SEM - Earnings call transcript Q1 2020 | Select Medical Holdings Corporation

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Operator

Good morning and thank you for joining us today for Select Medical Holdings Corporation's Earnings Conference Call to discuss the First Quarter 2020 Results and the company's business outlook.

Speaking today are the company's Executive Chairman and Co-Founder, Robert Ortenzio; and the company's Executive Vice President and Chief Financial Officer Martin Jackson. Management will give you an overview of the quarter, and then open the call for questions.

Before we get started, we would like to remind you that this conference call may contain forward-looking statements regarding future events or the future financial performance of the company, including without limitation, statements regarding operating results, growth opportunities and other statements that refer to Select Medical's plan, expectations, strategies, intentions and beliefs. These forward-looking statements are based on the information available to management of Select Medical today and the company assumes no obligation to update these statements as circumstances change.

will conference I Mr. over time, this turn call the to At Ortenzio. Robert

Robert Ortenzio

XXXX. morning, Thank Quarter Medical's for Select you, Earnings everyone. Call for operator. Good Thanks joining us for Conference First

metrics, Before I a I comments effects our pandemic the the regarding of operations. outline our summary want provide you some to with COVID-XX on of operational

As some clinically challenging most faced both of and the times two have months past company, the a proven be operationally. to we

been learn this has the face put work period, the and of in has ability be and During the say risen team proud have not more occasion, to to I'm our collaborate this to unprecedented the proud I health test. could done they of adapt our that, to crisis.

passion quality the in The leadership and innovation care vigilance environment. Our courage and of patient unmatched. teams highest resourcefulness hyper is level and shown maintaining safest have tremendous

Dr. our by led areas For huddles, and across Chief the virtual XX March lines leaders functional of quickly daily past our Officer huddles Hammerman had patients and from needs began ensure two organization. we we Medical responsive Chief on clinical have meeting Xrd, changing and critical Buddy cover informed and of by months, Quality operational, the across employees business. which all and our in are These and to attended

for decisions preparation and infections, Among PPE other in indicators, staff we COVID-XX and management review contingency region, strategies clinical sourcing and of availability strategies, equipment, COVID of COVID patients, incidents review planning. by ventilator communication patient treating

care. hospitals pandemic our role in this continuum cast the of of In light illness has new also broader recovery on the critical terms,

partners virus. combat In addition venture and hospitals host to uniting this to our with joint

decompressed acute has acute efforts care and ICU and other coordinated occurring to effectiveness beds. hospital care of care recovery hospitals daily established between illness the maximize Newly short-term hospitals patient been criticalness short-term

specialty currently XXX care hospitals of for Medical providing Select over XX our has patients. COVID-XX

telerehab services we of occupational home. their of services allow This across own across telehealth care front, United patients and We our outpatient States. our their rehab capable of to X,XXX expanded outpatient have telemedicine both including safety and are providing continue network. that now the medicine, On the in the clinicians our over

significantly for seen the as have by the payers services volume as several governmental grow with these increased the well government weeks past over and lockdown, regulators. We acceptance

operational Our of exceptional answer in Medical incredibly been mid-March. ability and calling to of collectively excellence historic frontline anchored leadership, began The pandemic. and culture our the is Select this hit in selfless clinical who the effects clinicians, to pandemic dedicated have in

in with virus, the high account we markets spread As to faced our admitted as other standard modifying patients. procedures needs as for well operate, of COVID-XX we have have these operating critical patients transmission rate a the many task has COVID-XX challenging and of of

the additional restrictions recovery and hospitals, units general isolated to population. to beds, labor. had our while subset. spaces, in increases or population in rehab incurred critical developed of staffing isolate we non-COVID the temporary we and our for continue family, our to and and cause had disruption from of disease, patients costs a space of created the specifically, active use reduced innovative visitation caused More illness ill and enhance patient for provisions increase operations number contract care have admissions, pandemic cases will added our patient some or eliminated of in in on treat We COVID patients the The segregated with this this COVID safe maintaining pathways acutely

sustaining office of physician hospitals our individual on patient segment, been state non-essential schools, and Concentra and rehabilitation outpatient restrictions travel restrictions negatively number a of U.S. impacted our on or on the outside have reduction mandatory In suspension visits and home, volumes the effects businesses, non-life of of workforce significant closure implementing governments by visit reduction mandated, at of all million surgeries includes elective issues. XX activities had surgery by unprecedented closures workers, have state the volumes. of of outpatient the facilities, This

provided it typical In a press a operating always of we more we statistics financial on quarter-to-date important by information with release, very provide but do, was detailed reader financials that the the our results insight the quarter. pre analysis analysis basis to separate February We quarter-to-date of decided business investors post-COVID and the by with for financial the provides of and our month company the impact segment. through COVID the greater believe of into our the our March on first

quarter. X.X% showing quarter growth to net increased last the revenue February, compared year our prior in the the with our all net up XX.X% of segments in $X.X period through period this over year. same billion for to Quarter-to-date business Overall, first four was revenue

March, overall X.X% in down was year. revenue However, March to last net compared

same X.X% up the first quarter day days hospital revenue Net with Patient million per last X.X% in year. to in compared quarter $X,XXX our Net to segment revenue million were in day quarter XXX,XXX the compared same illness last quarter. first year patient to $XXX per critical recovery increased over increased the days. $XXX the in to patient X.X% patient

revenue compared X.X% million to Patient the in segment our in year. per day XX.X% quarter day our million year. XX,XXX XX.X% in quarter $XXX March over last $X,XXX compared last but quarter-to-date the year. XX.X% compared compared through the in the patient hospital recovery last the critical increased quarter. illness year quarter hospital days. revenue first revenue when $XXX X% in February segment quarter rehabilitation Occupancy to in only to with the to up Net first same days XX% XX% increased to the period, last to increased period Net in Net was same per in first up was in patient

in in XX% Net in million quarter-to-date rehab our up to last the in was the compared February to million XX% $XXX only revenue year. first the same Occupancy our same to the year. but hospitals Net in last X.X% quarter outpatient up to segment quarter quarter year. X.X% first in the period, the was revenue rehab in compared XX% through March $XXX quarter last in period increased compared

X.X up million were visits visits over X.X%, the first Patient quarter. in with

revenue trended period quarter net period last same last $XXX period, the in lines XX.X% was the when down quarter up year. was compared February then Net year. XX.X% February per in XX.X% year. Our quarter-to-date quarter-to-date the revenue then compared through through declined period, but to last compared to in as March along but Volume with in to in the visits March the same when up first XX.X% patient in visit revenue, the the $XXX

$XXX quarter in the million our quarter to to increased revenue $XXX Concentra last Net million in compared the segment for same year. first X.X%

was For million down in visit the quarter. quarter visits patient Net compared in X.X% the were the centers visits per $XXX the at centers revenue year. in the first $XXX to same X.X quarter in last

then March in Net in were patient through February in but February revenue year. to but quarter-to-date the when period, period, declined period was in revenue, the volumes March X.X% XX.X% quarter-to-date then the as last to up last with when compared compared year. Concentra's period visits through X.X% X.X% up the trended along down

year. in $XXX XX.X% million adjusted the to company to last the compared million EBITDA quarter same in increased $XXX.X quarter first Total

of over adjusted for all to the showing quarter-to-date same EBITDA compared period same adjusted prior our consolidated to year. four the business The in last double-digit for quarter up the last first XX.X% February's year margin the year. EBITDA Our growth the with period January-February was segments XX.X% through quarter XX.X% was compared

was However, in down March March, to overall EBITDA year. compared last adjusted XX.X%

same up the in million XX.X% Our the compared to to March compared to in critical March to XX.X% margins year. quarter period XX.X% and same in last were last Adjusted for illness EBITDA the last combined in margin quarter year February was quarter-to-date XX.X% EBITDA the in year. first period $XX.X recovery in Adjusted when hospital was period. $XX XX.X% XX% compared February the the segment the adjusted XX.X% quarter period the up million EBITDA in year. Adjusted this January increased segment through and EBITDA

XX.X% was in year. the XX.X% compared quarter segment compared for million in million the XX.X% year. quarter in margin last the $XX.X EBITDA rehabilitation first rehab same to to Our EBITDA hospital quarter increased segment hospital the same $XX.X last Adjusted to adjusted

million. EBITDA the February period XX.X% of last through in last March year. quarter included $X.X date to year XX.X% quarter first EBITDA up to and compared up The adjusted when was The adjusted startup losses

XX.X% Adjusted were segment the margins quarter EBITDA the March was year. million to February and in in Outpatient last period XX.X% quarter was compared in last in the period. same $XX.X rehab in outpatient XX.X% adjusted EBITDA year the quarter this margin the year. the to for combined January, $XX XX.X% Adjusted EBITDA first same compared million

were X.X% March to XX.X% at period to period EBITDA was date through this last in February Adjusted EBITDA the the year. but up margins in the March only in January, period XX.X% combined quarter compared period. year when the February XX.X% in but declined Adjusted

million this to XX.X% the Concentra Our quarter was XX.X% compared up first adjusted $XX.X quarter same last year. to the in the was compared but Adjusted last compared EBITDA margins the year the in was quarter Adjusted in to margin period Adjusted in EBITDA XX.X% the EBITDA $XX.X year. the million March when same period through EBITDA combined last quarter-to-date XX.X% and February period February in in XX.X% declined January, period. year. were March in XX.X%

first fully Adjusted fully Earnings quarter share per the for share diluted tax the quarter quarter quarter quarter diluted was year increased first per same $X.XX related excludes per the both same $X.XX $X.XX in compared the the to year. share XX% last non-operating diluted to first for per share over for the fully diluted year. year. last earnings compared $X.XX in last earnings and to gains fully Adjusted effects this

financial inpatient begin the an surgeries. While high-cost including results broader reopen well in adopted the XXXX reason April operational amount if remain CMS. rule optimism payment overall XX, On our on rehab would uncertain, of as fiscal for pandemic as seen of X.X% posted elective we a rule performance reduction the outlier. economy standard states the see the have in COVID-XX implications The proposed the to were as by and proposed for increase

periods. be the expect to early required after the in We rule finalized August comment

into pandemic regulations response order hospitals hospital transfer general cover Congress length in concerning care suspend to hospitals hospitals admissions facilitate specialty of critical into settings. recovery government patients In the suspend to regulations that acute certain certain CMS illness and and from both of acted temporarily and stay to rehabilitation in COVID requirements the to

now additional That concludes it before for to questions. some Marty call financial up over turn for we open details the I'll remarks. Jackson my

Martin Jackson

Bob. Thanks, morning, everyone. Good

to financial for I wanted I some details the comments. Bob's Before of provide quarter highlight

in periods. through for and February. adjusted EBITDA the quarter margin EBITDA of and COVID had tale revenue We segments growth four first quarter-to-date periods, two expansion the The nice pre-imposed the Select our of was all growth, really double-digit business

which had the mandated March, significant on along being in the businesses. Then medicine of negative saw surgeries, impact states a occupational we and most of stay-at-home elective outpatient with suspension our requirements

Our costs operators the a status. on terrific time the their are driver rightsize spending volume. our to they primary to back is regaining but us have the of now to done Volume is area making job appropriate get changes pre-COVID most key

details. to Moving the financial

and our the include which quarter net administrative our and cost of billion revenue. expenses, of was first XX.X% For $X.XX operating services and expense operating general

operating operating were quarter the For last $X.XX expenses revenues. and same billion net year, XX.X% of

services billion the billion quarter the was Cost $X.XX first in of year. $X.X last same compared for quarter to

cost compares last a in to of same the percent were quarter services revenue for this quarter the net As first XX.X% of year. XX.X%

was a $XX.X percent million to revenue year. for in same of the quarter same first quarter. in This net of compares to G&A as quarter revenue year. $XX.X million last the expense the the first last net quarter compared X.X% in G&A X.X% was

$XXX.X $XXX.X Bob total for As mentioned, adjusted XX.X% to were margin first margins was adjusted of of adjusted million and in last million the total the quarter. and quarter same EBITDA year. EBITDA adjusted This EBITDA compares EBITDA XX.X%

in quarter first amortization in million a equity Depreciation and reduction compares million to other first $XX.X $X.X a minority which result earnings generated to businesses we unconsolidated was healthcare during $X.X the million subsidiaries compares of the the performance in the year. of earnings million same The quarter. last quarter. in year. $XX.X This own and decline of This in We last equity same was in and the quarter in the interest. related

this of interest in had gain was we last $X.X million Interest in in $XX.X activity first and non-operating The first first million a decline as result year. gain We $XX.X the of last million quarter compares did the a rates a This of million last the the in to during quarter. expense variable year. year. the quarter was of non-operating $X.X well in same second as the reduction half the quarter year refinancing

$XX.X of to in $XX.X an XX.X%, rate tax represents compared expense last this rate effective tax expense the and million of in We tax first which recorded income million quarter tax an of year, the year. quarter of of same effective XX.X%

$XX.X quarter. and attributable fully Net excluding year. Select $XX.X gain quarter adjusted first per million in income tax was in $XX.X was the was same per was non-operating its earnings the the to effects, million and attributable to in non-controlling to interest share This Net related the our million Medical last compares share $X.XX. income first earnings diluted $X.XX, quarter Holdings

At of the sheet. $XX.X cash and had we of outstanding the of end quarter, billion $X.XX first balance on million the debt

million quarter. cash Our first billion million X.XX% the in quarter includes of other revolving loans, debt. million of notes, for $XX.X in term $XX of loans, balance at activities and $X.X the the billion debt flow end miscellaneous $XXX provided $X.X Operating and senior

$XX.X last in compares same quarter year. This million to the

outstanding days March at XXXX XX to at days XX, at days XX was compares XXXX. XX, and or March days December DSO This Our XX XXXX. XX,

of is part Investing offset use included in from the quarter. $XX.X sale $XX.X million of of business $XX.X during acquisition million purchases of equipment, by $XX.X in used the and activities. activities the cash million first proceeds in This in cash property and quarter. investment and million The

slowed point also primarily on out the recovery we from better pandemic, have I the down will of be until have a we CapEx. the maintenance to outflows cash handle timing

voting million part our million Concentra. $XX.X XX.X% quarter. million $X.X net $XXX.X loans, interest included of to net borrowings of which in the common the $XXX.X in in of by to $XX.X the The includes cash million This and now distributions purchase used million prepayment repurchase partners, in stock, interests. non-controlling to in term activities was Financing use also owns cash in quarter. revolving first and $XXX loans payments This on Concentra of during offset Select of shares from minority million

outlook receiving we've grant result on of part and developments withdrawn related for XXXX. year April, surrounding Beginning as set of started the of impact X, April the second aside our the uncertainty for COVID, a healthcare $XXX previously CARES hospitals in week our business As and the operations of we providers. the dollars billion Act the to

the April $XX those is Select of Our subsidiaries Human Department distributed billion and received the related to understanding grant of Health fund. dollars million has billion its and consolidated $XXX beginning XX. have Services $XX.X

we minority COVID an funds million also received providers where These to incremental revenue for lost $XX.X dealing manage expenses reimburse a We are additional pandemic. entities in we and partner. in are designated health-care-related the with

than under Advance applied receiving receipt for X, scheduled payments These also after are -- Accelerated later Medicare our a Beginning XXX designated Program. advances of intermediaries. and in for no to are Medicare We it received our million began fiscal of repaid payments $XXX.X and be advanced and Payments funds advanced from days Medicare total after as XXX beginning funds. days receipt and April the we

we manage payments $XX.X an entities in also where minority advanced partner. We we additional in received million are

taxes begun for CARES In million payments XXXX XXXX We by December Act. may of -- XXXX. must this the the employer portion security repaid estimate of through be December under $XXX be range must XX% we've the deferring XX, be by and social in allowed balance the to deferred be $XX million deferred to XX, amount through and XXXX. These addition,

reducing improve help deferrals our where liquidity of temporarily additional in deferring We negotiating capital closed. to to certain we have and or and areas rent at measures have employees actions the these some landlords receive compensation and facilities organization with including suspending discretionary taken expenditures, furloughing position,

latter Between on on us cash year with $X have to part that credit Another point our billion close hand available refinancings we has last facility revolvers, of liquidity. is the I'd we additional like liquidity and the of provided to executed make today.

back This this operator remarks. time it for to up to And like our prepared at the we'd concludes turn the call to over open questions.

Operator

Markets. [Operator RBC you. Thank Capital first with Frank Morgan question is Instructions] Our from

Frank Morgan

maybe your stage any us commentary of up. as you've surgeries? the the I and business around what as open some of of quarter optimism talked the specifically to more color seen early ambulatory noticed the since far up outpatient can or percentage recovery? would more opening expect you what morning. start comes result surgical you about Good tell in outpatient Curious states the centers just you what see to And as overall so end Concentra

Martin Jackson

tell ball we've what come Yes, Frank up. Marty. give can is the type What over elective expect we really states that you this Quite our you past can't surgeries. is outpatient that's rehab a candidly year. thing. visits we And crystal we that's about open what basically seen XX% from of mean I to of

surgeries elective nice some see volume increases. these when we So, to expect back come

Robert Ortenzio

And Frank this is Bob.

starting there of we've have seen here been some that that elective in to the down we're Certainly starting states. approvals the southern some are some in and to the of see We in market. Texas see surgeries for and Pennsylvania states surgeries that opening elective

So, the that's kind they the the a to although bit and for for before it's those will switch. surgeries of then as for to little we say there's time patients. speak lag flipping It a as precautions time not the we starting happen take see -- and of

Frank Morgan

what how your then do with What And of Concentra you. unemployment? in from happened there? about ramp-up some And of just I'll Got thoughts you. Thank customers you are what's are the that around terms your you think there? the And hop. hearing on side

Robert Ortenzio

as an that Concentra we've the know employment-driven is and business. past Well, you said in

comes or expect have a the hits I would hard. Concentra see shape, V -- as correspondingly. business we pretty But them mean respond U this to we back So employment a is and if

suspect volumes the I see then and Concentra recovery that is well. the as slower we'll If employment in

employment driven businesses activity not by up. Concentra general grow. go just but But hard So, volumes as as And back unemployment even returns that to continues improve just to statistics, it tell. will again will as economic

Frank Morgan

other Do you given month of with Thanks. us us any insights? Anything April color companies the have early some of there of the I'll done. kind have be on share and some could you

Martin Jackson

tough both part XX% XX% rehab April outpatient outpatient in is in and be seeing on about business, very particular April, very, in Concentra. reductions our were I month to early our outpatient we of going on Concentra. mean the

see and of have the seen week basically to come -- out two that in last started weeks last the we back We bottom growth April.

Robert Ortenzio

think critical taken I the have they our the other of we of them because the recovery hospitals in position And as strong in that pandemic. the hand on illness being face see

So, business be I think that part the stronger. of will

Frank Morgan

you. Thank

Operator

you. Thank

question Our next Bank. Bowers Deutsche is from Justin with

Justin Bowers

everyone over there. good Hey, performance, and during congrats last the And putting And EBITDA release months. the last especially few growth given the nothing think to the weeks up first appreciate all morning I entire the quarters on in and disclosure press the at the I scoff night. two double-digit XX-Q

of just with on where Frank more understand trending? sounds you So, on the just of of kind the or help are piggybacking kind the side COVID you've up on critical side, kind like picked relative XXX a to It that volumes commentary us illness LTAC can March they're little maybe like how patents?

business? if And just of of March you've little there things where to trying on part of decline now of a then are of you there? a get bottomed kind And kind towards that the rehab, the I that the in was inpatient feel and like sense surprised end

Martin Jackson

this Yes, Justin Marty. is

the had and We're have are through I where probably nicely ADC pretty with up to LTACs numbers regards June. with continue that a expect we to LTACs April. those IRFs me And expect continue. is strong we to through mean, we the you -- and take Let volume.

hit area semi-private move up side, Kessler things those On number done had Jersey a had one we've to And in North private. was we And the hospitals decided relatively the do the with rehab to that what Kessler. of rooms. we the hard inpatient were semiprivate is of in essence

of we we one So the just the virus. have can of because per basically in the transmission limited patients number room, of take

we decline, as that see to start soon to as go semiprivate. ultimately we So will back

Justin Bowers

it. Got Okay.

just there disproportionately it with like more steep now, costs? And been of markets. focusing versus Jersey some hit give how on commentary of cost as sounds sounds comfortable other it like you've in then you sense And QX? the can volumes So some mean, you're structure, not the the us maybe services -- on maybe excuse think versus flipping where has the of taken the to are variable of broadly, costs I me, in kind you and so just about of actions end at And of you cost line? now fixed additional the a with then

Martin Jackson

Sure, maintaining done critical particular -- -- a on have for side, terrific expectations operators inpatient are been in illness the the hasn't Justin. in exceeding there, volumes group really most where hospitals our job. the And the recovery there the part, are The our were. or

changes happening that are there's So really many there. not

or a we cost probably portion the and on inpatient bit Concentra, of then staff reduction have side, and little On the there. rehab significant wages as know, of side And a our salaries outpatient significantly we've structure. seen staffing. of on And and flexing rehab benefits represent you flexed pretty

So thing on mean have is I the locations are. Select's in the our critical geographic is model we to where rehab, mass outpatient interesting

those clinics type to other expectation And will of type Concentra, over on volume dropped closed bring clinics -- those So our with of if clinics same all those and very reduction temporarily clinics. done then volume, a a XX comes We the centers and in clinics XX% activity. what XX volume a basically moved we XX XX have working that -- were those the we furloughed back is the same have in at we've the up we've the And marketplace back. our those is certain seen the then in look quickly employees employees of coming that took up, when thing. we

Justin Bowers

All Got it. right.

queue like happened see March hop I guys just to so in mean, just in didn't I things should respond quickly. any chance you improvement. some back we So have congrats and will again.

Martin Jackson

Thank you, Justin.

Operator

you. Thank

with Costa Wells Fargo. is Our Peter next question from

Peter Costa

question job started. this to all what's that thanks changes February with get we before going a COVID great January Good What up the here and of you is the in happen morning. happen My the when do side think the in And having will this patients seen. quarter particular this in other for to and seen past stepping you've critical seen do dealings in also your then they've your and with relationships referral of terms mobile stay illness your with in to the area? flexible in forward? that in on think recovery cost And business what side, you that's going does providers And outpatient you to with their that of what and going sources? go terms mean you more

Robert Ortenzio

Yes. Thanks Peter.

On we the of We've I Jersey believe pandemic critical that New City, out hospitals, other Orleans went markets. been have we got York we of a New illness Detroit, recovery and for firmly than are services -- that stronger had that the the will in reasons. hotspot hospitals come Northern -- in in number that many

have treating COVID I over are think that probably patients. we hospitals XX

before we I never recognition So and to have think we we I a gotten kind gotten provide. had the that was of appreciation many of critically become there very have from can important that hospitals mean, the big and referrals services hospital strong ICUs. we of

ventilator We one largest ventilators our are services hospitals. States in probably with of United all of in over probably X,XXX the of providers the

it's machines, ventilators enough to that the of of machine the important the of in. the a the not just appreciation thing wheel for it all is And that not I acuity a about that greater because of it's that the more just I sophistication of shortage sophistication, ventilators, has become patient the talk there's think the because appreciated become and is think the other

with You off and have but and have the maximum these wean doctors, efficiency not kind and successfully who in therapists to respiratory to the infectious the staffing get only calibrate disease work protocols, to machines, can patients pulmonologists, of ventilators. order

case ago. in thought think those the knows that to if population. would I was a of have I hospitals fire, COVID treat could use a where to And United certainly months the our into not words, I very in much that I the couple virtually ever run is. get States So, the didn't ventilator everybody mean, I point a career that my what

that's of that So, we've for the for the down we PPE more like, the it fairway because to been us, right things the do is not had easy do. it more center is of to isolation, and but what have

think to for So of respiratory going diseases I most us a with long of these period be believe people are time. kind infectious that,

so, And we really of in a early some partnering them really important discussions of recovery some hospitals with critical perhaps become more markets have in illness begun and have our with to about the hospitals to that part us put continuum.

So I'm that. by encouraged

On outpatient -- way will forever. I gone not come that mean, of shape There's the it's mean, pent-up the no knowing the surgeries what like of going comes back I it's it's elective recovery think, just way I question to I a side a of or that Concentra. It's that that business, are could whether have just thing strong. business back. the same with to that's there's demand. there. not I going of really is forever. going just of think of no think be a And and like, month look it's -- but, certainly, if I when a or a it V a question U not here or be

across of Concentra as eye have that on not also has largest States, term, that the beneficiary. the far the look share the their in comes employment only by work long relationships strengthening they market short at our occupational to I And medicine, be have. but the done will the the The we divisions United think back, have all term,

can we went than hopefully, stronger it. into come of out we this So,

Martin Jackson

over a rehab the XX we visits side little that And X,XXX well April, the and Concentra as doing change on outpatient as we side is a on day. have things seen of one in telerehab were averaged about we telemedicine. the oc-med Pete, a Prior day. COVID to

we provide types these mentioned, trained of to Bob clinicians service. have over As X,XXX

we of paying and think the will And population, that's to now paying that it, for the continue in a benefit that some be look think terrific. have to -- that. telerehab, we patients or clinics Medicare it. while and will that of coming payers -- probably the will seen Medicare the the with think many will of that think the for are lot back taking think A is telemedicine particular we We utilize cases, now we centers. Medicare population at In commercial that

Peter Costa

right. All

is that as Thanks the to question, talk a all financial about versus follow-up. you paid regular a a outpatient your what impact the can in bit color critical and for get visit? visit terms you on little hospitals. mobile But a Just illness of cost how on you recovery the for

Martin Jackson

great Yes. It's question. a

rates the and fixed telerehab most telemedicine. part, for For the are basically

difference between there or really visit. a a a So telerehab any not is visit, telemedicine versus visit physical

Peter Costa

is it similar? your And cost,

Martin Jackson

remember, of is is with It's similar. the amount same. It that the that costs really time one-on-one patient. very you're time the spend so it patient, the you spending with Yes. essence an the are of Because

Peter Costa

And you a you going then televisits, providers side you going do as the that. happen forward? do on think, the to forward? with you these What of side? to to on outpatient last follow-up you think going to outpatient is going come world the are you'll in Do often migration work more you a or see more will What do just think Okay. of change think towards

Martin Jackson

the at will people telerehab that volume had I certain are telerehab. Well, telehealth we'll do specifically to mentioned, a But I no think, more staying probably home. of think we see the population as decline as think longer portion and the more continue I the older probably population,

Peter Costa

think, question the is I more on…

Robert Ortenzio

mean, outpatient color time. quarters, you close lot collect you are the I at events, it change. thousands the where the business, tens systemic of that a certain understand for pretty look sporting in or of people whether don't clinic you I same that businesses concerts be I made outpatient there social for a mean, of think distancing. the much rehab have patients don't that, these that, in is are I locations No,

a It's therapists. safeguards talking kind easy have are of have that to relatively really You environment people the about.

So any hard it's kind me in to for industry. of systemic that project change

Peter Costa

out and will then work the away would some go actually on we're was with right. just business providers terms the those the help more going in of -- get what come now providers business of the mobile I with you? away you of them competitors All business trying of those really of complicated? some some that taking pressures of your or will go for seeing running being to impact be you're because And

Robert Ortenzio

bit. going in saw future of I we Well always that and provide. mean they business providers the that the economies markets efficiencies had fewer dominant was to be in a I our may before be larger think that pandemic accelerate to able I trends that think was where we're belief the the the the

payers want rehab think to markets. providers the of it for because requirements I be business because in because of compliance the continue in will one-off cost the that what outpatient of difficult

just I change those could not will about it -- of time. for argument it but you result that been things some be think may I of this as that could about the that an And accelerated that event, but we've cadence talking don't think of continuation guess be make a I a that sure but I'm changes, seen the and

Peter Costa

Okay, thank you.

Operator

Thank you.

Credit next question Rice A.J. Our is from Suisse. with

A.J. Rice

outpatient rehab you numbers since steps sort you centers. that were close closures fully the you where XXX obviously Is do this – well. your quarter stand by you everybody have those there end the clinics -- is of of of closed hear Hi happened the maybe like the of XX of additional at just and glad everybody. quarter. on Maybe to about see some first Concentra I'm down point? take And it that looks -- able I that the were to

Martin Jackson

temporarily of good Governor had question. the back open. nonessential. are closed and that were A.J. determined Kentucky in clinics now those was that where the Yes We Of of outpatient XXX -- Kentucky that the those marketplace XXX were thought rehab

required did seen an to the So the Governor's not government close. want requirements close XXX them. the of in is by clinics. were We we've to increase -- opening Those what

A.J. Rice

Okay.

there's So are closed a material end not it of the it's Concentra increase today less in at versus like or in quarter? the that rehab the outpatient either sounds

Martin Jackson

That's correct.

A.J. Rice

weeks relative those the of second in we've cost savings the as dollars on efforts in you've aggregate to of decremental know that terms in the in couple outpatient in perspective quarter of any very was around Concentra talking margin terms early Okay. size items I of really cost severe versus mentioned you or we the March? you the in reduction part all the fact what seen margin of of hit March what might and saw way to been there Is the business. -- and last the

Martin Jackson

AJ. isn't really There

if you the changes after from it occurred anything started was really started made that to a in March of very in is period. decline As impacted right the when changes. and fact at the there look quarter when XX. volume see us making we fourth really the matter a savings really -- pandemic Organization that was week declared little that the if But week, March take It this was we World Health first in that we that third

A.J. Rice

to No, just that. you any way Is sounds It Yes. an think magnitude since to to is of the what pressure? way of about have of trying it's that how revenue moving mitigate talk there may some about target. I and order it? that a implemented like I'm see understand the

Martin Jackson

Yes.

Robert Ortenzio

Yes.

A.J. Rice

Okay.

other out much question, last these post-acute -- with where guys comfortable the the some or than grant whether the they can accelerated attestations, not it, that? with respect fall feel payments of providers to all -- money. caution they some the but do B; advanced so whether Just you some of have justify A; more the Medicare about expressed

Martin Jackson

on pulling point And definitive now. A.J., a all currently that right give we this are and through we at -- time can't going we're answer that. you together information in

Robert Ortenzio

seems it shifting. But to and be complicated you're it's right

work So we'll just it. continue to on

and Fortunately we access costs information. data our all to of our have

-- to able able that. able we're whatever we'll grant some of to money won't allocate it, to So requirements be be not we do are we not because keep if it all don't of -- the

but So now. -- working through we're that

A.J. Rice

lot. a Thanks right. All Okay.

Operator

you. Thank

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

Kevin Fischbeck

on money just a Maybe follow-up stimulus number. that

million You of Is is that partners would or where minority you your and in the that? that you, a partnered. that said attributable minority got get entities you're $XX.X share amount the the amount to

Martin Jackson

the that's amount. Kevin Yeah, total

Kevin Fischbeck

a that received, really little and year? to would months understand more for, on was on two two the looking expecting what in then maybe a we get about on trajectories as for just quarter. first Total than wanted of matched Trying numbers like anything Select there, much would but look what year and have the up there a leap in more the stronger the you helped probably which those there the little think color first have growth the months amount had bit were strong incredibly or you that expected little to And been okay. they of the year Obviously a performance what might those is broadly, unusual you how the guys for new try bit, going against you normal? Were year.

Martin Jackson

a operators certainly had bit No. driven we mean, again, across anticipated. the I than four little it's It's a done all job volume. share, taking market bringing – really in business I think better were And have they the segments, bringing by volume. great in

Robert Ortenzio

Yeah.

did pleased just that. it quarter we with quarter from would exceedingly get show. have the a think of back believe of were mean, disruption momentum I lot and have think third that a fourth but quarter, we you And the I of we to of we was the March, the just really can changes to first of beginning saw lot year. the in not think last been continuation I a I things had we results

Kevin Fischbeck

to you saying the and about as specifically every you it elective that procedures, Okay. this? deferred utilization or just been procedures guess that have would than is declines procedures. were months almost elective in an have about three comment visits into back we've wanted had ago, to that determined visibility of some how what procedure seen tying you've are outpatient what you understand provider Is as thinking seen have into from it relates would we XX% exactly thought. coming elective then bigger speaking have I group what And I broadly across

Martin Jackson

I'm not Can that the again? you sure we Kevin. question understand say

Kevin Fischbeck

you of said procedures. elective earlier rehab come visits that think I outpatient from XX%

surgeries optimistic were XX%, in visits I surgeries then come back But will outpatient you so April. And come seen that outpatient guess surgeries we've XX% down elective back. down

So than you've much would thought you in have before. have surgery seen seen we ever drop a could bigger

would if procedures think sure elective of definition in what really seeing we of kind wasn't what the typical we're as I deferred is so April as And of procedures. really

just much average it seeing when So of elective was, a XX% this kind now? wasn't sure you're visits you well impact historically month what right saying, the say you is down this thought but bigger XX% or we're if whether were surgeries, we come from I using on obviously

Martin Jackson

the visits at divided took We That's months the look of elective XX%. so look XX had. do the visits by post-op. had basically done we being last we Yeah. over In essence how coming total those what we that is arrived took we a and from at number we those at that surgery a that

Kevin Fischbeck

Okay.

obviously necessarily So that's like… The right now time. not impact real bigger but sounds is it

Martin Jackson

Yea, exactly.

Robert Ortenzio

think real there's be going not I demand. be that our I find that time just Yeah, not to to will that mean historic. And think I ultimately it's but gone. all -- surgeries we those pent-up way of outpatient, think those their

at acceleration done to are So to be refer certainly some there there's be be they because while an going them as have to at -- going will some we elective, to we point. that believe point surgeries those

Kevin Fischbeck

my question. I then guess last And Yeah.

did the On patient that admissions volume expect that we there? rehab to would Can the the similar about to up the or to days think you even lot. being talk on was keep length discharged what dynamic we a be from Is we being stay down Was expect continue side, ultimately about trends? days would the rehabs, Thanks. admission though going would the a I see the hospital? of maybe issue some I were there guess increasing, patient rehab

Martin Jackson

Yeah.

going to pandemic it and of to far this I very is back stay, discharges. was would go a a the expect future unique that just as situation I see in admissions to as the historical with levels think you're regards length

Kevin Fischbeck

Okay, great. Thanks.

Martin Jackson

Thanks.

Operator

you. Thank

David from JPMorgan. is question with Common next Our

David Common

helpful. was maybe recognizing more thanks to be bit there's qualitative uncertainties. global many And the to morning. A.J.'s questions good the cost avoid length could on follow-up commentary us during of give outlook on just a the you, hoping might losses Thank financial crisis that that any questions, was little Great. operating And fielding structure all Concentra. thinking so regard for maybe comments a with performance I about particularly you our ability time. for and I to

then could the since business sort differences us in and remind of you similarities If then. of that, and

Thank mix as to about then makes significance be mentioned burden outpatient on little and would in permanent ask it and You at call expecting you. of this the the And whether closures the the actually, little on jogged whether part memory of my I tricky you looking go the rent bit? which wasn't a deferrals, put thoughts finally rent just a just forward? both businesses valuation

Martin Jackson

Sure. had David, would we months, drop would let XXXX two times minority the that last that of postpone put is anticipate QX me EBITDA with expected that anticipate basically exercise they that and and QX we've these will discussions question they put XXXX exercise and partners that address last XX.X remember EBITDA. and that in And multiple LTM come do actually partners put come of not XXXX. QX the given first have your our our of we in the in – that is

David Common

Okay.

Martin Jackson

the I salaries that amount to benefits. it and mentioned before the businesses, really As had structure, significant are a costs pertains wages cost of their outpatient the

have to at it's clinicians essence expense. isn't volume And And extent basically been there, clinicians that's past are flexed. that the is way the that variable what we the take that the the Those in So flexed. occurred has look a month. over

So costs considerably. are down

David Common

rent then And deferrals reductions closures? Okay.

Martin Jackson

being I large that amount. a rent deferral, about wouldn't Yes think

on $X I As less a is seen what matter annualized we've million of probably savings than of believe, cost an fact, basis.

David Common

global And Okay. that crisis, financial cost in of again structure and Thank difference reminders you. similarities just then business? performance make up or the any differences but not just

Martin Jackson

today. don't in happened we what what between there's to we have there's – comparison a David, Yes. no XXXX that comparative XXXX, think

being we extent XX those up, You're month. the open people will last to of a reemployed. lot the states over to the million think unemployed be begin And at looking basically people

period don't to going that's anticipate over time, a saw you what of it unlike we XXXX, here. So in occur where was

David Common

again All thanks right. Well, question. filling the for

Martin Jackson

Sure. Thanks, David.

Operator

Thank you.

Bill question next the Benchmark Sutherland from with is Our Company.

Bill Sutherland

Thanks and everybody. hello,

if forward complications Just number you business? point. can the mix thinking there's patient for the rehab, all very the think been two run this in one where of a for utilization you despite given quarter, And patients to strong quarter wondering, And the cadence the particularly utilization at about had that utilization. in do or March. going XX% I've to

Martin Jackson

an way far And Yes. at basis. took two hospitals take really rate first occupancy we up had remember, as Bill, as we in is on utilization the – as look you new XXXX. we the quarter a opened of

hospitals good that portion then what is is year of up. you're we've hospitals seeing that function of maturing. some volume And a the And seen so a the that you've opening of those had prior really from

can side. So mature get that you XX% think the rehab basis in we that a for XX%, on us, occupancy probably ultimately on rate of

Bill Sutherland

with even complications housing patients? the Okay. the And of COVID

Martin Jackson

Yes. Yes.

Bill Sutherland

Okay.

of you've The just you more handling or locations a a COVID guys you came – patient those Medicare have your even to for patients, you know ADC, this – that as to apply any long-term or census would two that? or ask I – where hospitals, referred Would set of take allow to of thing rehab wanted about on have admit know reimbursement basically other day your ago both I committed with another to I waivers in result of permitting to just kind is CMS from. out regardless criteria more they're and yet

Martin Jackson

just to destination to and acute -- find their assist senses those really able Yes. My were discharge short-term was understanding of that patients. the the rules hospitals decompress care for be a

acute do continue highly handled. we've As that what far population concerned, always as we'll handle I to the is patient think, we'll we're

Bill Sutherland

Yes.

Robert Ortenzio

they which network was patients Yes. and all. completely the take I to say that the rule fully I the illness ability The the don't on critical advantage hospitals. early on that our universally -- we didn't that waivers those for bill the of what I site-neutral and historically at LTAC would XX-XX XXX -- came call think that were across of

us for will of now as right I us that and Select the the, We patients are Medical the for out coming think, for mission sticking patients and the to this high-acuity best ventilator-dependent well. be

any really haven't of we taken waivers. So those of advantage

Bill Sutherland

-- there The is one All or new there makes you line any time total last your change? your rehab for sense. update hospital on right. Can That for me development. an is

Robert Ortenzio

we gone think with to has our the that are in in Banner on I unabated expect and construction construction under the open two on hospitals Arizona time QX.

Bill Sutherland

Great. guys. Okay. the all for Thanks color,

Robert Ortenzio

Thank, Bill.

Operator

there for will it I And ladies you. no hand management to is and back time for remarks. gentlemen questions. closing further Thank

Robert Ortenzio

everybody updating us. we Yes. And certainly quarter. you to next for Thank will you joining look forward

Operator

And and gentlemen. Thank thank for you you, today's ladies concludes conference. participating. This

Select Medical (SEM) 1 May 202020 Q1 Earnings call transcript