LHCG - Earnings call transcript Q1 2021

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Operator

Good morning and welcome to the LHC Group First Quarter 2021 Earnings Conference Call. [Operator Instructions] And please note this event is being recorded. I would now like to turn the conference over to Eric Elliott, Senior Vice President of Finance. Please go ahead.

Eric Elliott

Thank you, Robert and good morning everyone. welcome first LHC XXXX. quarter to call earnings like the for ended would you Group’s to conference I March XX, issued we last to release Results section information our I Investor Quarterly We like Relations our would page. on night the also posted have and that of some supplemental highlight earnings page and can well of this transcript as deck of be supplemental a on a copy the once ultimately, available, as earnings The as release, found this the well. XX-Q, call,

our includes of the among significant deck Our XXXX impact sector the year a supplemental assumptions, the on full COVID-XX, guidance and trends. detail detail breakdown amount monthly on of performance

All breakdown and as of non-GAAP well. included reconciliations of adjustments our are

in remarks this reference information will We our today.

Chief Financial Josh Mackel, allow expect and Dale to President; Officer, time Executive Officer; XX comments today’s for Chairman We prepared minutes Chief Proffitt, for from run approximately Keith to Q&A. and Myers,

Before presentation release read we statements made like supplemental X forward-looking would to press apply call Page of in information. point financial encourage our our to statements this and and to everyone start, carefully. They I our our and you supplemental on them to

over I turn Now, will Keith. to call the

Keith Myers

Eric everyone. you, you Thank thank and

even healthcare begin a our Group contributing our caring out that beyond on privileged want always we I of by today. privileged available be our want decades communities than be also activities and serve actions social new throughout our XX,XXX serve, in more in need report brings positive community LHC has an to have our country three people report for recently governance acknowledge to responsible, undertaken founding goal members being country. many citizen been to our each of country As community provide to I the invaluable provider. ESG mission and throughout are always, serve to are website. is and asset of part well we ago, Since we valued colleagues This nearly light environmental, to are and our the broader our throughout an published to privileged to impact team live daily and thousands of who thanking our vision in communities a

the cut and legislative telehealth, of continued like services from heightened and a flexibilities that services LHC range opportunity home sequestration policies extended X% wake very COVID of significantly to a remote our new regulatory a healthcare provider as relief unprecedented care, the broader positive legislative XXXX in-home activities the with for perspective We the perhaps certification are from and of part, innovative to I period in-home aim national of to some of remainder tailwinds on organization and CMS, services. in healthcare legislative way. throughout Group, view our that would how by policy begin business providing current for as tailwinds, beginning of Now, of high-performing capabilities footprint providing or including awareness healthcare shaping efforts full and XXXX our access in-home of in to waivers the the and in industry supported broadly increase due regulatory a

the up expand healthcare last I funding to by delivered years billion home. the increase current our XX encouraged to call, next plans As are we the to earnings on mentioned over by services administration’s in $XXX

new The FMAP and and in-home presumption home nationalize to services. the Security entitlement Hassan the first of Casey, draft Senator by funding, Hill Assistance and In and healthcare under a the community-based Among for Medicaid services. services for increases community-based for to time home this things, Aging goal other Federal this by the Chair or least for creating Senator one proposal circulating a proposes XXX% Social addition, others Committee exceeds on Act at and legislative Program,

We Home ways Medicare Medicaid on the benefit to are the coordination in-home traditional with improve particularly Senate by of focus the Health House’s administration, the services. and encouraged

you For and Program choice comfort Oregon given homes decades me now, that Passport proven age institutional for mention heard their and being of in to time-tested alternative innovative to have have the place state as Health such Plan, Medicaid an before long-term privacy seniors costly cared by Ohio as in care. programs the and in the the own more

as Our a programs, traditional health with legislation non-skilled which Medicaid blending eligible the in-home healthcare Choose state on these deem successful home Medicare first builds Home benefit, seniors for option, services. services

later for year. fiscal We us proposed it XXXX XXXX. and also to continue point additional to positive and are this later and for very also out would expect to build that hospice provide congressional year this will this in related legislation I momentum be the of and support introduced [indiscernible] rules

per value-based and home delivery in of supplemental provider, Group, services For a deck. million home providers of I tailwind formally us demonstration additional ACO ACO-attributed Of services home our home LHC policy in perspective, On an we attributed health, that services XXX,XXX spend performance-based spend say home health footprint lower growth. and our additional patient the the point those below From more details that efficient patients efforts of shed average of for with X% cost the our provide LHC health healthcare all lives lives, the provider to X the care healthcare in providers, patient, home served home strongly drive health. policy the To health on received would below performance Expansion on XXXX. states patient XX% our XXXX, program. was X summaries of to however, costs policy-related value-based in leverage in-home a and in-home ability this proven January We, consistently opportunities light and our to at given received proven X.X% performer, model national higher-quality costs, focus organic across a lower consistently million services only currently over individuals deliver earned purchasing were that the current there in health X capabilities satisfaction excess population incentives. have country. provided markets recommended served resulting the opportunity, consistent our purchasing provided effective LHC XXXX. outcomes and delivering materially significance health home high-quality top proven outcomes through over our to to average footprint all its satisfaction X received higher entire to patient our of for CMS areas, as of you X, average these at current that on XXX,XXX, Pages to roughly to and would XX% XX.X%, approximately X home expansion consistently total We nationwide from in of per believe of health have incremental

We to ability quality models patient more transition solely away fee-for-service objective popular, of and our from be a become reimbursement based activity. effectiveness, models reason traditional emphasis grow provider confident have significantly our market to that to models satisfaction, good and payment share models performance-based on volume outcomes, greater and in on place of as measures the

remaining amount over to time, pursuing million opportunities and trailing joint revenues, $XXX that $XXX venture M&A, with or million slightly this totaled of hospital pipeline our Turning being in XX% of over at is we in XX-month home services are Of acquisitions active revenue, health care. discussions are hospice, and million is community-based the X% with we on and home roughly trailing exclusive where currently XX% $XXX sellers. the opportunities, is XX% personal in XX-month

are pipeline amount that $XXX early to this high-quality target $XXX we the in With the our momentum point probability revenue we of confident million high opportunities of at M&A we overall May, XXXX. of and in surpass today M&A budgeted will acquired in our million and see range

We course, of but investments increased also hospice segment we also our volume made the hospice of segment. year be to for expect year in due a to XXXX a acquisition have over as result our past the record additional

our of hospice commitment services nothing care is new. Our to continuum of as part

clinical payers, team network vision ACOs a higher team with and customer and planners, XXXX, continuum look today of X.X% discharge with gender just we JV toward as demonstrate community trust, XXXX. and growth the more fulfilling forward health legislative on agency in care a in opened organic of partners, and COVID in we serve. as our through provide we responsive same other resulted hospital and the first sources our part professionalism and activity continuum our at managed that strides meaningful our providing home hospice partners, an significant The has than each co-located X are home dependability growing referral payers which from the we hospice vision addition was years combined physicians, community national make Day in opened we continued advances summary, from founding to and of organization stronger, respect hospice health collectively XXXX. than making serve the growth, always M&A a sources agile founding our that of increase see and care beyond, community patients, payers, higher admissions to anticipated of of and level have In a our beginning in has the year-over-year first better, and to members, and with hospital front, XXXX loyalty pandemic, With question, significant M&A our leadership many our more location clinical physician level volume up market expansion that we who family in regulatory home in the among Our health. were X referral in a base. earlier even coordinated in services of been of as leadership our we each and of Without

past will learned benefit created over normal importantly, to operations the communities and in our have new lessons future. throughout improvements more organization organization day-to-day the and patients, our experiences, and families that we quarters in implemented the Our serve our a continue five

our success on never take rest granted. laurels, never will We for

We are it more to Josh? at color will financial to we provide relentless pursuit everyday. all do of provide continuous And Q&A. and operations I more over details committed Josh Dale organization will on a in to guidance results every related excellence a to improvement of turn begin now, and and learning level before organization this and we that growth continuous

Josh Proffitt

on am Thank start bullish trajectories. this more and our morning. Thank details you, are very excited Keith for so and why provide current and growth to our good your morning we operational year everyone. you I to the on time strong

the our XXXX up framed this strategies how growth have up long-term regulatory legislative potential. over set trajectory growth the and Keith’s with Following as our strength our generate sources, you’ll well to supplemental episodic Ensuring focus momentum from several perspective starting next on in inorganic from quality build-out tailwinds delivering the deck, created co-location in comments, and Last to executing we today. and Today the new continued perfect comments the continued Slide I deliver as we XX near on points priority, growth on on prepared a growth are joint ventures, sequential with of growth quarters, has organic confidence for are strategies. our increasing want referral sequential well we and admissions, and potential, as quarter, are see improvement. in bringing a and our growth continued on of of differentiated been table the and we top continued we the and

model the acquisitions and growth the As in to co-locations, growth executing quarter hit and a growth competition, these we going received on opportunities and driving levers organic year models, few opportunities margin our provided reimbursement on from on connecting and particular, in on from moments. forward. highlighted Slides recent the slides will feedback XX, this to value-based in XX share touch we’re the capitalizing levers positive more multiple on afforded out earnings the on We last I on movement help JVs pulling objectives, upside and data since which the to with more inorganic

and the exception put pandemic. living coronavirus important the X-year quarter, the are past a assumptions from pipeline unchanged we of next proper under fourth it’s note of operating the from the M&A XX% to quarter remain within With this year To several QX. increasing of the anniversary operating PDGM now and that and context, the those in

are and ways DNA used change. satisfaction permanently as such outcomes all years for each historic face that will an to to all quality, so operations and come. workers such two support country operating our models those from in LHC always upon we While patient Group distinct you Thank and and altered team learn our across clinical change and prove sustainable our opportunity valuable members the events in to and industry, growth tap that of leaders stellar always to have our frontline our and much prioritize execution of for the improve and into

better We you. of because today are

a growth. to post-holiday comparisons indicative COVID-XX, despite some within quarter gears positive a our and most are metrics PDGM-specific several the while including surge, the the shift successive of year-over-year are little last they season This three metrics. key of the more The now will the be out as of underlying where have range break still comparisons, tight muddied, our sequential of likely waves quarters. Let’s recent expectation remained we last

home fact you particular LHC’s meaningful and admissions, during January, that data how and peel QX number than the in headwinds, last an down see all-time as expectation Given our first with in year, year first the were essentially you even our want snowstorms We XX on And and more QX quarter last day progression want XXXX. are months health occurred over to XXXX X that XX December more indicators for to in were this in that the the March a our surge when our now to they in higher in admissions I these quarantine a were that high highlight particular, of admissions moment QX the One will as and well flat growth. and quarter sequential because for key than I in all home XXXX the point, further, show of quarter. health ice five to metrics to our break spend our was QX our despite share that the home back couple a in the the wanted quarters trends, little we Dale history. details at on COVID on last they health total overcame two, during a April. per year the impressive trends higher on but the XX.X% admissions and moment, clinicians post-holiday in being our the Slides QX the

with So to is that our hurdle to all growth the be rate back segment. momentum having on have currently quarter, home this we after in that health pace headwinds, true testament for the a

provides momentum that are the sequential to We home. our admissions I like evidence tracking to fact pleased now momentum, the but additional are well. that pre-pandemic not one care to with would hospice also the to shifting observation that only above as share more our levels speaks leading also additional to further environmental is

during out calendar you’d early months the modest to health historically well Although have seasonal year, a us then home the flatten see has typically performed decline. of growth, census and and starting experienced

census For example, from for XX,XXX, May, of the period in home to for March health the XX-day beginning non-COVID start year of X.X% from of the declined to a our the decline. XX,XXX XXXX,

period, to of which census year at X% home we’ve health this start the of increase. XX-day May, that However, is over March actually start same at from the a grown XX,XXX XX,XXX

growth each. hospice X% achieving of guidance on and to Our home admissions organic full is health year based XX%

XXX segments the track admissions in Slide we breakdown particularly trend, are getting similar sector we here that ALS, seen XXX March, growth headwinds targets. remainder are of April, have trends length year. and very with past to again, I strong us all institutional bullish settings the One the as for will our exiting SNFs momentum fact same thus, from we stay impacted expect others second the stay the in percentage hospice of during and confidence quarter that these make the quarter to to per and levels. outlined of quarterly have average two XX, headwinds, have the is across by the stabilize. and the being The ILS below organic on to we day hospice, on begin the discharged give quarter, point seen Since of patients after QX the achieve trajectory, We points of basis on our the length pre-pandemic are and later in and from referrals be in

PHE to full addition hospice discuss, us these we’ll in trends all home confidence the and guidance. extension our sequestration to and that In year health raise Medicare give

well are in areas on based Our confidence we performing also other too. is how

In addition and including referrals health physician physician and call Slide quality correlation have hired trends lines. out satisfaction leading X we outcomes. to statistics have new want while employees head decrease. a compared our to in last of highlighted hired that QX increased direct we to continued number a year. what had we alone, to In amount turnover hired with the continued nearly census been X,XXX referrals, hiring focus new quality our recent unwavering X,XXX quarters, XX and of and have in our on growth scores QX on unique I in differentiated service culture, count across and X,XXX our record quarters recruiting have These home consecutive frontline this We’ve which frontline in employees has validation quarter patient

quickly growth want Turning inorganic acquisitions. I to to focus on our and our JVs levers,

target bullish in exceeding As to acquired earlier, year. of we $XXX remain this million Keith in delivering or against revenue very million our $XXX mentioned annual

pipeline M&A payers million touch partners which to want as continues as deals diligence. is several benefit various in I of engaged our negotiation with $XXX well our and stages we on as value-based the The us is are to Our strategy, over last briefly topic now exclusive with. due

length the improving and need We payers have and program what of the reduce to and experience mix while patient stay create care and innovation deliver that the lower protocols rigorous of right unique assets episodes, to quality-based plans clinical re-admissions outcomes.

on by evidenced the million peers of point ACO brings. business an earned is awards the attributed are million value We that business year. value-based experience only last the management One home and X health other earlier. Of we approximately in serve. received our markets what insights unique on markets lives There described The serve, over in XXXX. I’d approximately the the like also are in be with ACO continue ACO we to delivering one make our ACO Keith we to lives in builds attributed the management $XX XX.X% we

value-based from harvest correlation of continue total home, company our outcomes we expect on learnings XX.X% we to utilizing health evidence-based when high-quality cost management health. current our I home size with arrangements home care and results reduction will As and in between beyond the appropriately the subsidiary, now add continue the more our appropriate guidance. the learnings for with and educate demonstrate turn also the in from cared color care the and Dale, and opportunity that to are patients to our of be for on it the grow to to utilization will you that over utilized ACO additional

Dale Mackel

Josh morning you, Thank and everyone. good

pleased quarter ahead are our We were of that results to first report expectations.

or Specifically, on service basis, increased EBITDA to $XX.X increased net to $X.XX to million revenue million, adjusted comparable $XXX.X and a net per increased X.X% year-over-year diluted $XX.X income XX.X% adjusted million share. XX.X%

quarter deliver we performance, places first Our to projections. with full be where us exit on velocity, right coupled need our our to year

our during above EBITDA you when the the storms are the the for adjusted adjusted more our ice and the the while days the XXX impressive end midpoint agencies COVID the all Our February. impact and quarantine, consider and exceeded snow earnings post-holiday related faced from closure the top revenue of the multiple of These of on range. surge, staff headwinds percentage of was we of significant

key call and I with turn metrics and detail earnings supporting our community-based the to home out the first With XX release and and and service our spend where and time raised on revenue in attention trends I liquidity and then broken for deck the our provided factors guidance will supplemental strong key XX to and along our growth would in our the capital supplemental health, segments. of Pages hospice most guidance have deck, home like to my initiatives, we position. we’ve

March. sequential with levels the improvement pre-pandemic trending revenue in health, continued home per episode ahead Medicare exceeding the first quarter and our For of April through March

procedures this hospital this the to April of to climb due start and starting due volumes, the continue momentum will seen elective to percentage COVID, again. in softer we’ve was admits to open institutional percentage believe quarter which down caused resurgence up While back this of

hospice percentage our it in line pre-pandemic to back XX.X to X% while the case disease to quarter in decline and to not levels, than mix, also PDGM many improving. LUPA care is We a are on primary of a consequently, Josh days that moment want of quarter. from a to fact not Our to patients in our quarter. hold for from more hospice stay during mentioned this larger in days in attribute hospice institutional saw episodes the in and length the being past, to being seeing yet but and to continues with expectations X% our in we providers, into decline physicians dig ago, XX.X settings performance as used little I are as Similar other later QX to patients their much this much they the their regularly discharged current admitted to, states. the

Additionally, living continued pre-COVID to lag SNFs facilities admissions from levels. senior and

in EBITDA down price impact up out lower basis basis point XX.X% the concessions. hospice, year-over-year, period two, XX taxes; of of primarily stay; one, XXX three, X to length point basis and from QX, of For margin impact payroll from seasonal sequentially points XX.X%, of while factors: implicit XX higher due is

target this to the XX% for we previously, the is EBITDA margin communicated sustainable XX% in have segment believe we As range.

of margin We returning the quarter while expect XXXX. half XX% to second to second in XX% in of the incremental range improvement the normalized

increase labor to while biggest personal continue business several remained unmet initiatives did business in sequential be the and a quarter a checks and we billable Our stimulus see hours billable robust, The supply and capture demand. January XXXX. in staffing in are versus headwinds challenge is personal of mailed. hours Demand experienced the February. despite the of for first But all working very presented decline care to increase X%, we X.X% of care

had high The on approximately and quarter X.X% the start seasonality of typically of had around in January dipping in January, bridging February out to before the the quarantine, we March. differences severe billable guidance, in per our visit reached revenue and to holidays closure of with due the associated admissions, of this quarter. X% QX, new February and recall we first at following which range X.X% winter The the patients The the previous that the in which XXX than the million clinicians compared stayed we tax vesting the in Looking care a QX with January, benefit sequentially our higher due from resulted experience hours. from slower payroll $X.X called affected stock, personal care excess to the a taxes X% tax of weather to of for with and were agencies managed lower year balance percentage in restricted the below compared QX higher rate effective the to tax rate which for quarter. of XX.X%

also the COVID of to first projected would rest in a of expenses the relative share year. we experience disproportionate quarter the We

an corresponds quarter sequential As XX, and increase million. $X and saw We hospice. with a patients $XX see percentage COVID-XX in insurance right of in quarantine, a XX% expenditures to the and we on Slide the of drove million surge, in at increase first pay for health for higher supplies, you COVID This were combined hazard increase health COVID-related we can medical with most expenses claims. PPE, from higher $XX million home XX% had emission in of clinicians projected and recent directly sequential the the

$XX of million results. COVID out be to our adjusted as will to million we expenditures ahead $XX year, guide the our of for are comfortable full Looking incurred, range and with original still

any spend at COVID if and the view our revisit estimates of applicable. to will our changes We communicate end QX

XX.X% full less non-controlling adjusted new growth, the are And XX, projecting guidance in interest. earnings the Slide on and our growth, range, release. earnings we X.X% to Turning of revenue at year EBITDA our XX.X% outlined growth, adjusted midpoints

extension core Updates during our remain health July earnings outlined supplemental EPS, our assumptions emergency call in year and and performance public quarter guidance beat the through XXXX XXXX and initial guidance the EBITDA full XX/XX include our to fourth Our consistent operational QX our with through on waiver and XX. deck. sequestration extension documented of largely our QX

as we pace to elective still billable are we the stay; uncertainties hospice hours coupled of length in constraints. our the to a and one, of three, Given care early personal year, have residual for guidance two, related with pandemic, owing level in the relates to, prudent allowed of caution recovery; labor procedure supply ongoing it

Lastly, to our strong balance highlight I want sheet.

and that our total earnings We intend the recouping CMS liquidity intend we those have that relief with to amounts provider the accelerated funds of any were of I on will the relief mention $XXX in previously release. advance and of note, government. fully accrue. are the latter net return the the will which that’s announced of XX, funds, payments million Medicare federal that On to we began distributed before on April. last the Details provider to schedule repayments We the repay payments advanced along interest April

in Our days QX. XX sales days increased to outstanding

concludes collections program no-pay in up QX. wrap, of is is of payment. adjustment XX% the in the XX While resulted related an robust months. first in prepared remarks. opportunities businesses request Operator, to sequentially remaining implementation, CMS to our the a look cash to accelerated to of wrap free Even coming the the This wealth free of and of floor produced open million you cash advantage no-pay The we $XX sequential disposal. from of progress $XX quarter million. increase inorganic DSO the of days and our That Thank eliminated first respect approximately down the with directly from the XX and reporting payment cash on the forward growth The ready our flow in sustainable at competitive in our with the quarter. you. significant combined to ability gives us liquidity, are We for opportunities flow, questions. for cash XXXX, to to impact days the execute flow our strength with impact strong which

Operator

go first Please The A.J. question ahead. Instructions] from Suisse. of [Operator Credit comes Rice

A.J. Rice

everybody. Hi, Thanks.

deal I sound information I appreciate those are lot exclusive like are First, on an but pipeline. activity pursue a they on is landscape, the new the that deals to just thinking deals? would in from you the comment wondered of your perspective, you, just dynamics, of competitive you landscape if are your know updated but I terms what others competitive for on may what wondered latest about pricing not be we I hearing seeing.

Keith Myers

question, is Keith. let’s that. the I A.J. start by my for Thanks Yes. on perspective, This hospice, saying will start with from

do just competitive, volumes. market markets is it concentration multiple us, and then different. little certain variation at for see But I we bit hospice and on a depending So in look but

We are of care. building continuum a out

amount volume, in we home health So, multiples health high, hospice a focused because that be knowing to that we we significant know from to going the from home when partners. table have to and operations markets are at we of hospital look where are our a volume bring have we

And acquisitions so, look into build at, all our models the also will out, that look we obviously, at but we model everything we it. – as we

are away out high work model – nicely multiples to… in Then Josh, have others, combination and markets we we from. we the some just and walk for it have want us. So, can to make you

Josh Proffitt

them Yes. that exact currently No. mold mean, of working, described. that said. the you the just are A.J., ones, of many well fit Keith, I think I we Keith very

upon. close going known potential due for and growth business the So, and of one multiples lot that our still growth are not diligence doesn’t we all ensuring acquiring are just even we that higher upside have just things have those transactions that that it. the are or in rigor, execute be a in some upside that static of And to history a we and with the deals reinforce deals we somewhat we and on I do would of discipline,

pipeline. about A.J. we good, really got feel going what in on I have So, our

A.J. Rice

referral sort senior from guess, seems really a sort like or one being of pre-COVID census businesses health to back health reopens, the getting, some sources is are that Okay. depressed coming there referrals have on, new getting maybe health some levels. are at Then one housing would seeing to you it’s it is will those – from of I the point not come facilities? or the the this probably patients properties? in a getting home of referrals out? that this you facilities which the fully issue with that’s would sources, And a least still both sources home the got element senior seems it for follow-up back coming access you you parse come you depressed from also just may Is and so volume can and just while to hasn’t I then come question, census think of two and access all dynamics is is see can that you it would wonder you to those and these for pickup? and those hospice is has for you elsewhere. housing hospice then area other of as at would relative there, maybe more say, see or issue a But is like SNFs, in there to those might it comment home – it’s I

Keith Myers

Yes.

So Josh and I can both tag-team together. again that

we is assume home now what you know little in we in to straight we health. that that as Josh, mean higher were we I were the are to and patients hospice – start seeing about are that health. previously we if with home are coming but health. at population, and to are we hospital patients With see well, me that we home. a home a feel getting of patient do hospitals data being SNF I that we that that don’t just to difficult. lot are that acuity have can I enough going We dealing to SNF of think? are health, some these with going that do as discharged a just know data gone feel are of Let from are directly partners certain as home Hospice from lot more looking a we

Josh Proffitt

Yes.

both, say, it’s diversion a I the census the some So of and would access. A.J., facilities, facilities. It’s which Keith and mentioned just around

issue, by to week we relationships. in access talk only I leaders workforce, the the better that’s that, tell On And our encouraged quite the growth see almost but where getting our as regularly have markets how not we throughout adoption be going. seems am vaccine the to better with you more I just of and have would that SNF

to a point So, will I just better I week access kind seeing making. of home give you drive over data really few the week. points am are the get you

the points from For referrals XXX of home health, are basis down percentage about we our of SNFs.

about now. So, XX.X% at right we year, and are X.X% about QX are we last

up new on on what been of a On the the we referrals, reverse, talking are lot basis points have from physicians. physician XXX about so we referrals coming

new I the some able to we there then the from down and at around last XX% of not about ILFs, from directly community, are ALFs around about hospital, hospice, this year. been when have basis those of coming diversion to mentioned, XXX think from develop. year you coming also And So, only, on down out points SNFs, well QX as as X% some congregate look we of the physicians is but settings Keith right

trajectory So, then with physician continue those increase, improve, the stickiness are in all the the SNFs, our in if electives and lot that, from of the of is quarters hospital gives year. we A.J., three of growth confidence as can an as in bouncing ILFs you access throw census the increased good trends that improves, back if you news the and arrangements, then the a levels new as ALFs the last

A.J. Rice

Thanks great. lot. a Okay,

Josh Proffitt

Thanks.

Operator

Scott comes ahead. go question next The from Please Stephens. of Fidel

Scott Fidel

Hi, thanks morning everyone. good and

the bridge in you just First go of XXXX wanted XQ provided helpful to fourth question, a XQ with of quarter, had terms from us EBITDA. and back to drivers in revenue really

about get $XXX sequestration from had wanted target you on headwinds to your XQ, have you $X the out been worth by extended. called sense to to now a Medicare million get in that of Just had just million revenue and PHC –

And in called you the the that about are that that relative more HCBS laid $XXX three you how of quarter? you each fourth sort out buckets interested in that you for hospice feeling anticipating, this for point had health initially are the in components had of million at home out revenue? and terms So, those provided segment to when growth specifically, target then just you the in the of

Dale Mackel

The This change right the Dale. put still in together it difference We trajectory. are for that is extension, be thanks would good QX we on from PAG sequestration very feel QX to question. that the is Scott update and Yes, about only right. would we to the bridge that

look at now changes, we bridge the look at that adjusted look that. we’re basis looking – you an see on those you when at provide can and So, and at with you you

sets well segments, So I’d X QX I A on the at underperformance hospice little of everything was this in of up good That’s say overperformance into kind come some terms everyone. exit out home extremely going for because really about right. And of of the really bit feel The think been health. that. them I that’s of strong. we’re velocity looking would up stay in bridge. of probably length challenge, something say with

directly as affects not admissions the as XX% impacted that down as facilities by we’re to not living we’re exposed admissions basis. from are as from stay. We an senior of But X%, length Josh to and our it said,

the climb And softer about expected to think a I from but I’d to little difficult – we the pandemic, change. and margins supply for personal we We like again, the the that, had range than XX% have things a So feel because what projected. back say XX% then I’d business hospice. that. of little the care we be that maybe still labor business, say that’s to feel There like good most are going in probably

had I expectations So in we QX quite tempered our think that. well for

that but much bridge. say with QX solid about when line pretty in we would I put altogether, feel that, very we the So, are you

Josh Proffitt

of the And kind only since Dale. would lion’s points Maybe the I two other tying of Scott, that back give specifically to the that’s this share you on bridge. Yes, home is data Josh. health

are and health part signaled which the per been needed day they between higher door have remarks, ever. and home of sustainability XX,XXX now on for of we our then And And confidence as XX,XXX. of lot that. the prepared XX,XXX than admissions per the our look in gives mentioned if that been weeks we already census at we admissions have so last be We census, you my to a run-rate, into knocking the X I better north a of are of day have that

admits and had day So, pre-pandemic, were of in now year just the we X,XXX health. day X last home on per last per consecutive health home of QX admits of months have we under north X,XXX

So, at you we are have to admission that the like got throughput census we having. and are really where

Scott Fidel

called would thinking capability it. providers are other for eligible guess some or proposing ensuring Medicare how funding? the the this the sort the be you think enhanced something as of even some sort to your side Medicaid-funded positioning more be around HCBS out funding position ultimately proposed and passed are get are close And lot on about strategy elements in trying of to of to question, more If funding two my it that of of a the policy towards And you this? I up to to Medicaid you’ve trying relative for well? I $XXX or that best would things. Biden’s follow-up around that to proposed that, would am policy of exposure strategy then dynamics. spending for HCBS LHCG, And direct of Got that interested I Keith, I you a as just billion different about ramp Just guess enhanced those question strategic the PC how is through drive more at of and way ultimately know looking

Keith Myers

Yes, that’s question. really a good

we that Medicaid. now, models in very Medicare with. focused right trying on – works how to familiar we’re the that it’s bring two So together, state and other to trying know combination are been of we’re the programs proven see We that well, and

to out that. direction. now lot in activity it’s a a things; for that easy the union spending, much $XXX because is But but there, how to of there’s not how around with it proposed don’t number we could involved And know of be in detail difficult it’s be that’s to a structured. that’s going billion plan there’s that’s us So in mean going lot

vital expansion into from conservative more all of So there’s I’m think a one difficult have we more been We are if every stable for expansion we’re in approach to in a it’s – challenges staying those I different of care as and And services. risk personal rates different evaluate manage state, or or it most close so takers. a It’s program opposed because the to to for out very perspective. there’s we’re a big color how we’re taking everything, not that’s us ruling just service. into around going it, it. not to staffing think not to policy it delivered,

you think know that. I all

if now, remotely services for So, the for Medicare and this are I we is there through risk keeping we that is we in say and time opportunity us, enough there home and similar But close our on towards or good of will profile patients for legislation to spending it eye of together the the that that’s choose to would an Medicaid direction. a work coordination anything structured are majority right trying that. move

Scott Fidel

Okay, Thanks. got it.

Operator

The next question Mr. comes from

moment, Justin on one Deutsche you Bowers Bank. I into the while of queue. Hold move

ahead. You go may you. Thank

Justin Bowers

at differently, ask follow-up EBITDA. Thank next take little of bridge – if the we $XXX your on that and it PHE questions you for million quarters, I benefit A.J.’s sequestration the XQ kind for we just run wanted and esteem about to the introduction operator. out I just and just and that, get to and three add-back of want but annualize a the Scott’s

way kind if of the guide things the middle that oversimplifying good or your the slightly is about $XXX in and of right tracking that is it You I for of of are feeling at – or… midpoint fair pace XQ sounds print kind little the right like the you take year for at million, Is the things rest a it April are of the million am $XX.X us now holds we guide Are that say your it to with maybe least upside above there you the improve? census about right and XQ million takes to current like of like $XXX that. thinking

Dale Mackel

don’t oversimplifying. Dale. are I you Yes, think is Justin. This

from keeping I sort the $XX So elective right? the we’ve on to think and time, midpoint, is things the raised how million look of revenue in context. residually raised So this point would this the and one we’re about million, is $XX pandemic at EBITDA related guidance recovery. There procedure three at let’s our we’ve revenue pace talk midpoint, eye is I of right?

and think you assumptions, of about right, assumptions from procedure care had assumptions We hospice billable stay recoveries. hour we beginning if personal around guidance elective we had the the of So in year, length there. our had

bit dynamic all I stay hospital that around slowness a some keeping we of of length of thing elective all the caution one ourselves the are seeing we’re think forward. the understand look we procedure around now. the still Obviously, around that’s pace recovery. right as And we

We a And timing care expect right, it then recover. to back, personal is variable. that thing, of little come billable to slower but hours, same

as that. play those out, we of at view look play we you from to to to next [Technical stance letting million take. back indicators how perspective, to QX it’s X a months our originally itself an think what Difficulty] and out when points pulling the So before we’re guided X about for $XX appropriate data We of revenue around see start $XX three million revenue those flowing million the and But strong print when right margin, Our you’re I by revenue. right? back evidenced So guidance, margin firmly full the and QX our our flow QX, results, really there was in was through in in that million we’ve right? up holding showing of that’s you the margin got $XX $XX on to think through about at despite look in margin,

Josh Proffitt

that and Josh pretty was introduction. is a this Justin, And impressive

at That that is point see really – prepared can late April, growth way. I’ll But then the the months I maybe What decline, X% summer, what good. seasonal into what wouldn’t you’ve operator want seeing seen when around XXXX So a it just every pretty itself because that and remarks flatness May, went to that looking a and and every of what and traditionally I I it done said have in need and us historically fact – are now, what into year talk that. of kind end spring, – introduce my stopped we’ve year, I March a had fine add we that I’ll if to proved was tell trend. census then decline is back on put June, toward in our get from looked over kind during of you’re the to to you in of they I you as

in that’s some continues well do But that new bake and your have I’m made I do So if that now potential I reason to is because yet, we’re to don’t living and months, throughout were upside – another you an then I but think to to if for continue bullish. that those there. census a were if pretty continue increase think want that just point that’s very in normal.

Justin Bowers

trending pretty of just Can – health Got increasing queue hospital to help of XQ more like XQ? volume, And volume or is it. us some how just in that is the then nuances way is a you elective of the is from into it that there. I maybe the all then other institutions. is it’s the some – that now? along that. follow-up I’ll the acuity And obvious the after seeing kind in you’re and deferred back I’ll home hop with know but And the the modalities? think it’s institutional April, And there on to there and one, it’s Is maybe about side, early,

Dale Mackel

Yes.

we we’re we at footnote, are during the as Yes, want indicators to April, is in at so what on the all, as volumes, I first we’re seeing balance, some you not Dale. I’d make April caveat of mean, probably very the so sort know, estimate; this that recover. say we’d institutional will can. here. is I’ll coming what The encouraged So starting process just by think, around an point, we’re uptick you of the guys the you is is as that. But I with caveat. to hospital. closed the close But their say up-to-date obviously, that’s rebound the and page we take when the this look of give

think make question it the well same and I look way. sense at there. is that known, but electives, So pretty your I the would align this view you When we around think

And we for elective electives. around toward procedures. the the course quarters, back But the these balance more to about levels admissions get probably the from of that three of year. expect a in our volumes of pre-pandemic XX% pre-COVID heavier back of XX% about us, little of fully at the come over half We’re

XXX process volumes for comes back, opportunity that’s are or So us, back that XXX, come to additive of basis us. about that those points as that

Justin Bowers

Understood. you. Thank

Operator

go from comes of question Jefferies. next Brian ahead. The Please Tanquilut

Brian Tanquilut

Hey, or the follow-up I’ll on Josh, margin, guys. just strong good follow-up I’ll on guess comments morning – so yes, I pretty quarter. obviously, this

are kind thinking you we’ve bottom lands visits once XX.X thinking about episode, are As how seen that visits you LUPA and that at about of recovery? pace like of per normalizes like it the out, feels where how

Josh Proffitt

think you go PDGM morning. as up, you increase goes up would that for expected don’t Yes, revenue to consistent. necessarily is I what because up see said And with acuity as I now Brian. mix could want it’s case our as modeling we see But But acuity in pretty patient rebound I XX.X XX patient call mix been before, go – we’ve the pretty think might that I post-electives, XX, more you to occurs, that and XX.X. sustained comes say at. case a were where to and see would the it’s the it. appropriate post-surgery, we it population Good when see as see the have we and in seeing, we

and still visits that some co-morbidity the to HHRGs all stack So we’ve throughput. episode margin that different on analysis sensitivity Under done each how and we’ve like. got relates these, feel I the confident per very about of it what and the looks

that VPE pick the up, were margin be way. the still to sustainable in as So would

monthly that unwaveringly eye only And off our as to to I PDGM execution, want pandemic. as as and we’re star team those And really clinical about really have the a other and continue well. I taken then our cap Angie pacing satisfaction that. give I good VPE there not their operators quality on patient not is have good So entire but the feel we Doga about results to we’re as talking how tip ball our feel Dr. monitor to ratings, mention the just thing well and outcomes, leadership throughout

Brian Tanquilut

of Josh, follow-up right? were, And then where able to the just forward, pushing as we is think and ADC elevated the rate movement be this on sustain this being of trends admissions versus point just where your going? do as or normal that I recert ADC at the trends kind the you what like driver, new level to your quarter look going for see about Will So I recert census post-PDGM?

Josh Proffitt

Yes.

say recert at it that’s about was bit I run. to we elevated. think, around rate our I somewhere and is what about of you necessarily elevation the so. a look or little so There XX% and pandemic But earlier Brian, go what or back XX% on we is expect wouldn’t would quarter-over-quarter. would in XX% if

that’s think I pretty So solid.

the your looking and then throughput stay rate at So and the correlation if you’re just and your stable restart the between pretty of length admit census. is solid,

Brian Tanquilut

it. Got

thank you. Okay,

Josh Proffitt

Yes. Thanks, Brain.

Operator

The next ahead. question Please William Matt go comes Blair. of from Larew

Matt Larew

M&A morning. to your bit talk little good just on a comments Hi, on wanted Josh, the I pipeline.

you starting discussions, before flowing all saw CARES inbounds up PDGM-related your start on to of that’s creating the are some return more out? maybe the seen that’s that anything in expansion largely to you see you started majority a any the the then side? you’ve anything you is of sort just versus think And pop the overlap I Maybe mentioned of dollars of footprint markets. where could pipeline of confirm

Josh Proffitt

Yes, Matt. that Good yes. both I morning. those would yes on and of say

those acquisitions density especially or currently pretty the that majority overlap, are the more just we along co-location So our market described either the the is states and which operate. the that that earlier in discussions in overlap, of pipeline, were opportunities strategy far in diligence Keith

on not that second is point again, geographic that of me was then question, a to there second a expansion said And So already. the I your footprint yes growth lot – Matt, or way. which in kind remind of

Matt Larew

Yes, sure.

looking Just back? that opportunities you coming just those mentioned forward if curious were maybe of and any to starting PDGM had some coming pre-COVID you are

Josh Proffitt

call what you look our and because there I’m Yes. home did pipeline call, health ask at the that uptick pipeline. between if one No. and the you even this now last we is in reported glad an in at look if you right difference

modeling or so And we’ve I’ll So call, opportunities percent already hospice, XX two and of so that weighted it’s some, and this it home of we’re percent health at. to looking about hospice medium inbounds and toward was XX% week, last of home kind XX toward weighted or even now health. what call size had small

health last not were definitely in home seen and uptick activity specific that I’ve sensed So X the over fourth in the months an seeing we quarter.

Matt Larew

side, numbers That’s think hiring? payer dynamics any providers paying other to side a reduction with a some are is hiring in that Okay. helpful. staffing the related if curious of bumps, been using, any maybe then travel syncing And But that been I’m sort in COVID your agencies bonuses not way different question clinicians the of some up these just you might’ve there the supply sort of of demand. meet on record is to availability do record to you just of obviously, have just try hiring curious

Josh Proffitt

place that’s my a speculate the it believe and very things. work it, could Yes. the through I of to fatigue then is lot monitor our Matt, and metrics. you’re of that just levels more what the and I we efficiency do the to we type think a setting more answer. from you burnout onboarding a just just talking pandemic process I attractive. our and our in it of are of hire I of I going of flexibility healthcare, processes still over all closely think orientation way some for last to have speed is this and about a And and maybe year of we spend focused where when improved on a throughout want which doing to hard But the continue on one lot clinical we gut of settings might time give good workforce. be everyone really

had velocity the themselves historical just history. pipeline week had the daily their we positions. got that hire strongest highs. number the have keep quarters week Last sales open And we’ve being hiring, teams in go company’s operations reports for back-to-back throughout out alone, our of We in that jumping all the and

we’re hiring. had week one mean closely last I So watching week record and this that in just another

and quite in know We at the and acquisition are of our pace Matt. talent would of in frankly, kind we a expected. we be for from have didn’t bit So of up I’m tactical level what honestly, we leadership the both I – hopes little at capacity process really building would lot to team, here, We of put ahead growth, place. but a added

Matt Larew

good Thanks, Josh. Okay, deal.

Josh Proffitt

Thanks, Matt.

Operator

Markets. Frank comes question next The Capital from go of Morgan RBC ahead. Please

Frank Morgan

I Good X-day I to when and RAP mean, for M&A want a on DSOs of million elimination. morning. second. I of side the use $XX from I hear your cash whole guess the stay numbers just in increase

point. it’s hurt going You just to got I at some think

trying I So recent is selling mom-and-pops actually to their it to I of people I’m are deals enough scares that – these ends? about what sequestration have deals, figure people to out actually consider the about after or that want in come assets? mean guess talking talking or happens what

Keith Myers

home home I I are on health you mean think primarily? Yes. about talking –

Frank Morgan

Yes, yes. Yes.

Keith Myers

Yes.

money. pandemic the to think of the of and and made was stimulus XXXX COVID I decisions home the So then sell health mom-and-pops in

heard say You this. us

value-based a big of in – deal. are, we to I look really XX% that’s and and that’s all our prepared agencies where is relief the just We home my that’s at truth. much getting way I health provided places brought so some and we’re I is data in thing. business comments I saying the it’s the postponed think there we’re going When in changing far purchasing, mentioned the I out to outperforming get the about same light. home just that delivered, mean see urgency. found how I and think But health are

And cow. how really agencies so they were take and operating where is home their to health them from they were a cash

– So, just has I made, were how I it? sell been decision they out just right. think that of living to

to don’t just long-term started want say and so and they But started situation, something grew I stuff. end are view. witty. have I any and now their at fortune just names I – real. we’re I’m that now level, to. people didn’t grew mention that I certain a like that other to mean, let it’s not up are there is we’re LHC-type they of people from and Ginger in too these an very did things. couple them I good But probably me to business, but – of – good And really a know small. This talking thinking And these a the

don’t they And have any so debt.

are And to so nest it’s that they they at. egg are going retire

it’s XXs, on. move simple. they mid-XXs think that just so late and I And just looking are to

Frank Morgan

is the mix size the hospice like that these a from and therefore, in or of larger Got side? characterize perspective? How the larger of And Are backlog the the more the you function backlog, it. would that percentage? deals represent a just deals

Keith Myers

Yes.

So the that in investor-backed. more the investor-owned aren’t at or – were pipeline I ones hospices to aren’t we’re that we kind now have the just described that you. The looking now that

window of point they and it with out And and on. have done to move so to a are X well to where quite they just X-year them flip in the going

aren’t, So relationship-type the we’re Josh, not – are other in right? I ones now But pipeline described that there in that that deals. our are some think, fit of don’t the hospices I model

Josh Proffitt

couple... just Yes, a

Keith Myers

maybe ones but some don’t significant I the know small, aren’t.

Josh Proffitt

hospice ranging say, pretty question, the we’re a we right, medium-sized home more good little as health, after medium on you’re whereas And smaller size those on I they chunkier, on deals, the Yes. size, are the would to Frank, size to are, discussed. from just PDGM, as consolidating

Frank Morgan

then per And just commented it. last question episode. obviously, Brian’s you one my management, the on good here, about visits already Got

from nurses episode, and more or as and Thank labor more function line? cost of substitutional here visits Or top you. labor the in is of a any cost terms structure PDGM Beyond coding mix there left in between refining, LPNs? mix, per – labor opportunity anything just

Josh Proffitt

continue again, of our PDGM. before hate a and are would we very LPN/RN like very have metrics our kind effectively I public quite PTA/PT sound and you with team the operating mix. quite well has But we to feel we we to work XXXX, efficiently know mix record and knew executed on look us executed of back those before we those there preparation the flipped Frank, monitored PDGM. and going to what you tell broken to had have Yes, like VPE as calendar evolved that been like and were through to the all I But going our And well.

say I of there improvement wouldn’t is upside or there. a that further lot So

We’re on XX%, LPNs PTAs. still XX% XX% so on or mix and probably

Dale Mackel

Frank, is is around portion. contract Dale. say I opportunity grow would the is this And What labor

the strong off we’re with hiring, our clinicians retention, us, – to strong mentioned, starting Josh As create quarantine. and

Our capacity with. get where is comfortable starting to we’re very back to

some displace contract of more creates opportunity And labor. the an expensive so that to

but bit contract better better get we’re in hospice, home We’re pivot it’s like labor feel and us. but in to yet in good for gotten to at a it’s little where a overweight we health going point starting LTAC,

Keith Myers

Yes, Frank. that’s it,

Let me the – I mix. need to throw this into

about talking per visits So episode. we’re

I about for was PDGM as of start think influenced then the delivery how talking it’s changed result a also by COVID. time to us model and

know, so our think big LHC we – don’t when you talk patients. and but we with we Group, just time we patient inside So of about and is minutes talents visits, but on – focus

that this today think non-clinicians us is And all what, at that to patient post encounters and But value make nurses thought have and know the addition all-time are X our sense. spend patients us have visits in with only that would years of this have in around is meetings. making. an it and ago, those would there are significant If amount having all tried with what – time we COVID I our telehealth. a we that make how today, But discussion meeting easier So virtual many virtual high. of through visits. convince of understand you someone patients function for a we was we’re And differently we’re how not to time us they the to we’re

so you actually more market. keep at communicate time with just need are not. it about less we’re mode, to and this we’re to in we bring talking time if that that because are spending the to visits, how some we up to point, So gives we’re know the spending going going We patients that impression

Frank Morgan

Okay.

one me Let dumb ask follow-up.

the the then things get you encounter? visit And count telehealth to a Do and what’s other or between an So I’ll hop off. encounter? like difference create to things

Keith Myers

Yes.

So not these cost that a report. are we put on things

of encounters in we won’t same And we’ve or And all so do terms with visits. talked And put pre-COVID, of patients. now we’ve visits this always pre-COVID. at and honestly But health on we the pre-PDGM about didn’t they happen much time. monitor home

have and the in some past, a we would the XX minutes wasn’t any spent patients today, And of with can working. course the the model with of impact something during that if ago, bill time years it’s that So phone X say, we for how have tracked. It of just on a – day, nurse encounter just let’s learn or is the or patient track issue to all had we had financial part anything. nothing the doesn’t some as

Frank Morgan

Okay, thank you. Good insights.

Operator

last of of comes Joanna from The Gajuk Bank Please ahead. question go America. today

Joanna Gajuk

here. we the sticking thank Appreciate I question guess taking Hi, around. are you.

remarks confident Home seem to I even So that you is Choose it be guess more, the year. introduced on I guess this I the, prepared be could guess, follow-up legislation that

create know, big of be benefit, mean, can an implement more essentially, this to we for it importantly, these right the Kind this year, be more kind is So to frame don’t year, which And But maybe you care, maybe don’t right? the kind market? you company? the go in exposure able mean, require how is also starting of you industry partner have this any if the you of to if and this right, – passed, could your decent about of opportunity of I if things? can know, things next this if obviously, I SNF-at-home a assets your way like of or talk would you us. I or could for personal in timing would

Keith Myers

institutional it, went receptiveness alternative of I the the question I to honest, And it. and and shining the nothing on surprised to we We Passport we’ve – Plan little patients. Ohio, population. But all the take Health so skilled side other to Oregon surprised So that have a the borrows way proposed think positive new. the from been I’ll the just when – Program through, that were Home. It an in be start the – acuity model the experience adds this the patient light quite is about think we with for by reason COVID higher to is by care need to Choose more maybe reception because we

side. so getting is plan But heel just champions our that on expectation. the So thing the pretty for champions worst. house And are behind I’m incentive it’s the right conservative building the surprised exceeding I us. both just we always my at the I’m are at on expectation, exceeding right But least and the that I think time. at

get this So that year. introduced to later I it’s confident am pretty

don’t Now does go? I it where it passed? Does just get know.

I that’s and to up So But about to Washington think mean about pass... wants every has experience. of with if to I talk care – your sorry talk everybody home, now, And you. all where I am does just COVID in it want but it I you right the on lot am question do that second to shift the to if – a to ideas the legislation. you see policy show

Josh Proffitt

home. at SNF

Keith Myers

the opportunity? Yes, how big is

Joanna Gajuk

partner? more do that to then guess, need Right. own would you personal care, you to or have And I would coverage or

Keith Myers

Choose with the incorporates So skilled care the we Medicare Home personal of would have legislation to element an benefit. care personal activity because have more traditional

provider acquire or in a that that if say where Dallas just would would I care of the care. the So where probably we market. In have already we personal market, didn’t with contract we we that larger lower, personal probably markets have say, market build like volume service is kind in markets, joint let’s But venture. would THR our in

proven home and doing service, Just that as of without to benefit. SNF combined is have volume scale the economies for the already. of if we home be how And that this were the cared of model the home health with big could we patients out the XX% course, being regular admitted there market I just traditional is? at in think health the

benefit, think we’re this look XX% talking So or another when XX%. to about we I

X going with X in combination So of be cared a were the XX% which or that services. of setting means XX, XX% patients years home to could SNF ago for to

Joanna Gajuk

the Thank time. Appreciate I will Alright. end over the color. guess, you. here, I because

Keith Myers

Thanks, Joanna.

Operator

our concludes to for remarks. over Keith I any Mr. turn conference Myers question-and-answer back closing like This to would session. the

Keith Myers

Thank you, operator.

may just always you you will we remarks, between your always, contact participating any team thank management Eric for and be Dale speak know call, with Elliott. for you questions. and or to ask you And glad closing we’d Thank if the speak you’d Josh, that available and to calls, like as as aside, our time myself, be in far questions As to you set have. will to

Operator

conference concluded. has The today’s Thank attending for now you presentation.

now disconnect. may You

LHC (LHCG) 10 May 212021 Q1 Earnings call transcript