Universal Health Services (UHS) 25 Feb 222021 Q4 Earnings call transcript

Company Profile

Participants

Marc D. Miller	President and Chief Executive Officer
Steve Filton	Chief Financial Officer
Kevin Fischbeck	Bank of America
Andrew Mok	UBS
A.J. Rice	Credit Suisse
Matthew Borsch	BMO Capital Markets
Jason Cassorla	Citi
Pito Chickering	Deutsche Bank
Jamie Perse	Goldman Sachs
Josh Raskin	Nephron Research
Justin Lake	Wolfe Research
Whit Mayo	SVB Leerink
Sarah James	Barclays

Call transcript

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Operator

Good day and thank you for standing by. Welcome to the Universal Health Services Fourth Quarter and full year of 2021 Earnings Call. At this time, all participants are on a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Steve Filton. ahead go Please

Steve Filton

XX,XXXX. morning. morning, good Universal is joining ended also Services Thank welcome Marc you this December quarter fourth we for of to us results you, the Miller this Health review

as During the conference forward-looking represent anticipates, we will statements. that and words projections, believes, words similar be estimates, forecasts, expects, using call, such and

risk statements careful uncertainties of before opening forward-looking trends statements, these risk anyone familiar the reading the our for For of in questions. Form not forward-looking a We'd business with December the inherent the to factors section in up factors year couple call on recommend highlight and just and XX, risks the and like and XX-K developments I XXXX. ended to

last per with was to night, the impact of income attributable items share diluted release XXXX. the on reported the schedule release. press net After the Company our included fourth UHS the of the reflected $X press in of for quarter for discussed adjusting As supplemental

Our was quarter XXXX. $X.XX XX, per ended December adjusted for diluted share to income the net UHS attributable

of fourth to pandemic. During be quarter by the the operations COVID-XX our significantly XXXX, impacted continued

an covid December and which care the and a facilities the itself, expenses, postponement number function also patients certain virus incremental or procedures to in salary wages pressuring challenges, patient elective to scarcity exacerbated exposure Specifically, acute causing very wave labor hospitals. volumes XXXX, in issues, our level XXXX; our we already a of from tight labor by the to negative virus. large labor while January volumes in our market, behavioral of this these quarantine was at the of In resulting was care what and scheduled health by acute primarily increased peaked suppressed impact addition employees elevated experienced COVID of due of of sideline increased

unfavorable $XXX year the repaid net includes of that was received cash and million XXXX. of Medicare full accelerated during construction Nevada spent the month. payments a be costs the million during $XXX is expenditures care Reno, the XXXX, to open completed in impact activities scheduled year includes to the which Our and government new to We of operating capital which of XXX-bed were during hospital million that XXXX, acute XXXX generated on XXX related full during from next

XXXX. decreased accounts to the XX of our during compared ended receivable XXst, ratio XXXX, to compared to as year at as capitalization XXXX, XXXX. outstanding debt-to-total during December days XXst, December XX.X% At days Our to XX.X% XX XXth, December days increased

had of [Indiscernible]. for to each meant As XXst, aggregate our markets. in care XX conjunction further centers primary surgery our ongoing are home create with fulsome in initiatives freestanding markets. of third-party care development we revolving continued development health December In delivery XXXX, available borrowing In $XXX of our credit national networks. partnerships entities departments These and and operations physician more billion emergency $X.X of currently system ambulatory our a to with existing segment, our this ambulatory pursuant operational development, care care million in XXXX.We acute of have our capacity,

Missouri. De two underway West Iowa hospitals California. care and is acute Planning our behavioral and Las markets opened south hospital Texas, hospitals projects, Regional in Valley new Novo in in Henderson, also tower to Cape segment, Hospital Beach adding our Vegas Bed new new new soon Gardens in on XXXX in presence Edinburg Inland Our Nevada. in hospitals venture joint to Center Florida. in enhance Reno In Medical Nevada, and open in statewide will important capacities Clive, underway Center Palm Medical in scheduled Henderson are Gerardo, in at

Marc D. Miller

another And These along to care partnership a in new existing focus in HonorHealth. markets, segment in Michigan, as on opened the and with have increased in with partnership more XXXX in behavioral build is in is Wisconsin. of in which the our outpatient open meant scheduled hospitals Beaumont is in Arizona more later telemedicine well. year already Two development with out an a continuum Denova fulsome developments, to Health also

Steve Filton

far the experienced In a financial of operations of COVID repurchase pressures volumes from our continued $XXX activity stock we the authorized repurchases, to billion trajectory quarter increase $X.X of to approximately Directors XXXX. approximately in shares by anticipation resumption giving approved downward and more our our relief billion after We our increase billion accompanying on thus Board in $X.X currently second recent XXXX, share our have program. of Board stock effect our the a million to from surges, repurchased of and $X.XX repurchase authorized Directors. XXXX, close those and during recent the of After of during results; for

in provided XXXX. Our release, virus last of was the XXXX operating impact in night's which results COVID the forecast, assumes negative diminish will that

rapidly, decline cases importantly, workforce which over believe of course XXXX. the of occurring gradually to - in the most of appears non and dominated the landscape we healthcare will the stilling cases XXXX, COVID more in easing place COVID actual be While back shortages, the process take

our changes dynamic We staff. implementing in increase recognition beyond healthcare the innovative in have well to last decline models initiatives in a cases. certain may to the in that staff host retention active the And efficiency of recruitment of care COVID of clinical and place also

will of at the of which and While have demand difficult last pleased our predict, your this in The remain recovery been to signs of fundamental already time. early questions is in weeks. emerging the confident the pace Marc both underlying I to be answer segments. in business few we

Operator

America. the Fischbeck of [Operator Our line Kevin from with comes question Bank first Instructions] of

Kevin Fischbeck

it little margin you're segments? a I guidance this looks outlook degradation talking has the for both how guess your thanks. year like in Great, about a looking for margin fee, bit

Steve Filton

opening Kevin, think remarks, my the we indicated. I as remarks

the elongated recovery. premised the of the that volume than on a will labor process that's think be I idea stabilization the markets more

pretty XXXX. volumes in we will at notion So, a while a pace that or have increase decent and revenues

expense, premium salary use continued of the rate short the both run we'll then the and pay in inflation. underlying wage So,

hopes we we than be moment better on but more has of have seems that guidance I presumed, the make most trade-off. to prudent I think -- front do it's our progress that a salary at think quickly more the the than bit Obviously, can a outlook. and

Kevin Fischbeck

margin both of it the Are kind say seeing expect pressure earlier same one other? out of you segments would seeing division of type or of more you than would the one to is this pressure come and

Steve Filton

we the gets it labor the I pandemic, impact that made of see throughout manifested the the think both shortage, different ways. have segments point business while in

most acute but the we most fill so of on for have of through done significant are use of vacancies, to pay, our premium able part, premium the So, pay. amount we side, the

about $XX of think they both in the of recede the itself And as those to volume to some the fill we we the although expect COVID division the expense the or those into has $XXX pay in million to -- volumes million just of recede. side I so on those issue that more we've And acute for As consequence, side only premium been Alternatively, $XX year. side on on begin QX. incurred vacancies. think an in salary inability absolute begin dynamics continue behavioral behavioral I expense. an example, premium XXXX, side, agile about on the than incurred full behavioral bigger pay The as labor manifest really a shortage

Kevin Fischbeck

Thanks. great. Okay,

Operator

Your of with next question UBS. the comes from line Mok Andrew

Andrew Mok

revenue Steve, good is much price, morning. the contemplated how the between for respect through and growth to it you Hi, and can store new XXXX us different outlooks the walk with in guide? segments volume

Steve Filton

Yeah.

of to year I range, which the sort mid-single same-store think, both unremarkable. digits be to of anticipated normal segments, a in quite be in relatively X% the sort Andrew, would that growth and and frankly that in X%

COVID those non-COVID the somewhat. room that's visits, elective, from kind running levels been activity, towards, of COVID backfilling COVID of shift mix of are acute pre emergency and XXX% a to volumes, etc. on all presume think and side, that which I lagged has levels XX% We and at a a again - of procedures, We've acuity that more higher decline. scheduled outpacing away little this to to the volumes fat, our our in first have on side, compared increase But flattering relatively previous the and been to XXXX we're revenue hearkening the a increase will as Kevin's in bit QX. mid-single costs on QX in percentages back overall, behavioral think digits the volumes again, of year's that sort patient salary I impact question days,

rather that any than assuming of I an days of think again increase more mix. patient from But coming actual same mid-single-digit shift patient in we're sort revenue growth. it

As the amount far coming from non-same-store. growth revenue of that's as

the driving business points, lot couple it's a off, segments additions a think think I are of major and I Marc that. of in the two ticked that percentage

Andrew Mok

the there. in a million Great. been there you Kentucky, follow-up, even might there payments [Indiscernible] but few think $XXX as EBITDA out-of-period are did beyond $s some of business, about from Florida I And have then

core in did good the So behavioral perform a Thanks. and is run to XXXX? about think how for rate that the business quarter

Steve Filton

Kentucky. In I this for has represented been out the because two extraordinary There full approved largely in [Indiscernible], offset XXXX, say reimbursement of we reimbursement really year. We million quarter. quarter, earned was recorded item think quarter. about one-time I in I think that but Kentucky was a that other. the of fourth called activity. We $XX Kentucky will quarters Medicaid million $XX the reimbursement, they That each already little over roughly the were one which thought in other the

other will there purposely else 'XX. guidance. we highlight like million puts included did But Kentucky I much and be felt So, offsetting million think roughly a in reimbursement takes. generally or $XX $XX were we of in the And because they of quarter Kentucky that's ratable that recognition being item, in our the than more not anything

Andrew Mok

Great. Thanks the all for color.

Operator

of Credit line the Rice from with comes question next Your A.J. Suisse.

A.J. Rice

thanks Hi, everyone.

activity at just the billion. billion First all, share repurchase the maybe to $X.X looking rounding of pace $X.X of

flow. of X.X that over repurchase? leverage a also, continue How good the pace much do the you particularly past back to debt you'll times that generating -- you're do cash you generating is pace? assume get to then comment, to are ended that fund than just repayments if And this the flow, I you But EBITDA. willing of the I still up you the tick year. now at leverage will creep you How sort mean, up probably let feds. as course Can You're you at think free faster cash to

Steve Filton

A.J. Sure,

done. billion we over our we as $X.X resume that of plan guidance. our April. repurchased pace, in and Obviously, repurchase indicated, If authorization basis, was have Board granted share opportunistic about is quarters, the repurchasing three So, which on the that's our you of billion, And will doing in is XXXX. that, until we're $X.X yesterday. repurchase as of an we what's just be shares that with course frankly, historically increase neighborhood the amount our activity in share somewhere of quite this continue we didn't since That we

So, our we'd we respond opportunities, shares the the flexibility buying as deployment other it next But the to generation. course pretty free indicate at is conditions are certainly to and plan would current a point, pace leaving market much to over cash flow the year authorization ourselves board would above of increase and your back capital etc. be our

X.X, we'd our So, approximately end twos XXXX to X.X, XXXX. the X's, the of X.X at end of leverage, from high the X.X go at of the low

Marc D.Miller

the that stock remains and that the point, comfortable the very make just I we're calculation that's if I'll mean, made. with we've undervalued

our where share this of amount right this the at we price. time, certainly at on this depending stock the believe is, level is So,

A.J. Rice

No, that's great.

I behavioral little appreciate particularly is challenges I But in think business, other would again I geographies. is dynamics, all for geography my geographies any the about specific that reason question. more we see also in differences? of usually challenge I where And acute about asked. ask obviously, there labor Maybe acute where than ask have a some a you business will We that. were the follow-up you're Gerald the you in the in seeing

the So, anything sides about for business. the regions across geography, differences both despair of

Steve Filton

I months, most experienced, think that recent, COVID sideline. reasons. The by market. clearly the COVID the also, feel of significant again, is it and half and closely the way eight on are that And level more leaving we 'XX surges time, variety in -- particularly say hit with I any employees are hard the geographically. six may call of pressures certainly space widespread be frequency acute rates surges have in sort work most Markets to is Omicron, one another. to found But that in that of I and would few broadly, back sick, correlated have into of 'XX, etc., greater more behavioral worse settings, by is of we saying that first A.J., the in in what the than answer the been I with I'll premium what performance in market labor at getting our those are pressures But pretty employees Particularly hit a diffused. in the is we question, the all labor pretty at to least point the that last Obviously, out think geographically would own have for thing. for

a perspective, from tiny market so geographic sort the more pressure underlying other and Although one under issues. one next any really COVID month. in of maybe not it's much related But month than much

A.J. Rice

a thanks lot. Alright,

Operator

Markets. with next comes Borsch Your question Matthew BMO of Capital line from the

Matthew Borsch

morning. my Good Thanks taking for question.

mission good adjusted numbers and here. will and on both showing stay You adjusted behavioral. in have regarding same overall filling occupancy some basis, revenue some decreases you sequential facility also admissions, in acute patient Matt acuity per reported in for of rates length a Ben Rossi for

Just of of curious reflection is and that the caseload you continuing this a security that Thanks. if is quarter trend type in whether XQ? saw

Steve Filton

most earlier. had we in the of more in in sequentially, quarter, fourth or, offset year. little indicated has acuity in acute of in doesn't reimbursement as that, the experienced care basis are led -- change able Not reasonable behavioral acuity as have sicker. acuity an we really goes issue million rates I just of I the $XXX premium has segment, the part, That's for been which the business a higher million have we these that is, well, COVID the over about acute the had maintain acute most largely in compared the fourth year, most behavioral think in Look, we've for acuity million to we've segment, became the part, segment high in surged, this the we to the the up, I to sense think really of think is really COVID quarter COVID the quarter to I third and That and the revenue part highest alluded $XX in segment. on business, is acute also, the costs, overwhelmed XXXX, But which for business. what salary experienced during and level surge in today a $XX last which pay non the the around challenging, about patients COVID had an we

really So, gives much pressured margins of business. premium you how that the an the acute pay in has indication

that. acute I really has broadly, think has less ill as noticed problem think advantage the Delta been is, that space, other dynamic patients, able more that of we that don't we've than them. patients the is acutely Omicron or I The we've reported, I been noticeable know to been are in the take the before are

like You to make the I point would pretty stay remaining that is stable.

what ill we haven't that's to less patients really discharge benefit their homes, a have the discharge Again, them struggling stable as seen those network that we sites which itself health pattern to think been quickly. challenges more faster. care, of discharge and more been nursing own Omicron patients, COVID historically and to. try think and of to theory, a the home more normally tend will the we reflective of volumes discharge to skilled used patients are I all challenges declined long-term discharge in should we with able return being able referral labor used of been work I will The acutely as consequence, as we out some those to would

Matthew Borsch

you. Thank it. Got

Operator

Jason comes Citi. of question with next from the Cassorla Your line

Jason Cassorla

Great. Thanks. Good morning.

year. for volume EBITDA Is any an But frame XXX EBITDA right think about to you throughout you that? about would if labor how the perspective. million did mean, frame way maybe back, there is look you improving 'XX. or cadence that about help the So, backdrop the I talked XQ, to of in Thanks. you and largely bogey XQ

Steve Filton

etc. been norm. to we're looking and not pressures the really in historically volumes UHS guidance, quarter the certainly out case. and at and with that pretty not as been This begin look gate come are more year, COVID some out and year strongest about quarterly first and this it come So, declining, of to highest quarter, pandemic, strong decline the Normally, uncertainty we in certainly of when to-date the both is is have that business has there's to but slowly, decline now cadence comments, they a labor the we etc. historic our encouraging. the has given segments, declining gate our quickly I've what never alluded the is previous greater continue that's in We're intentionally

we've we more first XXXX tried will broadly, slowly think labor challenging, I the pressures indicate of as think decline. certainly to I than volumes COVID half be that more think diminish

lot might I back-half think electric we'll half year the the pre have like XXXX, -pandemic look a of begin to second XXXX more of looked.

Jason Cassorla

Got it.

CapEx go 'XX, And just spending enough. ended your up Fair a over there. maybe and increase you guidance, Okay. CapEx at where midpoint just like to XX% call the so

comments amount help new could You where the and you're both invest from flush maybe segments out you for made some prepared in acute in facilities $s your 'XX? CapEx your looking Thanks. priorities like, those but just remarks towers, to for

Steve Filton

Reno. whole perspective, what make invest commented and to share Mark we also fundamentally that economically approach business what terms are so in strong, compelling. and can alluded in our etc. think It's a a remarks projects our segments see from what in two De Marc on we view CapEx, in earlier, to think on CapEx dedicating and to we're Novo demand to sense in that response the remains to underlying development our of going -- really repurchase, I I we're as we're his think informs As and our dedicating

is I player competitive this in more us state We've the broadly more Riverside but market we market. California think County, community acquired Nevada. invested California. of Southern statewide an as us position much player We both market, in Texas a in the even to South hospital a have the Same important Reno, physical significant physician capital, will small the Reno in practice really, preeminent thing, as in but

in somewhat So, a we And in pointed and we and why, we understand we investments that we're then reinvest an and unappreciated like underlying really as shares, again, also that segments, while continuing our to the think point valued those. is our case, our acquirer of active underlying have time. strength be which And market. think, we out, the both of view in Marc the that's intend we and this acute demand behavioral to at well those but franchises the are in

Jason Cassorla

color. All right, the thanks for all

Operator

question of with Deutsche comes the Chickering Your from next Pito line Bank.

Pito Chickering

Hey, guys, good for thanks morning, questions. taking my

And if level, XXXX? of normalized acute quantified, fourth-quarter? pay of XQ versus referring in you about million we in for normal the premium to converting quantified employee a sort How think much how $XXX side, fourth about you script, full-time the us in the all quarter. or of that you question, than Kevin's track premium was did more On costing versus that and to pay

Steve Filton

Yes.

nurses, going reported the crazy hours. we're some that by has And a I million you and XXX million a broadly actually not greater XX We're necessarily volume, across in is year. number, QX. been think are one, QX little quarter written expense more good And million mentioned than a as the is in previous point just I of driven think rise by using using the considered more in that last rates countries. So, honestly, in raised in Pito quarter but that fourth meaning think that the compared to rate XX on over then about the I more

if at the third, can temporary employed for XX% but replace normally, however premium with either base significant. for who with would nurse we that, be say nurses we're would look it, our work you an to that a or some think pay, times temporary pay to would own nurses in you who a make replace less quite we're paying I like So three want cases, paying a nurse traveling we'd something difference we'll employee, or more I able, is that traveling

Pito Chickering

hours you at of those was but all stakes hourly rates as seeing color the you're reflect on well premium it in Having the pay year, begin wage to as where [Indiscernible] seen using? the for you guys in terms the any and those are fees, now

Steve Filton

mean, of see this a volumes to short in made COVID look, occurring it has that point. declines. I only half that time started January really on Yeah. we decline I've at point period been the in of the was those really I the mean, latter

So, hospitals is commitments, the but I these the we four this weeks. if into making longer to Even commitments as nurses. term were might some longer others. commitments for term to commitments. been making nurses were really think making piece themselves this term think surge or we're worsened, I other longer-term with weren't, making And they five have We were longer that

flexibility. made And other a is The have I issue months. six think greater of money. Those lot last that premium rates or some have eight nurses these sort the as in a who had they consequence,

And some all so, to are why they is time time. before And are some I that. some work. what off, they taking it thoroughly nurses we're But I takes think to entitled seeing are reasons think those return that, etc,

my definitely last in we've say a seen or seen think earliest pressures think encouraging segments both again, to signs the So, the you we've would we've in on got labor to remarks as I I seen -- go the say indicated, way of easing, weeks. long but business would side. volume we've five have labor recovery four I I that of signs

Pito Chickering

evolves in then you those so able you for and can recapture look do revenues How loss behavioral from on quick staffing? And much. one follow-up there impacted XXXX. revenues XXXX side that in XXXX? being at were Thanks much lack you think by the Do how the of Great think behavioral staffing? to Okay. is

Steve Filton

seeking A on levels, think therefore lagged I number is occasions, we has lot of shortage. exacerbated a indicated, behavioral we've volumes idea way, As colleagues premium and and labor revenues subset of volumes, single that by standard care we're of the that's all side has as it's be biggest we're our phenomena think other long-term that capacity sub-acute -pandemic the these because behavioral etc., to skilled been thing. are talking nursing, trying finding pre And it response, pretty to discharge more a some on the of acute the true a been as previous agencies, the COVID they these have being any population facilities, the and reason in widespread I a compel, the service and patients, employee setting. that rates again, and told sorts indicated by the desired all facilities acute saying nursing home industries, setting, same that homes, as And staff. in health by the because of we're to of simply lack don't have in

as prior growth, be year. of of I a presumes I amount are guidance all XX% or demand over three to think the quantify What do us activity, it's we'd And several it can say But if we top grow. so, sort would think and phone we volume. we revenue is if taken soon is back potential continued mid-single-digit underlying inbound pleased revenue is position don't that So, XX%. have the there quarters, what how of think every to get difficult be satisfied. growth as we the I the up inquiries, X% question of there our satisfy gets volume growth significant about the we've etc, the that's loss there to demand to it's sort labor in could the calls, certainly out that the last there. get demand. or our said certainly end situation incoming Internet we incoming just do. before We doesn't that But resolves have don't is, which again, you indication of

Pito Chickering

Great thanks so much.

Operator

line comes Your Goldman Jamie next with from question Sachs. Perse of the

Jamie Perse

What's starting acuity? give versus I Hey, growth XXXX trended XXXX, start we're to terms in if the on that can Admission, the color obviously back down. above about just for line. as of assumptions guys. wanted good mix come normalize things Revenue payer any and start per Adjusted to and with way sustainable you to That's morning,

Steve Filton

think So, different business in the again two is the Jamie, I answer segments.

admissions they you earlier, I number. that think QX. have Xth reasonable not there running Patient part be very some that in we that I well the as think days certainly by non a question day you there day, Again, I talked traditional historically saw robust instead behavioral all in behavioral instance, if is acuity, will more behavioral more an large think is eases, care expectation surges. COVID non admit patient revenue we just as I'll year that COVID acute But particularly will we been the believe per that, surgical would much previous looking levels, the the down over the very or [Indiscernible] high the other about mix get adjusted side business procedural of But grow Kentucky for during flat -- we'll pandemic. some our had high supply situation on the the adjusted quarter big make be point shift just during admission will because I replaced per night. as reimbursement point I utilization, had high and to more as pressures in lagged, occurs in the last side, make that It because cost segment. will of able labor looks segment, on the this think nearly, COVID the patients. a as a COVID, that patients shift from high ICU the sense alleviate that quite to sort the the simply like I is while the there's change had very in general stuff, more has utilization, come more in also also of expenses will that the revenue, generally, that revenue

Jamie Perse

in should Okay. And pay of things your like we for That's costs on or in of cost to the longer-term things then How you helpful. lot back there like start where structure or just in margin maybe follow-up transition expectations. couple to of here? 'XX, after about go longer-term a levels you get as and think on expectations? things years margin any thoughts temporary normalize, one be XXXX that. just Can this, a It share terms premium seems might can

Marc D. Miller

digits a like in and I either see believe model expansion think margin you Meaning, is achieve EBITDA that the of been generally, growth business we feel model the the economic times. changed. growth if our number of said segments can mid-single historical again, to in don't revenue what I over And time. fundamental you're has has we've going

And As Can XXXX, if we question I think year, we're the see are transition We of XXXX years and should down. wage certainly yes, basis think a like we're that expectation there some not compression it, these is have is then there's as we year, should margins? deferred post-pandemic. over has robust. over relatively hasn't growth get XXX,XXX underlying work volumes been see near, a growth, revenue EBITDA answer going not as back as in particularly as I in be that demand And an get I postponed the certainly that business think in we time they to after been the labor pressures but of as you turned there on-net pressures XXXX. look the frankly. back of end a we a segments -- should expansion by can the particularly and But margin But will it'll and viewing significant over models half points the We're was. to and get labor is again both mid-single-digit at out first beginning we of first inflation which how to past. get I least the quite XXXX half we believe, beyond the upside of margin towards quickly. think going a go I The can in that's it of if increased way have back model we last believe firmly we growth; the inflation that that the amount going several there therefore those to worked demand quickly achieve as maybe see consequence, recover characterize XXXX think bit ease

Jamie Perse

detail. the for Thanks Okay.

Operator

Your next the with Raskin Nephron question line comes Josh of from Research.

Josh Raskin

I'm I'm the you outpatient in types morning. to development do the next broader the years? up wanted comments of facilities segment? and Mark both, useful UHS strategy does think most on for couple in Good how And to curious thanks. in acute work are segment care the you development. outpatient that specifically of made follow thinking the care segment. the you I on more maybe what And acute Hi,

Marc D. Miller

mean, there's I that looking I it's departments. lot of Well, a specifically, freestanding we're -- areas emergency at, think

for able see had hospitals. with the We in they going of our And what opportunity to We bit hospitals. large are acquisition ago, few as refer been synergies be That's success have do owner and the some significant been part lot think California in that, had now. to the On an can physician group, And business, a and business working a well we to as on practice. acquiring lot able the with clinics. a And being very to had little that of lot things markets. from care into of opportunities which I acute them that a them, a top we months number to of earlier, physician years, FED with I we're number we as clinics as just that increasing Lightning more standalone of again, the many evaluate and us. to a but the a those in continue a doing of we're work drive with a open positive in guess with a

more are we there. for looking so, opportunities And

last services been I to the traditional of the well But front. the outpatient radiology we partnered all say little would to as right that, for of a or ASC tougher years. evaluating Company acute It's are probably on hospitals. for surgery to We've surgical as all center couple we that a do get just care our addition in currently markets that deals In with about bit like now. us large

gain as we're we four quarters with so, certainly. traction And next going in I three think more the go to to that forward

Josh Raskin

sounds versus maybe you rational mouth, put more outpatient shift it what it's is like from like on of about most I issue that that the care up I'm how think the follow think important inpatient ASCs. to a that in then you market, that issue; how strategy just your curious sounds And to and not words the but don't right? than pricing want a Mark

Marc D. Miller

Yes. definitely it's definitely that we're of. I trend. mean, -- It's cognizant as far something as I look, look at very it a

to the great setting advantageous not have but lower-end business a you I'm some to the taking our the but have business create of the only as that I outpatient replaced sure also own, do we far it surgery out by inpatient not And is of higher-paying businesses outpatient to that driven up way insurers move inpatient number business settings and higher business. the new think decamp are desire said, outpatient. I for reasons, and categorize of that's certain then in on opportunities space that centered their to and acuity, partner As

Josh Raskin

perfect. Got you. That's Thanks.

Operator

Wolfe question of comes Justin next Research. the line with Your Lake from

Justin Lake

Austin Justin good sequestration, for was And maybe Hey, full bump direct COVID the I the the if to the color the from then, year, Steve, on Thanks. 'XX XX% embedded those morning. just or programs, that of can give reimbursement benefit you and related impact It's on what on HRSA. assumption curious for in is emphasize here. some programs?

Steve Filton

Yeah.

and impact So, the waiver XX% and we've the disclosed add-on. of reimbursement the sequestration Hersha

lapses. current we've based been way on quarters few in the the the for mid-range. year. running it public historically, the that incorporated lapses plus sort early We've And guidance think of half minus knowledge have the the the million XXXX waiver I running it in -- $XX of last or Hersom to the in add-on, medicare which projections seem out. health be our first I The in quarter, second money XX% drives think the is or emergency the

yes, looks thing. as the concerned will we've Again, that reimbursement volumes were I up half with of etc. that. like the our part of part two reimbursement. we down, those this assumed significant loss is, But that away with go the presumes year. expenses that it guidance COVID two be Again, largely naturally. the expenses month off of really things tail tricky extra things and maybe that COVID we've relatively those go the off all most A high that facing So, the the it -- patients more half COVID the sink the in associated be of of off. mean, and for appears overall But we'd first the down this the ago, or will the that's assumed which year, will COVID that tail volumes first volumes go

our So drag that it's really not earnings. a significant on

Justin Lake

out where COVID curious quick trended a that just just a run there, assuming Omicron, early admissions maybe And percent given basis settling maybe the a year, And full for range then maybe that to follow-up Awesome. COVID continue where they're to on guys in out? is you are volumes here. there

Steve Filton

Yes.

our patients stay related COVID of what the COVID off During average Omicron surge, one-third were the surges, I of the the the length surges. height the XX% and say during taking again, in beds And COVID were about during somewhere the our because the of the acute of across twice I COVID Delta patients on the portfolio, of of surge, our is stay the of think our at COVID is, etc. length side, and surges, would admissions

So, significant was number. it a

earlier those So, our some COVID-related to will described back probably seen I which of endemic be X% think admissions be in less the in and X% something kind like assumptions of that we've XXXX acutely will is acute made that the of yield for particularly than has of environment surgeons. we've in been half the

Justin Lake

thanks. Great,

Operator

of question Your line from Leerink. SVB Whit comes with next Mayo the

Whit Mayo

hoping ill sense to. year just any it operations that pandemic haven't about more and framed gets maybe are get that's that a And I an I And attention U.K. decisions point update. maybe during to just guys Cygnet broader this for and think to be the get update is thanks. Hey, portfolio anything does to make that review making different you question that heard or we for you maybe Good morning. mean, your deploying broader some some is I markets, internally, paying about bigger? sometimes, more thinking behavioral. the was so should smaller, strategically, but probably this operationally, get advised, excited at

Marc D. Miller

few portfolio the during I some start operations, scaled And facilities, I that couple places, do mean, And all really to the the with a time. last a portfolio of COVID. I we years, you, tell we've will we those during continue we done I those your same mean, review. jettison time. saw a that will point, have few leased and we where others down wanted pare should to markets. lot just down to big of doing them. players They possible, the couple look weren't in to division well. grow changes as the a we've and if in the We're We

trying we're improve So, to always the assets.

comments I'll all partners the of all the opportunities robust. the point make opportunities created are And on to be just JV JV wanted behavioral side on equal. is One and make our continue that, JV I not to

we just we because that term. are there see long the opportunities, lot that don't of look JV of on, a situations So, do, at, others we merit that pass

the strong most players, we names, purposely done. recognizable no part are notice nationally, the do regional very ones or you that and If that's for they're

as you -- it's in start that's we COVID. that are team turn I Weekly, are number. And all terrific In are staffing, is, where far say excited it this very as there what excited. when we year, throughout we're when strong, get our mentioned stabilizing, regards There because week, continue about 's the Signet's and offer stabilize specifically already already and we is to which it be So, could to for very know that is over being with staffing quite turn, for it will We all we to and we well been are Steve beds pop stabilized, to we're able them us. competing upside often. but, growing. a due historical. as should us. the we're fact, track. to and talking starting very They close against excited they we with hedge see Every a this speak really you to to very getting demand due very Signet,

larger much we players the than market. that some competing are fact, in in having We're better Others have hiccups. past. much, In

going quite that they opportunities U.K. add in some number things present and at look we with existing we of NHS been a make forward. very incredibly we're the just with sense we positive about UK, or can facilities and And go new impressive. our right have so In So, excited. the within think has along we areas U.K., never think list just it's of the is The we're but going they that, the relationship outside that will to to business beds, stronger, where either we facilities. now,

Whit Mayo

one just Steve. Maybe for helpful. That's follow-up quick Great.

program an your update historically state million [Indiscernible] could from that for as XX-K this expect hasn't that continue and guys $XXX supplemental I maybe on you contemplating there's been give what Texas you're reliable. has number payments now presumably you will that and UCC, update If an -- guess

Thanks. year. of I the to state trying guess major I'm we're about any So, some of the make and just supplemental sure that takes with programs thinking puts this

Steve Filton

Yeah.

broad to rather So XX-K, first on of was disclosure these state UHS comments, a alluded has I few you May. all, in a I'll expansive make filed last programs. think do which

different details. they programs would informative. reading I think some disclosure on because of this suggest Broadly the couple interesting I Texas. spend really it XX-K subject as rather are time our that there is are regards it people So, in Texas, a

it or in regard over. is saw of week months concerns hopeful one of the starting the that program, care is payment some and moving I four $XX which sort did communications just XXXX, Health which had the be directed approved have million uncertain The related at like million over into payment people looks we the is We that we is expressed occur XXXX. it program, recognized in think sort state and although not that that CMS two. getting remain the next The are skewed of wind which recognize moment the in $XX to the we'll reimbursement retroactively to of will last program, most forward. of Texas. about the HHS I or up in from scheduled next within uncompensated actually Department etc,

to finally with we're is they're in And forward. some that state the moving that's like associated there be and means for not approved that either and seems reimbursement to we Look, sometimes, conservative levels, account I'll it how programs. make these state until So, them, one the recording federal We choppiness tend the wait hospitals income about tending last revenues or a comment. because you within on that trends states, are over trajectory the at then and net those are each the of the lot on the to think if be tends they look programs, I hospitals rely increased. or rapidly. But time, hospitals these these programs of the etc. of really programs rely safety

important become of part so, program's an really the federal both state And and funding.

there in the would months it these get how we but to some detail, uncertainty into or equal one will we remain really in recorded is sense is of XX yeah, some things reimbursement, So I programs the reimbursement on levels. didn't in at historical and XXXX. think but general Again, with worth that volatility -- get know recorded, I essentially Kentucky exception the that our

related recorded that or of in So reimbursement other six the words, XXXX. months we half the last really to

record will we that's a reimbursement But in bit because that's XXXX only clearly months of into a Kentucky of XX headwind XXXX. going So into baked our guidance.

Whit Mayo

guys. Great. it. Okay. Appreciate Thanks,

Operator

line Our final question Barclays. Sarah from with comes the James of

Sarah James

of much rate control When on. 'XX change that squeezing you pre more earlier the how environment? me a - cost about you talked Thank for of getting the in to back versus margins, is

Steve Filton

historically think we've labor at I ringing think out controls. real both I way elimination back our I Honestly, there component of sort think margins, for -- of nor order incurring this no, sort don't during model where of the last that really cutting which business don't with back think we to the to is, have I anticipate either some we're And But been if mid-single-digit the was for going combine getting model, those expensive always efficiencies of extraordinary cost back again, operations, get in that pandemic. get cost efficient margins. this I to I focused you the saying and get think on looking but increase. growth. And rate we're to is volume that cost certainly the controls XXXX that to, back you that Look, as we alluded I to recovery. to before had revenue What driver, of Mark Sarah, I think

both hope government there's the that pressures or Although, commercial on the of two, year we and labor payers and other from next more over costs. our would inflationary more recognition and

Sarah James

helpful. That's

you start? about think of you think when you or think payers. of about where their think different private timing that you do Medicare types the about act your Like As which recognition Medicaid payers, that? first Medicare, across would -- do the and could recognition How

Steve Filton

and out perspective, disadvantage. It's a from hospitals Sarah. in But bigger control, both our bigger put And participants I there that. obviously, of the We're forces, pressures not in federal a question, again, groups, level. active we're meaning, Medicare state great are largely at and groups, so at think the the those Medicaid lobbying not-for-profit that's driving inflationary particular, a

great And pressure so on there will that. be

contracts, get we're time, walk to then And willing we far for I terminate As more rate have some pressing payers, payers much believe a what than a and don't reimbursement think that have been role active be if there, more we think rate. we business playing today our we're that to in commercial reasonable role as from them, doesn't reasonable we the more have away [Indiscernible]. I of more active and and

Sarah James

helpful. you. That's Thank

Operator

over for closing back conference the turn any now will I remarks.

Steve Filton

for We'd quarter. talking the look Thank to their forward of the just first participation and everybody thank at you. end like to again

Operator

for all you today's joining Thank meeting.

You may disconnect. now

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