Earnings call transcript Q4 2022

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Operator

Good morning, everyone, and welcome to Encompass Health's fourth quarter 2022 earnings conference call. [Operator Instructions] Today's conference is being recorded.

If you have any objections, you may disconnect at this time.

I will now turn the call over to Mark Miller, Encompass Health's Chief Investor Relations Officer.

Mark Miller

Thank you, operator, and good morning, everyone. Encompass quarter joining earnings for you Health's XXXX fourth call. Thank

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

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

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

as to the like that the adhere measure I X-K available the on information, of supplemental we our all everyone one rule, such submit with release, SEC, the are to of end and measures, the of part end remind a Form For at at the question. comparable everyone the of to yesterday question question allow directly and would is follow-up reconciliation to to filed most will website. the GAAP earnings which one available

queue. the free to please in put you yourself back additional feel questions, have If

I'll to Chief Mark Tarr, Health's Encompass that, President Officer. the With turn call over Executive and Mark?

Mark Tarr

strong was year results to quarter to Thank full discharge our you, everyone. bright very and to a good contributing guidance driving year range. XXXX, of discharge remained our growth Fourth with QX a X.X%, end spot, finish a growth of the of top Patient volume particular morning, full X.X%.

on vigilance growth our EBITDA of solid and labor de facilitated management, Continued QX a XXXX adjusted contribution XX.X%. novos, year-over-year from

to business This our in upgrades Huntsville, California. our or Tustin, semi-private competitive strategic ramp our many did key hospitals rooms eliminating XXXX, and million bonuses, labor For were XXXX. contract so two hospitals, shift half able increase of de legacy overcome strengthen approximately while to to and position. in in invested bathrooms, pre-opening and year-over-year Alabama, $XXX nearly as continuing markets, increase fiscal building CapEx food we we to in and an $XX EBITDA. of $XX double-digit in in a novos, at generate million And in up sign-on costs many as our well utility new and store million second net replacement adjusted We in includes year and costs, in reducing and shared instances inflation

to our Reducing patient We to improved receive to our fewer We third this therapy the services. cost continued for on rollout. and outcomes dialysis service, now also in dialysis offer facility-based disruptions schedules, leads invest obviating Tableau our continue party reduces and technology these It XX onsite in in XXXX. also satisfaction. reliance through our rollout initiatives in like to of in-house and our hospitals, providers transport will patient

for and ever of four-wall we growing to In inpatient us. in expansions expectations de most opened EBITDA by in single hospitals, QX. exceeded million a underpenetrated element These investing A $X is strategy meet facilities XXXX, novo significantly nine year rehabilitative our contributing the central needs of for capacity market our in the in services. a

to increase facilities, XX We existing net a added X.X to in licensed XXXX. beds also leading beds in

As to and design are our costs market. we've increase to and utilizing mentioned contain speed increasingly construction prefabrication previously, alternatives we

ramped. has use and QX market to head from to compared adjoined construction Our walls, the which rooms anticipated to in exterior by of corridor. year, is conventional as to prefabrication with and in Uber two-patient savings progressed beginning of this are full of piloting anticipate program a speed We prefabrication walls XXXX, XX%, modules, bathrooms of cost gains almost hospital fully once XX%,

our investments through consistency complimented and The nearly of to $XXX these on with free these shareholder us shareholders funds. generation, business fund dividend our cash of We investments common cashflow primarily in with distributions, our the the internally-generated million stock. and return our to allowed strength

Our Advantage proposition Medicare further times, consolidated made, value our gains discharge leverage growth strong. unchanged from we the and payer XXXX. remained across in liquidity strong to in with QX, continues consistent was achieving our X.X our our by our constituencies. Evidenced Within mix, discharge growth, X.X% QX resonate

Our Medicare complicated, were than normalization season believe the Advantage been higher facilitated well. None do inflation, QX benefited years labor volumes tightening aggressive three accomplished The a dedicated that patient for of have through growth, health XXXX. and hospice early our of pandemic, has flows of fee-for-service. associates. view XX,XXX this more QX alternatives as success with business. X.X% The and been XX% We home from burgeoning QX healthcare, lingering and same-store strategic market, without past discharge flu discharges, than and Medicare

team these to and Our consistently opportunities. challenges meet to has seize arisen

about prospects we remain value Our optimistic business. strategy, have operating and proposition, validated, our long-term of our further been the and highly

XXXX. today our guidance providing our for also initial are As custom, we is

and growth, gains. of by reflects guidance revenue pricing year high our driven single this Our volume both continued digit expectations

We also EBITDA expect solid adjusted growth.

of improvements elsewhere in exercise Given continued caution initial we further some range. our in is it trajectory our the prudent believe around uncertainty the of impact inflation cost and cost guidance establishing structure, labor to

more to meeting, our At into including planning can XXXX. billion, de provide $X.XX be we'll key technologies, $X.XX. EPS insight host investors list to supplemental your elements that Please novo of follow detailed A provide $X.XX billion hope found management. from there. adjusted underpinning management within of considerations the opportunity clinical will Page slides. to strategy, of in of to Investor also $X.XX an array York EBITDA mark we of senior $XXX ranges Day We'll these million, want on Details we adjusted that of $XXX XXXX an labor the with to XX guidance you on of to Our also and of City the for XX. the guidance million includes, and are to hear September our ahead, I teammates days and in see ranks. September XX New calendars hospitals, note revenue

details that, Doug, on operating With I'll provide some our to to it further results. turn over

Doug Coltharp

Thank you, morning, everyone. and good Mark,

EBITDA stated, $X.XX very prior are adjusted billion, the Mark and $XXX.X over year our XX.X% As million. with QX pleased results. we X.X% to increased to for Revenue quarter increased the

combined We per X.X%. basis, X.X% to continued in strong volume inpatient discharge, drive to growth. revenue X.X%, growth revenue On X.X% see with in grew discharges a grew same-store Discharges increase which QX. a

referral labor on X.X%, In our admit continue This labor For to patients strategic growth began hospitals the decision and our regardless clinical provide and and XXXX, patients, and financial made to sources, contract bonuses value our shift when the in of appropriate to burden XXXX, to top that to to we X.X% of market started full payers. the the discharges XXXX. tightening, was allowed rise, company. year increased

we gains QX. result, market a on We progress share. are As labor further reducing experiencing in made costs in

the bonuses. or since from for in of labor $XX.X Contract expense contract was QX, in fact, every comprised labor, for experienced XXXX. QX QX, million XX.X% and peak last March. in QX bonuses $XX.X to of labor every in shift labor million in contract XXXX, million month December XX.X% in plus sign-on million labor, XXX $XX.X million, We contract $XX.X Contract QX declined Our sequential for and XXX or million $X.X and XX% or March. shift approximately month and from X$X.X QX and were sign-on compared in FTEs in from FTEs expense and declines

approximately the expense occurring of XX% concentrated, contract in spend XX is Our hospitals. labor with fairly

market-specific Agency QX in was $XXX,XXX, The QX. $XXX,XXX QX. rate associated for agency holiday due rates Reducing us, the expect remain some a uncertainty the QX around expense of premium key This part pay versus we ticked compared to focus improvement labor was highly FTE rates and for to remains contract trajectory albeit costs. with Agency these up in and XXXX, with in shifts. variable. year-over-year in

shift decline sequentially. incremental $X.X of had This approximately contract seasonality openings of bonuses Sign-on in in decline was of new in estimated QX. sign-on prior. million for lead and call $XX.X to our Labor December new we Our approximately and of from exit bonus shift $X.X our of $XXX,XXX via bed growth million the in XXX by in saw to We to business FTEs earnings ‘XX. Much $X QX million hires declined QX an as the million tied some from million labor a QX FTEs. QX to for and sequentially QX. Sign-on was from $XX.X level spend The QX, decreased contract capacity hospital and may bonuses XXXX. represents needs XXX an of expansions, in bonuses range XXX

shift unexpectedly clinical were of summer. during You'll elevated the PTO bonuses recall to QX, periods that staff in usage cover high

bonus utilization standardizing around made also shift progress have We significant the process and rate.

a bonuses shift tradeoff as FTEs. well, our improvement utilization bonuses year-over-year our of there in expect in and between reducing We objectives but remains and these XXXX contract labor for sign-on

rates. existing bonuses paid positive arbitrage labor contract hires, bonuses provide and against Specifically, paid to current shift a sign-on new associates, to

to such, labor. bonuses than improvement the As in shift and in be the XXXX, in improvement we expect less year-over-year contract sign-on anticipated pronounced

option staff bonuses. Our clinical shift efforts remain labor retaining hiring and mitigating for and best contract our in

same-store of RN had of XXXX, full we the For net XXX. year hires

we This a made expansion have and of of function significant the in-house As capabilities. establishment includes investments previously, in our a recruiting dedicated centralized have significant resources. recruiting discussed we

XX Our is now team acquisition talent comprised of associates. centralized

efforts. also We marketing in recruiting investment our support increased have our for

in result, And per included to to Utilities a patient XX.X% increased in first cost half increases ‘XX. $X.X from million continued to the in to anticipate ’XX, and increased from in this and expenses per declined million in X.X% as in We day for patient inflationary XXXX, Food utilities XXXX. from decline cost the cost increased year patterns. per primarily patient recruiting QX XXXX, As QX XXXX, XX% pressures million investment of QX from seasonal year. expenses. $X.X day QX our cost half QX lapping of attributable are the second before full compared and weather XX.X% $XX.X million, other in These was the day ’XX. Sequential larger from the relocation QX operating $XX.X increased XXXX. of

continues bed growth gains. contribute generate strategy to Our and addition solid share and de novo to

that which to add we additional novos Recall of XX-bed approximately exceptionally expected Our to EBITDA. and hurricane-related Coral delays new scheduled overachievement faster performed hospital in quarter even scheduled experiencing from fourth novos much to open disruptions than open well the de in break de in de novos XX hospitals. the in to QX de our QX. XXX to novos, had after Hurricane was to and Ian open April. in existing contributing hospitals beds attributable March, $X.X Cape QX, million Three anticipated. in eight and We Much beds totaling openings XXXX are an Naples plan in in rebounded XXX with adjusted administrative the in to

be quarter. the incurred such, first costs $XX to net As portion ramp-up a pre-opening $XX for to and of million million in is XXXX, in the estimated expected significant

As this supplemental a for annual to XXX XX are have XXX. revision. you bed range our have expectation changed noted from of of may for on we to There to a additions range XX our two reasons of materials, XXX Page

increasing as increased for initial XX The number XXXX, our First, and initial number incremental That front-end been future bed a de XX. the the average infrastructure the average larger de The in effectively hospital, the loads XX. de the in novos in we novos. of was novos, from XXXX XXXX higher leverage the expect we core period de footprint initial is XXXX, have bed partial beds XX through costs, and opened creates for mitigant thus average our beds The class. count construction of XXXX through to novos of to on XXXX in growth. serving to open

our question of earnings The may average beds size third new I of You our strategy in that the by approximately with initial a de increase in effectively about boosted number recall has XX to hospitals response quarter this annum. call. novo the of associated per spoke on an

an additional the Our incremental hospital serve chosen overcoming factor us existing market is and density beds hospital. large geographic an to patterns a here. markets, traffic closer certain new instead market strategy beds barriers and adding and also This placing In to better open of we to sources. referral growing the by have allows to

Houston, certain of deployed strategy markets are capital bottlenecks Orlando. allowed several estimate Tampa, $XXX million expenditures have recently, We Relief and other I'll XXX.X and maintenance doing northern mild many we to this us QX and to projects successfully of that higher earnings that including in supply Dallas chain proceed note of in markets, the and be also now in like assumed most would than our markets, our so in $XXX million, was with cited million report. had XXXX delayed. weather

in materials, to both XX of be the As you XXXX and we XXXX. XX Pages can supplemental see with and discretionary on consistent expect CapEx maintenance

open that, With Q&A. for we'll the lines

Operator

Fischbeck Bank ahead. Kevin from question America. first go our take we'll And Please with of Instructions] [Operator

KevinFischbeck

main I low. had one same-store the the it negative wage you of added, a in itself three in year. quarters little hires guess I actual then of And was I the first guess have strong the inflation I the of supplementals, some - nurses question labor Thanks. number pretty Great. in guess around your morning. quarter net after like when the we bit costs. was looked Good

love happened core shift sign-on still growth to I you're little a about why the about, wage get QX. of three? does if what would And maybe more color drop So, guess, kind to down talking bonuses, in

Doug Coltharp

Yes.

we with and anniversaried. terms that a I fact FTE, do series part that internal beginning in been XXXX of Kevin, of adjustments per about right running that of now really SW So, has made market in the to that the latter think the have of has X%, some

that's that So, up make to is about by XX% SW which note and we in X% think per a We internal that that, SW&B, typically group for correct. We good the the the The it medical is we're FTE, about XXXX, benefits, step front. wasn't do regard good of increase estimate. just did is, news hiring in With QX, take that a inflation expense. cost that seeing, in we're seeing hiring to observation is your the on back. expected

of of was XXX. to of it and So, an for of RNs offset so last if more XXX so terminations of of that in during the our were than compares an to as QX gross QX quarter, Unfortunately, at hires, by XXX, you XXX XXXX, look year, was hires XXXX, QX compared which increase XXX XXX. increase

in net a QX RNs. was from XX.X% increased our versus quarter. of’ So, that took in ‘XX decrease because That rate think year, year all of year for of positive Virtually of to us We that this to hires from termination improved rate XX.X% to the XX XX% first for XX%. a full attributable bit the year-over-year QX actually a XX. XX that ‘XX was to first-year aberration terminations rose within an

bonus-hopping XXXX. of necessarily take So, moving think detail termination Frankly, the have increased And of that did be care don't flu we a that of don't that acute appeared volumes some tied to trend. lot going be that that's Kevin. back. rate there, on persistent necessarily hospitals. in into higher volumes a to in we'll We a We based portends to some a think step tied again, to

Mark Tarr

Kevin, clearly but on So, recruitment bonus this in terms place retention. of only focus, year have structure. we not on of in a We things - the in nurses, put the also

very them. we've year within we a seen sure that turn especially we hired strong that having of that focus that Our within We've be the past, first nurses CEOs a those nurses the retain in year. that will hire first spike making over kind the on in

so in have that seasoned level to bring new that that we these orient long our the caring in are for want rehabilitation have them we into solid very have So, hands our for they orientation, forth deck that with hospitals, all we putting sure are be with to nurses that folks hospitals a so it's they a make time. there mentors, that comfort a and an patients on

So, retention. it's both and recruitment

anything being alarming. off As the taking from Doug I'm QX drop away not as noted,

It the I hospitals good function. think a with this the and centralized acquisition, of up of that pressure off to lot to a move. our strategy continues having keep talent took be our function recruitment of

at We centralized take here degree from task on aren't this in staffed that at to function the have Birmingham. hospitals a the we same

nursing very and both So, of focused we are on retention staff. recruitment the

KevinFischbeck

helpful. some the guidance. right, conservatism All being, anything prepared question to prudent that’s of I in guess have area a then this in second is scale there finger broad-based? just particular where Is prudent? remarks, to thought said here I in you was you in your bit guys guess Or is decided you kind it our in the the it being we little just say where on put of that

Doug Coltharp

would QX. of I really of couple things an price reflect X% put uncertainty. that probably a assumption point the in X.X% some to a We just to Medicare of in increase

you on back been over pretty the have is fiscal think increase nice payers. years, we prior, a also point assumption XX we're so existing certainly and I that increase. it couple that with assumption factors the saw to seen the input justify year would other If increase in higher really in. put reasonable from regard put getting look what at that where But last reflected to over of we and had the in the a notwithstanding, what we years We've the

available will move XXXX The is may see you, in that our not we and we to XXXX other normalization EPOB. anticipating some our from to stay that as factor are guidance we length of appear that's both on immediately that our in

so, you specifics to give some there. And just

is of metric. XXXX. QX changes ‘XX, was fiscal sensitive And XX.X was the of length year stay our It this small flow-through EBITDA to in very actually For in XX.X.

kind approximately on $X you've in X.XX EPOB acuity X.XX probably seen been that further normalization hanging in at was by right is X.XX, the has and EPOB. Fiscal expectation in $XX can moving just that our QX, given X.XX also of for It XX.X is been We assumptions X.XX. the think running. the is EBITDA. there of ’XX to X.X. that sustainable, ran expecting impact our million our fact, XXXX year in range. million not something We're metric that have guidance necessarily particularly In that in an CMI we've

is the and million This, guidance where translates metric, $X Some to million a are in attributable cumulative over two EPOB sensitive X.XX opening about XX to is that depending again, the increase $X very effect of in EBITDA, hospitals to of years. in you every ranges. on

Mark Tarr

It's worth same EPOB is were we the noting that that X.X EPOB pre-pandemic level in our running hospitals.

KevinFischbeck

Thank Okay, great. you. that's

Operator

Credit And we'll go with our Rice A.J. next ahead. take Suisse. question from Please

A.J. Rice

Hi, sequestration you and assumptions evolving quarter pickup your at some little to revenue. in or Care you the Are point. see more either of where more underlying Medicare I any on about in contracting this of a got pricing first mean, for this Managed the you - I Maybe from rate you fourth Thanks. care, type part seeing you’re managed a everybody. bit just at and Medicare managed a of rate Are the a move little normalizing becoming for guess for? XX% together step-up on Advantage Is what fee-for-service. or are stuff? of your least straight MA things care, that seeing value-based

Doug Coltharp

talked and a Medicare which are on paid we've progress to And basis, diem our about plus more which past, Medicare is as over of the CMG a on a the which great in the basis, to You've break five that CMG as paid of a last per rate. made lot specifically contracts that got tied is to Advantage we've the basis. moving years

like in around per just all revenues value-based we're little of right that and And take are and with increases getting basis. to virtually those XX% than the has basis, about say those, movement from those enter have be contracts we ready care, negotiated, traction the on most paid an on arrangements, made to kind risk-sharing care - of and feel that we but guerilla Medicare. more regard year that's move lockstep been managed our The of what diem have been warfare into to would With one-off of towards this payers and So, to payers. frankly to annual them that's are I see CMG into more date. of able Advantage to the there, types those it'll wrestle arrangements, now, contracts Medicare

Mark Tarr

payers, that. as of well how opportunity them difficult A.J., and would to certainly in though, think noted, Doug been value-based - outcome, terms to just for have administer reached out in I provide including to the component, it's we our if say hospitals with been had a Given it's we that about our to we as them work

A.J. Rice

And just follow-up the a Okay. on maybe labor. then

an about for similar lot or kind different? is of remind anything maybe a year? of versus it talked therapists just there? last percent us, generally? there Is to and your Anything You the it. therapists? to increase labor side therapists Is RNs RN changing physical new of What And what

Mark Tarr

to for had is same on turnover way but of not in mind, Nothing around in PT, just general, where certain that So, in therapists, markets markets more therapists little a well. But limited nursing, isolated much the licensed therapists, relative mean, marketplace X% some therapists. as on what responded and it's but OTs those been therapy respond seen have I markets there's markets nursing. been we've we've for just pressures. on seen on keep pretty in speech we've near the that's pressure to for we've bit had our But number

So, it have the in turnover nursing. near nowhere is that of we degree

Doug Coltharp

and the in be and the And personnel. support nursing, terms this hospital comprised of A.J., number about question, on FTEs, to balance therapy, our of based the XX% administrative of XX% would of your staff is staffing, is is and second

A.J. Rice

a Thanks Great. lot. Okay.

Operator

take question Deutsche. Chickering ahead. with from Pito our next we'll go And Please

Pito Chickering

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

Any X.X% from is, here GA about are on percent fixed color midpoint we how these throughout growth expenses versus think of variable? leverage and guidance? the of one on First cost should fixed OpEx revenue the what

Doug Coltharp

now because a inflationary little those, right There's volatility we've we're of we of utilities. food bonuses. before year sign-on just and And of around go the the half the bit again, got more that and question. seeing good rates a the and contract influx in labor through to because shift first that's No, anniversary

bit, adjustment that point in changing length equation is a The in and would referenced other that's just and that to should variable previously. normalization XXXX, really that that be of the one-time I the a EPOB I little stay

SWB, If we that you adjustment X.XX, from on this the sign-on on getting by we to X.XX improvement and go year-over-year total leverage labor think with fact based year it the you're about way a X.X% FTE if about going increasing X% about on where all in just good bonuses, EPOB to in the were basis, X.X% growing with there, contract X%. even your shift though count you're

there. And causing so, deleverage that's some in

of this and more in to little the is assumptions That around shouldn’t bit our the a composition there got get but takes with puts fixed both percentage, So, that's of of regard flux to you've year. costs. a kind XXXX exactly breakdown

Pito Chickering

in just it I and So, fixed? I actually variable OpEx what in G&A, think OpEx Kind besides is costs, side, what on guess I really specifically about and get I food on there with but variable, is the same of if versus there G&A? EPOB, mean

Doug Coltharp

staffing in XXXX expect are So, recruiting only going the of second half leverage all, and annualize some lever the really G&A. you're seeing year additions that to category within we think of of function. that we don't About first is I to good the the

side that's that little you'll the Corporate category, higher in but so, really the should to leverage the move a see we in not see And bit continuing on increase G&A, some needle. And hospitals. on. probably that's within included enough OOE an

occupancy leverageable the of as of portion well. lot you revenue leverage then costs, getting obviously get then almost up And we the staff you're the of XX% And again further a segment P&L, expense labor. variable good move that kind consumed is of the P&L, of Within is by remembering into whole as every dollar operating most that administrative the off costs.

Pito Chickering

sort here should sort You're saw be guidance quarter. we how denials just about debt to follow denials system so you of changing X% we should then, but on your of about also quick in in think sort new up start ’XX? fourth bad of accelerating denials the the And Okay. ‘XX? think the to able X.X%, How in

Doug Coltharp

up back slow enjoyed definitely switch starting on, across had But some all really of some it MACs ramp audits during was to is up. turned XXXX. as the We basically, then board. some of in with March cessation, activity even - So, are before. form kind of the And got the of relief engaged

of We claims to continue be Medicare in guidelines misinterpretations the by process. denial and frustrated misunderstandings the

which some of MACs being have take recent about multiple able to in the we us denials making requirements, kind the indicates merits, process We frustrating claim even and requirements and process, required upon is law. meeting is that dab, by being whether can course When its layers the parts success, had individual other MACs, denied of look those many success the one of it's with certain claims, of reversed. were of including ALJ at of each reverse. of the it we they which those is not blanket educate about and in how appeals to But resulted to the appeal years claims review or slow a a sometimes and are these

So, any immediate in we there's realistic spike trending. do improvement. expect debt estimate of the kind element the we're I above know that's don’t that that, put suggest that another that is nor bad think what we see how on we'll necessarily We’ve anything it'll horizon of would battling. most that

Pito Chickering

Great. Thanks much. so

Operator

our go take Mok Andrew question we'll with And Please ahead. next UBS. from

Andrew Mok

novo high annualizes of Hi. Good XXXX. morning. and even Wanted de above for run to the incremental follow up considering after EBITDA the end on losses the estimate, in guidance. QX guidance By XQ rate my startup range, outperformance

are stay You guidance called like the it X.XX. EPOB in QX. normalization embedded finished to as the of potential but quarter experienced EPOB sounds the Length XX.X headwinds, in finished out assumptions close and XXXX you stay and at length at what in of days,

out one, right are that the bridge that headwinds for assumptions with would other to the XXXX? that call And any have respect to Thanks. guide? So, specific of I midpoint back there you us do

Doug Coltharp

Yes.

length as million stay So, that to translate of in earlier, each XX.X. mentioned X.XX $X in actually was EBITDA. can $XX And million to movement I QX metric

but million Now, to QX EPOB X.X, about we've X.XX that was X.XX, the expectation EPOB in in and to million laid EBITDA. there every increase out is $X $X translates

normalized those that QX would midpoint from assumptions our like to impact run think of you've de looks your range. the two I the rate of you something novo guidance So, bridge kind alone once for

Andrew Mok

it. Got

the you de And helpful. then follow-through novos $X that seems de One, there well. outperformance? think novo have like drove XXXX as in Thanks. faster XXXX? reason that continue ramp into that's help for QX. can would it positive like us understand a And would sounds Okay, It outperformance to a that drove is what outperformance any of million

Doug Coltharp

I good lot a didn't a something of very lot into a visibility factor that and it's XXXX, that's simply really, because of we point, not that think have into. we

to little front As had set because on the our I would that delays even, mentioned my just the for QX novos in assumed would and delayed. the contributed expectations. was had in we Naples our expected of further, some earnings been QX, hospitals down that de as that kind administrative quickly, and the administrative QX pretty teams it we pushed dates that nicely. Naples opening meant our in had Cape saw ramp our and there to also And other out that were remarkably had time some lag contributed bit from the which above Hurricane Ian, that we had and the and linger expectation when a credit Coral we our end call, we they a in would significant hospitals real break really de well. comments, really of seen Coral starting prepared of we'd And disruptions those rebounded QX delays experience delayed impact number on that up our novos Cape a to QX

Mark Tarr

hospitals, and of other have also we've strong built there, think a seeing staffing novos, mentioned where we this we number you're I expertise. a market other have bit de resources where density of

can from to next. hospital You're staff starting move see to one where the

de the senior a hospital experienced novo a portion the and starting So, Health member. you're staff at novos up with is at of least de seasoned, team Compass

And do those exactly and up Coral, work both from I to saw of hospitals their in Naples curve at transfer existing those had think quickly. can CEOs where that their other they learning we way startups. hospitals So, what is very Cape

out my and that in do terms working startup the through hurricanes of want compliments to I too, the group to throw So, through working process.

Doug Coltharp

the some And are to the referral at as as when have up a faster consider. because can upon, we're to to touched we be two the bit brand than relationships us, payers is, JV also. we a hospital existing sources well And staff, mixed a the look factors of what market, a leverage ramp important got are when those if us, to One that partner, And you known bag proximate an be go can just which market. new into of to have we ramp-up on ramp a impacts class. bit faster some the the you've existing the of XXXX because up we because because to tends that leverage are a they known Mark new of tends the

at brand to Oklahoma, we're specifically Knoxville, for to quarter, is to be leverage. Tennessee. able to first Claremont, able us, the going we're Eau market Claire, Owasso, a be Looking as going leverage. to going be is Wisconsin, new

little each included in that there's - good a of of class. a So, those of bit little bit

Andrew Mok

the Great. color. Thanks for

Operator

we'll RBC ahead. And question Ben Hendrix our with go take next Capital Markets. from Please

Ben Hendrix

have but neuro. answered, acuity focusing higher mix and that a the on on in stressed Hey, than of higher around capabilities differentiated volume, having thanks and Quick stroke morning. mix. been industry guys. neurological Good case questions of you've stroke and volume Most question my past,

call how terms in to - if that in mix see progressing, how that's case general, and how there's anything into out to that of XXXX. wanted Thanks. see Just you evolving

Mark Tarr

Yes, been mix flat. has I - case think well, our our relatively

strong, XX%. little at mix, look we stroke, performing to a over you our there with continue If with program be bit

You add some XX another neurological. percent in

up our built in that our couple stroke conditions, X% So, just discharges. neurologically-based years is expertise last accounts over the what we've almost said of - over for others, of and we've now

to at discharges quarter back to of get went XX% that we of If time continue total an home, to ability this the you the at our patients last that's to our excel. look area Almost community. discharge back

the Association, population, American So, name conditions. and the stroke patients the those outcomes for say to the continue out Stroke in with markets association our relationship stroke this, I in has of we have helped to American suffering have neurological in better put from our the of terms co-branding Heart, with our ability in would of that caring to forefront patients terms

Doug Coltharp

but that had that because a that neurological to flu attributable in patient percentage showed basis declined very was significant and of actually debility, a as directly slightly, on season QX, pretty in year-over-year a growth QX. mix, and prevalent and in the is stroke we increase was Both

Ben Hendrix

Great. for guys. the color, Thanks

Operator

next Please go to go Brian with And Jefferies. we'll Tanquilut ahead.

Brian Tanquilut

cadence guys. how be I think would Doug, Congrats thinking good just about we I guess, seasonality out the morning, of the should as quarter. of course EBITDA year? call about from over the a just anything the modeling, or you on Hey, perspective,

Doug Coltharp

kind to the of of expect a normal de trends. should normal to go regard quarter some this quarter, but with regard has seasonality The from factors be otherwise, be novos would prevalent. seasonal I to year to that the impact, with timing

Brian Tanquilut

should that with Anything in share we it. labor you're - of and labor on - trends seeing the to XX prepared some markets in use tightness then thinking on us about? maybe tightness which out markets remarks, or you contract color are, I where you're And or labor. specific called contract those improvement anything and those know markets can Got any you high any rate be

Doug Coltharp

Yes.

team there and rates in that one made contract So, the the that most really been focused, there our number northeast in the of really regional FTEs the has would well. I challenging as of say course both focused team through that and has of the remains the the on terms market, been on is would progress, the remained are with it. Boston really focused have I sequential that a great transient progress. But but bit is markets around a cite a to the year, and team bit they've regard couple of area in

Brian Tanquilut

Thanks. All right. it. Got

Operator

go go Larew [Operator Blair. We'll instructions]. ahead. with to Please Matt next William

Matt Larew

good morning. Hey,

the a site perhaps much you relative categories, you for settings? coming how us back the Just Just wanted that sense color IRFs on to last other from on XX eligible just follow patients help of bit kind from taking anything can for, months, and of care out have sense a competitive you a payer Thank of or post-acute shifts with get dial to and more specific share up from share. payers shift you. a for bit - if

Mark Tarr

in you've but in in talk pandemic, and a complexities, can more patient and patients us I operating think we getting take gen, forward this pay moved absolutely I to dividends to community, past, ability Yes, that environment. a do high as challenging, think acute into good job continued during a the back with really the about has COVID we've heard take to our show very normalized them medical

I that have think created sources all and nursing homes, that post-acute equal, the skilled settings particularly between recognized referral not nursing facilities, are IRFs.

clearly I IRFs in to challenging and ability their think out patients. that of LTACHs take stood terms

a claim those overextended take be share there have so, ability of probably trying to in market terms rehabilitation And were homes bit we've I that and were taken where themselves facilities, particularly - patients. in their rehab-oriented and to communities, certainly to think pattern seen that nursing

Doug Coltharp

felt to have Medicare be difficult And because power We've discharges the up categories Medicare XXXX. fee-for-service we proposition really Advantage with Medicare in staying Matt, and discharge this in the major in XXXX. at ability payer was has two gain Advantage. strength of with relatively we fee-for-service growth increased prevalent us, to pretty true same-store regard Advantage. and early Medicare by same-store another XXXX fact, for like very We was in demonstrate Advantage, were had that of a XXXX, seven our when discharges X.X% a that, added look XX.X% year, are to Medicare been We in If now in we which to times and for consecutive QX fee-for-service of in increase some X.X%, that had in in we our dramatic it quarters value that's Advantage pandemic increase that year Medicare back our seeing through really discharge the mentioned consolidated full XXXX, up proven in the growth. X.X% going was X.X%.

services So, we to payers, definitely rate conversion that sources, we that we our market proposition is and value and and feel A, substantial provide, for resonating referral the with like, the very are to caregivers. remains low, to the

Matt Larew

you. Thank Okay.

Doug Coltharp

All is that the strong demographic of tailwind.

Matt Larew

being you place, how hospitals an I one hospital? timeline and it to that process adding bed about XX you and to capital hospital's few employed under - relative curious, of expansions addition demand? the down in past excuse depending in the have. existing a the be build still an the Yep, ability therapists a deploy maybe or is labor both nurses markets on down know where bed use the I'm you've perspective ROI thought understood. And or on about that able existing adding XX Just in and build prefab then, expansions highest hospital, me, road, that that that new miles I curious, Doug, new away to or or a of you bed would once minutes can to might from your new admin use some or costs once get compare bringing But changes few imagine math. built a or away, labor from any to talked leverage

Doug Coltharp

share XX there at it's growing look times direction that is this many XX, to in resources on new look a that going to add of to we point, have do existing like be Yes, that’s XX analysis absolutely we highest or that cluster really capital. expansion are back needs leverage able the case. this and When In regional your underserved. need because hospital staff, the a hospitals markets staff, hospital. by over proximate, a we're between marketing oh, get the beds say, it's But market, return reasonably the things Matt, we currently do the really hospitals. a is adding needs This hospital, see the earlier not existing remains bed we we on a to that bed - to We bed near-term. an the where particular is and XX solved administration we a

a facility construct advance are that particular advantage and demand and that competitors entering of to of in new other ahead go take try Let's market. that

Matt Larew

Mark. Thanks, Doug. Thanks, right. All

Operator

go ahead. go to Please Ann we'll with next And Securities. Mizuho Hynes

Ann Hynes

good Hi, morning.

regulatory on to over be Day, legislative XX And secondly, Investor on on targets to or some that's front, anything know the you expect outlook and months? should being your radar COVID, the for cash maybe is something Thanks. free that on flow. Is long-term just Investor before I So, Day? the at there had we Washington reinstated next your XX then EBITDA

Mark Tarr

Anne. So, Washington question first, I'll take the

members of about number the do Congress a a have new for we know talk process, patients about hospital, that opportunity they prioritized making them more it. a to so our that of tour or we when the familiar So, are having sure going much that that and have out rehabilitation we they with

that has big focus. been a So,

with of CEO with the year, a Washington, CMS quiet. marketplaces. not that our we or for any of CMS. plans to our congress fairly team RCD of with about our something come hospitals implementation fly-in Washington. associations is and But provided timelines have have this front details mind where additional And continued front, take regulatory there subset and out dialogue topic have dialogue members of them that's to that RCD. continue in kept any do has we've have trade one that been CEOs in coordinated CMS. multi-visit we'll there and remains it's from of We a each to Relative in and a the a we'll our

Doug Coltharp

and flow term visibility. longer health to lost regard Obviously, issue didn't at world the with XXXX. EPS any hour. be And long-range that of cash to specific was our So. or bed Anne, or Investor the And a targets two and for for term five-year Day then on open number measures for time. hospice. March issued growth, had about targets of we home we per at later, comparable novos just back down discharge everybody outlook, weeks We that additions, de last Investor Day, shut targets, Xth EBITDA longer

to to for the to see annual you the that targets period I time. targets the earlier think I’d We are a additions. a those those albeit we business, in So, about ago. materials year the and with regard and introduced check bed have the those today, with had supplemental of IRF - I've specifically, go suspend included change back explained just that the in for

September, outlook table, in on socialize we're that now still discuss something of what September. discussing a with just be individuals metrics we and the term provide specific that that something is terms is say going and we'll between on In I'd and internally. longer it's as everything will to such yourself

Ann Hynes

thought I I just right, Thanks. thanks. then. All at had - back targets was you right. for each EBITDA All the looking some out and segment

Doug Coltharp

history we was I did time a around I it. was that, in sometime There but like it feel or forget our XXXX when dropped so. we

Operator

the there at And this questions further call Mark remarks. for no time. turn are back I'll to over Miller closing

Mark Miller

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

Operator

today's Thank your you, conclude and for participation. Thank you program. this does

time. at any You disconnect may

Encompass Health (EHC) 7 Feb 232022 Q4 Earnings call transcript