partner and their experience in the community demand, where they where they see fit but metro has done a great job on the home care side, which is a bit unique trust. They typically have P. T O teams speech in all their facilities, which is a little bit.

Speaker Change: Unique we're always P T and sometimes we have a T don't generally have speech.

Christopher Reading: We're always PT, and sometimes we have OT, don't generally have speech. So they've done well with that. And there definitely will be some tangible. things that come out of that transaction that'll be positive for our partners. And that's already begun. We just announced another home care acquisition just last week or in the last week or so. You'll see we have more partners looking at that right now and seeing that opportunity and it's going to take a little time, but you know, I think that'll broaden our offering. But just really impressed with the people. Got it.

Speaker Change: We've done well with that.

Speaker Change: There definitely will be some.

Speaker Change: Some pain.

Speaker Change: Tangible.

Speaker Change: Things that come out of that.

Speaker Change: Transaction that'll be positive for our partners and that's already begun we just announced another home care acquisition.

Speaker Change: Just last week or in the last week or so.

Speaker Change: You'll see we have more partners looking at that right now.

Speaker Change: Seeing that opportunity and can take a little time, but you know I think that will broaden our offering them, but just really impressed with the people.

Speaker Change: Got it that's great and I think that the home care opportunity no ties in nicely to can I follow up and I think you've obviously talked about some of the capabilities that not sure had but then thinking about expanding.

Christopher Reading: That's great. And I think the home care opportunity, you know, ties in nicely to my follow-up. And I think, you know, you've obviously talked about some of the capabilities that Metro had, but then thinking about expanding the home care capabilities across the other partnerships as well. I guess just to put a fine point on it, you know, what are you seeing, you know, that makes the home care opportunity attractive? Is that largely a function of sort of patient demand where it's just the desire to get more and more care delivered in the home because it's more convenient?

Speaker Change: The homecare capabilities across the other partnerships as well I guess just to put a fine point on it you know what are you seeing.

Speaker Change: That makes a homecare opportunity attractive is that largely a function of sort of patient demand or its just a desire to get more and more care delivered in the home because it's more convenient.

Christopher Reading: Are you hearing from therapists maybe that, you know, they would like the ability to have a little bit more flexibility in their work environment versus sort of being tethered to the four walls of the clinic? Yeah, I think it's it's combinations of all of that and not one thing. So it's not me who thinks that we would rather perform care in the home. Most of these are, I would characterize it different than from a convenience perspective, because sure, if I can have somebody come to my house, that's great. By and large, the people who can come to the clinic and are able to come, they come.

Speaker Change: Are you hearing from from therapist Navy that they would like the ability to have a little bit more flexibility in their work environment versus sort of being tethered to the four walls of the clinic.

Speaker Change: Yes, I think it's it's combinations of all of that and not one thing. So it's not me who thinks that we would.

Speaker Change: Rather perform care or the home most of these are.

Speaker Change: I would characterize it different than from a convenience perspective, because sure. If I can have somebody come to my house, that's great by and large the people who can't come to the clinic and are able to come back home and we can do you know are really fulsome job in the clinic with all.

Christopher Reading: And we can do, you know, a really fulsome job in the clinic with all the equipment that we need and the right resources and particularly from an equipment perspective, just a lot easier to deliver. Now, there's a subset of patients who can't come in. Maybe they can't drive yet. They don't have a caregiver to bring them. They're kind of homebound, at least temporarily, until their physical function improves. It's those people that we can see in their home. And sure, there's a subset, not a complete set, but a subset of our clinicians, of Metro's clinicians, who do this exclusively and they just want to really do home care.

Speaker Change: The equipment that we need and right.

Speaker Change: Alright resources and.

Speaker Change: Particularly from an equipment perspective, it's just a lot easier to deliver no. There's a subset of patients who can't come in and maybe they can't drive yet they don't have a caregiver to bring them.

Speaker Change: They're kind of homebound at least temporarily until the physical function improves it shows people that we can see in their home ensure theres a subset not a complete set but a subset.

Speaker Change: Of our clinicians metros commissions.

Speaker Change: Oh, who do this exclusively and they just weren't really do home care. There's another set that crosses over where they're largely in the clinic, providing care, but they're able to do home care and make it a little bit more money, because we're paying a per visit basis.

Christopher Reading: There's another set that crosses over where they're largely in the clinic providing care, but they're able to do home care and make a little bit more money because we're paying a per visit basis. And so I just think it's another point of, call it flexibility, that we need to be good at in order to meet people where they are and deliver care that we know we can deliver. We just have to be a little bit site agnostic in terms of, you know, where we prefer to do it because Sometimes there's no other option. You either do it or you don't.

Speaker Change: And so I just think it's it's a it's another point of call it flexibility.

Speaker Change: We need to be good at in order to meet people, where they are and deliver care that we know we can deliver we just have to be a little bit.

Speaker Change: So I ignostic in terms of you know where.

Speaker Change: We prefer to do it because.

Speaker Change: Sometimes there's no other option either do it or you don't.

Christopher Reading: If you don't, you're missing part of the opportunity. Got it. Makes a lot of sense. Thank you. Yeah, thanks for the question.

Speaker Change: If you don't you're missing part of the opportunity.

Speaker Change: Got it it makes a lot of sense. Thank you.

Speaker Change: Yeah. Thanks for the question. Thank you we'll take our next question from Carsten Tina Davis with citizens. Your line is now open.

Constantine Davides: Thank you. We'll take our next question from Constantine Davides with Citizens. Your line is now open. Yeah, thanks. Maybe just follow.

Speaker Change: Yes, Thanks, Loren, maybe just follow up good morning, Chris.

Constantine Davides: Good morning, Chris. Maybe just following up on the last question. How do you how do you deliver to the home? Profitably, obviously, there's, you know, more of a windshield or downtime issue with the clinicians. So how do you kind of structure that with, you know, from a reimbursement standpoint to just sort of account for that? Yeah, well, I will tell you, first of all, that I'm not the expert. Not yet. And, you know, we're really relying on Michael and his team and looking at what they've done. And the way they've structured it has nothing to do with windshield time.

Speaker Change: Maybe just following up on that last question, how do you how do you deliver to the home price.

Speaker Change: Profitably, obviously, there's more of a a windshield or downtime issue.

Speaker Change: With the clinicians so how do you kind of structure that with you know from a reimbursement.

Speaker Change: <unk> standpoint to just sort of account for that.

Speaker Change: Yeah, well I would tell you first of all that I'm I'm not the expert not yet.

Speaker Change: You know, we're really relying on Michael and his team and looking at what they've done and the way. They have structured it has nothing to do with windshield time has everything to do with just paying for a visit.

Christopher Reading: It has everything to do with just paying for a visit. You pay for that visit, and you don't have other costs involved. You're able to do it in most markets, in New York, and particularly, you know, because they have a very high geographic index adjustment factor because of where they are and what costs are. So the Medicare rate's higher. And so the differential between, you know, what you're being paid by the government and what you're paying somebody, there's definite margin there. You don't have other costs other than maybe a laptop. And so it is margin, you know, it is accretive, certainly, and whether it's exactly the same margin, but it's going to be profitable.

Speaker Change: We pay for that visit.

Speaker Change: And you don't have other costs involved are you able to do it in most markets in New York and particularly.

Speaker Change: Because they have a very high geographic index adjustment factor because of where they are and what costs are.

Speaker Change: So the Medicare rate tier and so the differential between you know what you're being paid by the government and what you're paying somebody there's definitely margin where you don't have other costs.

Speaker Change: Other than maybe a laptop.

Speaker Change: And so it is margin.

Speaker Change: No. It is accretive certainly in whether it's exactly the same margin, but it's going to be profitable and again. These are people that probably you're going to miss unless you do it because it's not like they have a choice. Most of these people are kind of homebound at least temporarily.

Eric Williams: And again, these are people that probably you're going to miss unless you do it, because it's not like they have a choice. Most of these people are kind of homebound, at least temporarily. Got it. That's helpful.

Speaker Change: Got it.

Speaker Change: <unk>.

Speaker Change: That's helpful and then.

Eric Williams: And then Just another follow-up on IIP. I'm just curious, you know, there's certainly a lot of... focus by this administration on bringing manufacturing home. Is that something you're in dialogue with prospects or current customers in that business? To the extent you think that's something that could move the needle in the next couple of years, or is it still just too early at this point, more theoretical in nature? I can give you an answer that's what I think, but it's going to still be theoretical. So, I would tell you there's definitely certain industries. I mean, first of all, we're going to have to see where all this tariff stuff goes and, you know, even to the extent in the auto industry that the domestic providers who produce cars in this country still access a significant part of the pieces, parts they need to make the car here from other places.

Speaker Change: Just another follow up on IP I'm, just curious theres certainly a lot of <unk>.

Speaker Change: Focus by this administration on on bringing manufacturing home is that something you're in dialogue with with prospects are.

Speaker Change: Our current customers in that business.

Speaker Change: To the extent you think that's something that could move the needle in the next couple of years or is it still just too early at this point more theoretical in nature.

Speaker Change: I can give you an answer that that's what I think but it's going to still be theoretical. So I would tell you there are definitely certain industries.

Speaker Change: First of all we're going to have to see where all this tariff stuff goes in.

Speaker Change: You know even to the extent in the auto industry.

Speaker Change: Domestic providers, who produce cars in this country still access significant part of the pieces parts they need to make the car here from other places so.

Eric Williams: So, and I'm not sure how much of that, honestly, is going to change acutely. Different issues, again, for different industries. I think it's a net positive over a much longer period of time. If you're building an auto plant in this country, I've never done one. I don't know, but, you know, it's going to take years. And so, I think some things will happen sooner than later. And I think it's a net directional positive. But there's a lot of puts and takes right now really around uncertainty of You know, what is the trade policy and how does that affect us in the near term?

Speaker Change: And I'm not sure how much of that honestly is gonna change acutely different differ.

Speaker Change: Different issues again for different industries, I think it's a net positive over a much longer period of time too.

Speaker Change: Building, an auto plant in this country.

Speaker Change: Never done one I don't know, but you know, it's going to take years and so.

Speaker Change: I think some things will happen.

Speaker Change: Sooner than later and I think it's in that directional positive, but there's a lot of puts and takes right now really around uncertainty.

Speaker Change: You know what is the trade policy and how does that affect us in the near term.

Eric Williams: I think longer term, the more we can do here, the better off we are. And I think that'll help our business, frankly. You know, the people who are skilled at those jobs. are aging just like the rest of our population. And with that, there's wear and tear involved. And so, again, to keep these folks as healthy as possible. For their 24-hour self, meaning all the things they do at home in combination with what they do at work, really important to these companies. And I think people are beginning to recognize that more than they have historically.

Speaker Change: Longer term the more we can do here the better off we are.

Speaker Change: And I think that'll help our business frankly.

Speaker Change: You know that the.

Speaker Change: The people who are skilled at those jobs.

Speaker Change: Our aging just like the rest of our population and with that.

Speaker Change: Terrible thing.

Speaker Change: And so again to keep these folks as healthy as possible.

Speaker Change: For their 24 ourself, meaning all the things they do at home in combination with what they have to work really important to these companies I think people are beginning to recognize that one of them they have historically.

Speaker Change: And is there are you seeing benefits from the IP business on.

Eric Williams: And is there, are you seeing benefits from the IIP business on the outpatient clinic side yet? Or is that still just very early in it? I think it's early innings, Eric, you want to take that? Yeah, it is early innings, and we're trying to do this a couple different ways. You know, one of the things that we're really encouraged by, you know, is we finally, for the first time, really gotten into some government contracts. We really haven't done that before. Obviously, taking any sort of government contract requires some additional reporting, just around some of the affirmative action reporting that needs to be done.

Speaker Change: The outpatient clinic side, yet or is that still just very early innings.

Speaker Change: I think it's early innings, Eric do you want to take that.

Eric: Yes. It is early innings and we're trying to do to do this a couple of different ways. One of the things that we're really encouraged by is.

Speaker Change: As we finally put up.

Speaker Change: First time really gotten into some government contracts, we really haven't done that before obviously, taking any sort of government contracts require some additional reporting.

Speaker Change: Just around some of the affirmative action reporting that needs to be done and.

Eric Williams: And, you know, we have an applicant tracking system in place that allows us to do that. So historically, we've never chased that business before. But that also now gives us a lot of opportunity with that government business we have coming in. It's a lot of testing business, but funnel that down through our clinics. And so that's working pretty well. We've also reached out to our clinics, and there's an opportunity for our clinics to strengthen and deepen the relationships that they have with employers in the market, where they're only providing work time services. But the stickiness to that relationship would be better if they had an opportunity to also bring more value through the offering of injury prevention services.

Speaker Change: We have an applicant tracking system in place that allows us to do that so historically, we've never chase that business before but that also now gives us a lot of opportunity with that government business, we have coming in it's a lot of testing business the funnel that down through our clinics and so that's working pretty well. We've also reached out to our clinics and theres an opportunity.

Speaker Change: For our clinics to strengthen and deepen the relationships they have with employers in the market, where there are only providing work comp services, but the stickiness to that relationship would be much better if they had an opportunity to also bring more value through the offering average injury prevention services. So we have been working at a couple of markets.

Eric Williams: So we have been working at a couple of markets where we knew some of our physical therapy partners had really, really strong relationships with employers, have been meeting with members of our industry, our injury prevention teams, both on the progressive embryonic side. And they've been able to get some really, really good meetings with those employers in the market that's going to open up the door for injury prevention services, create more as it relates to that work time injury business that would flow into the physical therapy clinic. And it also creates an opportunity for our physical therapy partners to profit from a commission perspective for the additional injury prevention revenue that's generated on that side of the business.

Speaker Change: Where we knew some of our physical therapy partners had really really strong relationships with employers had been meeting with members of our industry.

Speaker Change: Prevention teams, both on the progressive embryonic side and they've been able to get some really really good meetings with those employers in the market that's going to open up the door pharyngeal prevention services create more stickiness as it relates to that war comp injury business that would flow into the physical therapy clinics.

Speaker Change: And it also creates an opportunity for our physical therapy partners to <unk>.

Speaker Change: Profit from a commission perspective for the additional injury prevention revenue that is generated on that side of the business. So early innings, but those meetings have gone really really well and we're really looking forward to seeing that expand in 2025.

Eric Williams: So early innings, but those meetings have gone really, really well. And we're really looking forward to seeing that expand in 2025.

Speaker Change: That's interesting thank you.

Eric Williams: That's interesting. Thank you. I guess one more for me your response. to an earlier question around the physical therapist is I guess a gatekeeper. Aside from some of the government programs you mentioned, like the one in Maryland, is that something you're starting to discuss with commercial payers, I guess more specifically in terms of a less episodic reimbursement arrangement? Thanks. Yeah, you know, episodic care and pay for performance and outcomes and all those things been discussed for a really long time. And yet, amazingly, even on the most simple basis, with some payers, it's still a challenge to be paid correctly, let alone to take it into an episode and think about sharing cost savings and other things.

Speaker Change: I guess one more for me your response sooner.

Speaker Change: To an earlier question around.

Speaker Change: The physical therapist is I guess, a gatekeeper aside from some of the government programs you mentioned like the one in Maryland.

Speaker Change: Is that something you are starting to discuss.

Speaker Change: With commercial payers.

Speaker Change: I guess more specifically in terms of a less episodic reimbursement arrangements.

Yeah, you know, it's episodic care and in and pay for performance and outcomes and all of those things. It's been discussed for really long time.

Speaker Change: Amazingly, even though one of the most simple basis.

Speaker Change: With some payers.

Speaker Change: It's still a challenge to be paid correctly.

Speaker Change: Let alone to take it into an episode in and think about sharing cost savings some of the things a lot of people talk about it we don't see a lot of it but I do think.

Christopher Reading: A lot of people talk about it, we don't see a lot of it. But I do think that this equip program, which again, is all Medicare based. It's in conjunction with CMS. And it's with the most complicated population really that we see. And results are really quite significant. And so I think that will give us some very tangible results to lean on to begin to have more interesting Discussions with payers around maybe how to change and how to think about the model a little bit. And we do, all of us in the APTQI, we believe that physical therapists are the right subset of health professionals to care for and lead really on a primary care basis everything that's skeletal.

Speaker Change: Just a quick program, which again is all Medicare based.

Speaker Change: It's in conjunction with CMS.

Speaker Change: And it's with the most complicated population really that we see.

Speaker Change: And the results are really quite significant and so I think that will give us some very tangible results to lean on to begin to have.

Speaker Change: More interesting.

Speaker Change: Discussions with payers around.

Speaker Change: We had a change in how to think about the model a little bit and we do all of us in <unk>.

Speaker Change: We believe that.

Speaker Change: Physical therapist, right subset of health professionals to care for them.

And the lead.

Speaker Change: Really on a primary care basis everything that's musculoskeletal.

Christopher Reading: These people are well-trained. They're much better trained than not to diminish primary care doctors' role, but the range at which primary care doctors, the range of issues that they have to be versed in is just so significant. Musculoskeletal is what we do and the training that we get, which is neuromuscular, musculoskeletal-based. so much more than what these other physician subgroups get. It just makes sense. So there's so much waste that happens, waste in time, waste in procedures, waste in. You know, diagnostic imaging, you know, things that happen are really quite unnecessary and very, very expensive.

Speaker Change: Yeah.

Speaker Change: People are well trained.

Speaker Change: They they.

Much better training then.

Speaker Change: Not to diminish primary care doctors.

Speaker Change: We'll put the range at which primary care Doctor the range of.

Speaker Change: Of issues they have to be first and it's just so significant.

Speaker Change: Scioto skull as what we do.

Speaker Change: The training that we've got which is.

Speaker Change: Which is neuro muscular musculoskeletal, we faced so much more than than what these other physician subgroups got it just makes sense. So.

Speaker Change: Theres, so much waste that happens wasting time wasting procedures, where he spin.

Speaker Change: Diagnostic imaging.

Speaker Change: Things did happen that are really quite unnecessary and very very expensive.

Unknown Executive: And a lot of that, not all of it can be eliminated because some of it clearly is necessary, but a lot of it could be eliminated if we had case control. And so I think this will be good. You know, way to open the door and look at really tangible results for an even healthier commercial population. And we're beginning to, you know, have those efforts and those discussions, but we're early in it. Thank you and once again that is start and one if you would like to ask.

Speaker Change: And a lot of that not all of it can be eliminated because some of it clearly necessary, but a lot of it could be eliminated if we had a case control and so I think this will be good.

Speaker Change: You know where you're going to open the door and look at really tangible results for an even healthier commercial population.

Speaker Change: And we're beginning to have those.

Speaker Change: Efforts in those discussions, but we're early innings.

Speaker Change: Okay.

Speaker Change: Thank you and once again that is star one if you would like to ask a question. We will take our next question from Mike <unk> with Barrington Research. Your line is now open.

Mike Petlusky: We'll take our next question from Mike Petlusky with Barrington Research. Your line is now open. Good morning. Hi. So on Metro, one of the things that you guys called out, I think, last conference call was, hey, we have some opportunity to maybe renegotiate some rates. And I was just wondering, has any of that started or any anecdotal evidence that, hey, we actually are able to sort of move the needle there, or is that still sort of to come?

Speaker Change: Hey, Mike Good morning, Hi.

Speaker Change: Hi.

Speaker Change: So.

Speaker Change: On Metro are one of the things that you guys called out I think last conference call was hey, we have some opportunity to maybe renegotiate some rates and I was just wondering is any of that started or any anecdotal evidence that hey, we actually are able to sort of move the needle there or is that still sort of to come.

Christopher Reading: Yeah, let me let me take a part of that. And it's a part you didn't It's related to that, but you didn't ask, and then I'll let Carey address the rate, because we have a schedule of things that we've gotten done, and then some that are soon to come. One of the nice things about Metro is, and we're going to get right up there, and rate is going up already. The rate differential between where Michael and his team are able to deliver care and that we get, compared to the private practices up there, it's a massive differential, $20 to $30 a visit difference.

Speaker Change: Yeah, Let me, let me take a part of that and it's a part you didn't get.

Speaker Change: It's related to that but you didn't ask and then I'll, let karri address the rate because we have we have a schedule of things that we've gotten done and then some that are soon to come.

Speaker Change: One of the nice things about Metro is.

Speaker Change: We're gonna get right up there in rate is going up already.

Speaker Change: The rate differential between where Michael and his team are able to deliver care.

Speaker Change: We get.

Speaker Change: Compared to the private practice this up there it's a massive differential.

Speaker Change: You know 20 or $30 or is it different and so it's given Michael and his team know us together with our resources the ability really to press the gas from a development perspective.

Christopher Reading: It's given Michael and his team, now us together with our resources, the ability really to press the gas from a development perspective and do some of these acquisitions, these aqua novos, which are smaller practices, and even some larger practices that are profitable, but just don't have rate. And even with. Just where we are today, the rate lift is really significant.

Speaker Change: And do some of these acquisitions suites, Ocwen novo's, which are smaller practices.

Speaker Change: And even some larger practices that.

Our profitable, but just don't have rate and even with.

Speaker Change: Just where we are today.

Speaker Change: Right, but if there's really significant so Carrie why don't you take that.

Carey Hendrickson: So Carey, why don't you take the real part of Mike's question on what have we gotten done and what do we have to do yet? Yeah. So, Mike, we're, we've gotten, you know, It's a continual process, right? We go through contract negotiations. We get rate increases, but it doesn't stop there. We just – we come back and revisit those rate increases. So I'd say it's an I don't know that I could say it's this much done or whatever, but we've been through a number of our largest contracts, but then we're going back to them again.

Speaker Change: A real part of Mike's question on what have you gotten done and whatever you have to do that.

Speaker Change: Yeah, So Mike where we've gotten.

Speaker Change: It's a continual process right. We go through contract negotiations, we get rate increases, but it doesn't stop there. We just we can we come back and revisit those rate increases so I'd say it's a.

Speaker Change: I don't know that Theres that I can say, it's this much done or whatever.

Speaker Change: We've been through a number of our largest contracts.

Speaker Change: We're going back to them again, we have a schedule that we keep of our top 30.

Carey Hendrickson: We have a schedule that we keep of our top 30 partnerships, and they're top five payers. And we are very focused on that because that will catch a lot of our other partnerships as well because they're across the country and in different areas too. But we're really focused on our top five payers and our top 30 partnerships and making sure. So we've got a schedule that says, look, this one's in process. This one was the last time this one was done. And one of the more significant ones we have gotten done this year is Blue Cross Blue Shield of Texas, which should provide us a nice little increase in that as we go throughout 2025.

Speaker Change: Dropped pretty partnerships and their top five payers and we are.

Speaker Change: Very focused on that because that will catch a lot of our other partnerships as well because they are across the country in different areas too.

Speaker Change: But we're really focused on our top by payers and our top 30 partnerships and making sure. So we've got a schedule that that does let this one didn't process. This one was the last time. This one was done.

Speaker Change: <unk>.

Speaker Change: One of the more significant ones, we had have gone down this year as Blue Cross Blue Shield of Texas, which should.

Speaker Change: Should provide us a nice little increase in that as we go throughout 2025, and then Chris talked about Metro and we've got some blue.

Carey Hendrickson: And then Chris talked about Metro. We've got a Blue Cross Blue Shield contract with Metro that took effect on May 1. That should be a nice lift for Metro as well. So focus on the big payers primarily. And then we have a – so that's our – we've got this strategic negotiating group that's two or three people that focus on the large payers. And then we've got a contract – a team that also focuses on some of the more regional contracts and local contracts that – that they're working on continually as well.

Speaker Change: Blue Cross Blue Shield contract with Metro. That's that's tech took effect on May one that should be a nice lift for metro as well so.

Speaker Change: Our focus on the big payers, primarily and then we haven't so that's hard we've got this strategic negotiating grip is it two or three people that focus on the large payors and then we've got a contract.

Speaker Change: That also focuses on.

Speaker Change: Some of the more regional contracts and local contracts that.

Speaker Change: That yeah.

Speaker Change: They are working on contingency as well so.

Carey Hendrickson: So I hope that gives you some color as to how we're. To Carey, specific to Metro, aren't we up, I don't have it in front of me right now, a couple dollars a visit, and then on May, I think it's May 15th, we have another big contract that's going to kick in here in the next week. Yeah, okay, so you've seen a little bit of progress in it. Yeah, Metro in the fourth quarter, their rate was $102.40, and it moved up to $104.50 in the first quarter, and it was actually at $106.00 in March. So really good movement there, and that's just from, you know, From the renegotiations that have taken place since we moved those contracts over to us and continued work.

Speaker Change: Hope that gives you some color as to how we're approaching it.

Speaker Change: The carrier specific to metro or aren't re up I don't have it in front of me right now a couple of dollars a visit and then.

Speaker Change: Yeah, I think that for us.

Speaker Change: Tina.

Speaker Change: We have another big contract, that's that's going to kick in here in the next week.

Speaker Change: Yeah. Okay. Thank you so you've seen a little bit of progress on it.

Speaker Change: Okay.

Speaker Change: Yeah, that's true in the fourth quarter the rate was $102 40.

Speaker Change: Moved up to $104 50 in the first quarter and it was actually one of the six in March so really good movement, there and Thats just from.

Speaker Change: From the renegotiations that have taken place.

Speaker Change: Since we moved those contracts over time to us and continue to work there.

Speaker Change: Okay great.

Christopher Reading: A couple more semi-quick ones, I guess. Chris, in terms of the conversations you're having with top partnerships, I mean, how much interest is there in sort of adding on a home care PP, I guess, capability? I mean, is that something guys are, like, excited about, or are they sort of looking at you sort of with a side eye, saying, that's not really what we do? Can you just sort of describe the reaction to sort of how, you know, what Metro does versus what the rest of your partnerships have?

Speaker Change: A couple more.

Speaker Change: Semi quick ones I guess, Chris in terms of in terms of the conversations youre, having with top partnerships I mean, how much interest is there and sort of adding on a home home care.

Speaker Change: T T. I guess capability I mean is that something guys are excited about or are they sort of looking at your sort of where the site is saying that's.

Speaker Change: That's not really what we do.

Speaker Change: Can you just sort of describe the reaction to sort of how.

Speaker Change: What metro does versus what the rest of your partnerships have done.

Eric Williams: Yeah, well, let me let me kick it to Eric. And Eric, if you would, not just home care, but cash based programs, we had a partner meeting focused around Additional Revenue Generating Opportunities, and Eric can give you a, you know, complete answer on that, Mike.

Speaker Change: Yeah, well, let me, let me kick it to Eric and Eric If you would not just home care, but cash based programs, we had a partner meeting focused around <unk>.

Speaker Change: Additional revenue generating opportunities and Eric can give you a complete answer on that Mike.

Speaker Change: Yes.

Speaker Change: One thing we have obviously visibility to cross the 125 partnerships. There's some some partners to do some things really really well others don't do it as well and so for example, we have partnerships out there who just to do a very competitive market.

Speaker Change: Not really been able to control referral sources.

Speaker Change: Referrals from our position is that as a result of that they really grew their practice by direct to consumer campaigns to the point, where 90, 495% of referrals they have coming in the door or to direct to consumer marketing significantly higher than any other partnership we have in the portfolio. We have partners out there who have done a phenomenal job in terms of.

Speaker Change: Cash based <unk> laser sales of laser treatment being a part of physical therapy, not reimbursed by insurance companies, but patients love it and are willing to pay cash for it we've got a partner out there who generates significant revenue based on his team's ability to offer.

Speaker Change: And utilize laser sales.

Speaker Change: We brought all of these people and with their various successful programs and presented for a day and a half in the Houston market. I think we had I don't know 15 15 of our top 40 partners there.

Speaker Change: To expose them to all these other things that we're doing across the country with different partnerships.

Speaker Change: And people took away from that meeting different things or a lot of people don't walk, but laser approach from the standpoint that didn't really require them to go out and market. It all outside the clinic. This is being marketed to the patients that are coming in every single day and taking advantage of the opportunity to use that laser sale. There are some people with children interest and Ah ha.

Speaker Change: <unk> I'll talk about that in a lot of them.

A bit, but that's really hard to scale, just saying, hey, I'm going to take my staff and we're gonna take these people out of clinical and have their home care business I still believe that the best way for us to grow the home care side of our business is to sit there very fragmented industry, just like outpatient physical therapy as with the target markets and start looking at.

Speaker Change: <unk> what are you can offer that as part of our portfolio of services combined with what we're doing on the outpatient side, we actually had a couple of other partners, who have been very successful going into prisons and cash based programs, providing physical therapy services to prisoners.

Speaker Change: And every one of those computers that someone else and so we had we presented a portfolio of things that people take interesting on the homecare side I do think there's a lot of opportunity for growth there and it's something that we'll probably look at focusing on acquisitions to really help us grow that and then.

Speaker Change: Organic from there.

Speaker Change: Great.

Mike Petlusky: Hey, last one, Chris, just in terms of the outlook for pricing going forward in, you know, relative to CMS, I mean, have you gotten back from legislators, Susan Collins, or anybody else that you guys are talking to, hey, there's an awful lot going on in D.C. right now, besides that, you know, cost cutting is what everybody's looking at, not looking for ways to pay, you know, like, essentially, this is just not going to get traction because there's so much going on. And a bias towards cost cutting, even though I know you explained your, you know, your proposal would save money, et cetera.

Speaker Change: Last one Chris just in terms of the outlook for pricing going forward and relative to CMS I mean.

Speaker Change: Have you gotten back from legislators, Susan Collins or anybody else that that you guys are talking to hey, there's an awful lot going on in D. C right now besides that.

Speaker Change: Cost cutting is what everybody is looking at not looking for ways to pay like essentially this is just not going to get traction because theres. So much going on in and a bias towards cost cutting even though I know you explained.

Speaker Change: Your proposal would save money et cetera, but yeah I'm just wondering do you feel like it's hard to sort of get people's attention given the environment up there.

Christopher Reading: But I'm just wondering, do you feel like it's hard to sort of get people's attention given the environmental Yeah, no, I think it's, it's, it's It depends on the question. So if you're asking me to handicap and to give you feedback on a permanent fix to the physician fee schedule, we know it's a $100 billion spend the way it gets scored. And I think the chance of that happening without a really significant offset, like a full-scale EQUIP program, which is not ready to, you know, for prime time yet necessarily, I think that's dead in the water.

Speaker Change: Yeah, No I think it's it's it's.

Speaker Change: It depends on the question. So if you're asking me to handicap them to give you feedback on a permanent fix to the physician fee schedule. We know it's 100 billion dollar spend the way it gets scored and I think the chance of that happening without really significant off.

Speaker Change: Set like a full scale equipped program, which is not ready for prime time, yet necessarily.

Speaker Change: Think that's dead in the water.

Speaker Change: The the <unk>.

Christopher Reading: And again, the longer we go this year, any kind of a fix, which would be a part-year fix this year and maybe, you know, relief next year to roll back the 2.9% that we're hit with this year, I give that a small chance, but Washington's pretty dysfunctional right now. There's a lot going on. There is a bias toward the cost side. But I think that aside, there's an appreciation for the fact that The system that we've been in, which requires budget neutrality, particularly overlaid in You know, call it broadly medical technology, which is advancing rapidly, where there are breakthroughs in certain areas, which are not cheap.

Speaker Change: And then the longer we go this year any kind of a fix which would be a part you fix this year maybe.

Speaker Change: Relief next year to roll back to two 9%.

Speaker Change: With this year.

Speaker Change: I give that a small chance, but Washington pretty dysfunctional right now there's a lot going on there is a bias toward toward the cost side, but.

Speaker Change: But I think that aside.

Speaker Change: And appreciation for the fact that.

Speaker Change: So the system that we've been in which requires budget neutrality, particularly overlay in.

Speaker Change: You know call.

Speaker Change: Call It broadly medical technology, which is advancing rapidly.

Speaker Change: Where there are breakthroughs in certain areas, which are not cheap in fact, a very very expensive.

Christopher Reading: In fact, they're very, very expensive, you know, robotics and other, you know, other breakthroughs across lots of different specialties. Those have to be paid for. So to continually take from people in order to do the thing that's going to provide the best outcome is not sustainable. You're going to get providers, just like we have in many of our Many of our other companies who've said Medicare Advantage doesn't, isn't going to work for us. You can't pass. 60, 70, 80 cents on the dollar, we're not going to lose money on every patient, and so. There's an understanding that a lot of this stuff has to be retooled.

Speaker Change: Robotics and other you know other breakthroughs across lots of different specialties.

Speaker Change: Has to be paid for sort of continually take from people in order to do the thing that's going to provide the best outcome.

It's not sustainable you're going to get providers, just like we have in many of our.

Speaker Change: Many of our other companies who've said Medicare advantage doesn't isn't going to work for US you can't pass.

Speaker Change: 60, 70 80 cents on the dollar.

Speaker Change: We're not going to lose money on every patient and so.

Speaker Change: There's going to there's an understanding that a lot of this stuff has to be retooled.

Speaker Change: I, just don't think given the nature of our hits that will be in the crosshairs in the coming period I can't even.

Christopher Reading: I just don't think, given the nature of our hit, that will be in the crosshairs in the coming period. I can't even imagine that that's going to happen.

Speaker Change: <unk>.

Speaker Change: But that's going to happen so longer.

Christopher Reading: So, longer term, there's a lot of stuff to figure out and none of it's easy.

Speaker Change: Longer term theres, a lot of stuff to figure out and none of the cheesecake.

Speaker Change: Thank you.

Speaker Change: Thank you and we have no further questions in the queue. At this time I'll turn the program back over to our presenters for any additional or closing remarks.

Unknown Executive: Thank you, and we have no further questions in the queue at this time.

Christopher Reading: I'll turn the program back over to our presenters for any additional or closing remarks. Sure. Well, thank you, everybody. Those were good questions. And hopefully, you know, what you found was good, honest, transparent discussion. And Carey and I are available, you know, later today and later this week. And we'll be at the Bank of America conference next week. So we appreciate the opportunity to, you know, to speak to our shareholders. And just holler at us if you have anything that you want to go over as a result of today's call. Thank you, and have a great rest of your week.

Speaker Change: Sure well. Thank you everybody those are good questions and hopefully you know what you found was good honest transparent discussion Cary and I are available.

Speaker Change: Later today in and later this week, we'll be at the Bank of America Conference next week. So we appreciate the opportunity to.

Speaker Change: To speak to our shareholders and I'm just Colorado. If you have anything that you want to go over as a result of today's call. Thank you and have a great rest of your week Bye now.

Unknown Executive: Bye now. Thank you.

Speaker Change: Yes.

Unknown Executive: This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful day.

Speaker Change: Thank you. This does conclude today's program. Thank you for your participation you may disconnect at anytime and have a wonderful day.

Speaker Change: [music].

Speaker Change: Mhm.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: Hum.

Speaker Change: [music].

Unknown Executive: Thanks for watching!

Speaker Change: Uh huh.

Speaker Change: [music].