Q3 2025 Universal Health Services Inc Earnings Call

1000, and twenty-five Universal Health Services' earnings Conference call.

At this time all participants are in a listen only mode.

Operator: Good day, and thank you for standing by. Welcome to the third quarter 2025 Universal Health Services earnings 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. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Darren Larick, Vice President of Investor Relations. Please go ahead.

Speaker #2: Good day and thank you for standing by . Welcome to the third quarter 2025 Universal Health Services Earnings 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.

To ask a question during the session you'll need to press star one one on your telephone you will then hear an automated message advising your hand is raised to win.

Speaker #2: After the speaker's presentation , there will be a question and answer session . To ask a question during the session , you'll need to press star one one on your telephone .

Draw. Your question. Please press star one one again.

Please be advised that today's conference is being recorded.

Speaker #2: You will then hear an automated message advising your hand is raised . To withdraw your question , please press star one . One again .

I'd now like to hand, the conference over to Darin lyric Vice President of Investor Relations. Please go ahead.

Speaker #2: Please be advised that today's conference is being recorded . I'd now like to hand the conference over to Darren Larrick , Vice President of Investor Relations .

Good morning, and welcome to the Universal Health Services third quarter 2025 earnings Conference call I'm, Darrin lyric Vice President of Investor Relations.

Speaker #2: Please go ahead .

Darren Larick: Good morning and welcome to Universal Health Services' third quarter 2025 earnings conference call. I'm Darren Larick, Vice President of Investor Relations. With me this morning are our President and CEO, Marc D. Miller, and our Chief Financial Officer, Steve G. Filton. Marc and Steve will provide some prepared remarks, and then we'll open it up to Q&A. During today's conference call, we will be using words such as believes, expects, anticipates, estimates, and similar words that represent forecast projections and forward-looking statements. For anyone not familiar with the risks and uncertainties inherent in these forward-looking statements, we recommend a careful reading of the section on risk factors and forward-looking statements and risk factors in our Form 10-K for the year ended December 31, 2024, and our Form 10-Q for the quarter ended June 30, 2025.

Speaker #3: Good morning , and welcome to Universal Health Services third quarter 2020 Earnings Conference call . I'm Darren Larick , vice president of investor relations .

With me this morning for our President and CEO, Mark Miller, and our Chief Financial Officer, Steve Filton marketing, Steve will provide some prepared remarks, and then we'll open it up to Q&A during.

Speaker #3: With me this morning are our president and CEO Mark Miller . And our chief financial officer Steve Fulton . Mark and Steve will provide some prepared remarks , and then we'll open it up to Q&A .

During today's conference call, we will be using words, such as believes expects anticipates estimates and similar words that represent forecasts projections and forward looking statements for anyone not familiar with the risks and uncertainties inherent in these forward looking statements. We recommend a careful reading of the section on risk factors.

Speaker #3: During today's conference call , we will be using words such as believes , expects , anticipates , estimates and similar words that represent forecasts , projections and forward looking statements .

Speaker #3: For anyone not familiar with the risks and uncertainties inherent in these forward looking statements , we recommend a careful reading of the section on risk factors and forward looking statements and risk factors in our form 10-K for the year ended December 31st , 2020 .

And forward looking statements and risk factors in our Form 10-K for the year ended December 31, 2024, and our Form 10-Q for the quarter ended June 32025. In addition, we may reference during today's call measures such as EBITDA adjusted EBITDA adjusted EBITDA net of NCI.

Speaker #3: Four and our form 10-q for the quarter ended June 30th , 2025 . In addition , we may reference during today's call measures such as EBITDA , adjusted EBITDA , adjusted EBITDA , net of NCI and adjusted Net Income attributable to us , which are non-GAAP financial measures .

Darren Larick: In addition, we may reference during today's call measures such as EBITDA, adjusted EBITDA, adjusted EBITDA net of MCI, and adjusted net income attributable to UHS, which are non-GAAP financial measures. Information and reconciliations of these non-GAAP financial measures to net income attributable to UHS can be found in today's press release. With that, let me now turn it over to Marc D. Miller for some introductory remarks.

And adjusted net income attributable to UHF, which are non-GAAP financial measures information and reconciliations of these non-GAAP financial measures to net income attributable to UHF can be found in today's press release with that let me now turn it over to Mark Miller for some introductory remarks.

Speaker #3: Information and reconciliations of these non-GAAP financial measures to net income attributable to us can be found in today's press release. With that, let me now turn it over to Marc Miller for some introductory remarks.

Thank you Darren and.

Good morning, everybody. Thank you for your interest in UHF.

I also want to take this opportunity to welcome Darren to the UHF team, we look forward to having him in a dedicated investor relations function for our company.

Marc D. Miller: Thank you, Darren. Good morning, everybody. Thank you for your interest in Universal Health Services. I also want to take this opportunity to welcome Darren to the Universal Health Services team. We look forward to having him in a dedicated investor relations function for our company. Turning to our third quarter 2025 results, we reported adjusted net income attributable to Universal Health Services of $5.69 per share, representing a 53% increase from the third quarter of 2024. Revenue growth for the third quarter of 2025 was 13.4% year over year. Our third quarter performance reflects continued growth in our acute care operating environment, modest volume improvement in our behavioral health segment, and solid pricing across both segments. The third quarter included $90 million of net benefit from the recently approved supplemental Medicaid program in the District of Columbia.

Turning to our third quarter 2025 results, we reported adjusted net income attributable to uhm of $5 69 per share representing a 53% increase from the third quarter of 2024.

Revenue growth for the third quarter of 2025 was 13, 4% year over year.

Our third quarter performance reflects continued growth in our acute care operating environment modest volume improvement in our behavioral health segment and solid pricing across both segments.

The third quarter included $90 million of net benefit.

From the recently approved supplemental Medicaid program and the district of Columbia.

Steve will cover the details of this approval and other supplemental Medicaid program updates.

Based on our operational performance year to date and the increased supplemental reimbursement in the district of Columbia offset somewhat by additional professional and general liability reserves, we are increasing the midpoint of our 2025 adjusted EPS guidance by 6% to $21 80.

Marc D. Miller: Steve will cover the details of this approval and other supplemental Medicaid program updates. Based on our operational performance year to date and the increased supplemental reimbursement in the District of Columbia, offset somewhat by additional professional and general liability reserves, we are increasing the midpoint of our 2025 adjusted EPS guidance by 6% to $21.80 per diluted share from $20.50 per diluted share previously. During the quarter, we experienced progress in our two most recent acute care hospital openings, West Henderson Hospital in Henderson, Nevada, and Cedar Hill Regional Medical Center in Washington, DC. Specific to Cedar Hill, we achieved accreditation in early September. As a result, the financial drag from our certification timing delay and startup issues began to subside during the third quarter, and we expect to exit this year at breakeven or better, putting us in a stronger position at this facility heading into 2026.

<unk> per diluted share from $20 50 per diluted share previously.

During the quarter, we experienced progress and our two most recent acute care hospital openings West Henderson Hospital in Henderson, Nevada, and Cedar Hill Regional Medical Center in Washington D C.

Specific to Cedar Hill, we achieved accreditation in early September as a result, the financial drag from our certification timing delay and startup issues began to subside during the third quarter and we expect to exit this year at breakeven or better putting us in a stronger position at this facility.

So heading into 2026.

We believe the long term outlook for Cedar Hill remains favorable due to demand for services and strong support within the community as well as our long standing presence in the district at the George Washington University Hospital.

Marc D. Miller: We believe the long-term outlook for Cedar Hill remains favorable due to demand for services and strong support within the community, as well as our longstanding presence in the district at the George Washington University Hospital. Our next de novo acute care hospital opening will be the Alan B. Miller Medical Center in Palm Beach Gardens, slated for the spring of 2026. This project remains on track, and we are encouraged by significant interest in the new medical campus by members of the community and the healthcare professionals that serve patients within this fast-growing market. We have a long track record of expanding presence in core markets with new state-of-the-art hospitals and are excited to build on our existing presence on the East Coast of Florida.

Our next de Novo acute care hospital opening will be the Alan Miller Medical Center in Palm Beach Gardens slated for 2026.

Related to the spring of 2026.

This project remains on track and we are encouraged by significant interest in the new medical campus by members of the community and the health care professionals that serve patients within this fast growing market.

Have a long track record of expanding presence in core markets with new state of the art hospitals and are excited to build on our existing presence on the east coast of Florida.

Separate from these new hospital projects. We've also been active on the outpatient side within our acute care segment, where we operate 45 outpatient access points, including freestanding emergency departments surgery centers and other ambulatory services.

Marc D. Miller: Separate from these new hospital projects, we've also been active on the outpatient side within our acute care segment, where we operate 45 outpatient access points, including freestanding emergency departments, surgery centers, and other ambulatory services. On a year-to-date basis, we've opened four freestanding EDs, bringing our total to 34, and we believe our FED strategy is highly complementary to our acute care operations by allowing us to capture incremental higher acuity outpatient volume within our markets. Within our behavioral health segment, we've taken a disciplined approach to new bed capacity growth, which has allowed us to focus on the highest potential expansion and de novo projects while we increasingly devote resources to accelerate our outpatient behavioral strategy.

On a year to date basis, we've opened four freestanding eds, bringing our total to 34 and we believe our <unk> strategy is highly complementary to our acute care operations by allowing us to capture incremental higher acuity outpatient volume within our markets.

Within our behavioral health segment, we've taken a disciplined approach to new bed capacity growth, which has allowed us to focus on the highest potential expansion and de novo projects, while we increasingly devote resources to accelerate our outpatient behavioral strategy.

On the outpatient side of our behavioral segment, we operated.

<unk> hundred access points, including stepped down programs closely aligned with impatient and residential operations as well as step in programs that allow us to reach patients and convenient community settings.

Marc D. Miller: On the outpatient side of our behavioral segment, we operate approximately 100 access points, including step-down programs closely aligned with inpatient and residential operations, as well as step-in programs that allow us to reach patients in convenient community settings. We are on track to open 10 of these step-in programs this year under local brands, as well as our new Thousand Branches Wellness brand in a model that supports outpatient services through both virtual and in-person settings. Our strategies are designed to accelerate our outpatient growth rate, diversify our payer mix, and allow us to be the provider of choice within a behavioral marketplace that continues to have strong demand across the continuum. The behavioral healthcare we provide serves an important need within the healthcare system and our society more broadly. With that, I will now turn the call over to Steve G.

We are on track to open tennis step in programs this year under local brands as well as our new <unk> branches wellness brand and a model that supports outpatient services through both virtual and in person settings.

Our strategies are designed to accelerate our outpatient growth rate diversify our payer mix and allow us to be the provider of choice within the behavioral marketplace that continues to have strong demand across the continuum.

The behavioral health care, we provide serves an important need within the health care system and our society more broadly.

With that I will now turn the call over to Steve Filton for them.

Our strategies are designed to accelerate our outpatient growth rate, diversify our payer mix and allow us to be the provider of choice within a behavioral Marketplace that continues to have strong demand across the continuum.

Fourth a nice financial review of the third quarter.

Thanks, Mark I will highlight a few financial and operational trends before opening the call up to questions. The company reported net income attributable to uhm per diluted share of $5 86 for the third quarter of 2025.

The Behavioral Healthcare. We provide serves an important need within the healthcare system and our society, more broadly.

Marc D. Miller: Filton for a financial review of the third quarter.

Steve G. Filton: Thanks, Marc. I will highlight a few financial and operational trends before opening the call up to questions. The company reported net income attributable to UHS per diluted share of $5.86 for the third quarter of 2025. After adjusting for the impact of the items reflected on the supplemental schedule as included with the press release, our adjusted net income attributable to UHS per diluted share was $5.69 for the quarter ended September 30, 2025. We recognized approximately $90 million of net benefit during the third quarter of 2025 from the District of Columbia Supplemental Medicaid Program, which covers the time period from October 1, 2024 through September 30, 2025. Approximately $73 million of this benefit was recognized in our acute care results, while the remaining benefit was recognized in our behavioral results.

After adjusting for the impact of the items.

It reflected on the supplemental schedule is included with the press release, our adjusted net income attributable to uhm per diluted share was $5 69 for the quarter ended September 32025.

We recognized approximately $90 million of net benefit during the third quarter of 2025 from the district of Columbia Supplemental Medicaid program, which covers the time period from October one 2024 through September 32025.

Proximately $73 million of this benefit was recognized in our acute care results. While the remaining benefit was recognized in our behavioral results.

During the third quarter of 2025 on a same facility basis adjusted admissions at our acute care hospitals increased 2.1% over the third quarter of the prior year.

Steve G. Filton: During the third quarter of 2025, on a same-facility basis, adjusted admissions at our acute care hospitals increased 2.0% over the third quarter of the prior year. Acute care volumes were consistent with trends in the first half of 2025, with solid growth in both inpatient medical admissions and outpatient services during the third quarter, and surgical volumes that increased slightly as compared to the prior year. Same-facility net revenues in our acute hospital segment increased by 12.8% during the third quarter of 2025 on a reported basis as compared to last year's third quarter and increased 9.4% after excluding the impact of our insurance subsidiary and the prior period net benefit from the District of Columbia Supplemental Medicaid Program.

Acute care volumes were consistent with trends in the first half of 2025 with solid growth in both inpatient medical admissions and outpatient services during the third quarter and surgical volumes that increased slightly as compared to the prior year.

Same facility net revenues in our acute hospitals segment increased by 12, 8% during the third quarter of 2025 on a reported basis as compared to last year's third quarter and increased nine 4% after excluding the impact of our insurance subsidiary in the prior period net benefit from the district of Columbia.

Supplemental Medicaid program.

Acute care same facility revenue per adjusted admission increased by nine 8% during the third quarter of 2025 on a reported basis and increased seven 3% after excluding the impact of our insurance subsidiary and the prior period impact of the addition of Columbia supplemental Medicaid benefit.

Steve G. Filton: Acute care same-facility revenue per adjusted admission increased by 9.8% during the third quarter of 2025 on a reported basis and increased 7.3% after excluding the impact of our insurance subsidiary and the prior period impact of the District of Columbia Supplemental Medicaid benefit. Operating expenses continued to be well managed across labor, supplies, and other expense categories. We have not experienced any noteworthy impact from tariff trade policies. Total operating expenses per adjusted admission increased by 4.0% on a same-facility basis over last year's third quarter after excluding the impact of our insurance subsidiary. For the third quarter of 2025, our solid acute care revenues combined with effective expense controls resulted in a 190 basis point increase year over year in same-facility EBITDA margin to 15.8% after excluding the prior period impact of the District of Columbia Supplemental Benefit.

Operating expenses continued to be well managed across labor supplies and other expense categories. We have not experienced any noteworthy impact from tariff trade policies total operating expenses per adjusted admission increased by 4.1% on a same facility basis over last year's third quarter after excluding.

<unk> the impact of our insurance subsidiary.

For the third quarter of 2025 are solid acute care revenues combined with effective expense controls resulted in a 190 basis point increase year over year in same facility EBITDA margin to 15, 8% after excluding the prior period impact of the district of Columbia supplemental benefit.

Turning to our behavioral health results during the third quarter of 2025 same facility net revenues increased nine 3% on a reported basis and were up eight 5% excluding the prior period impact of the district of Columbia supplemental Medicaid program say.

Steve G. Filton: Turning to our behavioral health results during the third quarter of 2025, same-facility net revenues increased 9.3% on a reported basis and were up 8.5% excluding the prior period impact of the District of Columbia Supplemental Medicaid Program. Same-facility revenue growth was driven by a 7.9% increase in revenue per adjusted patient day as compared to the prior year. Excluding the prior period impact of the District of Columbia Supplemental Revenue, same-facility revenue per adjusted patient day increased 7.1% during the third quarter of 2025. Same-facility adjusted patient days increased 1.3% as compared to the prior period's third quarter, with volume growth modestly improving as compared to 1.2% in the second quarter and 0.4% during the first half of 2025.

Same facility revenue growth was driven by a seven 9% increase in revenue per adjusted patient day as compared to the prior year.

Excluding the prior period impact of the district of Columbia supplemental revenue same facility revenue per adjusted patient day increased seven 1% during the third quarter of 2025.

Same facility adjusted patient days increased one 3% as compared to the prior periods third quarter with volume growth modestly improving as compared to one 2% in the second quarter and 4% during the first half of 2025.

We expect further volume improvements during the fourth quarter, although we now believe a reasonable expectation for same facility adjusted patient day growth should be in the 2% to 3% range with our near term expectations at the lower end of this range.

Steve G. Filton: We expect further volume improvements during the fourth quarter, although we now believe a reasonable expectation for same-facility adjusted patient day growth should be in the 2% to 3% range, with our near-term expectations at the lower end of this range. Expenses in our behavioral health segment continued to be well managed with relatively stable margins during the third quarter, leading to a 7.6% increase in same-facility EBITDA as compared to the third quarter of 2024 after excluding the prior period impact of the District of Columbia Supplemental Benefit. We continue to experience labor tightness in some markets, although hiring trends have improved steadily throughout the year. Our cash generated from operating activities was approximately $1.3 billion during the first nine months of 2025 as compared to approximately $1.4 billion during the same period in 2024.

Expenses in our behavioral health segment continued to be well managed with relatively stable margins during the third quarter, leading to a seven 6% increase in same facility EBITDA as compared to the third quarter of 2024 after excluding the prior period impact of the district of Columbia supplemental benefit.

We continue to experience labor tightness in some markets, although hiring trends have improved steadily throughout the year.

Our cash generated from operating activities was approximately $1 3 billion. During the first nine months of 2025 as compared to approximately $1 4 billion. During the same period in 2024.

We expect to collect the $90 million of district of Columbia supplemental payments during the fourth quarter of 2025.

Steve G. Filton: We expect to collect the $90 million of the District of Columbia Supplemental Payments during the fourth quarter of 2025. During the first nine months of 2025, we spent $734 million on capital expenditures, close to 30% of which related to the new hospital in Florida and a replacement facility in California. During the nine months ended September 30, 2025, we also acquired 3.19 million of our own shares at a total cost of approximately $566 million, including 1.315 million shares purchased during the third quarter of 2025. Today, our board of directors authorized a new $1.5 billion increase to our stock repurchase program, bringing our total authorization to $1.759 billion, including amounts remaining under the previous authorization. Since 2019, we have repurchased approximately 36% of the company's outstanding shares and paid approximately $340 million in dividends to shareholders.

During the first nine months of 2025, we spent $734 million on capital expenditures close to 30% of which related to the new hospital in Florida, and a replacement facility in California. During the nine months ended September 32025, we also acquired $3 $109 million of our own shares.

At a total cost of approximately $566 million, including 131 5 million shares purchased during the third quarter of 2025.

Today, our board of directors authorized a new $1 $5 billion increase to our stock repurchase program, bringing our total authorization to $1 75, 9 billion, including amounts remaining under the previous authorization.

Since 2019, we have repurchased approximately 36% of the company's outstanding shares and paid approximately $340 million in dividends to shareholders.

In the absence of compelling acquisition opportunities over the near term, we expect to continue to prioritize our excess free cash flow per share buyback and dividends.

Steve G. Filton: In the absence of compelling acquisition opportunities over the near term, we expect to continue to prioritize our excess free cash flow for share buyback and dividends. As of September 30, 2025, we had approximately $965 million of aggregate available borrowing capacity pursuant to our $1.3 billion revolving credit facility. Turning to an update on Medicaid supplemental payment programs, our current projected 2025 full-year net benefit from various previously approved programs is $1.3 billion. This figure includes amounts recorded during the third quarter for the previously mentioned District of Columbia program and additional amounts related to this program that are expected to be recorded in the fourth quarter of 2025, but it does not include programs pending CMS approval. As we discussed during our second quarter 2025 earnings call, the OB3 legislation includes several significant changes in the Medicaid program, including changes to state-directed payment programs and provider taxes.

As of September 32025, we had approximately $965 million of aggregate available borrowing capacity pursuant to our one 3 billion revolving credit facility.

Turning to an update on Medicaid supplemental payment programs. Our current projected 2025 full year net benefit from various previously approved programs is one $3 billion.

This figure includes amounts recorded during the third quarter for the previously mentioned district of Columbia program and additional amounts related to this program that are expected to be recorded in the fourth quarter of 2025, but it does not include programs pending CMS approval.

As we discussed during our second quarter 2025 earnings call. The Ob <unk> III legislation includes several significant.

Changes in the Medicaid program, including changes to state directed payment programs and provider taxes.

At this time, assuming no changes to our Medicaid revenues or other changes to related state or federal programs, we estimate that commencing with the 2028 fiscal years, our aggregate net benefit will be reduced on an annually increasing in relatively pro rata basis by approximately 420 to 470 million.

Steve G. Filton: At this time, assuming no changes to our Medicaid revenues or other changes to related state or federal programs, we estimate that commencing with the 2028 fiscal years, our aggregate net benefit will be reduced on an annually increasing and relatively pro rata basis by approximately $420 to $470 million in 2032. This cumulative impact range has been increased to reflect recent supplemental program approvals. Given various uncertainties, including the evolving state-by-state interpretations and computations related to this legislation, our forecasted estimates are subject to change, potentially by material amounts. Operator, that concludes our prepared remarks, and we're pleased to answer questions at this time.

In 2032.

This cumulative impact range has been increased to reflect recent supplemental program approvals.

Given various uncertainties, including the evolving state by state interpretations and computations related to this legislation are forecasted.

These estimates are subject to change potentially by a material amount.

Operator that concludes our prepared remarks, and we're pleased to answer questions at this time.

Thank you we will now open the call to questions and answers.

To allow as many people as possible to submit a question. Please limit yourself to one question and one follow up.

Operator: Thank you. We will now open the call to questions and answers. To allow as many people as possible to submit a question, please limit yourself to one question and one follow-up. As a reminder, to ask a question, please press star 11 on your telephone. Our first question comes from Justin Lake with Wolfe Research.

As a reminder to ask a question. Please press star one one on your telephone.

Our first question comes from Justin Lake with Wolfe Research.

Thanks, Good morning, Steve appreciate all the all the details I was hoping you could give us an update in terms of.

[Analyst 1]: Thanks. Good morning, Steve. Appreciate all the details. I was hoping you could give us an update in terms of, I know there's a couple of states pending approval, Florida and I believe Nevada. Maybe you can give us some color on the potential DPP there that could benefit the company if those are approved. Maybe give us a quick rundown on or an update on where the exchange contribution looks like. What's the kind of run rate on the exchange volume and revenue year to date? Any updated thoughts on if those subsidies expire, what you think that estimate is. Thanks.

So theres a couple of states pending.

Florida, I believe Nevada, if you can give us some color on.

But potential.

See there that could benefit the company. If those are approved and then maybe you can give us a quick rundown on.

For an update on where the experience contribution looks like what's the what's the kind of run rate on the exchange volume.

Year to date.

Any updated thoughts on if those subsidies expire what do you think that estimate is.

Okay.

Sure Justin so as far as any new potential Medicaid supplemental.

Benefits, we've been disclosing for I think several quarters that there is approval of a pending plan or expansion of appending plan in Florida that we estimate would result in about a $47 million of annual benefit to us.

Steve G. Filton: Sure, Justin. As far as any new potential Medicaid supplemental benefits, we've been disclosing for several quarters that there's an approval of a pending plan or expansion of a pending plan in Florida that we estimate would result in about a $47 million annual benefit to us. As I said, that program remains pending CMS approval. The state of Florida seems confident that it will be forthcoming at some point. Additionally, we learned this quarter, and we'll include this in our to-be-filed 10-Q for the quarter, that there's another maybe $30 million approximately of Nevada DPP increase, again, pending CMS approval. On a combined basis, these two states would represent somewhere in the $75 to $80 million range. To the best of our knowledge, there are no other material programs or approvals pending.

As I said that that program remains pending CMS approval of the state of Florida seems confident that it will be forthcoming at some point.

<unk> I think we learned this quarter and we will include this.

To be filed 10-Q for the quarter that there's another maybe $30 million approximately of Nevada, DPP increase again pending CMS approval. So on a combined basis. These two states would represent somewhere in the $75 million to $80 million range.

To the best of our knowledge there are no other material programs or approvals pending.

As far as your second question about exchange contribution.

The <unk>.

Percentage of our total adjusted admissions acute care admissions at our exchange patients is in the six to six 5% range.

Steve G. Filton: As far as your second question about exchange contribution, the percentage of our total adjusted acute care admissions that are exchange patients is in the 6 to 6.5% range. That number has been ticking up. Most of those patients are in two states, in Texas and Florida. All the public companies have been reporting increases. We have a smaller footprint in those states than some of our peers, but our numbers have been ticking up as well. We have previously given an estimate, assuming that the exchange subsidies don't get extended, of a $50 to $100 million negative impact on us annually. Given the increase in exchange volumes, we're probably trending towards the higher end of that range. As far as any prediction about how the exchange subsidy issue is to be resolved, we don't have any particularly pressing insight into that.

That number has been ticking up.

Most of those patients are in two states in Texas and Florida.

And so I think all the public companies have been reporting increases.

Have a smaller footprint in those states and some of our peers, but our numbers have been picking up as well we have previously given an estimate assuming that the exchange.

Subsidies don't get extended.

$50 million to $100 million negative impact on us annually.

Given the increase in exchange volumes were probably trending towards the higher end of that range.

As far as I think sort of any predictions about how the exchange subsidy issue has to be resolved I don't think we have any particularly.

Pressing any insight into that and we're watching how this develops and congress along with everybody else.

Steve G. Filton: We're watching how this develops in Congress along with everybody else.

Thanks.

Our next question comes from Jason <unk> with Guggenheim.

[Analyst 1]: Thanks.

Great. Thanks. Good morning, just wanted to check in on 25 guidance you increased the midpoint by a little over $90 million can you just walk through the bridge to the updated guidance how that split between the five quarters of <unk>.

Operator: Our next question comes from Jason Cazorla with Guggenheim.

[Analyst 2]: Great. Thanks. Good morning. Just wanted to check in on 2025 guidance. You increased the midpoint by a little over $90 million. Can you just walk through the bridge to the updated guidance, how that's split between the five quarters of BC DPP, the malpractice reserve increase, the legal settlement in the quarter, and outperformance? You know you have about a $50 million guidance range at the low and high end. Not significant range by any means, but just thoughts on what you need to see to trend towards the high end or the low end of guidance at this point. Thanks.

<unk> DPP.

Malpractice reserve increase the legal settlement in the quarter and outperformance and then you have about a $50 million guidance range at the low and high end not significant range by any means but just thoughts on what you need to see to trend towards the high end or the low end of guidance at this point. Thanks.

Okay.

Yes.

Jason I think you largely.

Captured the components.

<unk>.

Uh, great thanks. Good morning. Uh, just wanted to check in on 25 guidy million. Can you just, uh, walk through the bridge to the updated guidance? How that's split between the 5 quarter, uh, BC DPP, the the malpractice reserving increase the legal settlement in the quarter and outperformance? And then, you know, you have about a 50 million dollar guidance range, uh, at the low and high end. Uh, not significant range by any means, but just thoughts on what you need to see to Trend towards the high end or the low end of guidance at this point. Thanks.

The guidance increase as you said at the midpoint, it's in that 90% to $95 million range. That's made up of $140 million of increased ETP. The biggest chunk of that of course is the DC number that's $90 million that we recorded in the third quarter and another $25 million that we expect to record in.

Steve G. Filton: Yeah. Jason, I think you largely captured the components of the guidance increase. As you said, at the midpoint, it's in that $90 to $95 million range. That's made up of $140 million of increased DPP. The biggest chunk of that, of course, is the DC number. That's $90 million that we recorded in the third quarter and another $25 million that we expect to record in Q4. That's $115 million of new DPP. There's another $25 million of miscellaneous increases across a variety of states, none of which are singularly material to get us to the $140 million increase in DPP. We deduct from that the $35 million malpractice increase that we described in our press release and another $18 million in a legal settlement that we described in an 8K that we filed a few weeks ago.

Q4, so that is $115 million of new DPP, there's another $25 million miscellaneous increases across a variety of space, none of which are singularly materials to get us to the 140 increase in DPP.

And then we deduct from that the $35 million malpractice increase that we described in our press release and another $18 million and a legal settlement that we described in.

Yeah, so I I Jason, I think you largely um captured the components of the um the guidance increase as you said at the midpoint, it's in that 90 to 95 million range that's made up of 140 million dollars of increased DPP. The biggest chunk of that, of course, is the DC number that's 90 million dollars that we recorded in the third quarter and another 25 million that we expect to record in Q4. So that's 115 million of of new DPP. There's another 25 million of miscellaneous increases across a variety of States, none of, which are singularly materials.

To get us to the 140 increase in DPP.

In an 8-K that we filed a few weeks ago and that gets you to that sort of low to mid nineties number.

Actively meeting that we're assuming from a core business perspective that the trends that.

Steve G. Filton: That gets you to that sort of low to mid-$90 million number, effectively meaning that we're assuming from a core business perspective that the trends that we expected when we increased guidance last quarter will continue. When you talk about what it takes to get us to maybe the higher end of that, we're talking about, I think, the two businesses running same-store revenue increases in the 5% to 7% range. What gets us to the higher end is if we land at the higher end of that range either through volumes or pricing. I think all that is pretty consistent with what we've said previously.

And that we expected when we increased guidance last quarter will continue when you talk about sort of what are what it takes to get us to maybe the higher end of that we're talking about I think the two businesses running.

Same store revenue increases in the 5% to 7% range and what gets us to the higher end is if we land at the higher end of that range either through volumes or pricing.

So I think all of that is pretty consistent with what we've said previously.

Okay. Thanks, maybe just as a follow up just checking in on managed care activity in state budgets in relation to your behavioral health business.

And then, uh, we deduct from that the 35 million malpractice increase that we described in our press release and another 18 million in illegal settlement that we described, uh, in an 8K that we filed a few weeks ago. And that gets you to that, sort of, you know, low to mid 90s number, um, effectively. Meaning that we're assuming from a Core Business perspective that the trends, uh, that we expected. When we increase guidance, last quarter will continue. You know, when you talk about sort of what are, what it takes to get us to uh maybe the higher end of that. You know we're talking and uh you know about I think the 2 businesses running um you know, same store Revenue increases in the 5 to 7% range. And you know what gets us to the higher end is if we land at the higher end of that range either through, you know, volumes or pricing. Um,

[Analyst 2]: Okay. Thanks. Maybe just as a follow-up, just checking in on managed care activity and state budgets in relation to your behavioral health business. I mean, it looks like behavioral health length of stay continues to hold on. Pricing remains favorable. I guess, are you seeing any different behavior as it relates to managed care at this juncture for behavioral? We're hearing multiple states enacting budgets that are reducing behavioral rates. Any thoughts on the state budget situation across your markets stepping into 2026 would be helpful. Thanks.

It looks like behavioral health length of stay continues the hold on pricing remains favorable I guess are you seeing any different behavior as it relates to managed care at this juncture for behavioral and we're hearing multiple states enacting budgets that are reducing behavioral rates just any thoughts on the state budget situation across your markets stepping into 2026, it would be helpful. Thanks.

Yes, I mean, I think we have consistently found that managed care players are aggressive in their utilization management and their management of length of stay and their management.

Okay, thanks. Maybe just as a follow-up, just checking in on Managed Care, activity, and state budgets in relation to your Behavioral Health business. It looks like Behavioral Health length of stay continues to hold on, and pricing remains favorable. I guess, are you seeing any different behavior as it relates to managed care at this juncture for Behavioral? We are hearing multiple States acting budgets that are reducing behavioral rates. Just any thoughts on the state budget situation across your market stepping into 2026 would be helpful. Thanks.

Steve G. Filton: Yeah. I think we have consistently found that managed care players are aggressive in their utilization management and in their management of length of stay and their management of where patients are treated, meaning in inpatient or outpatient settings. I don't know that that's changed materially. As you point out, our length of stay has remained fairly constant. A lot of that is, I think, a function of our aggressive behavior in terms of documenting the medical needs of patients, etc., which we are very much focused on. We, again, have not seen significant changes in payer behavior to date. We understand that payers are under or any number of payers are under some pressure, but we also understand that their subscribers do need behavioral treatment.

Their patients are treated meaning in inpatient or outpatient settings, I don't know that thats changed materially as you point out our length of stay has remained fairly constant.

Lot of that is.

I think.

A function of our aggressive behavior in terms of.

Yeah, I mean I think we have consistently found that, you know, Managed Care players are aggressive in their utilization Management in in their management of length of stay and their management of where patients are treated meaning in inpatient or outpatient settings. I don't know that that's changed materially as you point out, our length of stay has remained fairly constant. Um,

Documenting the medical needs of patients et cetera, which we are very much focused on.

And so we again have not seen I think significant changes in.

you know, a lot of that is, I think, you know, a function of our aggressive behavior in terms of um,

Payer behavior.

To date.

We understand that payers are under any number of payers are under some pressure, but we also understand that their subscribers do need behavioral treatment.

I think given our market presence given our clinical reputation et cetera, we continue to be I think a preferred provider for many of those managed care companies as far as state budgets are concerned the only state budget.

You know, you've documenting the the medical needs of patients Etc, which you know, we we are, you know, very much focused on. Um and so you know we we again have not seen I think significant changes in um, pay or Behavior Uh, to date. Um, you know, we we understand that that payers are under or any number of payers and under some pressure. But we also

Steve G. Filton: I think given our market presence, given our clinical reputation, etc., we continue to be a preferred provider for many of those managed care companies. As far as state budgets are concerned, the only state budget that I'm aware of where there have been actual Medicaid cuts is in North Carolina for behavioral. It's not a state that's material to us. I think about 2% of our behavioral beds are in the state of North Carolina. Other states have talked about state budget cuts for Medicaid, and we're sort of tracking that. At the moment, I'm not seeing anything that affects us in any sort of material way.

I'm aware of where they had been actual Medicaid cuts is in North Carolina for behavioral.

It's not a state that's material to us I think about 2% of our behavioral beds in the state of North Carolina. Other states have talked about Bud state budget cuts for Medicaid.

Understand that they are subscribers. Do need behavioral treatment uh and you know, I think given our Market presence given given our clinical reputation Etc. You know, we continue to be, I think a preferred provider for many of those managed care companies.

And we're sort of tracking that but at the moment.

I'm not seeing anything that affects us in any sort of material way.

Okay, great. Thank you very much.

Our next question comes from Whit Mayo with Leerink partners.

[Analyst 2]: Okay. Great. Thank you very much.

As far as state budgets are concerned. The only state budget, uh, that I'm aware of where there have been actual Medicaid Cuts is in North Carolina for Behavioral. Um, it's not a state that's material to us. I think about 2% of our behavioral beds are in the state of North Carolina. Other states have talked about budget state budget cuts for Medicaid. Um, and we're sort of tracking that, but at the moment, um, you know, I'm not seeing anything, uh, that affects us in any sort of material way.

Hey, Thanks, I'm, just curious how west Henderson West Henderson is performing now and any cannibalization of that on overall volumes within the quarter and then my second question is just on Cedar Hills.

Okay, great. Thank you very much.

Operator: Our next question comes from Whit Mayo with Leerink Partners.

[Analyst 1]: Hey, thanks. I'm just curious how West Henderson is performing now and any cannibalization of that on overall volumes within the quarter. My second question is just on Cedar Hill Regional Medical Center, whether or not you think it can offset the headwind. If it was, let's say, a $50 million drag with startup losses this year, that $50 million will reverse itself. Any thoughts on maybe the growth next year? Thanks.

Our next question comes from Whit Mayo with Ling partners.

Are there or not you think you can offset the headwinds since it was let's say a $50 million drag with startup losses. This year.

50 will reverse itself, but any thoughts on maybe the growth next year. Thanks.

So I think as Mark commented in his remarks West Henderson has been performing well, it's had positive EBITDA really ever since it opened which is really quite remarkable for a start up hospital.

Uh hey thanks. I'm just curious how West Henderson West Henderson is performing now in any cannibalization of that on overall volumes within the quarter. And then my second question is just on Cedar Hills um whether or not you think it can offset the headwinds. So if it was let's say a $50 million drag with startup losses this year that 50 will reverse itself. But any thoughts on maybe the growth next year? Thanks.

Steve G. Filton: Yeah. So you know I think as Marc commented in his remarks, West Henderson's been performing well. It's had positive EBITDA really ever since it opened, which is really quite remarkable for a startup hospital. It does, I think, affect our same-store numbers and particularly our same-store volumes. We've talked in the past that there's probably, and again, this is difficult to quantify precisely, but we would estimate maybe a 50 or 60 basis point impact on our same-store adjusted admissions. Meaning, without a West Henderson in the mix, our same-store adjusted admissions might be 50 or 60 basis points higher because of the cannibalization because some of their admissions or adjusted admissions are coming from our existing hospitals in the market. West Henderson is doing well, and you know we would expect we'll continue to improve into 2026.

It does I think effect.

Our same store numbers and particularly our same store volumes that we've talked in the past that there.

There is probably and again this is difficult to quantify precisely, but we would estimate maybe 50 or 60 basis point impact on our same store adjusted admissions, meaning without Henderson West Henderson in the mix our same store adjusted admissions might be 50, or 60 basis points higher because of the.

Cannibalization, because some of their admissions and adjusted admissions are coming from our existing hospitals in the market.

The west vendors and they're doing well and we would expect we will continue to improve into 2026 Cedar Hill.

<unk>.

As we identified last quarter lost $25 million in the second quarter, we projected they would lose $25 million in the back half of the year. They did lose that $25 million in the third quarter and I think as Mark pointed out we would expect them to breakeven in Q4 and.

Steve G. Filton: Cedar Hill, as we identified last quarter, lost $25 million in the second quarter. We projected they would lose $25 million in the back half of the year. They did lose that $25 million in the third quarter. I think, as Marc pointed out, we expect them to break even in Q4 and improve into next year. Obviously, the $50 million loss that we incurred in 2025 should be a tailwind going into 2026, assuming that worst case, Cedar Hill breaks even. We assume they'll do better than that, and they will be profitable in 2026. Although I think our general sense, and we'll give more detail on this when we give our guidance in February, is that any incremental improvement over break-even will largely help to offset any opening and startup losses from the Alan B. Miller Medical Center in Florida.

Yeah. So you know I think as Mark commented in his remarks, West Henderson's been performing. Well, it's, it's had positive ibida really. Ever since it opened, which is really quite remarkable for a startup hospital. Um, it does, I think affect, uh, our same store numbers and particularly our same store volumes we've talked in the past that, um, there's probably and, again, this is difficult to to quantify precisely but we would estimate maybe a 50, or 60 basis point impact, on our same storage adjusted admissions. Meaning, without Henderson a West Henderson in. The mix are same store, adjusted emissions, might be 50 or 60 basis points, higher because of the cannibalization, because some of their admissions or adjusted emissions are coming from our existing hospitals in the market. Um, but West Anderson is doing well. And, you know, we we would expect, we'll continue to improve into 2026 Cedar Hill, uh, as we identified last quarter, last, 25 million.

And improve into next year, so obviously the $50 million.

Loss that we incurred in 2025 should.

It should be a tailwind going into 2026, assuming that worst case Cedar Hill breaks, even we assume they will do better than that.

And they will be profitable in 2026, although I think our general sense and we will give more detail on this when we give our guidance in February is that any incremental improvement over breakeven will largely helped to offset any <unk>.

Dollars in the second quarter we projected they would lose 25 million in the back half of the year. They they did lose that 25 million in the third quarter and I think is as Mark pointed out, we expect them to break even in Q4 um, and improve into next year. So, um, obviously the 50 million dollar um loss that we incurred in 2025 uh should be a Tailwind going into, you know, 2026, assuming that we're

Opening and start up losses from the ABN Medical Center in Florida.

Okay. Thanks.

Our next question comes from Ben Hendrix, with RBC capital markets.

[Analyst 2]: Okay. Thanks.

Case Cedar Hill breaks. Even we assume they'll do better than that. Um, and they will be, you know, profitable in 2026. Although I think our general sense and we'll give more detail on this. When we give our guidance, uh, in February is that any incremental improvement over break even will largely helped to offset any um opening and startup losses from the ABN Medical Center in Florida.

Great. Thank you very much I appreciate your commentary on your outpatient surgical initiatives I was wondering if you could give us a little bit more color on what youre seeing in terms of surgical trends, both inpatient and outpatient.

Okay, thanks.

Operator: Our next question comes from Ben Hendricks with RBC Capital Markets.

Marc D. Miller: Great. Thank you very much. Appreciate your commentary on your outpatient surgical initiatives. I was wondering if you could give us a little bit more color on what you're seeing in terms of surgical trends, both inpatient and outpatient, and what case mix is looking like in the quarter and just how that's contributing overall to the volume growth for the acute care hospital segment. Thanks.

our next question comes from Ben Hendricks, with RBC Capital markets,

And what case mix is looking like in the quarter and just how that's contributing overall too to the volume growth.

You care Hospital segment.

Yes, so I think in our prepared remarks, we made the comment that outpatient.

Surgical trends increased slightly over the prior year in the quarter and that actually wasn't improvement over the first half of the year. When I think they were actually down. So we're encouraged by that and I think.

Steve G. Filton: I think in our prepared remarks, we made the comment that outpatient surgical trends increased slightly over the prior year in the quarter, and that actually was an improvement over the first half of the year when I think they were actually down. We were encouraged by that. I think we've noted that some of the, I'll call it surgical softness or softness in surgical volumes, have been difficult comparisons with prior years where we were seeing some benefit from the catch-up of deferred and postponed or procedures that had been deferred and postponed during COVID. I think we're starting to anniversary that and kind of get that behind us. It feels to us like surgical volumes are returning to sort of more normal levels. I'm sorry, was there a second part to your question?

Take your commentary on your outpatient uh surgical initiative. So I was wondering if you could give us a little bit more color on what you're seeing. In terms of surgical Trends, both inpatient and outpatient. Uh, and what case mix is looking like in the quarter is just how that's contributing overall to, uh, to the volume growth of the, for the, uh, care hospital segment. Thank you.

We've noted that I think some of the I'll call it surgical softness or softness in surgical volumes I think had been difficult comparisons with prior year as where we were seeing some benefit from the.

The catch up of deferred and postpone procedures that had been deferred and postponed during COVID-19 I think we're starting to anniversary that and you kind of get to get behind us and it feels to us like surgical volumes are returning to sort of more normal levels.

And then I'm sorry was there a second part of your question Okay.

Okay to make that case mix was up slightly in the quarter not not a big driver of improvement maybe 30 basis points.

Yep. So I think in our prepared remarks we made the comment that outpatient uh surgical Trends increased slightly over the prior year in the quarter and that actually was an improvement over uh the first half of the year when I think they were actually down. Uh so we encouraged by that and I think um, you know, we've noted that I think uh some of the call and surgical softness or softness and surgical volumes, I think have been difficult comparisons with prior year is where we were seeing some benefit from uh, the catch up of deferred and postpone or procedures that have been deferred and postponed during Co. I think we're, we're starting to anniversary that and and you kind of get get that behind us and it feels to us like surgical volumes are returning to sort of more normal levels.

um,

Marc D. Miller: Case mix.

Steve G. Filton: Case mix was up slightly in the quarter, not a big driver of improvement, maybe 30 basis points.

Thank you.

Our next question comes from Raj Kumar with Stephens.

and then I'm sorry. Was there a second part to your question? Excuse me. Okay, so exact case mix was was up slightly in the quarter. Not not a big driver of improvement, maybe, 30 basis points.

Okay.

Marc D. Miller: Thank you.

Hi, just on the <unk> side, maybe just trying to kind of understand the overall supply demand dynamic that you've seen kind of like S. WB growth of high single digits on a same store basis.

Operator: Our next question comes from Raj Kumar with Stevens.

Thank you.

[Analyst 2]: Hi. Just on the BA side, maybe just trying to kind of understand the overall supply-demand dynamic. You've seen kind of like SWB growth of high single digits on a same-store basis, where volumes have kind of been slightly negative to slightly positive throughout the year. Maybe just trying to understand what the dynamics are in terms of you're kind of increasing staffing and we should expect kind of better volume growth in subsequent quarters, or is this more just in order to maintain capacity that you're kind of pushing through these SWB trends?

Our next question comes from Raj, Kumar with Stevens.

While volumes have kind of been slightly negative to slightly positive throughout the year. So maybe just trying to understand what the dynamics are in terms of you're kind of increasing staffing and we should expect kind of better.

Volume growth kind of in subsequent quarters or is this kind of more just.

In order to maintain capacity that you're kind of pushing through these <unk>.

Right.

Yes, Raj I mean, I think that we've talked.

At some length in previous quarters.

If there are two.

Steve G. Filton: Yeah, Raj. I mean, I think that we talked at some length in previous quarters, if there are two broad sort of overarching dynamics that I think have muted behavioral volumes. One, as I think we mentioned in our prepared remarks, has been a labor scarcity issue. It's not pervasive. I think it exists in maybe a quarter to a third of our hospitals where we struggle to fill all of our vacancies, whether that's nurses, whether that's therapists, whether that's non-degree professionals, the people that we describe as mental health technicians. I do think that in those specific facilities, volumes are often muted. I think, as we said in our prepared remarks, our hiring numbers are increasing incrementally, albeit, and I think you see a little bit of that in the salary and wage data that you're referring to.

Hi. Uh, just, uh, on the B8 side, maybe just trying to kind of understand the overall Supply demand Dynamic. Uh, you've seen kind of like, swb growth of high single digits on the same store basis where, you know, while volumes of kind of been slightly negative to slightly positive throughout the years. So maybe just trying to understand, you know what the D Dynamics are in terms of, you know, your kind of increasing Staffing and we should expect kind of better, you know, volume growth kind of in subsequent quarters or it's just kind of more just you know, in order to maintain capacity that you kind of pushing through these swb, uh, trends

Broad.

Sort of overarching dynamics that I think had muted behavioral volumes.

One is I think we mentioned in our prepared remarks, there has been a labor scarcity issue, it's not pervasive I think it exists and maybe a quarter to a third of our hospitals, where we struggle to fill all of our vacancies, whether that's nurses, whether that's therapies, whether thats non degreed professionals. The people that we described as a mental health tech.

Yeah, Raj I mean I think that we've talked uh at some length in previous quarters. Um if there are 2 um Broad

Nations.

But I do think that in those specific facilities.

Volumes are often muted I think as we said in our prepared remarks, our hiring numbers are increasing.

Incrementally, albeit.

And I think you see a little bit of that in the salary and wage data that youre, referring to I think the other piece of this is what we're finding and I think.

We read through what a number of the managed care companies say is that behavioral utilization broadly and nationally is up across the board a lot of that seems to be on the outpatient side and I think that's being delivered in a very I'll describe it as sort of fragmented way, meaning those.

Steve G. Filton: I think the other piece of this is what we're finding, and I think, you know, we read through what a number of the managed care companies say, is that behavioral utilization broadly and nationally is up across the board. A lot of that seems to be on the outpatient side, and I think that's being delivered in a very, I'll describe it as sort of fragmented way, meaning that outpatient care is being delivered in all sorts of settings, including hospital emergency rooms and urgent care centers and retail pharmacy clinics and mom-and-pop operations. We think we can do a better job of capturing more of that outpatient activity through, frankly, better focus as well as, you know, new and additional dedicated outpatient facilities. Obviously, that focus and those facilities require additional staff, and we've been staffing up for that.

That outpatient care is being delivered and all sorts of settings, including hospital emergency rooms, and urgent care centers, and retail pharmacy clinics and mom and pop operations.

Sort of overarching dynamics that I think it muted behavioral volumes. Um, 1 is I think we mentioned in our prepared. Remarks has been a labor scarcity issue, it's not pervasive, I think it exists and maybe a quarter to a third of our hospitals, where um, we struggle to fill all of our vacancies, whether that's nurses whether that's therapists, whether that's a non-degree professionals, the people that we described as mental health technicians. Um, but I do think that in those specific facilities, um, volumes are often muted. I think, as we said in our prepared remarks, our numbers are increasing in incrementally, albeit, um, and I think you see a little bit of that in this hour and wage data that you're referring to, I think the other piece of this is what we're finding. And I think you know we read through what a number of the managed care companies say is that behavioral utilization. Broadly and nationally is up across the board. A lot of that team.

We think we can do a better job of capturing more of that outpatient activity.

Through frankly, better focus as well as.

New and additional dedicated outpatient facilities, obviously that focus on those facilities require additional staff and we've been staffing up for that so to some degree I think the increase that you were alluding to in salaries and wages as something thats preparing us to be able to treat them.

Seems to be on the outpatient side and I think that's being delivered in a very, I'll describe in this sort of fragmented way, meaning those, um, that Outpatient Care is being delivered in all sorts of settings, including hospital, emergency rooms and Urgent Care Centers and Retail Pharmacy. Clinics, and Mom and Pop operations. Um, we think we can do a better job of of capturing more of that outpatient activity um through frankly better focus as well as you know, new and additional dedicated.

Steve G. Filton: To some degree, I think the increase that you're alluding to in salaries and wages is something that's preparing us to be able to treat and absorb more patient volume.

And absorbed more patient volume.

Great and maybe as a quick follow up you had a step up in kind of acquisition spend in the quarter and I'm, assuming that's kind of more on the outpatient behavioral acceleration that you've kind of spoken to so maybe.

[Analyst 2]: Great. Maybe as a quick follow-up, you had a step up in kind of acquisition spend in the quarter, and I'm assuming that's kind of more on the outpatient behavioral acceleration that you've kind of spoken to. What can we kind of expect forward from a capital deployment on M&A on that front?

Ated outpatient facilities, obviously that focus. And those facilities require additional staff, and we've been Staffing up for that. So, to some degree, I think, you know, the increase that you're alluding to in salaries and wages is something that's preparing us to be able to, uh, treat and, and, and absorb more patient volume.

What can we kind of expect for from a capital deployment on M&A on that front.

Yes.

Yes.

Acquisition spending that you referred to is actually mostly it's about 35% or $40 million in.

Steve G. Filton: Yeah. The acquisition spending that you referred to is actually mostly, it's about $35 or $40 million in the UK in the quarter. That's mostly, honestly, on the inpatient side. I think we've talked about the fact on the outpatient side in the U.S., creating a greater presence in the outpatient space really doesn't require a tremendous amount of new capital. It's probably, you know, $1 million to $2 million, on average, to create one of these step-in outpatient clinics. Again, I think the bigger challenge in those places is finding the appropriate number of therapists more than it is a significant capital spend.

Great. And maybe as a quick follow-up, uh, you know you had a step up in kind of acquisition spending the quarter and I I'm assuming that's kind of more on the outpatient behavioral acceleration that you've kind of spoken to. So maybe um you know, what could we kind of expect forward from a capital deployment on on m&a on that front?

In the UK in the quarter and Thats, mostly honestly on the inpatient side I think we've talked about the fact on the outpatient side in the U S.

yeah, so so the the um,

Creating a greater presence in.

In the outpatient space really doesn't require a tremendous amount of new capital.

It's probably $1 million or $2 million on average to.

Craig one of these step in outpatient clinics.

So again I think the bigger challenge in those places is finding the appropriate number of therapist more than it is a significant capital spend.

Thank you.

Our next question comes from AJ Rice with UBS.

Yeah.

Um, in the outpatient space really doesn't require a tremendous amount of new capital. Uh, it's probably, you know, a million or 2 million dollars on average to uh create 1 of these step in outpatient clinics. Uh so uh again I think the bigger challenge in those places is finding the appropriate uh number of therapists more than it is. Um you know, a significant Capital spend

[Analyst 2]: Thank you.

Hi, everybody, maybe a couple of quick things here.

Operator: Our next question comes from AJ Rice with UBS.

Thank you.

I think in your updated guidance it was about $25 million.

[Analyst 1]: Hi, everybody. Maybe a couple of quick things here. I think in your updated guidance, there's about $25 million of, sort of miscellaneous DPP payments, and it seemed like in the back half of the year that are incremental. Is that more in the third quarter, or was that something that'll be booked in the fourth quarter? On the litigation, settlement in Nevada, was that booked in the third quarter, or is that going to be booked in the fourth quarter?

Our next question comes from AJ rice with UBS

Miscellaneous DPP payments.

And.

Seem like in the back half of the year that are incremental is that more in the third quarter or was that something you will be booked in the fourth quarter and on the litigation.

Um, hi everybody. Maybe a couple quick things here. Um,

Settlement in Nevada was that booked in the third quarter or is that going to be booked in the fourth quarter.

Yes, that's what the litigation settlement was recorded in the third quarter.

And it's reflected in our non same store acute results.

Steve G. Filton: Yeah. The litigation settlement was recorded in the third quarter, and it's reflected in our non-same-store acute results. The additional DPP, I think, is spread pretty rapidly between the third and fourth quarters.

I think, in your updated guidance, there's about $25 million of, uh, sort of miscellaneous DPP payments. It seemed like in the back half of the year that our incremental is that more in the third quarter. Was that something, you know, to be booked in the fourth quarter? And on the litigation settlement in Nevada, was that booked in the third quarter or is that going to be booked in the fourth quarter?

Okay.

The additional <unk> I think is spread pretty ratably between the third and fourth quarters.

Okay.

Yeah, so the litigation settlement was recorded in the third quarter um and it's reflected in our non-s, same store acute results.

I know you.

Pricing on both business is actually even if you ex out the DPP.

[Analyst 1]: Okay. I know your pricing on both businesses, actually, even if you X out the DPP payments, was pretty strong by historic standards. Anything to call out there? Is that a sustainable level of year-to-year pricing gains? Any thoughts on that?

Okay, the, the additional DDP I think is spread pretty rapidly between the third and fourth quarters.

Payments was.

Pretty strong by historic standards anything to call out there is is that a sustainable level.

Okay. Um, I know you, um, your pricing on both businesses. Actually even if you exit out the DPP um,

Year pricing gains any thoughts on that.

So taking it segment by segment I think on the acute side, we said that.

Our revenue per adjusted admission was close to 10% increase.

Uh, payments uh, was pretty strong by historic standards anything to call out there. Um, any um, is, is that, uh, a sustainable level of of year-to-year pricing gains, any thoughts on that?

Steve G. Filton: Taking it segment by segment, I think on the acute side, we said that our revenue per adjusted admission was close to a 10% increase. Half of that, I think, is DPP related, which means 5% is from core results. That's on the high side for sure. I think we think that sustainable acute care pricing is more in the 3%, maybe 3 plus % range. I think the excess in the quarter is a result of some revenue cycle initiatives that we've undertaken to ensure that our billing is clean and complete, that our denial appeals are as appropriate and aggressive as they should be, and dispute resolutions with a number of payers, all that sort of stuff. There are a few small one-time items in terms of an opioid settlement, and we've disclosed our accountable care organization profits.

Half of that I think is DPT related which means 5% is sort of core results.

That's on the high side for sure I think we think that.

Sustainable acute care pricing is more in the three <unk> three plus percent range.

I think the excess in the quarter as a result of.

Some revenue cycle initiatives.

We've undertaken.

To ensure that.

Our billing is clean and complete that are.

Denial appeals are as appropriate and aggressive as they should be.

Dispute resolutions with a number of payers all that sort of stack theirs.

A few small one time items in terms of an opioid settlement in.

We've disclosed our accountable care organization.

Yeah.

Profits.

Uh, so you know, taking it, you know, segment by segment. I think on the acute side, we said that um our Revenue per adjusted admission was was close to 10% increase. Um, half of that I think is DPT related uh which means you know 5% is is sort of from core results. Um and that's on the high side for sure. I think we think that um sustainable acute care pricing is more in the 3D, maybe, you know, 3 plus percent range. Um, I think the excess in the quarter is a result of um, some revenue cycle initiatives, uh, that we've undertaken, um, to ensure that uh, you know, our billing is clean and complete that are uh, you know, denial appeals or are as appropriate and aggressive as they should be. Um, you know, dispute resolutions with a number of payers, all all that sort of stuff. There's a few small 1-time items in terms of

<unk>.

But yes, I think I think our general sense is that acute care pricing in the 3% range is sort of a sustainable level on the behavioral side.

Steve G. Filton: I think our general sense is that acute care pricing in the 3% range is that sustainable level. On the behavioral side, we've been in the 4% to 5% range when you adjust out the DPP impacts. We've been running that, and probably in the quarter, we're again at the higher end of that range because of some of the things we've discussed already, including some pressure for Medicaid state reductions. I think we believe that the sustainable level of behavioral pricing is probably a notch below that, maybe 3.5% to 4.5%. It should continue to be quite positive and a good tailwind for that business.

An opioid settlement. And, um, we've disclosed our Accountable Care Organization. Um, you know, uh, profits, um,

We've been in the 4% to 5% range when you adjust out I think the DPP impacts.

We've been running that.

And probably in the quarter were again at the higher end of that range.

Because of I think some of the things we've discussed already some pressure for Medicaid reductions.

Reductions.

I think we believe that the sustainable level of behavioral pricing is probably a notch below that $83 five to four 5%.

But but still should continue to be quite positive and a good tailwind for that business.

But yeah, I think I think our general sense is that acute care pricing in the 3% range is sort of that sustainable level on the behavioral side. Uh, we've been in 4 to 5% range when you adjust out, you know, I think the DPP impacts, um, we've been running that um, and probably in the quarter. We're again at the higher end of that range. Um, because of, I think some of the things we've discussed already you know some pressure for Medicaid State um reductions. Um,

Okay. Thanks, a lot.

Our next question comes from Craig heading back with Morgan Stanley.

[Analyst 1]: Okay, thanks a lot.

You know, I think we believe that the sustainable level of Behavioral pricing, is probably a notch below that maybe 3 and a half to 4 and a half percent, um, but but, you know, still should continue to be quite positive and and a good Tailwind for that business.

Yes. Thank you on the behavioral side, you mentioned kind of a slight improvement in hiring can you just talk about more broadly how you think about capacity versus demand behavioral and kind of what that means for volume growth.

Okay, thanks a lot.

Operator: Our next question comes from Craig Heddenbach with Morgan Stanley.

[Analyst 2]: Yes, thank you. On the behavioral side, you mentioned kind of a slight improvement in hiring. Could you just talk about more broadly how you think about capacity versus demand in behavioral and kind of what that means for volume growth?

Our next question comes from Craig Hettenbach with Morgan Stanley.

Yes, I mean, we've said that I think we think a reasonable level of volume growth in the behavioral business in the intermediate and long term as sort of 2% to 3% adjusted patient day growth.

Yes, thank you on the behavioral side, you mentioned kind of the slight Improvement in the hiring you just talk about more broadly how you think about capacity versus demand and behavioral and and kind of what that means for volume growth.

Steve G. Filton: Yeah. I mean, we've said that, I think we think a reasonable level of volume growth in the behavioral business in the intermediate and long term is sort of 2 to 3% in adjusted patient day growth. We're still a little shy of that, and feel like there's a chance we can get there, exiting this year. If we don't, I think it's a reasonable target for next year, particularly at the lower end of that range. To get there, we need to continue to be able to fill our vacancies and reduce our turnover, things that have been happening, and I think we can improve. I think we can see that process has been somewhat slower than we expected, but we continue to make incremental progress and expect that we'll continue to make incremental progress.

We're still a little shy of that.

And feel like there's a chance we can get there exiting this year, but if we don't I think it's a reasonable target for next year, particularly at the lower end of that range.

To get there we need to continue to be able to fill our vacancies and reduce our turnover things that had been happening and I think we can improve.

But.

I think we can see that that process has been somewhat slower than we expected.

But we continue to make incremental progress and expect that we will continue to make incremental progress.

Got it and then just a follow up on capital allocation on the back of the increased buyback authorization.

Net leverage is that kind of a low end of history, just how youre thinking about that any target there and how that might influence capital deployment going forward.

[Analyst 2]: Got it. Just to follow up on capital allocation on the back of the increased buyback authorization, your net leverage, is that kind of the low end of history? Just how you're thinking about that and any targets there and how that might influence capital deployment going forward.

Yeah, I mean we've said that, um, I think we think a reasonable level of volume growth in the behavioral business in the intermediate and long term is sort of 2 to 3%, adjusted patient day growth. Um, we're still a little shy of that. Um, and feel like there's a chance we can get there, um, exiting this year, but if we don't, I think it's a reasonable Target for next year. Particularly at the lower end of that range, um, to get there, we need to continue to be able to fill our vacancies and reduce our turnover things that have been happening. Um, and I think we can improve, um, but uh, you know, I, I think we can see that that process has been somewhat slower than we expected. Um, but, but we continue to make incremental progress and expect that we'll continue to make incremental progress.

Yes, I mean, we've been an active acquirer of our shares for a number of years now we said in our prepared remarks that since 2019, we've repurchased more than a third of our shares.

It and then just to follow up on Capital, allocation, on the back of the, The increased buyback authorization, you know, your net Leverage is that kind of the low end of History. Just how you're thinking about that and and any Targets there and how that might influence?

Steve G. Filton: Yeah. I mean, we've been an active acquirer of our shares for a number of years now. We've said in our prepared remarks that since 2019, we've repurchased more than a third of our shares. We continue to view share repurchase, particularly at these current stock price levels, as a compelling use of our capital. We have seen an elevation in our activity in share repurchases, largely, I think, tied to the increase in our free cash flow. I think our expectation is that at a minimum, we'll continue to devote most, if not all, of our free cash flow to share repurchase absent any other compelling opportunities. You know, might we choose to increase that and lever up even more to do that? We might. It's something that we'll make that judgment as we move along.

We continue to view share repurchase, particularly at these current stock price levels are compelling.

Use of our capital.

We have seen an elevation in our activity in share repurchases largely I think tied to the increase in our free cash flow.

And I think our expectation is that at a minimum.

We'll continue to devote most if not all of our free cash flow to share repurchase absent any.

Any other compelling opportunities.

We choose to increase that and lever up.

Even more to do that we might.

It's something that will make that judgment as we move along.

Helpful. Thank you.

Our next question comes from Kevin Fischbeck with Bank of America.

[Analyst 2]: Helpful. Thank you.

Great. Thanks, maybe I'll ask the behavioral question again, maybe slightly differently I guess.

Operator: Our next question comes from Kevin Fischbach with Bank of America.

We've historically thought about this long term supply demand imbalance within behavioral.

Our next question comes from Kevin fishbach with Bank of America.

[Analyst 3]: Great. Thanks. Maybe I'll ask the behavioral question again, maybe slightly differently. I guess, like, you know, when we've historically thought about this long-term supply-demand imbalance within behavioral, you know, you at least had a competitor who is growing very quickly. Now it seems like they're slowing. They're closing down capacity in certain locations. Is there anything else that you're seeing more broadly? Because 2% to 3% isn't a Herculean number, I don't think, but it also was easier to underwrite when someone else was growing much faster. Is there a competitive dynamic that's going on that's maybe skewing things as part of the market that we don't see every day? Or anything else that you would kind of point to that might say that the broader market is, in fact, growing faster than we think, than we can see from the outside?

We set a competitor who is growing very quickly now it seems like.

They are slowing their closing down capacity in certain locations is there anything else that youre that youre seeing more broadly.

Because 2% to 3% of the herculean number I don't think but it also it's easier to underwrite when someone else is growing much faster or is there is there a competitive dynamic that's going on.

Maybe skewing things that part of the market that we don't see every day or anything else that you would kind of point to that might say that.

Yeah.

The broader market as it is in fact growing faster than we think then we can see from the outside.

Yeah. So Kevin the first thing is it's difficult for us I think to comment on.

Great thanks. Um maybe I'll I'll ask the behavioral question again. Maybe slightly differently, I guess. Like you know when we've historically thought about this long term Supply demand imbalance within behavioral. Um, you know, you at least had a competitor who was growing very quickly. Now, it seems like, um, they're slowing their closing down capacity in certain locations, is there anything else that you're that? You're seeing more broadly? Um, because 2 to 3% isn't their Herculean number, I don't think, but it also it's easier to underwrite when someone else is growing much faster. Is there is there a competitive Dynamic that's going on? That's um, you know, maybe skewing things as part of the market that we don't see every day or anything else that you would kind of, you know, point to that, that might say that.

You know.

Operating trends and our competitors, we just don't have access to enough detail to really have I think useful insight in that regard in terms of sort of what.

A broader Market is, is in fact, growing faster than we than we can see from the outside.

Steve G. Filton: Yeah. I mean, Kevin, the first thing is, you know, it's difficult for us, I think, to comment on operating trends in a competitor. We just don't have access to enough detail to really have, I think, useful insight in that regard. In terms of sort of what, and maybe I'm rephrasing a little bit, the question you asked in terms of what gives us confidence that there is increasing demand out there. I did reference before, I think, I'm not going to say every single managed care entity, but a great many of the managed care entities over the last several quarters in explaining an increase in their medical loss ratios and utilization have cited behavioral care as a significant chunk of that. We obviously don't have access to their data, but we do have access to claims data and things that we look at fairly carefully.

Maybe I'll rephrase it a little bit.

You asked in terms of what gives us confidence that there is increasing demand out there I did reference before I think.

Yeah, I mean so Kevin, the first thing is, you know, it's difficult for us I think to come in on, um, you know, operating Trends in a competitor that, you know, we just don't have access to enough detail to really have. I think useful Insight in that regard in terms of sort of what

I'm not going to say every single managed care entity, but a great. Many of the managed care entities over the last several quarters in explaining an increase in their medical loss ratios and utilization.

Cited behavioral care as.

A significant chunk of that and we obviously don't have access to their data, but we do have access to claims data and things.

You know, maybe I'm rephrasing a little bit. Uh the question you asked in terms of you know what gives us confidence that there is increasing demand out there. I did reference before I think um I'm not going to say every single Managed Care entity but a great, many of the Managed Care entities over the last several quarters in explaining an increase in their Medical Loss, uh, ratios and and utilization.

That we look at fairly carefully and what we see is increased behavioral utilization as I said earlier on the outpatient side in particular being delivered in a lot of I'm going to sort of call them non traditional.

Steve G. Filton: What we see is increased behavioral utilization, as I said earlier, on the outpatient side in particular, being delivered in a lot of, I'm going to sort of call them non-traditional, some not necessarily in dedicated behavioral facilities, but in emergency rooms and urgent care centers and nursing homes, etc. I think, given the clinical product that we can offer in our in and outpatient facilities, given our in-network position with many of these managed care companies, etc., we believe that there's an opportunity for us to capture an incremental amount of that. As you point out, it's not a Herculean effort. We're at 1.3% adjusted patient day growth in the quarter. We're sort of targeting 2%. That's obviously not a huge gap to fill.

So not necessarily in dedicated behavioral facilities, but in emergency rooms, and urgent care centers and nursing homes et cetera, and I think given.

The clinical product that we can offer in our in an outpatient facilities given our in network position with many of these managed care companies et cetera. We believe that there is an opportunity for us to capture and.

An incremental amount of that and as you pointed out it's not a herculean effort.

We're at one.

3% patient day, adjusted patient day growth in the quarter.

Targeting 2%, that's obviously not.

A huge gap to fill.

Let me just add also.

Steve made the point I mean, some of the limitations have been on staffing and as that stabilizes. We do think that there are significant opportunities that we can take advantage of we have been very responsible for the last few years in our growth and other competitors multiple competitors.

Have cited behavioral care as, you know a a a significant um chunk of that and and we obviously don't have access to their data but we do have access to claims data and things. Um, that we look at fairly carefully and what we see is, you know, increased behavioral utilization. Um, as I said earlier, on the outpatient side in particular, being delivered, in a lot of I'm going to sort of, call them non-traditional, you know, some some not necessarily and dedicated behavioral uh facilities, but in emergency rooms and Urgent Care Centers and nursing homes, Etc. And I think, you know, given, um, you know, the clinical product that we can offer in our in and outpatient facilities, uh, given our in network position with many of these managed care companies, Etc. We believe that there's an opportunity for us to capture. You know, an incremental amount of that. And if you point out, it's not a Herculean effort. You know, we're at 1 point for 3% patient day adjusted patient day growth in the quarter.

Marc D. Miller: Let me just add also, you know, Steve's made the point. I mean, some of the limitations have been on staffing. As that stabilizes, we do think that there are significant opportunities that we can take advantage of. We've been very responsible the last few years in our growth. Other competitors, multiple competitors, have been a little bit more aggressive, and now, you know, probably didn't make sense, some of the moves that they've made, and they're having to temper that and go backwards. We're on the same path that we've been on. We've been responsible in the way we've looked at it. We've held on some supply increases, so adding beds because of maybe a lack of staffing in some of those markets. As that stabilizes, we're going to have even more opportunities to grow going forward. We feel really good about where we are with that.

We're targeting 2%. That's obviously not. Um, you know, a huge gap to fill

<unk> been a little bit more aggressive.

And now probably didn't make sense some of the moves that they've made and they are having a temper that and go backwards. So we're on the same path that we've been on.

Been responsible in the way we've looked at it we've held on some supply increase and so adding beds because of.

Maybe a lack of staffing in some of those markets and as that stabilizes, we're going to have even more opportunities to grow going forward. So we feel really good about where we are with that.

Let me just add also, you know, Steve's made the point. I mean, some of the limitations have been on Staffing and as that stabilizes, we do think that there are significant opportunities um, that we can take advantage of, we've been very responsible the last few years in our growth and other competitors. Multiple competitors have been a little bit more aggressive, um, and now, you know, probably, uh, didn't make sense some of the moves that they've made, and they're having a temper that and go backwards. So, we're we're on the same path that we've been on. Uh, we've been responsible, in the way we've looked at it. We've held on some Supply increases. So, adding beds because of

Okay, and then maybe.

Just to follow up on the outpatient side of the equation because to your point you do have some advantages here as far as your in network.

[Analyst 3]: Okay. Maybe, just to follow up on the outpatient side of the equation, because you know, to your point, you do have some advantages here as far as your in-network, location, position and contracts and things like that. It sounds like you're not capitalizing or you haven't capitalized on it, historically. Can you talk a little bit about the barriers? Was it just lack of focus? Are there markets where you are doing it well and that are blueprints? How can we get confidence that you're going to get that if hiring has been the issue? Hiring has been kind of an issue for a while now. Why will you be able to kind of capture that volume going forward? Thanks.

Feel really good about where we are with that.

Okay.

Position and contracts and things like that but it sounds like youre not capitalizing or you haven't capitalized on it historically to talk a little about the barriers. So is it just lack of focus are there markets, where you are doing it well and that our blueprint how can we get confidence that youre going to get that if it's hiring has been the issue because hiring has been kind of an issue for <unk>.

For a while now why will you be able to kind of.

Capture that volume going forward. Thanks.

So what we've talked about I think in the last couple of quarters, Kevin as I think two things one.

Okay, then maybe um, just to then follow up on the outpatient side of the equation because, you know, to your point, you do have some advantages here as far as your in network, um, location, uh, position and contracts and things like that, but it sounds like you're not capitalizing or you haven't capitalized on it. Uh, historically, can you talk a little bit about the, the barriers is it just lack of focus are there, markets, where you are doing it? Well, and that are blueprints, I mean, how can we get confidence that you're going to get that? If if, if higher in the issue because hiring has been kind of an issue for for a while? Now, why will you be able to kind of

Is just an increased focus we have conceded that for most of our decades long history as a behavioral health provider. It has been a very inpatient centric business and while we have always had.

Steve G. Filton: What we've talked about, I think, in the last couple of quarters, Kevin, is, I think, two things. One is just an increased focus. We have conceded that for most of our decades-long history as a behavioral health provider, it has been a very inpatient-centric business. While we have always had, or in most of our markets, outpatient programs, they just haven't been a focus. What we've done, I think, that I think will wind up being quite effective is we reorganized such that throughout the organization now, there's really dedicated personnel or personnel that are dedicated to developing clinical programs, business development, referral sources, etc., that are dedicated outpatient-focused. I think that's going to make a big difference because historically, when you have inpatient-centric facilities that have sort of, on the side, outpatient programs, the outpatient programs just don't get the attention that they need.

Capture that volume going forward. Thanks.

In most of our markets outpatient.

Programs.

They just havent been a focus in.

So what we talked about I think in the last couple of quarters Kevin is I think 2 things you know 1 is just an increase Focus. Uh we have conceded that for most of our decades long history as a behavioral health provider, it has been a very impatient Centric business. And while we have always had

What we've done I think.

That I think will wind up being quite effective we've reorganized.

In most of our markets, you know, outpatient, um,

Such that throughout the organization now Theres really dedicated.

Personnel and personnel that are dedicated to developing.

Clinical programs and business development and referral sources et cetera that are dedicated outpatient focused and I think thats going to make a big difference because historically.

Programs. Um, they just haven't been a focus and and um what we've done, I think uh, you know that I think we'll wind up being quite effective is if if we reorganized um, such that throughout the organization. Now, there's really dedicated uh,

When you have inpatient centric facilities that have sort of.

On the side outpatient programs the outpatient programs just don't get the attention that they need so so I think focus.

<unk> organization personnel et cetera will be a big help in that regard the second piece, which we've talked about quite a bit in the last few calls is there's really two components. Our behavioral outpatient one is what we describe as step down business. These are folks who.

Steve G. Filton: I think focus, reorganization of personnel, etc., will be a big help in that regard. The second piece, which we've talked about quite a bit in the last few calls, is there's really two components of behavioral outpatient. One is what we describe as step-down business. These are folks who are generally discharged from our facilities, but who require follow-up care, either partial hospitalization or intensive outpatient therapy. We've always had that. Again, I think that that business will benefit from increased focus. Where we haven't really had much of a presence historically is what we describe as step-in business. These are patients who enter the behavioral system in an outpatient setting, and often are not comfortable doing that and entering the system on a hospital campus. They'd much prefer to get that care in a freestanding outpatient setting.

Personnel or Personnel that are dedicated to developing, um, clinical programs, uh, Business Development, referral sources, Etc. That are, you know, dedicated outpatient focused. And I think that's going to make a big difference. Because historically, um, when you have inpatient Centric facilities that have sort of, um, you know, on the side outpatient programs, the outpatient programs, just don't get the attention that they need. So, so I think Focus, um, reorganization Personnel, Etc. Will um be a big help in that regard. The second piece.

Our generally discharge from our facilities require follow up care, either partial hospitalization and intensive outpatient.

Therapy.

Which we've talked about uh you know quite a bit in the last few calls is there's really 2 components of Behavioral outpatient. 1 is what what we describe as step down business. These are folks who

We've always had that and again I think that that business will benefit from increased focus, but where we haven't really had much of a presence historically is what we describe as step in business. These are patients who enter the behavioral system in an outpatient setting.

And often are not comfortable doing that entering the system on a hospital campus.

Much prefer to get that carry in a freestanding outpatient setting and.

I think that that's where mark was referring in his prepared remarks to our thousand branches branded program.

Steve G. Filton: I think that's where Marc was referring in his prepared remarks to our Thousand Branches Wellness branded program. We brand it that way because we don't want to necessarily associate it with an existing inpatient hospital. Again, you said, and repeating what I had said, we have advantages. We already have existing referral relationships, referral source relationships. We have existing managed care contracts, etc., that should help us establish a footprint in that step-in freestanding business a lot faster than a competitor might be able to do.

We branded that way, because we don't want to necessarily associated with existing inpatient hospital.

But again.

Are generally discharged from our facilities but we require follow-up care either, partial hospitalization or intensive, outpatient, uh, therapy. Um, we've always had that and again, I think that that business will benefit from increased Focus, but where we haven't really had much of a presence historically. Is that what we describe as step in business? These are patients who enter the behavioral system in and out patient setting, uh, and often are not comfortable doing that and entering the system on a Hospital campus. Uh, they'd much prefer to get that care in a, in a free-standing outpatient setting and uh, you know, I think that's that's where Mark was referring in his, you know, prepared remarks to our thousand, branches branded,

You said in or repeating what I had said we have advantages we already have existing referral relationships referral source relationships, we have existing managed care contracts et cetera that should help us.

Establish a footprint in that step in freestanding business, a lot faster than our competitor might be able to do.

Great. Thanks.

Our next question comes from Matthew Gillmor with Keybanc.

[Analyst 3]: Great. Thanks.

Program. We we branded that way because we don't want to necessarily associate it with you know, an existing inpatient hospital. Um but again, you know, you said and and or repeating what I had said, you know, we have advantages we already have existing referral relationships, referral, source relationships, we have existing Managed Care contracts, Etc, that should help us, uh, you know, establish a footprint in that step in freestanding business a lot faster than a competitor might be able to do.

Hey, Thanks for the question I wanted to ask about the acute performance as you think about the volume trends in the expense trends that Steve discussed is there any geographic variation to call out to highlight particularly in some of your larger markets like Las Vegas.

Great, thanks.

Operator: Our next question comes from Matthew Gilmore with KeyBank.

[Analyst 2]: Hey, thanks for the question. I wanted to ask about the acute performance. As you think about the volume trends and the expense trends that Steve discussed, is there any geographic variation to call out, to highlight, particularly in some of your larger markets like Las Vegas?

our next question comes from Matthew Gilmour with KeyBank

Yeah.

Yes, I mean, obviously theres always some variation in performance.

We've been asked I think about that Vegas economy in the last couple of calls I think it's fair to say that our Vegas.

Hey, thanks for the question. Um, I want to ask about the acute performance as you think about the volume Trends and the expense Trends, um, that Steve discussed is there any Geographic variation to to call out to highlight particularly in some of your larger markets? Like Las Vegas

Steve G. Filton: Yeah. Obviously, there's always some variation in performance. We've been asked, I think, about the Vegas economy in the last couple of calls. I think it's fair to say that our Vegas, or the results in the Vegas market, are very similar to our overall results. As we pointed out, I think West Henderson in particular is ramping up quite nicely. We do acknowledge that there's been a lot of data that suggests that tourist volume is down in Las Vegas. It's something we're watching. If that decline in tourist volume starts to have a ripple effect on the Vegas economy and unemployment rises, etc., that could be challenging in the future. At the moment, we're not seeing those impacts. Unemployment, honestly, I think, is remaining relatively stable.

Or the results in the Vegas market are very similar to our overall results.

And again as we pointed out I think west Henderson in particular is ramping up quite nicely.

We do acknowledge that it's been a lot of data that suggests that tourist volume is down in Las Vegas.

Yeah, I mean, obviously there's always, you know, some uh, variation in performance. Uh, we've been asked, I think about, you know, the Vegas economy in the last couple of calls. I think it's fair to say that our, you know, Vegas, uh, or the results in the Vegas Market. Are are very similar to our overall results. Um,

It's something we're watching.

If that declining tourist volumes starts to have a ripple effect on the Vegas economy, and unemployment rises et cetera that I think could be challenging in the future at the moment, we're not seeing those impacts unemployment honestly I think has remained relatively stable at the moment in Vegas.

And again I think our performance in that market is remaining pretty stable and pretty consistent with our overall.

Operator: Stable at the moment in Vegas. I think our performance in that market is remaining pretty stable and pretty consistent with our overall portfolio in the acute care business. Other than that, no, I don't think there's anything real significant from a geographic perspective.

Portfolio in the acute care business other than that no I don't think theres anything real significant from a geographic.

Geographic perspective.

Okay Fair enough and then a quick follow up on the pending SDP approvals, you mentioned, Florida, and Nevada is there a way for us to think about how that breaks down the net benefit between acute and behavioral.

Operator: Okay. Fair enough. A quick follow-up on the pending SDP approvals. You mentioned Florida and Nevada. Is there a way for us to think about how that breaks down the net benefit between acute and behavioral?

Uh, other than that, no, I don't think there's anything really significant from a, uh, you know, geographic perspective.

Well first of all I would say that the Las Vegas numbers predominantly acute.

Okay, fair enough. And then, um, a quick follow-up on the pending SDP approvals you mentioned: Florida and Nevada. Is there a way for us to think about how that breaks down the net benefit between, um, acute and behavioral?

I don't have a breakout in front of me Mad for the Florida number we can provide that in the future.

Operator: The Las Vegas number is predominantly acute. I don't have a breakout in front of me, Matt, for the Florida number. We can provide that in the future.

Okay.

Thank you.

Uh, well, first of all, I would say that the Las Vegas number is predominantly acute.

Our next question comes from Benjamin Rossi with J P. Morgan.

Operator: Okay, thank you.

Um, I don't have a break yet in front of me, mad for the Florida number, we can provide that in the future.

Hey, good morning, Thanks for taking my question.

Okay. Um, thank you.

Darren Larick: Our next question comes from Benjamin Rossi with J.P. Morgan.

Wanted to touch on operating cash flow development.

Notice that some of the drag year to date.

Marc D. Miller: Good morning. Thanks for taking my question. I just wanted to touch on operating cash flow development. You noted that some of the drag to date has been coming from unfavorable changes in AR. I know you're expecting to get some of that back next quarter as you collect on the DC approval. Do you have any theories as to the drivers behind this unfavorable trend? Is it fair to attribute some of this to broader payer utilization management trends?

Our next question comes from Benjamin Rossi with JP Morgan.

From unfavorable changes and they are I know youre expecting to get some of that back next quarter and you collect on the D. C approval, but do you have any theories that the drivers behind this unfavorable trend and then is it fair to attribute some of this.

Hey, good morning. Thanks for taking my question.

Router payer utilization management trends.

Yes, I think our belief is that.

The increase in <unk> is.

Almost exclusively a function of the $90 million of DC DCP that we intend to collect or expect to collect in the fourth quarter and then the new receivables both in D. C. We didn't get our Medicare certification and ability to bill until early September so there's.

Just wanted to touch on operating cash flow development. Uh, you noted that some of the drag due to debt has been coming from unfavorable changes in our... I know you're expecting to get some of that back next quarter as you collect on the DC approval. But do you have any theories as to the drivers behind the Sun's favorable trend? And then is it fair to attribute some of this to broader payer utilization management trends?

Operator: Yeah. I think our belief, Ben, is that the increase in our AR is almost exclusively a function of the $90 million of DC DPP that we intend to collect or expect to collect in the fourth quarter. The new receivables, both in DC, you know, we didn't get our Medicare certification and ability to bill until early September. You know, there's virtually no collections in at Cedar Hill in the third quarter. Even West Henderson, as its business continues to grow, its AR continues to grow. I think once we sort of factor in those dynamics, we're finding our days in receivables to be quite consistent with historical levels.

Virtually no.

Collections in.

At Cedar Hill in the third quarter, and even West Henderson.

This business continues to grow it continues to grow I think once we sort of factor in those dynamics, we're finding our days and receivables to be quiet.

Consistent with historical levels.

Okay is it the confirmation I guess just a follow up on some of your acute volume commentary.

Specific to yourself paint category, how did volumes trend during <unk> and then have yourself any volumes developed year to date relative to your expectations coming into the year.

Marc D. Miller: Okay. Appreciate the confirmation. I guess just a follow-up on some of your acute volume commentary. Specific to your self-pay category, how did volumes trend during Q3? How have your self-pay volumes developed year to date relative to your expectations coming into the year? Next?

Yeah, I I think our belief then is that um, the increase in our our is is almost exclusively, a function of the 90 million of DC, DVP, that we intend to collect or, or expect to collect in the fourth quarter and then the new receivables both in DC, you know, we didn't get our Medicare certification and ability to Bill until early September. So you know, there's virtually no, you know, collections in at Cedar Hill and the third quarter and even West Henderson you know. As as its business continues to grow, its are continues to grow. I think, once we sort of factor in those Dynamics, you know, we're finding our days and receivables to be, you know, quite just consistent with historical levels.

I think as we said in a previous comment the one sort of identifiable change in payer mix as we saw an increase in exchange volumes that seem to come at the expense or is it a shift from Medicaid exchange volumes are up a little bit.

Operator: I think, as we said in a previous comment, the one sort of identifiable change in payer mix is we saw an increase in exchange volumes that seemed to come at the expense or as a shift from Medicaid. Exchange volumes are up a little bit, on an overall basis, and Medicaid volumes are down. In terms of our other payer classes, Medicare, commercial, and self-pay that you're asking about specifically, we haven't seen any major changes in those other payer classes.

Okay, appreciate the confirmation, I guess, just a follow-up on some of your acute volume commentary. Uh specific to your self-pay category. How did volumes Trend during 32 and then have your self-paid volume developed year to date relative to your expectations coming into the year. Thanks.

On an overall basis, our Medicaid volumes account in terms of our other.

Payer classes Medicare commercial and himself day that you are asking about specifically, we haven't seen any major changes in those other kind of class.

I think, as we said in, uh, in in a previous comment, you know, the 1 s of identifiable change in pair mixes, we saw an increase in exchange volumes, uh, that seem to come at the expense, or, or as a shift, from Medicaid. So, exchange volumes are up. It's a little bit, uh, on an overall basis and Medicaid volumes are down in

terms of our other, um,

Got it.

Our next.

<unk> comes from Stephen Baxter with Wells Fargo.

Marc D. Miller: Got it. Appreciate it.

You know, payer classes, Medicare commercial and, and self day that you asked me about specifically. We haven't seen any major changes in in in those other payer class.

Yeah, Hi, Thanks, So can you talk to us a little bit, but just hoping you could elaborate more on the change in surgical apparently following $400 were down slightly as of last quarter to up slightly this quarter I guess, where are you seeing that improvement come from and I think thats kind of been danced around a little bit but I was wondering if you feel like there's been any kind of pull forward.

Got it.

Darren Larick: Our next question comes from Stephen Baxter with Wells Fargo.

Marc D. Miller: Yeah. Hi. Thanks. I think you touched on this a little bit, just hoping you could elaborate more on the change in surgical trends you saw in the quarter, going from down slightly as of last quarter to up slightly this quarter. I guess, where are you seeing that improvement come from? I think this has kind of been danced around a little bit, just wondering if you feel like there's been any kind of pull forward, evidence that we've seen of that, for maybe like exchanges, other populations where coverage loss is a bit of a concern going forward. Thank you.

Our next question comes from Stephen Baxter with Wells Fargo.

So we've seen of that maybe like exchanges other populations where coverage law.

Going forward. Thank you.

Yeah.

Yeah.

I think we've seen the improvement in surgical volumes relatively across the board I would say cardiology and cardiac services has been particularly strong.

Yeah. Hi thanks. I think you touched on this a little bit so just hoping you could elaborate more on the change in surgical terminology as well. In the order going from down slightly as of last quarter up slightly, this quarter, I guess where are you seeing that? Improving come from. And you know, I think this is kind of been danced around a little bit, but just wondering if you feel like, there's been any kind of pull forward, uh, evidence that we've seen of that, uh, for maybe like exchanges other populations or coverage loss is a bit of a concern going forward. Thank you.

Operator: Yeah. I mean, I think we've seen the improvement in surgical volumes relatively across the board. I would say cardiology and cardiac services have been particularly strong. As far as sort of pull through, which I think, the crux of that question is, does it seem like exchange patients are sort of accelerating care in anticipation of potentially losing their coverage? I don't think we're really seeing that. I think we've made the comment before that exchange population seems to behave or their utilization behavior sort of mirrors or is more closely tied to the Medicaid population, meaning it tends to be emergency room-centric as opposed to a lot of elective cases. Yeah, I don't think that there's this significant pull-through impact.

As far as sort of pull through.

Which I think the crux of that question is does it seem like.

Exchange patients are sort of accelerating care in anticipation of potentially losing their coverage I don't think were I don't think were really seeing that I think we've made the comment before that that exchange population seems to behave.

Or are there utilization behavior sort of mirrors, what is more closely tied to the Medicare population, meaning it tends to be emergency room centric as opposed to a lot of elective cases, so yes.

Yeah, I mean, you know, I, I think we've seen the Improvement in in surgical volumes relatively across the board. I I I would say Cardiology and cardiac Services has been particularly strong, um, as far as sort of pull through, you know, which I think, you know the the Crux of that question is, does it seem like um, exchange patients? So our sort of accelerating care in anticipation of potentially losing their coverage? I don't think we're, I don't think that uh, we're really seeing that. I think we've made the comment before that. That exchange population seems to behave or or their their utilization Behavior, sort of mirrors or

We don't think I think that there is this significant.

Significant pull through impact.

Our next question comes from Michael <unk> with Baird.

More closely tied to the Medicaid population. Meaning it tends to be emergency room Centric as opposed to a lot of elective cases. So yeah, I I I don't we don't think I think that there's this, you know, significant cultural impact

Thank you.

Behavioral volumes just wanted to confirm you're now expecting 2% to 3% growth in fourth quarter, but closer to the low end and then should we expect next year to be consistently in that 2% to 3% range and then.

Darren Larick: Our next question comes from Michael Ha with Baird.

Marc D. Miller: Thank you. On behavioral volumes, I just wanted to confirm you're now expecting 2% to 3% growth in fourth quarter, but closer to the low end. Should we expect next year to be consistently in that 2% to 3% range? On acute pricing strength, even excluding the DC DPP, 5% is pretty strong, especially off the tough prior year comp. I know, Steve, you mentioned case mix, revenue cycle initiatives, other one-timers. How much did exchange volumes contribute to pricing? I know you mentioned 2% to 3% is still a pretty good long-term target. Just to confirm, you're still confident on 2% to 3%, even in the face of exchange volume declines over the next couple of years? Thank you.

our next question comes from Michael ha with beard.

Acute pricing strength, even excluding the <unk>, 5% pretty strong, especially off the tough prior year comp I know, Steve you mentioned case revenue cycle initiatives. Other one timers, but how much did exchange volumes contributed to pricing and I know you mentioned, 2% to 3% is still pretty good long term target.

Just to confirm you are still confident on 2% to 3% even in the face of extreme volume declines over the next couple of years. Thank you.

Okay.

Yeah. So you threw out a lot of numbers, Michael I'm not sure that I follow all of them again I'll repeat.

That our view of the sustainable acute care model as <unk>.

Operator: Yeah. You threw out a lot of numbers, Michael. I'm not sure that I follow all of them. Again, I'll repeat. I think that our view of the sustainable acute care model is, you know, 5% to 6% revenue, same-store revenue growth split pretty evenly between price and volume. You know, 2.5% to 3% price, 2.5% to 3% volume. I think on the behavioral side, maybe 6% or 7% same-store revenue growth, you know, 2% to 3% volume, 3.5% to 4.5% price.

6% revenue same store revenue growth split pretty evenly between price and volume, so two 5% to 3% price two and half to 3%.

I think on the behavioral side.

Maybe six or 7%.

Thanks to our revenue growth.

2% to 3% volume three five to four 5% price.

Our next question comes from Ryan Langston with TD Cowen.

You know, 2 to 3%, volume, 3 and a half to 4 and a half percent price.

Great. Thanks, Good morning, I appreciate the commentary on capital deployment, but the leverage ratios just keep coming down despite the share repurchase activity. I know you mentioned, the new Florida Medical center, but have you contemplated any additional areas you could increase capital spending or sort of absent M&A and again.

Darren Larick: Our next question comes from Ryan Langston with TD Cowen.

Steve G. Filton: Great. Thanks. Good morning. I appreciate the commentary on capital deployment, but the leverage ratios just keep coming down despite the share repurchase activity. I know you mentioned the new Alan B. Miller Medical Center in Florida, but have you sort of contemplated any additional areas you could increase capital spending or sort of absent M&A and, again, additional spending? Are you just kind of comfortable letting those ratios decline? Thanks.

Our next question comes from Ryan Langston with TD Cowen.

Additional spending are you just kind of comfortable letting those ratios decline.

Sure.

Yes, I don't think we anticipate our leverage ratios.

Getting any lower than they currently are.

Operator: Yeah. I don't think we anticipate our leverage ratios getting any lower than they currently are. Obviously, we're not looking for ways to spend capital just to increase our leverage ratios, whether that's acquisition-type opportunities or CapEx. We'll continue to invest where we think we can earn a compelling return. I think we've intentionally kept our leverage ratios low in an environment where there has been some level of uncertainty at the policy, regulatory, legislative level. I think that's been a prudent approach. As I think we start to experience, and hopefully, we do start to experience more certainty, you know, we may be more comfortable increasing those leverage levels.

Great. Thanks. Good morning. I appreciate the commentary on capital deployment, but the leverage ratios just keep coming down despite the share repurchase activity. I know you mentioned the new Florida Medical Center, but have you sort of contemplated any additional areas where you could increase capital spending? Or, absent M&A and again additional spending, are you just kind of comfortable letting those ratios decline? Thanks.

Obviously, we're not looking for ways to spend capital just to increase our leverage ratios, whether thats acquisition type opportunities or Capex. We will continue to invest where we think we can earn a compelling return.

I think we've intentionally kept our leverage ratio is low in an environment, where there has been some level of uncertainty at the sort of policy regulatory legislative level.

Think thats been a prudent approach.

As I think we sort of start to experience and hopefully we do start to experience more certainty.

We may be more comfortable increasing those leverage levels.

Okay. Thanks.

Okay.

Our next question comes from Joshua Raskin with Nephron research.

Steve G. Filton: Okay. Thanks.

Yeah, I I don't think we anticipate our leverage ratios, um, getting any lower than they currently are. Um, obviously, we're not looking for ways to spend capitale, just to increase our leverage ratios, whether that's acquisition type opportunities or capex. Uh, we'll continue to invest where we think we can earn a compelling return. Um, I think we've intentionally kept our leverage ratios low in an environment where there has been some level of uncertainty, at the sort of policy regulatory legislative level. Um, I think that's been a prudent approach, um, as I think we, we sort of start to experience and hopefully we do start to experience more certainty. Uh, you know, we may be more comfortable increasing those leverage levels.

Yes, I guess I have one that just maybe maybe an updated view on where you think margins can trend in the next few years.

Okay, thanks.

Darren Larick: Our next question comes from Joshua Braskin with Nephron Research.

[Analyst 1]: I guess one that just left, maybe an updated view on where you think margins can trend in the next few years, you know, sort of thinking about pre-pandemic levels versus the progress you guys have made since the pandemic, and maybe specific areas where you think there's opportunity to expand margin in each segment.

Sort of think about pre pandemic levels versus the progress you guys have made since since the pandemic and maybe specific areas, where you think there's opportunity to expand margin in each segment.

Our next question comes from Joshua Raskin with Nephron Research.

Yes, I think just sort of mathematically Josh.

The general sense is if we can achieve the revenue targets that I.

Yeah, I guess one that just left maybe, um, maybe an updated view on where you think margins can trend in the next few years. You know, sort of think about pre-pandemic levels versus the progress you guys have made since the pandemic, and maybe specific areas where you think there's opportunity to expand margin in each segment.

Operator: Yeah. I think just sort of mathematically, Josh, the general sense is if we can achieve the revenue targets that I just outlined in my last response, 5% to 6% on the acute side, 6% to 7% on the behavioral side, clearly, costs at the moment are not rising faster than that. They're rising more at the 4% range. As I think has been the case with the historical model for these two businesses for many years, there should be an opportunity for EBITDA growth and margin expansion. Again, in an environment of relatively stable operating costs and, I think, relatively stable demand and pricing, we're looking at margins in both businesses able to continue to improve.

As outlined in my last response, five 6% on the acute side, 6% to 7% on the behavioral side clearly cost at the moment are not rising faster than that they are rising at a more at the 4% range.

So as I think has been the case with the historical model for these two businesses.

For many years.

There should be an opportunity for EBITDA growth and margin expansion.

And again in an environment of relatively stable operating costs, and I think relatively stable demand and pricing.

We're looking at margins in both businesses are able to continue to improve.

And maybe the follow up and it's probably a silly question, but how do you go back I know.

Exclude some of the government.

Segments that are paid but when youre negotiating with managed care companies.

[Analyst 1]: Maybe the follow-up, and it's probably a silly question, but you know, how do you go back to, I know, you know, let's exclude some of the government segments that are paid, but you know, when you're negotiating with managed care companies, if you're seeing that revenue number, I think the core or acute number of 5% that you guys are throwing out, if you're seeing numbers in that ballpark and costs are not going up as high, what's sort of the conversation with the payers and the justification around above-average rate increases that we've been seeing lately?

Yeah, I think just sort of mathematically Josh, you know, the the, you know, the general sense is if we can achieve, the revenue targets that I I just outlined in, in my last response, you know, 5 6% on the acute side. 67% on the behavioral side, clearly costs at the moment are not Rising faster than that. They're rising in a more at the 4% range. And so, as I think is, has been the case with the historical model for these 2 businesses, uh, for for many years. Um, you know, there should be an opportunity for Ev dog, growth and margin expansion, um, in and, you know, again, in an environment of relatively stable, operating costs, and I think relatively stable demand and pricing, uh, you know, we're looking at, you know, margins in both businesses able to, you know, continue to improve.

If you are seeing that revenue number I think the core acute number of 5% that you guys are throwing out.

Seeing no numbers in that ballpark and costs are not going up as high what's sort of the conversation with the payers and the justification around above average rate increases that we've been seeing lately.

So the point that I would make on this.

Not exactly what you're pointing to but when we sit down with these managed care companies.

[Analyst 2]: The point that I would make on this is not exactly what you're pointing to, but when we sit down with these managed care companies, we've got much better information these days than maybe we had years ago. Even though we feel like we're doing well in a number of our areas, we still see some of our pricing lagging competitors in certain markets. That's what we really point out and hone in on, and that's where we're able to have a positive effect for ourselves because we're still behind what they're paying some of our competitors. That's one big area that we bring up in our negotiations.

And, and maybe the follow-up, and it's probably a silly question, but you know, how do you go back to? I know, you know, let's exclude some of the government, um, uh, segments that that are paid. But, you know, when you're negotiating with managed care companies, if if you're seeing that Revenue number I think the core or acute number of 5% that you guys are throwing out, you know, if you're if you're seeing you know, numbers in that ballpark and costs are not going up as high what sort of the conversation with the payers and you know, the justification around above average rate increases that we've been seeing lately.

We've got much better information these days than maybe we had years ago. So even though we feel like we're doing well.

Number of our areas, we still see some of our pricing lagging competitors in certain markets and Thats, what we really pointed out and hone in on and that's where we're able to have a positive effect for ourselves because we are still behind.

What they are paying some of our competitors. So that's one big area that we bring up and are in negotiations.

That's helpful. Thank you.

That concludes today's question and answer session I'd like to turn the call back to Darren <unk> for closing remarks.

[Analyst 1]: That's helpful. Thank you.

We bring up in our negotiations.

Thank you everyone for participating in today's call and also for your interest in UHF Hope you have a great rest of your day.

That's helpful. Thank you.

Darren Larick: That concludes today's question and answer session. I'd like to turn the call back to Darren Larick for closing remarks.

[Analyst 2]: Thank you, everyone, for participating in today's call and also for your interest in Universal Health Services. Hope you have a great rest of your day. Thanks.

That concludes today's question and answer session. I'd like to turn the call back to Daryl, Eric for closing remarks.

This concludes today's conference call. Thank you for participating you may now disconnect.

Darren Larick: This concludes today's conference call. Thank you for participating. You may now disconnect.

Thank you, everyone for participating in today's call and also for your interest in UHS. Hope you have a great rest of your day. Thanks.

Call, thank you for participating. You may now disconnect.