EHC - Earnings call transcript Q1 2019 | Encompass Health Corporation

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Operator

Good morning, everyone. And welcome to Encompass Health’s First Quarter 2019 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 to turn Encompass the now Crissy call Officer. I’ll Relations over Carlisle, Investor Health’s Chief

Crissy Carlisle

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

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

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

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

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

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

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

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

Mark Tarr

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

revenue to was The good start EBITDA increasing XX.X%. increasing EPS first quarter with adjusted XXXX increasing a and consolidated X.X%, X.X% consolidated adjusted

home first XX a in with signed our We objective the made With the benefits definitive Home home priorities. and Health markets, XX new three health operational this to markets Alacare creating business. us is location hospice in and these quarter to acquisition Jackson, of patients areas. of and and significant overlap hospice also in to our in across home building Huntsville Montgomery, Alabama, in bring Hospice. We scale agreement adding result our strategic progress acquire will density markets, to Alacare acquisition recently new and on existing The allowing overlap collaboration health consistent

in transaction to June. We expect close this

the a objective our quarter XX%. and XXXX. This first the near-term We increase in the continue to clinical quarter over collaboration XX% first make point achieved revived collaboration rates first rate XXX progress basis we've of to clinical quarter collaborations XXXX, exceeded and on a our of XX%, marks

American and officially showing Heart to an awareness strategic to allows far, We quarter This be guidance after we in XXXX. distributed patient AHA/ASA patients their community education, Stroke guide patient inpatient and families. us have website. eight individuals ASA than women and on skilled recommends luncheons for electronically facility. bolster hospital been initiatives bring branded to received sponsorship to XX rather X,XXX build since jointly downloaded rehabilitation Association. first visited go highlighting nearly life to Encompass for our the This treated In stroke AHA/ASA of the guidance Stroke This been and more we a end Thus awareness three-year Health red strongly the life stroke in completed We've the of launched about information. with provider, educational website, are strong stroke guidance nursing between Association/American stroke anyone that also sponsorship is has available progress share. the market across co-branded our XXXX, the to country and over completed being X,XXX and our download American times times than January is attendees Association's guide on the the X,XXX has for also after where

launched reducing posts with combines and stroke have model of our shared AHA/ASA In via In media pilot We've stories in tools of prediction addition, XXXX, the project five And been first acute to channels. continued of outcomes support of readmissions acute focused lowering on a other this the across care Stroke we market. Association's several quarter the Houston model. refine patient post of improving our readmission also solutions cost promoted each existing on Health by hospital Encompass American entire social as that post care. in network, April, and continued the XX-day episode patient we development part the that

estimate Medicare year for changes an year XXXX, reflecting company patient rule year inpatient begins to hospitals forward with for On XXXX, April be for in fiscal year the this rehabilitation we second rates stemming transition and other proposed, to to the XXXX in This payment CMG XXXX rule fiscal referred and XXXX, result data Moving XXXX the community. moving implemented October fiscal CMS rule would XX, as regulatory its that system. the tool transition in the and which updated to provisions now X, incorporating from table facilities. our CARE the the system rule down proposed rehabilitation included of CMS flat assessment mix for that the X.XX%. to as Recall released several is inpatient XXXX case proposed front. with would a final included dialogue provider reimbursement

seeing Additional to information information have that hospital the the can the documentation new earnings our component document from our August releasing abilities inter-rater impact our each portfolio. regarding reliability across proposed to Page is accompanies information the to rule We functional Since under that found company working we CMS of appreciate each are how under captures last elements, and new supplemental clarify estimated on be our an FAQ system. of XX focused with the we information care patient's on improve hospitals CMS, receive that improved we release.

their industry CMS of episodic being CMS help and it. technical provide proposing functional our therapy fully XX-day a a weighing wake consideration. as Patient the for weighing assessment for provider begin of Model, and potential continue clinical and not that stay. year of is to this and open measures function assessment other constructive examining period. a We proposal perspective and relies part in the methodology to to during payment rules functional thresholds. implement the on is also input not period. heavily This this to through to proposed clinical yet on the We want a characteristics these the understood. is views home of health as dialog care fiscal Driven cost. payment aspects care a weight feedback current Reimbursement to payment health, of Among to on with under of relevant correlate to by the initial XX-day system with CMS CMG's differently XXXX assessment changes, home will and The proposed stakeholders stakeholders the activities attempt relative burden proposed the now system patient's company common effect the service trade weighted weighted length other or thank current common Notably, revise CMS's various to on period methodology will new, to The new In a whereas, eliminate system develop also reduce reflects score weight plan questions Groupings engaging CMS did items more and replacing CMS groups score PDGM.

to will X.X% offset reduction the CMS addition neutrality, rate. changes achieve base assume budget behavioral in In

Our to drive the and care these continued efficiencies includes incremental changes objectives generate preparation use administrative functions. plans for evidence-based of support technology in to

care system all enhancements acute increased to XX-day Also We of with less than to for transitions be we're are doubling which with key our periods the working previously does of MetaLogics from home we hospitals, not prior in is our refine payment investments XX-day to continuing working care part home part homecare health as ensure impact the our PDGM and our payment move on be a costs. as base its we an from had of to admission we're seeing will made PDGM estimated. we periods from result expected related frequencies in in billing serve billing plans program, driving further negative care increase patients

adds the not low from this day both encouraged a also and bill setting preferred the of are cost many support bill soon but Bipartisan as support value bipartisan of a are for is by seniors. with we hopeful We receiving it home appreciated the care evidenced rare setting have by will support health is in shows the of also Congress house in the the senate home receiving XXX, companion widely we we believe are we support. bipartisan is is care also by parties only America's and

after home this health on estimates revenue calendar updated provide impact is to to expect XXXX proposed of rule the summer. our PDGM We for the released year

demographic system and predicated demand these company outlook the track provide. have trend increasing to reminder, proven a to work services able which are record proposed of on as of the a long-term we through neither the do We changes payment well-positioned for believe the our a we being company, so. changes driving for new is we As

through XX produce and managed payments economic patient consistently cost-effective outcomes have and provide sequestration freezes of in changes, EBITDA necessary XX to ageing adjusted quarters. recessions, We a growing successfully last an manner. high-quality in We the and cuts, services the regulatory Medicare population

population the capacity. with our and that demand home-based expanded enhanced facility and the grow. will As meet to capabilities demand continues for age, will And we services

Demonstration June. health the preparing home start RCD of or Choice also in is the Our segment Review for

demonstration Earlier review ago, preplanned RCD of Following announced to in this PCRB flexibility and the we agencies. preplanned work June have choice for Illinois or month, to home in program offer the review more two the will health CMS XXXX three begin revise pause CMS where X, years providers.

prepared Illinois conclude I'll X%. our navigated my apply the non-accrual an well are of for this locations with with excess and comments XXXX learning's from PCRB that discussion of in successfully aforementioned guidance. We program will rate a

current our XXXX rehabilitation and As a strong XXXX result proposed for for of of rule our of the fourth the impact quarter remainder the included on the expectation of to start XXXX XXXX. inpatient hospitals

guidance. reiterating are full-year We our

revenues billion continue a million in to $X.X in of to adjusted a billion, per include Alacare, We guidance This close adjusted range in does With $XXX $X.X EBITDA expected of range range billion over and is net $X.XX Doug. share. of to to in I'll operating million a not EPS $XXX to it acquisition which turn planned of that, $X.XX our to June. expect

Doug Coltharp

Mark, good morning, everyone. you, Thank and

business a As expenses. operating the stated in against his of achieved G&A leverage beginning and both gains the and year adjusted comments, revenue with EBITDA strong Mark solid start was QX our to at segments

And rose QX X.X% X.X% billion. adjusted $X.XX EBITDA EPS consolidated increased share. adjusted revenues for XX.X% diluted Our million. to increased to from $XXX.X $X.XXX per Consolidated

We million free business debt dividends in capacity and cash in quarter million adoption repurchases. Consistent was used with was at additions line fully of flow. generate Adjusted in free $XX significant to to new $XX our We QX year-end lines. our X.X with flow in cash fund and ratio common XXXX, standard. million our levels $XX the attributable common million, the $XX.X in ended of million for stock expectations the approximately to leverage times. with accounting lease to continue $XXX.X increase

close which Alacare, more $XXX.X and balance have liquidity respect the to capacity We in fund million purchase June. sufficient sheet we of than to

strategies. We other pursue continue capital deployment to our

decrease from impacted and market improvements XX QX point debt. XX expectations disruption bad in in discharges in across offset increase to and in related an Revenue Michael. and for discharge. business X.X% in of discharges an estimated results slides. Revenue same-store by growth factors comparison points resulted QX in for X.X%, increases basis reserves approximately for Moving stores debt were to by from of Easter were 'XX IRF the was revenue discharge 'XX. toughest stemming by reserves above that segments growth our flu city XX growth points and basis continued same-store our in same-store related Hurricane from to discharge a by basis We community. a attributable on related XX Discharge in XX to points. can to increase growth an QX. classes of It specifically included increased in QX bad new related QX negatively rate These X.X% QX X.X%, same-store season was increase the Passover. was Moreover, posted faced basis X.X% as the supplemental seen severe to Panama and discharges payer and destination, basis increased all partially driven discharge resulting in timing and points the basis Page be 'XX the of we Recall declined major revenues the points QX and revenue XXX QX by additional X.X% to XXX in

denials New claims a QX both year-over-year basis. in and on prepayment declined sequential

also However, previously denied collections of claims declined.

The X.X% expectations in and lower benefits adjudication quarter, resolution revenue XX the increase to During on for claims on backlog no a was the claims increase segment $XXX in to million, was IRF favorable progress experienced subjected our awaiting an level. of improvements labor ALJ than at substantial going anticipated a as the QX the rates to process productivity. EBITDA period. of below to adjusted saw once we we over point of year again, prior continued little but TPG percent basis in XX.X% SWB costs increase

that EBITDA. declined million offsetting of non-qualified included to corresponding We benefits mark-to-market percent increase our XXX(k) $X.X mark-to-market a of XXXX. costs income in basis in expect impact to as plan. X% on and million Other X% no a general of the $X.X pharmaceuticals. such QX increased activity quarterly primarily QX within administrative in There approximately generic Supplies to to XX adjusted $XX due expense has points this continue revenue was on to related entry a expenses, consolidated utilization

Revenue which QX growth to XX.X%, X.X%, Revenue basis a our revenue home same quarter the aided hospice segment. now was benefited with receipt episodes million acquired increased increase X.X% driven by Turning XX.X% X, BPCI XXXX. hospice. the the Segment May both same were inclusion home XX.X% former in health, revenue increased X.X% in store for growth QX volume of from reconciliation increased and community on Home Admissions and locations, by health in XX.X%, health pricing up were episode on XX.X% the quarter in growth and in on the basis. payment. of per gains. $X store the an approximately healthcare

prior in inclusion of lower community adjusted locations. the and year by $XX.X increased growth from the Scalable Growth adjusted QX As reserve. declined XX% while period. of by an continued per on hospice decreased to was million, admission also increase. prior a hospice optimization to services revenue, $XX.X growth the owing for period, approximate percent of visit continues included 'XX. and episode of was driven in to X,XXX per negatively $XX.X per XX.X% health business over Home primarily ADC Separately, EBITDA in of segment $XX.X $X an was store QX QX benefited same 'XX over of EBITDA was from the former QX our XX.X%. by revenue productivity. QX for hospice 'XX, QX visits revenue as impacted our Hospice 'XX million also QX focus ZPIC in $XX.X episode but cost from cost to reminder, acquisitions driven year in caregiver again increase

related administrative be a QX as slides, to year-over-year in initiative. we'll The line compared open expenses both rebranding our questions. dollars QX for reduction now, revenue to XX of supplemental on attributable can absolute the of as expenses declined Page our Finally, and primarily for 'XX. decline percentage general seen And the was to in

Operator

Blair. Matt of [Operator Larew line Instructions] of from question Your William comes first

Matt Larew

part to IRF that first affected here payers per from providing in by your maybe confidence wanted your increasing. tool into insights the CARE private And you side. education the get XXXX. I in would and impact pricing, to the question to all ask for on alluded bracket maybe on that training be FIM gives comments, you revenue Doug, then been just first two the discharge in

can the So your on sense private how us that maybe one, to for, then a are CARE if give you side. number you at tool arrived with for and FIM trending two, things how payers bracket part

Mark Tarr

Mark. to I'm the for clarification a second your a which we started discussion a new with lot give those Doug our, had. and additional question. that that all of to the turn questions that to could August, tool. as we from There standardized part last Once couple were education CARE develop CMS a seeking to on we number came turn details the of was we clarified, on really to and able to is of increased Matt, in were Jacobsmeyer for out But we had details the we education then this and our additional a overall comments Q&A reliability. in of Barb out additional out gave clarify going the inter-rater year, of then first insights roll us

we we at see one another our get compared to and demand and looked need their therapists program hospital to to and greater in that leads at in And nurses. consistencies scoring and process. with as mix So look work the that all

mid the has Recall therapists generation back in in FIM for of meaning of a our nurses have when that tool started late industry understanding tool. XXs use good something. score literally really to entire in the started and more CARE So or they the been FIM

work educate they've big our Barb's Barb going to to of And ask to help under weigh staff. So this. leadership, transition. there done a in on I'm been lot a has

Barb Jacobsmeyer

XXXX. has lowest Mark the defined usual. taken difference of what is tool uses as mentioned, performance FIM those August the there So CARE a certification most got we've always with as late the score patients as big And of XX and as whereas hours first is their

we to there so And to made our that been could has how that saw that could projecting, hospitals. done. the what been We and see we certification So more really progress from reasons quarter was did one cross a so we sustainable the CMS of is because one we work a we field. be one that it, of watch four to we the has base on education moved we use not it's actually really XXXX but of to provide interpret were lot that that being quarter feel from do quarter probably only needed that we some have progress from that to the

performing And on to two inter-rater the on is separate to which we about thinking news we good be So our continue educate that October focusing staff. focus assessments, reliability the allow additional tool. for and CARE should on the able X, will stop specifically

Doug Coltharp

Matt, Doug. this is

your a that of additional some to question up managed payer per volume the strongest and across in explanation this based MA advantage that’s so consistent mentioned Medicare pricing and excludes more just there was the I that increase. a had up increases which Medicare the from on is an increase Medicaid add and with bit little was Advantage across the aggregate private reimbursement payer for pricing And was other pay on our with classifications rate Let neural up XX.X%. XX.X% color component classifications, we Medicare X.X% side. what on X.X% Advantage penetration. Start Medicare care, quarter something and Advantage good both we're contracts all are with me increase major all Pricing address increase on for growth benefiting that. also are which and the carries number in CMG deal. And quarter, of increase not higher in on an was contractual stroke the

same towards we the patient Medicaid aware of predominantly in again contractual patient growth stroke Managed able way reflects increasingly preposition increase mix Care and the rate the and the on X.X% payers to become increases the On out nuero, an through in our were where for that side, really negotiate these was both as value it based the increase mix.

Matt Larew

home then terms in then obviously related as would and And out of and health of M&A I closing here seller additional or Thanks. And you separately preference But at that hospice you if million wondering. an point? the that there June. is there second noticed so an terms disconnects just in are to in with in seeing agreement XX What targeting Alacare of maybe $XX a still be of buyer this are maybe or PDGM? terms

Mark Tarr

the so to opportunities bring first say health areas in of would think there's priorities. of see Alacare $XX million new closed for equally two and home solve I $XX second incremental and priorities to density acquisition continue we remains examples And But their one those of serve in more to were more to same business create Healthcare I any patients, great hospice in think that to good build Out and third than quarter. worth If about that both our is ago. the or on new first million, that. of grow we've for to change and home that the markets and hospice. as there're collaboration is build Camellia overlap to groups they I healthcare is we years weighted say the today scale that the can probably clinical priority

Alacare having predominantly And bolt-on depending And that so describe those. of up continue we're we're even how that be you pick these discovery. to believe or we acquisitions not going will a issue integrated closing on focused to with on though want real price an to we some fill-in

we're what than Mark the right consternation of HHGM little to not home out look these, that, we health PDGM to a about a for adjustment. about There is optimistic behavioral happens there's opportunity. cautiously now and having the we there model. when regulatory being I on in to risk reasonable potential think predecessor I we're adjusting as ultimately think the hospice with a at were coming comments, the resolve acquisition his going impact around basis maybe legislatively. clarity was more alluded of the whole bit difficulty But

Operator

Tanquilut comes question of from the next Jefferies. Your of Brian line

Brian Tanquilut

just better the have like M&A sounds done visibility you've feel with that bit Alacare. a IRF as year, the reimbursement Mark, for given PDGM you getting that you're next into and for and it little now more well, a

you be say would able given So EBITDA you to confident still today? you that year that we where next dollars are grow feel can

Mark Tarr

taken will for the our I'll The answer that. yes. go business review Doug segments, But is We've of of lot we let the we to a details. in and believe on And demand grow that given the can both do strong continue services EBITDA.

Doug Coltharp

I it's down think if into it Brian, pieces. helpful its you break

quarters the XXXX three the Medicare So of fee the with for first hits update. estimated reimbursement flat down segment X.XX% IRF service XXXX to for rule the

XXXX We'll pay normalize the payer fee-for-service regard about in We updates modestly to rate positive. with will take price rate talked fourth calendar quarter just increase. actually on rule, those which the We other the expect the in reimbursement to categories, classes. the have to will based aggregate which XXXX Medicare increases to add

approximately half. four sources, new We've beds we skewed those will in the IRF We and volume that will Recall XXXX from that XXX And XXXX. are IRFs. online growth bed in back three have got coming expansion. organic, open hospitals towards are anticipating

we an volume we strong grow of PDGM adjustments a categories next segment bit remain leverage results, probably year. or EBITDA expense like that modestly Home growth, we be XXXX those consolidated some are service little actually including others corporate organic deleverage, the And into IRF health Alacare. a And Within will reimbursement. growth and but uncertainty. does can the But believe able reduced, occupancy. XXXX. away the very continue to then segment, should acquisitions, manage such flat with go Medicare to and hospice SWB G&A down behavioral think if the as translate take fee only on will for will in

Brian Tanquilut

my follow-up. guess I

per And level? margins for per maintaining stronger sustainable think discharge it home revenue I quarter cost numbers was think a about quarter, t$XX. these we was and As the during think How margin health discharge day that per strong. the was do about are? performance the you should Revenue

Doug Coltharp

you most out the identify on in year in as we the We some Well, home comparisons impacting segment, favorable that you then notably had again, as ZPIC both last last health reserve pointed think on had in pricing tailwinds the to well, that comments and side our the time IRF performance business for was trends year. been continue payer both our best the with towards is the segments acuity skewing our in are guide that's But that higher we've pricing future think to business general expected other our segment considerations in our focus. I outlook being. will for included the this

Operator

Your question Suisse. of comes AJ from the Credit line Rice of next

AJ Rice

but change. higher Just to guess, my rule question more is the be on the IRF the around you impact have this change and year's got year, I guidance. that main obviously, clarity the that will potentially in later

well that thoughts What different strong guidance what there? some numbers, so the trajectory your don’t in But numbers that know. maybe you're are adjusting you and thinking on I or than the up are range light potentially moving the your consensus ahead of You're now. own of quarter and about

Doug Coltharp

AJ range been safe same impact the we been talking drop it's say it's that the And rule time. about a or significant of for reporting to that IRF I in the increase would have at been to think have Doug. have the would not guidance

fee got noted in then guidance in Medicare service offset as previous QX. was we've expected by you assumption impact almost against And considerations change, for of it's QX. overachievement the per rest X.X% increase the QX dollar essentially IRF of of the the the the rule not So dollar have

year. the months period. into We're the of beginning three XX expectations those have We month

that things guidance changes enough on yet. other the And within clarity so don’t considerations there we any to just the have make we've cited

AJ Rice

buy Or they your the could for in health that have Obviously, remainder you capital And my home an it year. the Encompass, to of that? in. I proactively always making thinking way are affecting opportunity that’s early well. follow-up any year decisions the that deployment what's then be this put capital Is deployment on believe ownership your the you you to of just decisions year? as next would outside

Doug Coltharp

The to receive a segment rewards partnership team has their are to since to that our and exercise health prior building time. of the SARs. just. them period increase management like We more for job to We're business, see the their in they'd to management that very ownership would equity as a those glad continue done home they the partnership business put exercise extent phenomenal elect to both which team our and the with lengthy owners have options,

deployment and with the capacity be substantial an in ourselves or the it to continuing opportunities, to remain good we option, to cash do out our the more to our put call after than any portion in of liquidity we distributions. to strength expansions not capacity and capital core that able comes should sheet exercise crowding that deployment, option related business balance of without of XXXX capital be our All consistency those and-story an shareholder the our and should position to any We're have course other balance our free we or-story. ample it that has of exercised said when given of be or sheet of flow choose our

Operator

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

Frank Morgan

the in from of the a just on of on there volume then then And changes you And was the the can this from the the more the Good the anything a stay you that nothing volume on any and in that help assumption there color change quarter around just side. if terms anything patient. anything -- in utilization outlook curious could only program management? of just But has thing may that that in happens is the Is revenue volume Is under the is morning. change to steps know a different rule. about with an type the think the rule, you to from just you stroke envision question side? curious rate second home that assumptions? fourth mitigation opportunity some cost of I Do is case, perspective? late Thanks for is I focus perspective. there just length that terms talked that's when there you mean healthcare new and do anything? do about

admissions other now outcome the that you're rule. should and You that deal called Could and quantify big we surprise will looking be produce there any things for you maybe on the that and out area? pleasant how out new is more better that a seeing that positive from this a hospital-based under Thanks. in

Mark Tarr

that that to Frank, an to Jacobsmeyer. I'll over But And committed neuro. comment typically those then lot of clinical our care transitioned more lines. to out for remain show particularly have moved product and stroke, decade it those a our But for an make as almost Barb a a a of the now area now past orthopedic focused. turn demand programs programs to require it continues we into acuity we in neuro and higher of focus IRFs, we is that relative our into services, level quick

that. to as association initiative well ask we then comment part our those co-branding of Barb strokes and committed with remain the I'll So as to on

Barb Jacobsmeyer

to care healthcare to we're best it and continue patients getting of know exposure providers, that far that heart to with really we as the stroke best focus sure So also patients get is the stroke. as strong, side to caregivers where education for association but recovery. relates making is the on to and stroke the really on they The

And them those to home we mentioned, get IRF of that the We front value showing MA it’s costly take be more the really can end patients maybe also, care proposition really growth proposition the understood. of that value as and the and Doug on prevent starting even side. seeing expensive we're readmissions though on is when

that focus on be will look those grow. continue to we will to we to as continue So things

Mark Tarr

in your to home April health ask on weigh question. I'll

April Anthony

we surely proportion admissions, increase concerted facilities I come increasing acute health put rule, not our as And We discharges hospitals, a PDGM Health our new hospital sure discharges. -- making to partner think to our of non-Medicare we effort the that effort slowly institutional marketing other care the but family higher in good care are under the and the rate. real acute that have covering that home a as part Encompass based reimbursement as non-community is of hospitals we that well and various well have hospitals inpatient. Regarding sales serve, presence as that

base progress a have PDGM next yet gains non-institutional. total been our to today we communication and XX% discharges. of that pleased really year round strategy But and pursuing impact see specifically our the that institutional we on the to partnership half wait or We'll So that for rate. four it's -- side, a of in we come it's in. beginning we're know exactly make since continue almost out. We are something Currently and making admissions are the our going survive And almost we with do that that's expectations the of there now. as to

able that rates been institutional we've So to XX%. admission increase

Operator

Fischbeck next of comes of Your Kevin Bank the America. question of from line

Joanna Gajuk

the Joanna thanks Gajuk Kevin, question. filling is This taking for for in

So the segment. pricing on follow-up of comments the here terms in inpatient the very in strong rehab the

X% growth X% because that growth this to like anything seems have have payers, changed, And to might you X% 'XX in So also pricing XX deck has deceleration Medicare out it because for in your expect outlook expected to X% something talk growth of bucket. to guess in XXXX noticed Page Care but terms bucket, X% previously years? cost the same I you show the Managed now for rampage the at time all strength of from going every slide actually about you on noticed in but or that changed X% bottom, the the to in XXXX in across year I I've is you're at the the

Doug Coltharp

expectation that previous a and and CMGs our to calls book Medicare impacts to a also account our made very portion Medicare many to movement that for of expectation. for to quarterly Medicare CMG tied was business, for of Yes, for of is on managed is trend from our contracts that of a we've that that book we've of CMG revised basis. Medicare and about in the in it many that's negotiating almost And XX% Medicare Advantage Advantage, Medicare talked per successful of been diem we relates fee our solely now fee CMGs. Advantage business. service for service about And to Reduction a basis total attributable that adjustment a

Joanna Gajuk

the just some helpful. on suspecting $X million I what your pricing And to so and year-over-year comparison guess end that’s year benefit obviously second the is And for health follow-up $X want about within That's there last was that. confirm from there with this BPCI. million differences home I the plan year is I

that's pretty XXXX. if year last X.X% so much exclude So increase declines better in both, number, I it's a still than obviously good

this think a expectation I XXXX guess about So that for to your good is be should it it way rate? forward going

Doug Coltharp

which I this our think is includes it close that in is that is Alacare, when on patient than because different we therapy wise, success recently to health then higher currently Advantage and trend our normalized will with at It and there portion mix, also a a driving the look Care increase proposition because Managed what's at mix, have offered home value of establishing year we've way we it. had our Medicare place Alacare within good be segment. more patient a

Joanna Gajuk

you my question. guidance on guess it I not closing in the appreciate it's as that June. Alacare did I actually in now, And but of include

how purchase of talking some you talk and not the some being once closes. because initially to to as So about was in But accretive, it to that question afterwards. similar deal play you look asset Camellia do but profile where expect out the cost disclosed is then revenues. accretive of this you also My the going of investments is, about margin the and terms initially we're can there price and metrics this

So any you. can us helpful? would you give color be Thank

Doug Coltharp

be we will this June a there are we in expected some going think it's on be said don't we're to home that we very industry-leading. ramp to been services our the that but health that of of performance patients is period. do home that to in we’ve our a guidance in up depth is well-run similarities great very Alacare to on has Camellia anticipating and That it be segment always year. There Alabama, Again, acquisition. effective until Acquisition. I actually policy, comment at and provide don't be Joanne, updated closed Healthcare organization hospice have way really an there state certain will health proven providing and things that

and so contribution place EBITDA take next year will to help by then. benefits then be will back And enjoy will our the we adjust in in year we time fully from of standards the January operating the Xst of those hopefully some the team to full and half year of a

Operator

Hanley question next Stephens. Your of of Dana the Instructions] from [Operator comes line

Dana Hanley

XX if XXXX. might go question to health get you your and a to negative be in adjustments outlook the back comment that -- Is business reimbursement or to in wanted X.X% go correct an that answer about to earlier I a using you're behavioral home able does that on Doug, to Brian's the flat compare now. right page away

Doug Coltharp

said is big That behalf. promises I've making on what on April's

Dana Hanley

just just includes uninformed, or wanted to which Mark then right, that. for All Bob myself. the the follow-up, clarify And

IRF's understand to score in score un-weighted proposed functional a to an going importance trying weighted the the Just of functional rule? from

Mark Tarr

It to our ask the actually a tools. their stakeholders. a is CMS of with I that, made to We Barb of very is a part big the feeding proud change. and listen contributions on we back expertise as big of willingness And to this in once actually of so from therapist, done team the again, I Barb of that were going marking physical to mentioned appreciated that clinical she's that. some am CMS. type comment trained terms of

Barb Jacobsmeyer

tool So use to weighting CMG. spin the the and does we the to CARE additional determine actually honest, than differently they on analytics requested be did. from things data the weigh CMS And information that

weightings. to are but understanding we comments, are the it understand can are how there's better that don’t was those there we with that FIM, they some have determine very way some a different. weightings as we point, of this really that prepare similar And the So our at some because

Operator

comes Kevin Craig of question Ellich Hallum. the from next of line Your

Unidentified Analyst

other operating operating? but million G&A strategic or to the if This is and it touched in on, in have questions apologies post the been little of solutions? it's $X so my so housekeeping if in those And actually just acute are you is Most Ryan mentioned investments talk million costs bit before, of some $X timing on stuff. a Kevin. about Could for

Doug Coltharp

balance to the be just may G&A, be probably piece it, for be So in cost, because be it's XXX% some XX% to of IRF going I'd $X the hard to on It slips not -- involve was we their segment, it's to say of it IRF $X And corporate be that all light out. There million side pull million of it's will expect operating the going into the all pretty necessarily of three the in of ratable rest year. over first to I folks little the bit quarters but cost quarter. the would us would this a

Unidentified Analyst

guys a my versus just funded how down? And relates deal? quickly be do the Alacare as by revolver will want it follow-up. you then to How to much that cash And pay

Doug Coltharp

probably on fungible, financial relatively is in But of Cash is terms it I'm so generating will revolver. and Xst. a June that low don’t and balance know our cash. cash I business I of into But doing go what some paying will it down, modeling, it a again lot model. under the this allocation plug leverage if be all in And cash exactly our then were degree is of

spread. of that, look wide are have the very composition debt to of we lot regard to you capital, we have at if little and a our principle flexibility, our and pushed So -- don’t amortization with I in out addition maturities

Alacare of wouldn’t I even So any the free a balance try and as flow. funding reduce revolver pressure cash feel after to prioritization

Operator

of question from Nathan of the line comes Leiphardt last UBS. Your

Nathan Leiphardt

increase initiatives joint American been some gave yet? any wondering around Association, that out of I might and marketing the benefits some mix. to volume and and that Heart on see measurable But we stroke Just what called initiative, start downloads there's those? not with Stroke you numbers some Association/American if from When know what what you those

Mark Tarr

are we I seeing. think Yes,

measure in we Strokes share. when that if by We a the share that bit basis. the a discharge data. X% look stroke look it. what strokes the to little we've CAGR And at frequently. at of all, away is stroke remove mortality more of to rate, see market own look our incidents to of that and our measure American in on continued There And equitation. stroke We is updated at last we to is got take in just had then a look to stroke you've Association/American X% Association is the discharge the three try annual the Heart And First which lag over published an range. in we numerator is as addition our years, growth we market that, in our that and

-- within this certainly So year. ASA/AHA with now the January started of on Xst partnership only

has is at benefited can this all So one say really that quarter we from initiative.

highly there and to things a we've been think clinical stroke Although, of ramp-up. the opportunity certification to serve so that was still a already is this bit patients complementary the and vast. we certainly, to programs forth remains doing that But and with regard very stroke is

Nathan Leiphardt

in same-store earlier you gave growth. the the in of total? out and Was that Medicare and Medicaid then clarification, I payer pricing if also was segment I just the had you growth know volume commercial growth. you advantage. a could some numbers rattled or give hoping volume And IRF I the by And terms

Mark Tarr

was growth, of and down Care was That terms for not X.X% total was slightly. same-store volume Managed in and Medicaid up

Operator

closing Carlisle Crissy Thank to you. call for return comments. I'll now the

Crissy Carlisle

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

Operator

Thank call. first quarter you. That conference does conclude Encompass XXXX Health's earnings

and You have may lines, wonderful day. now a disconnect your

Crissy Carlisle	Chief Investor Relations Officer
Mark Tarr	President and Chief Executive Officer
Doug Coltharp	Chief Financial Officer
Barb Jacobsmeyer	President, Inpatient Rehabilitation Hospital
Patrick Darby	General Counsel and Corporate Secretary
Andy Price	Chief Accounting Officer
Ed Fay	Treasurer
Julie Duck	Senior Vice President of Financial Operations
April Anthony	Chief Executive Officer, Home Health and Hospice
Matt Larew	William Blair
Brian Tanquilut	Jefferies
AJ Rice	Credit Suisse
Frank Morgan	RBC Capital Markets
Joanna Gajuk	Bank of America
Dana Hanley	Stephens
Kevin Ellich	Craig Hallum
Nathan Leiphardt	UBS

Encompass Health (EHC) 26 Apr 192019 Q1 Earnings call transcript