EHC - Earnings call transcript Q1 2018 | Encompass Health Corporation

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Operator

Good morning, everyone, and welcome to Encompass Health’s First Quarter 2018 Earnings Conference Call. At this time, I would like to inform all participants that their lines will be in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer period. [Operator Instructions]. Today’s conference call is being recorded.

objections, disconnect any this have you you at may time. If over now Officer. Carlisle, turn would to the Relations I Investor call Crissy Chief Encompass Health’s

Crissy Carlisle

Ed you, Andy Patrick April and on and Barb Fay, Rehabilitation participating the Darby, for in Thank Financial phone. of Birmingham via Officer; quarter morning, Officer; Counsel and Mark and Jacobsmeyer, Chief Officer; call General is earnings Encompass Hospitals; President Tarr, Anthony, Operations. Doug are President segment, today’s Chief XXXX Health me Health’s Inpatient first Executive Thank you Hospice Officer With Treasurer; call. Secretary; Duck, Financial Price, Vice Corporate Executive Senior today operator, Our Julie Home Chief call good in also Accounting and President joining of Chief everyone. Coltharp,

at the statements, encompasshealth.com. supplemental the we you Before detail which in and are the forth of earnings of website On on have the Harbor release. on find supplemental a Form our quarter will greater already SEC, the X-K copy set Page not information Safe earnings filed last information, page with release, also available related if you X first the do are begin, of

XX-Q quarter results to and discussed March XX-K Form the we XX, filed. expectations, make differ our for read when XXXX, the and company’s call, actual of December included the you earnings which that materially with statements ended control. encourage uncertainties estimates and X-K year SEC filings, subject the which are Form from projections, are the Certain them. are XXXX to the risks Form the During related XX, will cause We could in beyond ended and release and forward-looking our to uncertainties, many in risks and

We not only are to do on the cautioned today. reliance and as of on place information speak which current forward-looking based projections, a statements. update duty presented guidance future to other events of and undue these forward-looking not You undertake estimates estimates, are

certain Our supplemental measures. information and discussion include on call non-GAAP financial will this

reconciliation available of of such yesterday the the supplemental which end most Form release, the SEC, part as comparable X-K directly end the information, the of filed are measure at on is For with and the the measures, related all our to GAAP available of press at website.

over we to turn the everyone will that I one I question Before and follow-up to everyone it question. one to remind a adhere like to Mark, to question rule would allow submit

over that, feel have additional the turn to put call free I’ll the yourself If to questions, queue. you please Mark. With back in

Mark Tarr

joining and you, good to Thank morning everyone Crissy, today’s call.

The per with earnings consolidated first XX.X%. good XX.X% X.X% to EBITDA increasing results share were achieved with and effective growth strong volume management labor increase an start and consolidated quarter leading both in a to was of adjusted a These XXXX increase of segments. revenue adjusted

on or as disciplined volume discharges pleased labor and their timing referral discharge downstream Our We the experienced with our and of both acute hospitals The XXXX. issues patients increase quarter same-store Inpatient flu growth of first in manner hospitals inpatient our across care we of assist volumes country were this capacity segment second Rehabilitation grew had to of an acute process and care we've largest a a in increased rehabilitation around IRF positive the contributed The This since same-store incidence XXXX. discharges to impact to care. requiring discharge later the of hospitals. approval many also leverage productivity. the very widespread higher fell led X.X%, efficient timely the could managed level of Passover achieved April as quarter and the Easter how in

of growth in improvement XX.X% was admissions CareSouth segment quarter This of locations. difficult comp the same-store admissions total by Health against X.X%. same-store of and a the XXXX, included grew which growth former strong grew Home X.X% first a Our achieved

continues to episode lower our health in as or do to not satisfaction, to ways high home that caregiver consistently productivity per allowing our addition, make compromise ratings. In and improvements team quality are visits efficiency evidenced patient our that by quality us

million As and months of capital first byXX.X% earnings this a free we favorable changes, as some to three increased also well result XXXX. of revenue as working cash adjusted increased the $XXX.X for

including increased cash inpatient clinical segments, We’re post-acute have patient our and this Tennessee. name rehabilitation April locations which we year, and Camellia Healthcare. new opened Camellia In in included hospital change Mississippi, hospitals our underway, in two navigation our which across recently of growth Alabama, strategic our definitive private-duty initiatives, In investing North and implementing IRF in a our are a Health other collaboration rebranding development segment, implementation acquire in and Idaho, agreement tools. and this and seven XX for opportunities we projects both health of states Home Louisiana we development Shelby of between XX the to announced home XX-bed and two segments, us. hospice, Carolina Alabama, new County, operates

X. We close transaction expect this to prior to June

our year. pipeline this While to in Health attention remain our active and maintain Hospice and to of on Camellia opportunities, plan integrating we open we Home transaction opportunities to various segment the continue an focus

XXXX, of attribute the to achieved XX.X% a simply outcomes and quarter We the cost We the for of collaboration primary clinical to collaboration to of across patient new revenue to XXXX. higher clinical basis deployment our full practices objectives total in quarter XXX high collaboration a TeamWorks objectives and across episode. much collaboration first experience clinical admissions at improve pleased important reduce of this to post-acute and are to we very of The of increase are the growth. points It's the are overlap markets. up our of care first drive best report watermark clinical note, not the over

skilled between while facilities hospital are our achieved. higher and patient and IRF health are lower resulting home to our markets. coordination increasing discharges early, While within And teams it's The and discharges readmission these seeing are evidence are rates overlap markets, objectives is we satisfaction still increasing home overlap nursing decreasing. to scores being in

We million XXXX. rebranding our of the and spending name also continued $X.X during change, of first implementation quarter

X, brand. April to the inpatient Arkansas rehabilitation transitioned migrations to completed by will care continue first be Local expected of new in and and our XXXX Alabama are home agencies hospitals quarter Texas, Our throughout the XXXX. and

care of mean costs. quarter XXXX. navigation of of value-added fracture overlap a as record Post-Acute than also analytics to which electronic for with hospitals In leveraging issues. We part system longitudinal algorithms has work this to post-acute Tyler, already exist from to hospital. continuum medical and management Texas fracture care don't year, to This through identify the we This patients existing In support effort, care we our patient coordination to XX documentation care the that developing pilot provides use the hip in long-term Tyler, market all we're care full January continue for to be Of for Trinity the to Center, a the the carries necessary care record to care assessments today. specific data been We're record case acute combined over with Texas. both workflow first hip has needs. care management rehabilitation- for care and one treated Mother between of acute and solutions to only patients, recovery post-acute XXXX, uses focus and acute more patients. Homebase this the create collaborating patients service patients to patient Data from provide predictive models proactive are management patients communicated positively system, other and tools easily By collaborative marketplace that navigation, constant payers a XX on post- difference center and care care, represented a the to their includes patients, and our navigators, a with providers fracture quality hospital project to transitions all care and Epic and primary in platform our rehabilitation building impacting complex their acute the project CHRISTUS Frances fracture shown that where for across in hip seamless manage for physicians and Innovation readmitted of manage of can those plans acute includes serve were this in began evidence-based we advanced caregivers. care documentation can partner and hospitals' Homecare

post-acute In prediction readmission Innovation settings. working all identify Texas, XX-day patients for addition readmission model to the in develop across this active to at Center a to risk post-acute Post-Acute project is

by tool. begin developing post-acute developing define what an effective the we a better working is various to efficient center markets, in be right means outcomes and post-acute post-acute our provider to help expand to determination these the it patients placing post-acute also to markets, support and right in post-acute drive networks provider. ready abilities As post-acute we're costs us the with will other Once management tools and setting

moving with facility beds decision with Before by nine to we hospitals each Worth, Fort consolidating in In an structure were private our our announced plans comment more our of those our on owned made other, efficient miles three inpatient within all hospitals. one the I create consolidation the guidance, to April, we market Texas operating want to Texas region. in Fort market a Downtown two rehabilitation hospitals Two into Worth. of in of being semi-

result in belief validated XXX ability closed financial is remaining and construction XX Hospital. the the hospital the of consolidation two contribute at operations close all Fort improved use to the to performance of will Worth it as Downtown from known market census in admitting three across the the the as private were and of Worth beds absorb stopped Fort XX the expansion a new building have This We displaced hospitals fact satisfaction City approximately beds to additional capacity of May. patients plan have term. we'll in the in absorb improved to two near less that City our Mid-Cities market. sell and hospitals Downtown proceeds that We volume excess currently in about to The this a locations View into employees We patient fund View and officially by is the sufficient believe and consolidation. than capacity this to hospital

to guidance. moving Now

of increasing our raising guidance revenues billion are billion. from billion a of full the ranges to to As $X.XX range year, start we billion $X.XX a to strong $X.XX a $X.XX We're operating our result as of range to follows. net year

million top our a by increased are to prior Camellia over inclusive turn June by range X. to These a guidance $X.XX that, EBITDA per ends increasing $X.XX acquisition it of $XXX of $X.XX of adjusted of adjusted Doug. per bottom and range of to top our $XX we're earnings the We’re million and bottom and of to the $XXX million, ends share increasing per With planned share I'll to ranges share. to our

Doug Coltharp

Mark you, morning Thank and good everyone.

Mark strategic on results our start outlined, to QX significant nice represented just strong several XXXX As business initiatives. both segments key with of a by progress operating posted and

the Adjusted for primarily increased XXXX on strong accounting EBITDA consolidated change, now higher lower from revenue option bad business in and growth our revenue. well significant QX rate a efficiencies and growth the as increased resulting approximately component from expense, X.X% the for debt, owing redemption of with adjusted quarter. QX with which QX on expense tax to consolidated interest tax volume segments notes convertible XX% subordinated to lower was based reduction exercise our adjusted effective drive labor in as Our QX in segment reform. of of income stemming effective leveraged EPS early Revenue EBITDA, management increase IRF a is a both XX.X% in

the income and and cash anticipate period. QX. QX Our increased timing make payments company primarily two income one also was federal payments. QX for did over attributable a increase $XXX.X we not in significant in EBITDA tax to tax The collections. of higher generate the XX.X% of free levels improved cash cash Adjusted for capital QX Adjusted we free accounts from adjusted federal decrease in each free flow continues QX year making million payment to and benefited a federal our related working receivable flow to QX. tax prior of a income flow.

the $XX payments XXXX a discretionary $XXX approximately cash million common QX Free in tax in dividends $XXX management in to $XX was Hospice their Health of million in million Home these $XX remains of of in shares subsidiary in rollover of estimate Home subsidiary fund and expenditures, million purchase the XX.X%. held deployed million. purchase shares and our cash capital Hospice members the for and to by flow Our team. The range increased to Health ownership of

year end QX of with times, the modestly down end Our balance sheet XXXX. strong ratio remains at at leverage from three

Slide the on Given be in and is distributions. shareholder $XXX million. realized we June towards price will period over million X, growth has result to with capital, the be continued for those a to segments in and purchase of close Healthcare Xst. expected as million to Camellia level noted transaction transaction prior an of the composition benefit of prioritized an or of cash will flow on and opportunities $XX utilization present XX-year value debt federal to estimated this a announced year $XX our anticipated previously balance tax

growth X.X% X.X%. growth inpatient Moving the segment of by with outpatient a driven the of partially revenue several an of was volume offset the same-store now the segment increase hospital-based on closure results. outpatient by IRF of revenue, and Discharge growth decline to rose included in X% revenue revenue strength Inpatient in X.X% programs. pricing. associated

and his Revenue As increased per a in timing reduction Medicare and stemming Mark and Passover QX contributed QX, in the season volume reimbursement growth. discussed X.X% bad discharge rates of debt. from an flu year-over-year increase Easter to heavy the in comments, in

revenue was X.X% compared revenue related XXXX. in IRF Our in as X.X% QX QX to segment of to reserve debt bad operating

quarter, may supplemental XXXX. in denials of previous XX claims be slides, prepayment but As QX modestly from were QX new on from Page up down the significantly seen the

past As implementation ADR we the of much reduction the contract from activity discussed and in to on to full calls, Cahaba the we to MAC the of have Palmetto. of transition TPE attribute

denying aggressive certain of what believe of MACs CMS also regarding been claims interpretation have we an setting. guidelines previously therapy We IRF the discussed levels in be on to required based that have

guidance sustainability considerations in XXXX. We CMS of in the be quarters. this can to first QX. denials in issued bad segment TPE bad clarification prepayment do updated believe the a two this are assumes to new of or the that with positive consistent levels debt during as in past with QX pleased IRF slides, experience our half March realized the of of XX notwithstanding, QX, reduction for claims and guidance page seen recent these Palmetto guidelines still not enough have levels experienced to these year, those we our assess regarding the the over we contributed supplemental on debt results

from adjusted the for Additionally, $XXX.X substantial with was was million adjudication points little labor management. bed, QX progress to IRF level. by declined QX of SWB made growth to rose revenue or another EPOB, the QX and awaiting QX revenue ALJ yet XXXX. with on XX as XX.X% at to backlog of labor in basis leveraged by in segment quarter claims measured X.XX productivity, EBITDA occupied employees X% X.XX per improved as

driven, growth hospice and admissions with Home volume XX.X% of growth our increasing XX.X% X.X%. in QX to growth was again increased Health Home health XX.X% revenue same-store Moving and including in health revenue home with hospice. X.X%, admissions segment, growth

of owing the the to former CareSouth please comments, XXXX, of half that the Health during in half reminded a tough clinical our as growth improvement highlighted, QX. first stated to As the occurred IRFs. QX of XX% Home in approximately, clinical to we locations year-over-year his Mark our comparisons increase Mark And collaboration be in significant same-store admissions first XX.X% rate in admission faced collaboration that with in tied experienced XXXX. in was the

scope related reimbursement Medicare declined our in $X Health reduction course are a ZPIC for audits QX of was predict. to revenue somewhat result difficult revenue ordinary and timing to per a million of audit. the rates Home in the Our and approximate an X.X%. occur The business, episode decline ZPIC and sporadically reserve

X.X% of increased Medicare XX.X% than the patient offset ADC in as same-store as reserve, hospice revenue impact in Again, rose QX reimbursement driven episode XX.X% mix in revenue increased changes a impact increase ZPIC would the Excluding the have primarily reduction. by XX.X%, more per of the admissions. by

EBITDA related Hospice seek was The opportunities hospice our nice represents to Health in and reconciliation Camellia XX.X% scale Home this continue segment We period business two million. acquisition by and items, ZPIC the offset in direction. adjusted payments to increased fully to prior add reserve a $XX.X to QX step QX compensation cost for and will as point open now, and care of also the improvements productivity of percent a to operator a to EBITDA in from growth decrease QX due XXX in contracts further efficiency. owing services a revenue timing. to managed resulted basis in incentive questions. in accruals Adjusted line for line caregiver And reduction

Operator

Your first Instructions] Larew, [Operator is Matt question from William Blair.

Mark Tarr

Good morning, Matt.

Doug Coltharp

Matt. morning, Good

Matt Larew

good Hi, and morning question. the for thanks taking guys

impact, the above parts particular market obviously, if recent moving but is such patient out the very trend. local types about are ask growth, this to there any growth flu strong IRF during impact, of just really of quarters. straight wanted break strong the First, driving terms two you quarters holiday if a two are growth last could I that wonder dynamics in or

Mark Tarr

couple give a of Jacobsmeyer comments to I’ll in Barb weigh Matt. and Hi, ask well. as

know, portfolio. complement big a a – for see we’ve of – in of our certification set we’ve have the markets. all number our neuro As continue in had to volume neuro both you the from progress hospitals nice XXX program our on standpoint. past to in several With we a complex we’re stroke and focus consistent I’ll hospitals. over years, on the really their now virtually our stroke neuro stroke joint Barb it portfolio. overall their the was some across than nice that, growth, markets to spread others, that comments. but give commission, handle was broad cases. better which sleeve relative We a from puts do ability always across stripe additional to the it have ask entire pretty our

Barb Jacobsmeyer

really and patient at that XX, looked they a reducing readmission look skilled. would along really value as to show home SNFs only of those or look our when them we’ve with stroke a of patients high you’re the ability looking about go – talking we’ve coming have. this the get when cost to especially, come coming the home, to patients to we keep at the can and that past, XX about IRF. that we you that when IRF talked then at perspective really in time going readmission on, just a patients the the lot costs and thing value from so of proposition XX-day. the past, when spent And in that the rates

Matt Larew

that. Okay. thanks for

of market curious up following an doing in the Just patients market. of the increased in then or what in for and sort share more and is just Texas also additional taking fracture increase patient we on really expansion market. you’re programs Cerner in incidence work of with that hip of other if Tyler, timing broadly the can program potentially about think types? of terms then that growth pilot

Barb Jacobsmeyer

XX and able data the really is that do only to mentioned, helping share. that that do of is to the the now in get a past, using, going so, collect to again, We them that markets. to more facilities that’s to Mark that, that can model some by in really home. something be taking that refine replicate on the it’s we’re to we CJR that were, able perspective, skilled analytics care and how of showing that of we’re has market gone so helped one again, really Yeah. we being XX-day from all in this show patient, know patients acute those to as days. going which that the value those has market ability and longer that is, in facilities. definitely the it’s pulling past were feel skilled navigator patients that managing

Doug Coltharp

other particular in markets. replicating addition I think this it model in to

we’re area a the scope we’ll thing that in services post-acute other expand providing in be the the and we’re Tyler being is of level of navigator. to seeking the patient treating The that doing of patients

Matt Larew

questions. taking for thanks Okay. the

Operator

Craig-Hallum. next is Your Kevin question from Ellich,

Mark Tarr

Kevin. Hey,

Doug Coltharp

Kevin. Hey,

Kevin Ellich

Good hey guys. morning. Hey guys,

first, seen the the strong especially flow, capital So we on plans and in wanted if transactions have your market? I lay of and given the M&A your touch out given allocation environment. you wondering leverage to decreasing some cash could for

Doug Coltharp

Yeah.

transaction, the additional the is and markets just a akin bit health the we healthcare into It to So over of it currently longer successfully working health we Camellia is this we’re an and issues, of we’re it where done to to home some going we’ve that’s on into really further to in home acquisitions little a last of with creating based will more in recent in sight year. emphasis those to smaller line our one primary We’ve get on agency of fold. and acquisitions. more acquisitions latter pretty size. in assets but of week, on And just and larger of but year integrating months about Curo. full assets think and integration to two and are hospice number and out have there Camellia are the significant that those of be prior that we transactions processes our this we mindful around in assets that discussions Kindred announced opportunities returns the of risk that regional an leverage, as opportunities an acquisition of generate space and Those and good only with part IRFs, about in for size, been any of do the between is occurred more a be that health with tag. Doug. – ability because but arise. of the hospice the I our terms market that make as or we’ve of that come at we’ll we be health number balance in finish the on Home active overlap not believe in a will XX size line. this balance those in pursuing hospice preemptive excited be comes with a do are that focus our on size density just then those transaction. our a got price home any have and it’s there those of there they hospice calls And space Home believe nice-sized shareholders sheet the that couple and home those. the last so and hospice appropriateness that the company impact took said years, along appropriate obviously, that the very the obviously come There’s to have markets, participant began kind agency, Health variety transaction again, are Hospice, We in a opportunity. transactions the the a the excited referenced. presence. the have we of Camellia with exist adding have in that intended don’t over are

Kevin Ellich

before One X. do the baked But contribution have quick one expect it I expect that question before ask close for your much closing? guidance you MACs. Camellia, about my to How you in June you –

Doug Coltharp

particular a number We haven't One we is a asset out don't yet. broken reasons. own number the of for

an recall acquisition in million and home previous will thing do the with integration following with during immediately expenses in intentions $XXX you that see midyear would assumptions do the in and that six typical business And finally, health you'll first a the in is of acquisitions advance and you'll that guidance parties know somewhere of best period hospice also and the some we even what convention. that together The that integration agency in our between some had $XX smooth then working million assumed it's erosion with we transaction closing is closely that the months. closing second of XXXX incur the the for

this already elevated if is so the not the transaction for to year not into incorporated impact it's overall large guidance expected range. Camellia be from the So

Kevin Ellich

And CMS you seeing Okay, impact remarks, are guidance denials I have your in sort horizon? versus prepared that's else issues then, what the Wondering expect? this therapy. you individual helpful. do for guess, around commented And anything might and group but guess, missed – on of I some you I if

Doug Coltharp

really from around one And basis denials specific But like right on impact of March. flow the that There the Yes. new only only that it's some third positive we MAC. was I that for MAC having came about specific were in week it denial. where think, a looks having out, now, again, issues

Mark Tarr

and group. of I a think evaluate the versus from the defining it this. individual do propensity we clarity it some marketplace whole group on therapy they think of how seems to add help additional therapy clarity individual certainly short standpoint of did some versus the to around stopped to apply But

Doug Coltharp

TPE. It's not in of terms nearly of magnitude have going transition to to impact the of either Palmetto or the Cahaba just though the adoption

Operator

next your Markets. question is Morgan, from Frank Capital RBC And

Frank Morgan

out with a care question. home I'll health start

– how clinical opportunity collaboration has do IRFs I you secondly, we curious, with has then that of care Looking a home the markets? know there of That any XX.X% think rate question. XX%, about being grown, you should at in – limit just about the quickly as Or Or think a of layer geographic in just as overlap I'm market? XX% purely be to first that that a is an at And think Camellia this will some opportunity. just on in and thoughts of sort stand-alone today goal? target reassessing longer-term this, I have less there? way, drive would those health strategy to maybe my

Mark Tarr

We're Frank, pleased our last implemented by impact very year. to collaboration. the apparent we from was clinical first that with Mark. take your I'll question fourth rolled initiative TeamWorks that the the relative fully quarter it's of out

time You saw you've of which the was around near-term four-year the term, to clearly we more look basis XX% increase points year. prior said We in from somewhere we out a XXX longer think if get a of said, closer be XX%, to you years, we're we'd it identified We've closing can frame, two on. over standpoint, which XX%.

once expect to continue And appropriate have goal So couple certainly it, where quarters we hopefully, forward. to We come we'll we'll we'll an take that. positive back the next where with next to out is this and couple we'll moving feel the take stand. we increase see we nice And quarters evaluate then measure.

Doug Coltharp

pick this were density already business. the we some operating creates space in on in About market the Frank, revenue hospice is it Doug. base three Mississippi. up And XX% incremental approximate importantly, create currently IRF does second question. of Camellia transaction overlap the boxes I'll Gulfport, checks hospice adds is nice in markets down The And really then an the It in to us. further to. It which of home health our of well. Camellia as in scale or for

the we backfilling to of or of In think acquire IRFs, Camellia say. were one Alabama do some able new state in IRF. an past our expand in the to facility basis. markets State we backfilling will markets second be of that be opportunities. early a open a of we're can – been home we with because done within pleased our of to That there the terms this didn't the in this presence be some up should specifically CLM with very opportunistic quarter those to restrictions, have although that so may challenge quarter, new is have the – health of But on do objective Mississippi, We home looking I

Operator

Your Baird. next is question with Matthew Gillmor from

Matthew Gillmor

are of to I of capture portfolio are there follow addition some kind many about fractures the targeting? many, within there you portfolio? how could of sense the think specifically, is rest you up markets on more opportunity? makes you a arrangement that project hip like And – quantify expand. comments to the this, broader then how to the I think in that, with you But of guess within how you're as way want a you the sort about with an could number provided pilot CHRISTUS, and And

Doug Coltharp

how place assigning expanding And think fractures be hip But might I start. are that number I to to upside for DRGs. us. think is other to to hip think available to start this really that and fractures appropriate a convenient many us the it's too early I a

how that we markets have a Trinity the of and earlier venture pilot Mother you XXX of more piqued similar to most Center inbound interest last of going because with relationship of already some other us. might the us with those lot can – are with or that of our had the – able them. is conversations have markets joint really, that or our partners project have We've start announcement a Post-Acute where the venture Frances. are basically, a Innovation late with to can of public calls be comments in, in start talk them, joint about assist place then this you to we year there again, recently, – underway about terms the We're piloting the taken In we

We that those sure are in the in doing reads we working We and very make pilot are existing the absolutely early actively expectations. discussions. things that those are to want engaged and can well meet that positive are we the

scalable. the protocols replicable we've a will as established first, and tools really little built expect that think couple initiatives. these see this I have and determine think before then go to I it at with be So we'll rolling additional into out around momentum and again, a slow announced we build that that more XXXX of year and is a least it'll are pilots lot that the momentum we at

Mark Tarr

Matt, our had in our of we experience certainly thoughts in Cerner. would what possible with supports terms Tyler hoped be

and for electronic Cerner allow for new the this partner systems with been medical us data things for really partnerships relationship, well it analytics They to marketplaces for we've If you partnerships. working to next an relative record. existing and know to predictive as at level and create apply better to Cerner partner, very our around our a both capabilities partnership know years take us being company think will make almost on well. modeling We well. very us seven as their We our attractive the look and

Matthew Gillmor

on these one shift That's the and Doug, for numbers. the follow-up from missed helpful. did quantify I'm it. I what flu quarter? Got And impact you in was the volumes quick calendar IRF if sorry the

Doug Coltharp

I We but will. did not,

also in then So it to tend to really, who got landed flu-related patients retained those because were issues those were acute We've got IRF but you've discharged at care – diagnosis or were incidence things. hospital's diagnosed flu not unit the XX to is our no ascribe with so who an the an flu. weakened facilities because, and stability, impact XXX range Easter another would by for patients We hospitals XXX and acute factors they to the to of are with be the from flu from points of little of you've timing facility predict of then for or volume Passover. and XX we primary points flu severe caused care that got a had two floated would capacity QX of an then volume estimate more IRF case who be in and the absolutely patients that about basis harder estimate qualified hospital acute have by that basis a quickly in setting. care recovery bit And being that those the their and

Operator

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

A.J. Rice

you seems – natural your Maybe be be I ask wouldn't and your that of more your going some thinking hospice. stand-alone emphasis you're on starting home a of sort in a I health out more with orientation hospice. health rehab just home Or increasing deal the to as That there's little hospice. involved strategic IRF give business discharges in? I'll think people activities. of of progression of Camellia that IRFs emphasis, into little just attractive coming out into in a little about many there's with on a to of bit there's the view know, that Do us home health, bit why commentary. post-acute

Mark Tarr

arm reasons and Doug make with. you've It's Yes, A.J. that to the We see and a see, this hospice that nice for another something do But operations for. service There some comments. we see of that particularly our be we home see arm very in do are between of third synergies we forward. those back the come moving do rehabilitation inpatient that is not I'll collaboration Mark, need involved a don't lot us see an with – stand-alone We health the hospice for stated. clinical growth additional think let attractive it hospitals office. it the as We we certain as represents But line.

Doug Coltharp

focused before, the hospice core look we our very the population, growth driving and is serving home driver a that some pressures. is is shift, beneficiary growth at that the for foreseeable we've over you which Medicare it, we're has excited the as core business. tailwind services business IRF about will, it's on the that exists future two for fiscal lines, the of if And one things further importantly, stated of And And opportunities for our societal those Well, call of, well. health, hospice and is demand as also services. demographic

you it during about If patient's total of expenditures life. a that expended XX of Medicare third right the think now, last everybody fact knows the a days are approximately

have that health ultimately, expenditures, really is And an going to for address inroads trend. on the progress to bending hospice care we're to make And way so making meaningful to begin curve appropriate there.

year If degree be a some in now, forth, who low Medicare expire because to statistics Medicare experience the you about benefit. and And on hospice the sudden to accidents right out any at things higher. so death related look expire like beneficiaries relatively there while particular XX% percentage substantially of of that ought trauma beneficiaries from

couple of that fact themselves the seven avail who of days You within expire admission. beneficiaries the then the and approximately that expire, a with hospice third Medicare of benefit

other regular have only hospice that that, As suggests been a business now, we longer-term which know, than basis, folks exhausted. when we're to all means on the benefit it's a line admitting

we those be demonstrating that hospice clinical you to demand. that natural the regarding a other also of to the further appropriate characteristics look be comments very, growth are And at that we metrics time And the think my and deliberate during been to of the were about extension indicators the as that's if developing Mark business. able business. in making successfully. have we because we have and case think and over been I successful evolve and the able hospice very All before, tools going business, mentioned drive we our operational discussed that, and team sure related, April I studying adopt It's business that that synergies of think, those and our things, we're her to

A.J. Rice

updated Okay, that's thinking then happened. your at couple just a follow-up And great. of question. look that When my I of I'm guidance, things

at how I much relative You've in quarter, the your to to internal least outperformed relative estimates. estimates Street first know don't

in raised second because and Camellia growth, Are the there guess, the I'm looking the assuming that it referenced seem have of guidance. also the takes for quarter the guidance? there Are we that that example, been other in you're and of aware the that, have a somewhat? for got are those upside MAC deal, balancing is incorporated, discharge pull-forward doing the new be you've I may you of all Or how those like with may offsets? amount fully you trends You've are rest out which doesn't from should of year. the the implications

Doug Coltharp

first ever unprecedented. it's of after with, There's of it's history other start the to almost raised one A.J., been the we our end and So end only quarter. the the guidance in where first quarter, time

So is doing to breaking this a extent. trend some

stays at debt level two provide we higher certain that at if bad upside. the that QX XXXX. made with guidance specific Obviously, adoption experienced in the assumption guidance in bad either to through the segment the have snaps we push can don't that IRF of you and it range QX, we experience levels, As have back from quarters us see the long curve debt, first because that a some or considerations, of again, TPE, would Palmetto

in guidance it, some going some as result that business to happen relatively anticipate, to the XXXX three had we’ll $XX assumed half we’re of try hospice that remains is and agency avoid second guidance regard mean underlined and we the in and discussed midyear; our going home we’re the now as temporary $XXX anticipating over reverting our has increase it’s recall two, the of a And assumptions one one because expenses medical higher also may previous is there XXXX. that to health experience for of expenses remains group a that, closed finally, guidance integration such the considerations. to of and yet; with favorable group the then taking in assumptions with already Camellia, one then in in year; That You transaction earlier I erosion intact not incur be to somewhat and a had that medical XXXX a just midyear occurring million initially acquisitions even convention. may finally, right place our will is that we transaction be million

Operator

Your is from John with Ransom next James. question Raymond

John Ransom

really trend trending? have XQ smart health do considerations, trending? range scraps. wide is the Well, saying care bit that and A.J. to And The that how – That’s is guidance in let questions, big, your any start a pretty me out so you cost in by I’m how your so Matt down comments? my updated asked

Doug Coltharp

We basis. semi-annual – I we group our think of do on true-up John, as actuarial we’ve expenses an a discussed medical only before,

seeing hard because some in really what medical issues just course trend so a through and expenses and also group forth. It’s timing deductibles year it’s QX. year So to of based the see utilization we’re the of on you establish the that the around for case do the

as So it’s we the too bottom the to how we’d medical early much end is progressing I We’ll the maintain therefore, is line better there assumptions. when think read guess, tell to get and we of second have those to a quarter. group

John Ransom

what driving couple volume look gains Okay, past thanks. just is Is Is years? that? share at you the it over home in the just you, think publicly, the What consciousness not raising? what mean, Is market for-profits? do with it I do you explain better – going Is hospice can something it across collaboration we but But health? by of the on? there else acceleration

Mark Tarr

setting and they their end-of-life all to not an I think this wanting make people on Mark. of move that for More and acceptance to able is hospital continuing want John, their towards to this hospice days increase. to hooked as at they I’m ask be just decisions tubes And in spend home to and overall, is the are going April institutional her But up to thoughts own end-of-life. societal more wires. too.

with give possibility. So I to just is it’s want is time. societal acceptance And realize think increasing that? April, this once that your you people a thoughts starting to again, on do are

April Anthony

Yes.

talked very value with but I add that appropriate with high coming Medicare a say thing the the hospice wave understanding address those to creating a awareness that Advantage is just so is you just direction. finally, not cost at is level, patient And of broadly that’s I would would about the awareness mentioned of just, Doug ACOs other our the course, that end-of-life consumer plans, growing can earlier. we’ve a for particularly only of when The that demographic then costs

consumer we’ve informing broad-based Medicare have So to service. so of plans, that as more consumers rely seen the that simply you awareness Advantage on have they’re more ACOs, we don’t

John Ransom

to That sense. Two Okay. output do XX reasonable jump the quick think multiples? consider you Encompass the the makes does breakpoint me, times multiple something ones or for to XX more EBITDA health Doug, from the is on What would numbers? what me. of level – excuse

Doug Coltharp

You mean in terms of acquisition opportunities?

John Ransom

these Yes. Like you not buy multiples? can having pay to where crazy where you’re

Doug Coltharp

it’s specific. situational Well, I think

where I very are seen where there going and options what managed aggressive more think run multiples care the are you’re we’ve the high. on in is companies, like the those drawing larger be options players properties to aggressive where

where more on forth, density our of opportunities creating we’re regional market think multiples. somewhat justify more and so we’re I some with where I creating overlap higher IRFs, players we the think can

consistently demonstrated going acquirers the forward. of businesses, we’ll very trait and throughout that are that continue to we disciplined have past exhibit We

Operator

from Your Fischbeck, is next question Bank Kevin America. of

Kevin Fischbeck

Hey, good morning.

ask the bit home you’re a I health on guess, the to little side. I So making about wanted adjustments

as visits the for going number prepare the the model. exactly doing mentioned be And wanted you’re reduce far I in to what how down may grouping any that was, this trying to of whether making per You line to episode. you’re adjustments understand about and way, that coming as new

Doug Coltharp

to Kevin, I’m ask on that. going weigh to in April

April Anthony

there’s alterations. that don’t I those to Kevin, systemic anything necessarily think

bringing continued patient, the just seeing like what to full in really effort our they’re that always create a professional clinical they’re the have organization succumb value that that kind staff among I to themselves advance And to fact, patients, clinical to that we’re letting they’re think we across encounter they outcomes with but of every them, in the I efficiencies. to single that continued really patient. focusing focus, never can think on have awareness challenging of I ensure do clinical being the a our staff, it’s visitor having liking

contributor in well. little also as bit We see mix shift of patient a as our a

And so different types of patients have different volume demands.

exactly know like amount time this yet winning highest models going But future efficiency.” primary as to clinical that, and going a cost that simply fully at that in be at we our make impact is we What the the And I shift, we of have greatest bit stage. is that the value a know awareness bring the that to clinical to challenging mix And what can’t is patient say, of shortest look to “Boy, are finding of the sure staff little an say impact. philosophy. see can least so that would you’re

around everything possible. to patient full done of quickly value, do so those effectively, that get potential rehab And years tenets for the cost as has their bring it back focused as core we’ve

strategies And so continued think of progression have been just that a for place it’s I long a time. in

Kevin Fischbeck

more seeing? this? do just you shifting in clarify, opportunity in doing And much there then mix So you I would – you is guess, to think say patients, are what how exactly

April Anthony

end to find going volume with need XX-day IRF those Well, patient three issues we out week so coming have be back bridge situation, that for and episode co-morbid visits a in visits or will the entirety have weeks. their shorter who four that’s bridge the week really so patient that, in that versus that to patients patient’s for surrounding care than discharges setting to where are duration more may with episode. see the Take overall a but higher intensity care a patient less patients dealing three five multiplicity find IRF intense a care across front XX-day of may We chronic home. hypertension of of of needs. you need the that, are on the or more may transitional chronic trying to that They they’re higher IRF

as types we mix we’ll in see, patients that’s what we’ll that where so patients call of we’ll bring those that in. shift And shift, see

as, to to use visits. it’s challenge trend to will continue, continuing I alternatives just the of to As would say far a ourselves matter

visit interject to tools. situations That’s We also that. phone helped replacement to as the that us high-risk ability another find certain calls in program do

to as not the most only And deliver way with we improved for efficient method. most do continued think with visits care runway so for the some efficient caregiver, the per caregiving efficient most I really look but there episode is

Kevin Fischbeck

Okay, thanks.

Operator

Hambly Dana from is question next with Your Stephens.

Dana Hambly

you Good morning, to to that actually getting line. date, My for stayed your me business, which, question largely in. adding the personal away been thanks have or is while private-duty from on have care peers

what’s benefit view Advantage industry? kind that pay that – those that allow of your of And will new just to year starting alter business? services on I next So does Medicare view the your for

April Anthony

So this April. is

and would would can that, through up the in the the that in very finding area about control. have really through we that find into utilizing not acquisition leadership as relationship. include a have as any our local expanding really partnerships that as effective we there the much be pieces just found across to interest to look and certainly that would That that like for we anticipate ownership had the in tough think foreseeable a business not partnership but belief over business, that way. experiences meaningful being say, the that, I where XX-year gain that – could continues a We’ve road, as foreseeable challenging here history have the may us. Medicare that’s segments say future. small local acquisition pick relationship a Advantage our different it’s to down plan We future, having a player be do run. we I that We major that an and right could right that. network that, is line, And outcome service that pursue and But best it’s can patient least, think or that certainly time acquired we we we’ve our changes, the an said, that could in benefit the something at result, evolves points businesses for the

Dana Hambly

you. Thank

Operator

Morgan, [Operator question Instructions] is Markets. RBC from next you. Capital Frank Thank your

Mark Tarr

Welcome back, Frank.

Frank Morgan

Yes.

Just had a shopping list question here.

same-store about I the that the And the was number recertification wanted my think question be one. if total, on and And make is number that number, the I growth that’s what calculated sure you’re in was, the would goes I with was side, same-store care – that? to home what’s rate not that but XX% aggregate. – health episodic

Mark Tarr

want to April, do you this? answer

April Anthony

it’ll trends, I it Sure. look pretty as it’s supplemental break clearly Frank, XX where for at in been you time. Slide over you think down the information, as if well

same-store health X.X% X.X% total in and the growth same-store coming the was home of from So division, the that category.

Doug Coltharp

were is up was and you of episode suggested, an of from on And Frank episodes same- store that slides. perspective, XX.X%. XX%, Slide supplemental that And X component as the

Frank Morgan

thanks. Okay,

Obviously, as other question. great an But one the productivity volume growth. people a have strong so Just done about final issue. all you labor much curious, managing job just with talk

what any around Just segments are terms color of Thanks. labor there on on any overall variation there how you’re and if the in and availability is business where regional two is. much labor your of the regional seeing of pressure market –

Mark Tarr

a in if the it’s I and to Frank, our of with say I the process rates putting we’ve the clearly, the increased it look whether it’s evaluating particularly to everything on-boarding certainly nursing pressure, I in our an lot of us we side. done the below emphasis board, continues have of area on Mark. mean, if you’ve past stay now, talk issues, therapy that it’s terms industry side. turnover or benefits or and in calls to that had clinical across at at say on of try right would standards. luck, would are lot We’ve you a labor heard education front on staff. see

good and and not to to that But nurses try one and new to for On use right business employee track once great workforce. our our every retention continue in, that increase the retain We engagement on again, grow be we attractive it’s best therapists our keeps have lines staff ability the average. every and our tool now. to, either single day, industry of below a to coming in be our impacting attention place do to and we turnover,

Frank Morgan

Thanks.

Operator

the to Crissy now I for call like over Thank closing to you. back would turn remarks. Carlisle

Crissy Carlisle

questions, additional has XXX-XXX-XXXX. for anyone me today’s joining Thank please again call. If at right. call you All

Operator

Encompass quarter call. This Health’s first concludes conference earnings XXXX

now disconnect. may You

Encompass Health (EHC) 27 Apr 182018 Q1 Earnings call transcript