GEN - Earnings call transcript Q4 2019 | Genesis Healthcare, Inc.

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Operator

Good morning. My name is Marcus and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Quarterly Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Ms. begin may your you conference. Mayer,

Lori Mayer

our and issued our morning, be call on section will thank of available A The for you We today. available one of Relations Investor our us also joining the at earnings this will genesishcc.com. replay for announcement Good website on press website be yesterday. release 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 materially 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 differ any events, or statements by statements to required or and could could not

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

our measures useful for presentation adjusted We investors and EBITDAR, information non-GAAP Our financial regarding our non-GAAP earnings discussion public which references these the non-GAAP non-GAAP include adjusted provides financial financial EBITDA, measures of and measures. believe value useful and information our the for are of EBITDA, to our contained results in financial company's the because GAAP the filings release are in to reasons the today disclosures financial analyzing relied to its and to exclusion business, and benchmarking GAAP of earnings refer trending, financial performance measures. should be today's at release. Please non-GAAP upon not reconciliations as such, measures

that, I'll with to Hager, the of And turn over Genesis call George CEO Healthcare.

George Hager

morning today. Good Lori. you, and joining Thank for you us thank

Including Healthcare's members Joanne as As Financial Chief the Chief Genesis today. Chief Management Richard Feifer, a our call Officer; Senior of Genesis and Medical on DiVittorio, as Tom number Nursing Dr. of Dr. well Officer; the team Officer. Genesis Reifsnyder,

turn on today's prepare are Before I and would call we will over centers our share to who precautions like the Feifer earnings prevent Dr. the call, I latest the to taking with start to Dr.Feifer? coronavirus.

Richard Feifer

George, morning. you, good and Thank

virus that our United highest person taking to reduce the residents spreading community the facilities. and the without precautions you to we experiencing wanted country, well-being share many and the within preparations with and States areas spread likelihood patients the of goes With our in we're It safety to of priority. around Genesis to our is our person saying of and

about with leadership the COVID-XX teams Since have clinical Dr. China, coronavirus, address the in outbreak with consultation and impacting the the in collaboration meeting with and to regular management centers. possibility of officials. the executives have I States been subject American Genesis an and the our outbreak public Health experts Care health the and direct began regularly United concerns Reifsnyder in senior CEC, at our Association matter and local been virus Joanne along current

central Our federal [ph], and publishing to guidance local synthesizing leaders. guidance finance activities, updating and executive meet team leadership daily reviewing

more as or We cost calls are your currently action, to answer specific we conducting provide and questions. updates, to guidance reinforce needed twice-weekly provide leader companywide

of specific immediately email taken result hotlines established are concerns. have real-time which We or internal as are and have follows: actions to we questions escalate the to Some monitored in

have policies. educated and travel employees on our COVID-XX and our revised We sick

and epidemic continues to throughout coronavirus residential of patient our a end member very and to and doing affiliated each video appropriate self-monitoring. through are circumstances to all We them we families Arrangements we've market exceptional this visitation that well be precautions country, everything enhanced all single our each these restricting with to residents capabilities. now will our facility patients, measures facilitate underway such support to crisis. As spread entry conferencing screenings family can to provide are and be to entrants [ph] to challenging the center as employee life realized situations. of to difficult mechanisms well and centers are Upon ready with

a facilities enough dispenser Rest Finally Coronavirus. one each XXX of all time, have had all receiving centers sanitizers in working the to minimize are single are that COVID-XX but of case an potential any this to in centers. confirmed of we room. our and more assured, product one we our experienced hand any dispensers preparing are at said, we patient spread, diligently also With

I'd of be questions happy end at to George. your today's [Technical answer back Difficulty] to the

George Hager

and pandemic our and fortunate residents required significant this effectively our time to Coronavirus during at Genesis our highest protecting and and Feifer leading the Feifer. impending unprecedented operations is Even is caregivers is have exposure. consuming Thank risk. on bedside our currently Reifsnyder the clinical the resources you, priority though truly Dr. manage to focused of our patients, Dr. Dr. risk

in reflecting I on achievements would XXXX. like a to spend minutes few our

we have the year, strategic Over our made initiatives. of many with significant headway last

improve. industry to a whole For continues the post-acute as

improving of During to The saw improve. And occupancy environment growth. successfully while to rate the costs managed have outcomes. continues our PDPM. reimbursement consecutive we year, fifth quarter We effectively transitioned we

of Genesis. strategic happy changes be the report have reposition results. time, our non-core facility I'm out have year continued down that to to At -- turned focused on while made, the a positive we paying for we increasing ownership continue objectives same XXXX, to generate assets, shed strategic remain with and debt. to And

same to the in XXXX, Specifically basis our year. XX in prior compared quarter EBITDAR grew points margins the as QX

$XXX on Occupancy grew for the million growth XX% the the year, have XXXX. We of year. ownership or quarter to end in same-store thus of additional quarter exited, XX exited of an compared the far assets basis the the over by and approximately points right quarter, debt. partnerships estate We with net own, same to future the set divested, we as LTC for non-core fifth million the course our and creative estate paid real recognized prior the that the ACO's XXXX, closed Program. Shared of through of $X two facilities. And participation XXXX in of stage five completed facilities, fourth operations down consecutive We Medicare of track in we the are own, of we in income to Savings of real XX our XX

a interest facility estate industry-leading sold vein In in X, Washington real located program. pursuing XXXX, benefits and as Genesis the and strong platform In venture. announced, Nevada effective scale, we XX California, combine newly creative of national with facilities into leasehold and that innovative local previously designed experience and been February provides joint formed addition to divestitures, that the structures, our have operating joint venture to of clinical infrastructure

is NewGen and and facilities. the agreement, XX% early formed a Health we interest This will a in although retain LLC success will operate management recently both these model, financially. facilities showing long-term under operationally

care that Shared patient Lastly, presents our the focuses to efficiencies efficiency, It long-term Genesis a reimbursement would volume. for improving I MSSP demanded system Medicare not LTC on and continued ACO. for and our cost participate in ACO healthcare participation of through quality evolution in truly like discuss the A and being a Savings the our healthcare value-based residents generating the Program, This unique facilities market. outcome to non-Genesis by opportunity of system. promotes already

by nearly LTC XXX of this announced Moreover, facilities. more we designed care has unaffiliated than residents LTC and care providers. LTC capital primary LTC back opportunity XXXX, serving meaningful by presents the new for ACO and to with facilities. requires -- in these outlay growth our participating risk care to primary initiative lives The December, ACO care along through downside providers associated that with the these new to the long-term order is In attribute LTC contracted and end XXXX welcome future. for pass to facilities additional unique the facilities no ACOs approximately ACO primary X,XXX providers participate. -- of ACO

achieve In I results. that pandemic, to conclusion, despite Coronavirus the outcomes operational Genesis and patient regarding as financial optimistic the improved outlook facing and challenges the well improved continues near-term will remain XXXX for hopeful as improve.

will I Tom now call DiVittorio. to over that the With turn

Tom DiVittorio

million acquisitions and to in is XQ services in PDPM. of this well with 'XX is million results as the today million you, $XX planned of revenue rehab revenue, George. will in focus from net the on line, by third-party revenue $X.XX top 'XX. Good to million segment decline contract in trends our My principally Of lower $XX $XX driven adjustments everyone. declined fourth pricing and billion connection comments attributed with Starting XQ attributed PDPM. as $XX morning, divestitures of quarter operating Thank impact

the marks payers, same-store will business inpatient rates revenue and These discussion. our growth, segment. revenue of This principally drill our declines into highest services period. consecutive I reimbursement over revenue organic later This inpatient growth were offset in growth X.X% favorable the or five-quarter by was further $XX of million of growth fifth same-store quarter the in the level by it is all led across which in

XQ million over $XXX.X 'XX same-store net in X.X% million million $X.X prior adjusted of occurred 'XX despite from quarter. into After in or lost from of this 'XX. account, increased earnings taking XQ million year divestitures $X.X growth grew of $X.X acquisitions. EBITDAR Adjusted This the EBITDAR XQ

XX.X%, of With represents in and XX.X% the year-over-year in occupancy year lowest we since 'XX to 'XX 'XX growth, skilled average XXX quarter, thus XXXX. quarter basis far prior fifth skilled consecutive respect growth the XQ XQ see points increased XXXX. from from year-over-year increase of days impact same-store below basis marking mix the Operating prior the basis occupancy patient rate the occupancy, in is quarter points having properties the This XQ to XX mix represents divesting of of growth mix remainder decline and XX this occupancy. of year points and continue same-store of

PDPM a 'XX. XQ rates. and to growth that under Mexico provider our Because tax of same-store higher Now the X, of in in in rate Medicaid payment XQ 'XX program New last program reimbursement 'XX X.X% average State reimbursement rates Medicare Adjusting weighted in the third Same-store and tax growth weighted recognition strong $X retroactive at million was of implemented fueled X.X%, out recorded 'XX. new by was the July by of implemented New to income, XQ retroactive provider call the average XQ relates quarter XXXX. was as this Mexico quarter rate quarter was average noted over for on 'XX to XQ of our net this reimbursement reimbursement

be reimbursement finance, and thanks professionals. Looking exceptional work, and expect year over went X.X%. clinical, to PDPM, skill ahead, into very the operations, we dedication drilling year rate our our and Further X% between our smoothly, transition XXXX last October hard of growth systems to regulatory

have system. our patient average Medicare five, out and over new the average the run under adjusting than higher months of market consistently rate under We prior the rate system payment period RUG per has time increase, after four X.X% day about operated X% our that basket

rate concurrent services modes leveraging $X of rehab to side pricing serve 'XX better our for Genesis our also adjusting impact in or more anticipate. changes group delivery goal by skilled XX% of the cost dollar, successfully dollar met the our we model nursing contract the of the and labor third-party therapy in cost delivering effective savings PDPM, such and as These by own On we of reduce million of run XQ to facilities annual therapy. actions offset

rehab result margins rehab As over in PDPM, and our points basis around planning XQ EBITDAR our successful segment grew adjusted a 'XX. execution XQ XX 'XX of teams in

we of future. early confident complexities, accounts it's in A transition, model model and is the PDPM effectively increasingly that needs array the our Although more reimbursement patients. medical broad that the for still are of for viable care a

touch where XX nursing over wage in hours for staff 'XX a increase quarter. specific 'XX, or per we non-overtime on all-in inflation nursing about force. And of wage by the in function is our the function wage hour 'XX represents labor overtime X.X% over last XX% our and reported worked basis to to inflation this see grew 'XX. hours rate pressure. of inflation wage greatest our This nursing nursing Including in The all nursing is last, worked agency continue XQ grew XQ inflation. cost XQ wage I'll point wage X.X% XQ employed costs,

inflation the labor our in other X.X%. of Wage approximated half force

about points So inflation X.X% higher in 'XX what or in reported basis we XQ was quarter. the than overall last XX rate wage aggregate, Genesis'

are wage Although X.X% inflation above keeping levels be pace. to historic rates continues reimbursement at

the continued results, reimbursement To the metrics rate We top platform we're well the in mix and optimistic the expansion remain This recap of ancillary very strength our performance unique line with inpatient portfolio strength trends skilled pleased that strategies fuel will and optimization, with business. future. growth in organic growth. and us our the ACO position of for our our investment long-term of along occupancy,

With that, the call Marcus, up please for questions. open any

Operator

Instructions] question of line with the A.J. [Operator first Credit from Thank Suisse. comes Your you. Rice

A.J. Rice

went in guys flip those. of Are sometimes flu you to point? you might about in more acute point. a an when at hospitals know that? And that on discussion about a course is trying seeing a play setting they we at What you thing any doesn't little is, Thanks. Maybe to care do. like facilities they discharge season that the seen is think had is on one do you situation this yet talk sound of than will post-acute first, then capacity, bit It makes just the side, and that facilities back hold COVID-XX phenomenon otherwise some XX quicker XXXX- to free look there this patient up where about I XXXX admission to with your I that's

George Hager

think near for part time. admission in that 'XX saw think far give as take that. course Look, to this level flow is The the I year. admission offset going facilities I'll on in point me start to the its the most over of, a this anywhere we say, I Let as that ban flu, 'XX A.J. turn and the are from I'm it I'd run normal impact Rich. not normal you bans at

admission the to so it out, obviously relates we has and ban. one the COVID, it As facility an have facility that one patient

will So impact we here material to as we we're census obviously to the any monitor closely. continue we going sit are on not seeing very -- today, situation make

We will is the impact seen, full this -- obviously virus to the at yet of be the at virus. still have

to the clearly turn over nationally both call it's well. Genesis at So as the and to level Feifer. going Dr. I'm

he them of situations address us in place Dr. what admission bans. to So put and can Feifer kind what situations caused

Richard Feifer

sensitive Department important with all and Public In questions of are like hi. working we Yes, cases, that. closely the Local on Health questions

also requested we the And managing that's case that the in of Genesis center forward. admission COVID-XX goal outside is and going centers for now, one that ban, the has The course from and keep a how coming of so right to And centers. virus Health and one we requirement. Department spreading to patient the the Department an this follow of and Health for

capacity. we'll of to with create So that. lockstep part all patients potentially on like [Technical be a Difficulty] other working the questions regard your DOH which is hospitals to question discharged With

seeing are would the into working the center closely are to extent are and do that not risk being and patients. that, represent We not very patients hospital receive local partners the with COVID-XX and does that and have definitely that of hearing we transferred them that

are very We support them work to to that. with eager

JoAnne, would to anything you that? like to add

JoAnne Reifsnyder

Thank No, I it, Rich. you. think covers that

A.J. Rice

Okay.

The ask other staffing. to about going is thing I was

in non-clinical of any as Give maintain staffing? the quite maybe on a there laid of face any And you staff that. a you workers people you that Maybe you see reason help with way? get don't non-clinical have this, to clinical about Is to up on people getting Does think cost? guess, need bit? other that situation too and Tom, current do in do staffing off level environment the or clinical as As little you areas. in early your it's hourly us you terms thoughts I broader your the like there many

George Hager

Rich take follow will at then center and -- to staffing? question you Tom the that Joanne, And up. on want of the level

JoAnne Reifsnyder

George. you, Thank Sure.

-- said like visitors end the outside, in except compassionate care the So extenuating restricting are as we Rich all circumstances of life. from currently,

who are allowing and all the requiring come our and consider all essentials the to centers. work to operation are based center as of of We we members to employees them in team fact,

staffing that plans as in monitoring we staffing and in are our we'll have every We center step day, every up up place necessary. and for

Richard Feifer

may add. if Joanne, I

We issued guidance very and are requirements also by the the issued days closely just following a few CMS, ago.

or So of limit personnel. care deferred. not is essential being staffing for to health who essential is that sensitive Those discretionary are care Anything residents. the time

A.J. Rice

Okay.

Tom DiVittorio

question. staffing your on AJ And

it's for to something crossed early their I excellent certainly recent opportunity robust observation and health And think displaced just we're think we pose who there, workers mind the being an think businesses, little across cycle hiring important seeing, have opportunities as the well. had of that's us say a scarcity I in in job times difficulty it's staff are result I where a as a very country providers other that but with could in the our market. care it for of given here

there think So there. opportunity an I is do

A.J. Rice

on. is know time And that Okay. real covenants you're some last in the least like about us, you'll renegotiation. doesn't in Can maybe get question This now is when second quarter, XX-Q XX-K that? is particularly last think in quick to talking I the addressed? And and the urgency it, that you is but going do just you sound explain with on it about what there

Tom DiVittorio

very A.J, that agreements material of in expect have for the we agreements large we large and fully all master in with we're those leases remain credit number we'll that of compliance and compliance.

rather And than the involving one We've that collecting not on past facilities three continues some landlord a, for in I frankly the has for is us the our for waivers. just years. just to lease quite and been been waivers issue compliance time. problem is two think there quite instance, compliance fixing

A.J. Rice

lot. right, thanks Okay. a All

Operator

from with of question the comes Your Chad line Stifel. next Vanacore

Chad Vanacore

Thanks.

So, If kind just of residents the community, COVID-XX your the outbreak that staying there place in take to with of is protocols an outbreak. care what there? have you already in are

George Hager

Rich?

Richard Feifer

Sure.

is closely of or center course Health outbreak is situation the to Of understand of the we're case within the working most possibility to of the each most either nature because defined it to or the one we now, be initial beyond spread in going center, the somewhat with Department every before if has heightened likelihood level. state spread but have following different, But case been outbreak, protected, a at most right the the or federal as the getting suggested We're stringent, the case that even are on local an case. guard. of rigorous measures the

For example, discretionary even their health-care monitored and residents being discretionary residents visitors social centers are not meals, leaving are workers not are are coming of room in, not for all gatherings are for steadily. temperatures in all quite our Symptoms coming in. taken or being any

within So that it transfer up reducing have continuous center. we the between surveillance, should problem pick quickly We're movement before spreads of staff and we it the or the providers a centers.

do So symptoms. staff not see potentially develop a a before that inadvertently member center affected we become

are Association these miss so just CDC that the we and I are and to them the anything? the guidance Care come all American from letter. Health Joanna, examples And did out of of are following

JoAnne Reifsnyder

continued a additional place in I isolation and case, well. private room that, put that we the person we proper enhanced if just person measures and in a isolation of as monitoring other the of remains add would except that center, and and residents would in then we confirmed individual do that would staff in be placed add precautions COVID have

Chad Vanacore

you to facility? workers And facility from have going care Okay. have from to date, you limited

Richard Feifer

limited it's facility. facility that care some go and reduced does and put also workers and some We we've care possible to the a but necessary, to for that for have doesn't. that yes, -- specialties, so you've example, workers givers not some to in cases environments and from have that In place do going health-care requirement facility for the reduced a facility

not So do in matter. that spread inadvertently we

Chad Vanacore

seeing that about you inflation? to what then is much gets it how does PDPM in compared your thought of experience last to-date. what we're then in How --, gains how just terms by offset of quarter? Okay. labor you And talking your Tom, been experience had were And

Tom DiVittorio

we the reported Well, there bit medical but this our moving And this steady to PDPM complexities remained to at being months positive. what be conservative a level. because We're look, about just patients system. last our I with -- the expect had lot on what time side pieces publicly that's had was Chad, we we would that see to under to little a of it we said think new reimbursement on rate the there, plus rate Medicare only belt, speaks month flat with medical our the as we're really and very and of X% needs slightly

our there. off with happy the not a where of projections We far we're rates they're conservative too were models. landed So being our little in

difficult As staffing costs, it's for the look, predict to that. very

it's that in direction some seen time. You've moving for particular a now been quite

and know really next we I really the I it. think in of that see of ancillary very some There into up providers availability the look help at other we're the going a workforce terms like the staff. what in point weeks us, coming see be The it's may of running can rest don't mostly folks and us. of is couple to interesting X.X% on and where side we including nursing think function A.J the business observation, very, brought

I think And seen. remains just the inflation to labor so be side on cost

Chad Vanacore

leave All there. it Thanks. right. I'll

Operator

comes of line question next Capital Frank the Your Morgan Markets. with from RBC

Frank Morgan

discretionary nature today a but or mean Medicare I a are it's my describe would admission? care in saying there the investors I say are long-term know a pass release out press morning. discretionary? out Good so of But general you mind. been question what I'll slowdown specifically they We've in and would question. admissions, just terms housing by overall I seeing senior [indiscernible] in patient their percentage COVID guess you people's how of actually overall business, this asked obviously

George Hager

word procedure where centers. post-acute surgery guess where potentially surgical Joanne I that post-surgery. discretionary accurate one terms patients to the non-discretionary I non versus of Well, acute data admission the maybe discretionary would patients, potentially I at the elective majority that of the question And in. for that, -- have for the Rich when far I volume. describe or care cetera, word type the use admission in and procedure that probably actually to procedures We obviously, our use certain of described first would weigh into never surgical of activity. a as think require as to admissions from admission we hospital is have any would et on vast don't therapy elective in a think post-acute from venture do good setting

As access we think going if can their look healthcare fairly in somewhat pandemic is system, discretionary, at COVID, way people intervention that until avoid acute to defer its if into runs they're course. to the any action I this try

negative open, to bound I admissions we're majority impact be So a from as and discretionary doors of way there don't concerned it's think of stretch potentially restriction. coming elective admission not the to see, elective any line by our we where those and has far procedures what us continue our But are kind activities. as of -- in

seeing to levels patient we of today. here it's we'll continue are sit We normal as patient activity monitor. Obviously something flow and

Richard, add there? to Joanne anything

Richard Feifer

something. I could add

the don't we are or While percent specific have that data on not. elective

as proportion down, but recent models. complex years, increasingly and in cannot elective medical programs ambulatory up. those more acknowledge going I of frankly know, has gone give have of our the and that rehabilitation cases type you gone is been that number, admissions had I straightforward can been have proportion elective of you that involve to has situations So, the a Of

during cases have likely we and are the we seeing been crisis. that see and so complex And more more this to medical will continue ones those

Frank Morgan

the any can that share you CMS your Thank you. you comment And the I that's Tom think population. a do about attributing is Maybe is, color something patient and just actually do that? that sustainable this on how would thought X% growth segue guess happen? to you the made good rate And more into think

Tom DiVittorio

well. rate Well, February, in you see March that assuming the held up really and in through and I'm has I'll the as January fourth that quarter say Frank here

rate it's consistent month possible like and it seems So quite I our frankly than month more for matter. thought from more maybe to that RUGs stable even was

in the very this results. providers, I that may of medical the needs numbers rates they feel So, different do these as patients are Other under you're in like score our reflective have of seeing PDPM. release

Lori Mayer

no think reimbursement industry nursing. is I and incremental I Frank question think on there Genesis, issue Dr. the Feifer going obviously rates Yes, skilled this call. impact discussed of cost to of know thinking protocols the have the programs COVID for the rest the is that and implement Dr. for is of to, you There Reifsnyder and

So thoughts on virus consider rate the impact the we'll of around any industry. hopefully, reimbursement this

Frank Morgan

and one final hop. One I'll

and you this of of if rates with Just, flu, the have of under hop I'll compared like like kind in do these respiratory off. new [indiscernible] system PDPM, average some how cases

Tom DiVittorio

the as you that general at this don't can tell rehab of I that complex, needs Yes, Frank. intensive look higher quite I about call. think talk a more less of are frankly just a we're needs prepared diagnosis on level comment, the medically you rate. and to the rates the are the at But patient a patient

Frank Morgan

you. thank Okay,

Operator

At further sir have this no we questions. time,

George Hager

not and patients humanly foremost and possible doing investors employees the the in time not a this of make only I dramatically. interest in are serve their our we lives our are all people can but assure but industry, you are where in first we this our employees, following interest the Well, protect company, our everyone's conclusion. I country we Obviously, only and and changing the to safety. just stakeholders, patients everything our

appreciate we the you, this XX/X. quality And energy I of everyone. our no the time to the to work continue are tell some to point Thank probably voices of Feifer the the the Dr. is rest There of we highest diligently, in situation. We at in provide. we risk clinicians service by will continue managing support your and and Reifsnyder, level in working are committed Dr.

Operator

conference. today's concludes This

disconnect. now may You

Genesis Healthcare (GENN) 17 Mar 202019 Q4 Earnings call transcript