GEN - Earnings call transcript Q1 2018 | Genesis Healthcare, Inc.

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Operator

Good morning and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions]. Thank you. Ms. yours. is floor the Mayer,

Lori Mayer

our Good our morning issued This us We also section for is of A this call for thank earnings press one you will of Relations our Investor morning. available in joining at release genesishcc.com. available replay on today. be the and website website earlier announcement this year.

like few housekeeping Before a we matters. review begin, to quickly I would

impact undue and beliefs the based are on review complete information, for in affiliates statements First, our results that any cause those that a about revise management's or changes implied Genesis Healthcare today's from new reliance expectations, These any filings result of and or changing our assumptions other factors made our expressed arise forward-looking as to federal differ for business to uncertainties on update statements law, operate. do our forward-looking undertake reason. SEC forward-looking we circumstances Except to call. on and subject risks environment securities a future place results. are its current discussion publicly which from today and actual encouraged more not as are should that Listeners materially any events, or statements by statements to required or and could could not

revenue direct us, the and the are company the that that operating to operating In own we, operated addition, of consolidated entity. any by as employees operation similar meant or assets various imply management, that References we the operated as any of by are has Healthcare well our verbiage and its subsidiary to and mentioned or operations the separate has independent and today a use not same assets, Genesis is employees terms activities assets. its

non-GAAP business. and measures useful benchmarking that EBITDA, information financial release and today of earnings We the analyzing non-GAAP EBITDA, in to believe EBITDAR, for which our Please for adjusted our useful measures should results investors the information adjusted public at are measures. turn financial GAAP financial over the non-GAAP trending, our not company's refer financial the to include measures. with of contained these and be presentation financial upon filings our regarding references And Hager, measures of CEO performance Our provide are to Healthcare. in discussion because and of to I'll exclusion But disclosures in call GAAP that, in reasons value earnings relied reconciliations non-GAAP non-GAAP today's the to George its release. Genesis financial such

George Hager

thank our and and turn then focus the I of regulatory recognition trends and operating revenue met during despite challenges results on with unanticipated ahead color pleased for am these Today, Lori. near-term reimbursement assessments. adjusted for slightly this you, on the to Good capital very quarter, more rules strategic accounting DiVittorio quarter. three for two performance our over call going Revenue us. adjusted structure. and quarter. were to achieved the and you provide I'm joining new expectations Tom We consensus to landscape. I EBITDA and results morning Thank my objectives comments the topics: will the

by an second, skilled First, nursing $X the over GI year-over-year year quarter, effect These quarter. to million. million centers admissions EBITDAR Also up of in adjusted colder regulatory-imposed staffing prior due divestitures were constraints the the million additional prior prolonged adjusted we costs $X outbreaks, over influenza, less temperatures severe facilities. and drove divested reducing XX EBITDAR These or year, past other weather on year and quarter. than year of our other utility underperforming more XX $X upper restrictions nonstrategic XX restrictions. generated had and patterns winter And the the weather-related facilities during impacted current

a million very, which I $XX a that weather continue the reimbursement point to small within for Tom key of inflation to a all EBITDAR virtually, of and both these in restrictions subset skilled not divestitures, encouraged the conditions details patient completed about monitor also this inpatient in length more will minute, year-over-year adverse of nursing regulatory be XXXX. drivers cautious stay, performance and summary, into to positive some and remain balance adjusted We events very but We the very rates. negative we impact movement uncontrollable is will want including of decline these the recurrence there in trends, in attributed of closely. of wage out few can So facilities. anticipate do our quarter, get

parts Moving business. on the of other to

Our very growth. EBITDAR business a quarter, had strong year-over-year rehab therapy producing

this that For response to the the continued solid is we XX% time quarter And of structure. year. streamlining growth in G&A over cost EBITDAR million Overall, seven our divestitures the start in year-over-year $X very reduced to quarters, last, the we or to overhead cost a X%. in was first reduce and as by

Moving now strategic near-term to objectives.

reported, during major we designed the cost overall liquidity, improve capital of the to and financial previously As financial restructuring completed of the quarter, health reduce a improve the company.

was credit result our levels the million X, to of provided restructuring. into entered rents effective $X basis of cash restructuring, XXXX this liquidity. reduced facility And XXXX million XX% Annual $XX $XX expanded from interest and post or that January cash we As annual levels. reduced additional from prior new restructuring million a

and capital. us, a back portfolio significantly below-market leased With These further initiatives now facilities of cost reposition of pursuit to these to company. to of and turn attention the opportunities the other overhead designed reduced buy cost further smaller mission-critical evaluation at certain restructuring include strengthen activities optimization, to with initiatives and restructure opportunities our we leases behind landlords

in all nearly expected result of will $XXX divested These and Texas. or to in we reduction. XX underperforming of State optimization. facilities, January we be divest nonstrategic Between divestitures XX sell Since neutral, of additional we facilities XXXX, topic portfolio the XXXX, have an operate flow cash On X, now expect debt million XX to or including but planned free the are facilities. July

thoughtfully insufficient exiting with density continue our will underperforming We delever compete. to to and opportunities markets shutting assets on noncore to by focus additional evaluate core or

landscape like would to for moment plan million. our for means take help Company in and expansion our April, opportunity this to to stake initiatives we this in discuss of Riswein expansion strategic perfect I to a Chinese in is XX% China. business Health next With China. level. to our highly us the deploy, regarded what to to to subsidiary were China In very our partner the Industry excited in Next Having it Investment sell challenging and key able the future navigate the I'm to announced $XX limits and well-established, success. we a Riswein help capital take transaction is us partner to about the rehab well-capitalized

goals Our Chinese these conditions. comments regulatory to and months final China over the and in regulatory the post-hospital quarter to customary of subject on ecosystems our and population on and significance would facilities China potential to lack reimbursement partnerships therapy of with matters. given the of XXXX, is expect forward the focus Chinese dominant, care first aging focus rely ecosystems developing really partner and rehab calls coming Shanghai in and hospitals on care working there post-acute in My approvals acute licensing the the huge to believe other in close rehab and I transaction develop with Traditionally, what Beijing. networks. look today. and infrastructure Riswein We

several the past First, A basket proposed Medicare X.X% market let's for law basket October Part years net look not pace at inflation. year calls fiscal The a proposed the update over XXXX. kept rules SNF with XXXX. beginning payment for The market X, has

PDPM as proposed positive X, system inflation CMS X.X% So June increase RCS-X will is development, Payment groups in of the the proposal for cost. similar that mix a to the public payment CMS suggest rate Model Upon carefully to comment we further advanced view comments. before simplified. deadline previously the details both be to order examine certain approximate also proposed to to to in underway in effective aspects national within it as changes case the Driven Patient and October having In the been of submit initial trade new XX proposed with Efforts an program Genesis of are review, of the the submission changes XXXX. April, our of or design

As of the aspects a early a provide PDPM, comment the of certain to be much assessment result, and by but too is we proposal. detailed encouraged it continue to

revenues. it First, expectation compared the be budget to neutral that is will line to have as is system methodology. RUG on designed top the our Therefore, new no impact the current

burdens the of a new and elements will the system optimistic are respect of scale a third, accomplishment, and measures. like touch on provision certain And nursing focused our of areas a costs. limited, Quality changes on for Genesis to Five-Star measures. system its And we does providers and with provision services. care the to In limited geographic administrative redirect positive to be our achieved reduces within staffing number that our of quality to industry. paperwork two CMS care This four stars diversity. System. System years. critical to the made for rather administrative cautiously the aggregate report greater in the size, that will to than the Five-Star to I'm I keenly allows efficiency more my and therapy flexibility quality resources than most given review reflect based facility. Rating PDPM been proposal particularly truly the for that to our quality spring, Rating date, would Second, I in are better clinical opinion, we've overall centers analysis remarkable Overall, Quality the This pleased the and the Two in Five-Star emphasize, is that on last, allow

significantly would commitment financial As quality The rating value-based X.X who a stars. reflect Officer. Chief despite With a call I Financial improved average costs. the staffing system outcomes These the are I it providers, centers challenge. achieved our patient ultimate at national consistently to winner commitment optimal above this finally, DiVittorio, make of staffing, like who will industry's deliver outcomes XX,XXX And the clearly once to in a Tom Genesis' Genesis stars, X.X to again of turn reality. and to employees relates overall that, over thank those Genesis'

Tom DiVittorio

$XX.X X.X% Thanks, from of Standards George. revenue that operating XXX, to in adoption the Accounting and Today, on XQ note then and comments trends $XX.X is this with been $X.X If Codification on the Over It's $XX.X attributed quarter have billion XXXX. sheet-related with to contracts and effective million million my million of year-over-year XX, customers the prior EBITDAR this million of remaining a approximately revenue XXXX decline XQ revenue Good XQ while occupancy was balance Revenue year-over-year on XX% X, our focus to X.X%. or mix. reported implemented basis and revenue the provisions forma XXXX. or from to of or from XXXX, structure top-line. lower decline divestitures, pro everyone. results declined topic attributed comparable attributed January of to of the in $XX impact March morning, XXXX. XXXX topic important that $XXX.X matters. were declined is million Starting of first capital applied the decline reported year XX% I'll XXX ended Adjusted is would X.X% XQ skill

of attributed George in $X the XX.X% in principally of facilities compared declined million the XX attributed seasonal in impacted XXXX from attributed XXXX additional performance $X $XX.X days points remaining year to occupancy XQ costs points million is regulatory XXXX respect quarter. to XX.X% the comments, as As year the restrictions impact XXXX XQ basis from of covered XX mix, prior of to during the and prior million divestitures, is to basis mix XQ his in this With Skilled an million by with quarter. decline, $X XX of XQ declined occupancy various higher operating quarter. to

basis Medicare XX Medicare of days, increased category, category quarter, prior year Managed from the which points the the mix skilled largely XX consists days while Within of insurance mix points. declined basis

first compared in first X.X% to last patient admissions quarter decline skilled as the of quarter the experienced XXXX, we During year.

XXXX in decline Medicare admission and a X.X% length in admissions. patients we X% compared to the Average of skilled Managed in was the X% patient the by quarter Managed home last discharged to Medicare flat year. experienced admissions, same offset Medicare Within stay Medicare for quarter first decline, a increase

overtime growth quarters. worked rate XXXX XQ hours rehabilitation patient the all-in nursing rate basis was for two reimbursement staff have growth quarters. segment stay year-over-year XXX over our growth, past versus all-in we agency summarize inflation generated of On several To with therapy These have first to Including costs, of nursing most non-over grew length This headwinds, wage strongest the but our reported hours received rate rate X.X% favorable we overall per exceed years, nursing costs this growth wage over seen XX of an XQ we nursing growth mix and as reimbursement was all-in drivers. nursing X.X% the employed X X.X% we the in operating gap XXXX. show the stable, the consecutive trends from wage X.X% time time XXXX inflation of cost all-in basis of a the topic experience compared for same we weighted to narrow XQ XQ movement by and our occupancy wage XQ over average X.X% from worked quarter, the period, point in two improving continue EBITDAR last the grew reimbursement wage inflation is hour seen X.X% statistics payers quarters, XXXX. XXXX. in seven labor reduction our to skilled trend in in we moderated Skilled points continue and since growth in in key business although the

with balance structure rents XQ and matters. XQ XXXX. transactions in or X.X% $XX.X driver XXXX of moving million reduction a Restructuring primary sheet-related cash to a to Now in capital compared as completed

fixed inpatient Our X.X the rent basis coverage assumed a basis classifying January X.X on pro was pro held-for-sale. leverage assets adjusted times. for we forma times, reductions XXXX was Texas Effective funded of a the approximately our Texas X, operations began forma of charge full-year March net and same sale our XXXX, LTM while on interest as asset and ratio

of use sheet transaction as held-for-sale. is us consequence, costs operations separately XXXX attributed allowed reported cash, the XQ inpatient all fourth of As This a the $X.X assets while of in transactions. in preserve segregated to and have through of over and to and incurred was our cash XXXX, balance to the extended the the been anticipated of and quarter obligations $XX cash repayment flow Texas We million quarter short-term worked million. we liabilities labeled consolidated which in negative on of from restructuring

XXXX as delay will in XXXX. expect These flow cash have reported years, Looking will in several June states to July. we impact operating Medicaid company, ahead to serve but delays XQ XQ no prior and reduce on until material receipts to

open XXXX. report We in expect operating that, questions. the flow With for positive line to cash fiscal full Amanda, please

Operator

Instructions]. [Operator

of Your first Gajuk Joanna line question comes America. Bank from from of the

Your line open, Joanna? is

Joanna Gajuk

Good morning. the Thank you so much for taking questions.

of on EBITDAR. the gave guess of for I you So numbers the -- on those decline in couple in year-over-year explanation terms

restrictions. $X So related closures of buildings, flu you and of the some regulatory-imposed there to staffing year-over-year also is but some decline that restrictions million said was

flu So you about? was break in can us color How maybe restrictions? any also restrictions versus you And what were these terms much those give can these of other out?

Tom DiVittorio

of flu Joanna, the vast in restrictions the majority were category GI. and of these upper

in can you all that category. of So was it assume virtually that

Joanna Gajuk

know. to good That's right. All

mix, stability skilled what maybe because, but maybe in declines experienced like seems are there lower there you some -- seems guess, you're is on somewhat still the -- these so still guys so than year-over-year, I And down XXXX.

SNF. I there? up talked respiratory maybe color also on hand a but of of for about to because any more end was closures you one there in impact So the and high any seniors the flu-related had volumes sort benefit And issues you, negative know

any there would is us to? So give color be you that helpful can

Tom DiVittorio

question, can bit there. of Joanna. We a is a Yes, bit that's Flu a color sword. great double-edged a little of provide

past seasons, a severe. seen season as the would benefit. when think you we in have are year flu moderate I it describe But was net cases I so this as flu think, some probably

if those buildings, down I of was it almost basis down in skilled a incredibly skilled buildings, at buildings; just the their double some our were XX statistic for year-over-year fact around rate. And time -- quite look that of of that quarter and admissions X.X%. somewhere earlier prolonged had admission few the quarter. provided we severe, But of during a XX where the period form course subset the flu-type buildings a admissions during some XXX our of were Beyond were on to that almost restriction buildings subject you

percentage so I of it's was flu for portfolio, to our say significant net admission flow. that of safe think terms negative And a in fairly

Joanna Gajuk

helpful. I make I you to proposal That's trying were And I guess, in appreciate XXXX. if Great. in of George, comments may, CMS the changes the the terms for fiscal

the in what how prior to you -- CMS the changes at about is core, deemphasizing do guess, the I rehab So kind therapy. reports of in the model terms of similar think because,

your are how also come for will about changes changes, improved that think flagged changes? but you this those do of that I you EBITDA preparing those you business? given actually your So mean, think that third-party somewhat how part services, Or rehab do will you impact those quarter,

George Hager

as the Obviously, to equal structure utilize new there significantly we the the direct major without there more and not more provision modalities, a RUG which fundamental mentioned, in is system believe payment system Joanna. modalities allows, the efficacious Also Yes, will of the new the least I Use with as and concurrent today. if system, group at change is down. your of to are not great current ability detail, therapy rate cost one-on-one is linkage services to drive than cost-efficient therapy.

third-party effectively customers, think, are relationship, provide also own cost customers contractual significant reduce the our a great our as pass into manage opportunity through opportunities third-party and more but that will centers our efficiency also cost, to to preserve for margin, as I well. cost far will about So there be no all our question, forward we fundamental in business, changes as going but in approaching of think we

Joanna Gajuk

-- If I may, sorry. the I'm last

George Hager

months will become XX these changes have we or XX before effective. Fortunately,

rule reviewing opportunities released, than with -- contractual be looking at very being RUG optimal in recently relationships as really nature move they're to to rule might So cost we are the the contracts that we our and more light are aggressively today. based

Joanna Gajuk

on the is for full-year. because the of, with -- enough there may time flow and I it. this? of still give just guess, the the positive squeeze comment that changes appreciate Tom for to there I pieces cash definitely the I Right. divestitures moving the can a appreciate is comment on last operating one. be guess, you on to I prepare you But Any if exit lot CapEx make color and for expect the I the

Tom DiVittorio

we're Joanna, mentioned planned in for point referenced a the he the in neutral. we will But the we've comments, expect direct providing and key that still about release not year. think George's I guidance divestitures divestitures that the be cash free flow that

respect of really virtually associated million with about divestitures, debt. repayment no line bottom of impact significant these with given a event very So the to to the cash delevering but $XXX

Operator

Your from Stephens. open. line next from Dana of comes Hambly Dana, line question your the is

Jacob Johnson

-- occupancy Hey, thanks. for closed? question, Dana. Can XX I decline in first impact occupancy This shut is Johnson your year-over-year sequentially, the those occupancy your the of you have facilities did quantify facilities. Jacob ticked guess, up those to being on you down

Tom DiVittorio

to They closed. of that were the through were new admissions was facility. influenza not were just they simply -- through Jacob, be were working just level those facilities clear, while the restricted, running

basis think the that contribution individual have the buildings, to we just rest just than But what not made the admissions more quantified XX and of earlier portfolio. was down closer point decline. I of overall So year-over-year of comments that admissions the XX we impact is a do the buildings, to buildings the the their XX double skilled basis on rate these to about in

XX basis impact So it on points. that pretty had significant a

Jacob Johnson

Got it.

facilities the going guess, the something So there's of with your exit or conversations then Was XX are by your landlords to there. else? this another landlords? some of conversations the this operations headwind part of your July some smaller how X. I plan is -- of on leased And smaller with announcement those

George Hager

neutral were George Jacob, with those transactions Actually, landlord, our XX with they strategy landlords to This core core all and landlords. these have to and density XX, formal level at on are -- are I if look were the I'll comments, and of even these we're not with look compete in though hopefully said Hager. markets, were portfolio optimizing significant a accretive would on And core principally my our say, look older result X very just valued, and the we and our were exit to have that two will our very, take market to markets. I looking continue not -- to least is the our improving do at at the were at highly. XX residual as we will and assets, flow in right they basis. And not the in that more those coverage assets of and portfolio effectively one. of Actually, transactions cash

produce. the going seen the smaller Obviously, of well. the can I supporting often as a impact. the larger industry landlords that But significant industry the landlords discussions have -- of what in in far reflecting one they're As two current think have with the smaller flow individually the done level landlords, of cash have landlords

And albeit, our so nearing we good approaching when lease dates amounts the are natural we those termination we to selective are residual of through work seeing as portfolio. are response, landlords

Jacob Johnson

then loan. Got to moving it. I the new real guess, estate

the about you Welltower I loan. looks quarter talked of you financing, refinanced $XX HUD million to think like last alternatives

give new any on on there? these estate color Just you real can you more loans took

Tom DiVittorio

partner, the this our Yes, Midcap. new lender is Jacob, in case

them successful, you So to as with as the side know, restructuring and financial we grow. ABL of part continues bringing capital our structure partnership Midcap the were the into on

was of there at us great cost a to so And for opportunity lower a refinance capital.

existing underlies real the Welltower bridge estate that loan. Some the of

a just for us. role So transactional good

Jacob Johnson

in the for preference maybe question the last new answer a On of of you is from then is think regulatory obviously, PDPM? -- push this working industry's to And PDPM, industry the to have burdens do the any me. to the Do chance it. but there both, back continuing ease with is associated Or the respond. terms for rule? implementation you or Got sense

George Hager

back is the industry date. push implementation to Jacob, necessarily to going try don't think I the

change generally been view in the the to also I before, new be challenge generally within positive will XXXX the RUG No, I initiation We've of from changes a industry through we bill in the has to this on industry Prospective when just and a think new decades I process saw set radical patient under claims system. mechanism compare are reimbursement The very RUG the speaking, moved cost-based obviously, that wouldn't and, changes preparedness both that this system. and rate. to with both, the a of to the industry numerous but it front-end on the both the CMS system, system System. overall, system. operated to Payment These prospectively the rates, a a for evaluate the of a needs think therefore,

always industry PointClickCare it's that So to has vendor support prepared from think was to but like details, a implement be the technology solid I partners system. in new that an

think there don't back to be push aggressive I implementation will So action date.

Operator

[Operator Instructions].

Your is the next from question Vanacore comes line Chad, your open. line from Stifel. Chad of

Chad Vanacore

which length with on stabilizing path, without sequentially basically Jacob's occupancy, a words over something in at occupancy think normal off take or three portfolio The is gain different going take quarters. stay average to lows? mouth, a do mix, you putting it question, marginal of I'm So past improved seasonality bit these else is and the

Tom DiVittorio

you're sequential at occupancy you're on basis? Chad, So looking -- referring a

Chad Vanacore

there. is Right. And that seasonality there normal understanding

Tom DiVittorio

and admission a think that flow you But there. as over careful little is mean, against be actually take a expected. lift quarters expect to consecutive occupancy, seasonally of that flat did the Yes, does had we're overall yes, the Are the always up. But nice little terms maybe I'd of mean, couple a to that a difficult X-or-so of on a there which discount look, slightly and at in the gap bottom? experience when little and we until or issues where it we certainly the say last year-over-year overall quarter-to-quarter basis, look feel Tough the we is in narrowing. quarters gap bottom we I narrowing be a you're makes experience right, a say that we're flu, of on we of year-over-year we bit around from would I I are very bit seeing I at occupancy.

Chad Vanacore

length bottom is Calling stay, exercise give understood. remarks Average in your prepared you'd I getting bit details looking. Can a there? maybe you it backward of better. always mentioned us about, in something little an more

Tom DiVittorio

flat. just Yes,

we patients, unchanged. the been So look narrowing versus as the relatively there of quarter we of year-over-year I'm Medicare first say a bottom data interest. each the it length And quarter of but over look not Medicare and at stay when a prepared again, quarters, is last the either, we is have couple [indiscernible] seeing straight patients there Managed to we this and point year hit

Chad Vanacore

I All you right. mix bit a stabilized And after is balance here? there? lowered than similar a seasonal the around a think going better or then in had skilled do maybe on mix. better trend bit as maybe anything expected occupancy, little mix had bar or Just little skilled Is there

Tom DiVittorio

XQ it to would compared the and recur benefit quarter, year -- you're much trend. just as seasonal prior sure, to I that back probably that at as sequential can going Well, you it on the bite really the to certainly to as say very much can we as flu. March you, expected. certainly looking I'll But it's And benefits -- obviously bit go for balance, had the as in quarter, year. sequentially, Flu you XQ than this can we're more compared of balance. a can last bite And see have it quarter. -- again, won't little

of we'll we I a of -- see as the gap bit narrowing mean, So close little we'll see maybe further out XQ.

Chad Vanacore

all-in of X.X% wage that Okay. X-plus-percent. had nursing you had Then growth in than also remarks, been a prepared mentioned your better

the that to organic of last most of inflation? we is how to think that seen labor? had temporary wage use I How due growth of due is And year. lower much much

Tom DiVittorio

say most the in of use actually -- it temporary the the of that drop labor. a on I On would is

seen agency think overtime. use stability and just more I growth recent employee cost we've in sequential seen and this year-over-year we've times and our what in per in is of hour

this got was [indiscernible] we strategies. I the less So bang think quarter most reliance and of

your If some that in markets key saw we agency in We overtime in starting inflation that in in expectation and to this we you last may would many see some as think, you And where the the nursing retention and that year-over-year is time quarter wage our much return. -- have that mentioned jump seen over staffing on year I increase markets had investment now improve moderation that wages first rates. recall, with we the big third was self-imposed. some reliance occurred in quarter had we of the effort those to the that we made had of constraints yield

Chad Vanacore

just one be could quarter. rate more rest guarded in there of model last year? than any me. for the run All Then the just G&A or Are to for one the looked right. better saving

George Hager

Chad, to what for just of the beginning there. opportunity cost need divestitures. obviously, the seen is We, the you've adjust structure

out, look are I As successful is commensurate efficiency overhead and initiatives will level overhead itself, that us greater which that reduce there, we very even with of a allow underway there structure. been realize the we've divest the to we I revenue think think in to challenge but in

in come think quarters. more that subsequent you'll to I So see of

Operator

Instructions]. [Operator

from Your RBC is line next Morgan question open. of your line Frank, the Capital comes from Frank Markets.

Frank Morgan

second you far? a Lot the give can around bounce flu. quarter weather in curious, just actually so the I'm the anything so that seeing back seeing of color But far. us and you're You're

just sort Any mix. occupancy clearly now admission any was back just that you any us I sure make back to or and a of on can since things normal. callout those bouncing to color are -- So of want color give or bounce trends

George Hager

hard it's to Frank, Look, really tell.

highest typically some first volume. quarter skilled adjusted, -- quarter earlier and in of in seasonally Tom said is census the responses, you have admission your As the

back into move Substantially So second of you're seeing expecting, the stability as to a these, end are will -- think the and into into say admission the say, May see decline of all some you A natural around quarter aggressive restrictions. are of us. I'd adjusted. flow. behind lot we lot them and census of seasonally I I admission

a seasonal back period we natural those or where quarter, a themselves. But to not back starting turnaround second you a kind second we should as into the -- to into expect into into would the the some summer quarter in census of on see So you're and basis. decline centers move month move it's measure bounce it's

So --

Frank Morgan

get that demand I the Right, starting in with know -- is but this do first some another of look let -- really it think guess, on Obviously, you tough quarter, of me to forgetting a just that yes, about a look? color would a second centers bit second and back quarter could it question the with, of I what look this looking lifted came quarter? like quarter, -- second like restrictions alone normal I many exactly little and of say, kind is it way. you will that and you like more normal seasonality ask some these fact out would and the to how was normally so quarter more like a

George Hager

little the a targets, first But were bit. perspective we Frank, we -- spot budget internal from ahead winter our to this on for the people Tom the would did our as lot will -- you I were who us, metrics numbers much of Mid-Atlantic -- a states pretty tell on were well, which of the costs. some and on in aggressive quarter, consensus have of a pre-consensus, from the budgetary I We living a go the think Look, flu in despite that elements Northeast, internal a conditions, on we pretty know and and those add weather.

first lot are see. There our we what is of initiatives began back lot So is opportunity more that that in thing. in the the side we're elements management think see more positive And structure in we good on to which stable, I the Census you'll that referred cost a cost by quarter, to, aggressively of the nine the place. Chad saw of a encouraged we manage months a year.

our the say, which highest the perspective I and an year. seasonally normal more adjusted, a in would the EBITDA quarter be to -- perspective flu second would or calendar on numbers is yes, we Tom, actual a quarter So on second from historically, quarter, expect EBITDAR

Frank Morgan

there, I understood. so -- there wasn't a was my Now, that

color and items? list You really of it bottom regulatory Was on impacted -- a back to said just some adjust the that restrictions something about of out? set how that not that any just and just just might Or the automatically Is is might at flu? all have regulatory volumes. restrictions that

Tom DiVittorio

Yes, Frank.

add regulatory would list. were comments. particularly little others. the GI, upper And to were flu, at illness I I bottom and think bit look top of to most color a the the maybe related, that we flu, There of of on of to flu put the referring restrictions few were GI. a put George's those list upper the and

we and our back a second go disappointing May slope we movement look, middle fairly in at we're of pretty had of last steep terms year, through a It that you XXXX If and the the second of here. experienced. And only actually quarter look quarter occupancy. was

slope not the would But George at the at which are in we're last question, least normal your to-date, We the what if saw we that providing see, that expect that I slope I color to Frank, answers we're but looking not that normal, seeing I but don't you steep described, the obviously year. XXXX you really have. we call think guidance. full see that's today, what know XQ the

Frank Morgan

now sounds that encouraging. Okay

utilization to proposal more be understanding So going new group, like there's the the some sounds to of to with it those that, things. for concurrent over regard Model, the flexibility therapy Payment kind in and Patient-Driven hopping

on can more of you MA today, lot I group world don't Just curious use have MA wrong, if in you and a I'm don't concurrent that mean the sort there flexibility already correct me patients. but you work -- side, and already for

that if does change profitability? than my lower -- those does So correct? using -- is concurrent models? understanding is of have group other the -- seen profile that how margin then, on of has is it there just one And kind correct, been you just MA, by more and any rates number Was being how that, the in

George Hager

of the new with our delivery in it a care period to you're is how in system, right that especially been Frank, one process operationalize it we to the aligns of delivering to other obviously, including -- patient value-based stay payer. that, care, cost-effective around like sense, level. as and to the appropriate But the by in place some optimal of most managed positives manage PDPM for -- system our clinically real means appropriate to from trying underlying around the also BPCI its programming therapy required initiatives absolutely initiatives the that some have

operating environment. So have an yes, we been in already

the just patient of to a Medicare of patients the less or is profitable in with efficiency have So other that managed make are and value-based But even payers that we managed the managed managing side, I for Part on the based. adequate the would is difference think, managed majority cost therapy that programs. the need not margin Medicare do argue I the the of than indemnity already lower with because care is still amount rate though Advantage not on patient, managed operational under this new things some offset patient. those Medicare we care cost, system therapy for that changes care place premium have A in Advantage and What our to -- it the been time Frank, in help would care, RUG incremental

Frank Morgan

have know impact of Got and build the Could -- called us is trying the and/or could but rent could to sort then, you to you. kind Texas number what of so if those divestitures. model try just you you run think number incremental any about at rate give you're share about XX I in? out EBITDAR without the those with an a of don't think I color least us coming of give And acquisition out, think -- you we that guidance, you

Tom DiVittorio

the their as did to relates facilities, associated an those it in XX level with with press EBITDA adjusted revenue. Yes. Frank, the provide we release, annualized of properties, along

Frank Morgan

rent too? they have there did and Okay

Tom DiVittorio

that annual $XX.X component we did. was we rent those There away of when that divested million Yes, goes XX. cash a

Operator

no time. further turn I this have call back We the George to questions Hager. Mr. at

George Hager

things everyone. you do bottom. to so conclude, few again in just you, look forward a I months. could Thank see if talk I a we to And approaching

seeing to all Thank us been look We portfolio what growth very you of XXXX. And managing we forward have morning. the half very, are in and cost the encouraged for to back the very joining structure. and aggressively we're this returning by

Operator

Ladies today's and gentlemen, this conference. does conclude

You may now disconnect.

Genesis Healthcare (GENN) 11 May 182018 Q1 Earnings call transcript