AMED - Earnings call transcript Q3 2019

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Operator

Greetings, welcome to the Amedisys Third Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

At this time, I’ll turn the conference over to Nick Muscato, Vice President of Strategic Finance. begin. may you Nick,

Nick Muscato

supplemental and Investor the the quarter results A are press XXth, operator filings Form Call the page with ended Investor of to XXXX. SEC release, our of discuss of on copy and welcome you, related Amedisys X-K the to available Conference September slides Relations Thank our website. third our

Chris and will Gerard, Scott Dave Counsel call today’s Affairs. Kusserow, Paul on joining and be us Operating from Also Chief Amedisys is Chief Officer; Kemmerly, Ginn, and Executive President Speaking Financial Senior Officer. Officer; of Chief General Vice Government

under we that is Safe Private on the calls, to Litigation forward-looking Act. statements Amedisys our on Company I Harbor assumes These Reform today information subsequent started obligation this are Securities everyone reflect on protected this laws. remind events, under call today. conference statements to provided statements information to the Before update than made applicable forward-looking to securities required get no call available the may of would based with constitute other like are and

These factors the results risks filings, actual forward-looking risks to number a XX-K, statements. outcomes such materially including detailed include XX-Q company’s and differ Forms from our and or our may which uncertainties statements These may X-K. uncertainties, involve cause of SEC and

GAAP the Form comparable reconciliation non-GAAP our measures any most G, will mentioned available of as call addition, a In our today by SEC to Regulation required also X-K. during in measures be

Kusserow. turn over Paul Amedisys’ call to the Thank now I’ll you and CEO,

Paul Kusserow

whatever again very pillars, our New XXXX. deliver our proud World will continuing while in we earnings to strong call. for Thanks, as financial post-PDGM the as rigorously third on very generated XXXX results, once quarter, this welcome quarter prepare as strategic Nick and have performance be well four of the Amedisys to I’m

as pillars strategic define us a our company. Again,

four progress focus Our the largely due our to these is over in success years areas. and last four

four referral and success sources lines, to employees these same patients, endeavor our as we’ll along our define continue long As pillars. to on progress make

our we hit X% growth Home highest organic was QX is So, service particularly our growth Health quarterly growth, in Medicare XXXX. for This growth. rate fee strong since as

front, streamlining Hospice internal to a acquisition, full On integration our early work the disruption process Health while prepare as for pipeline, and tuck-in continue we absorption next inorganic in Home year. industry we

an de continued novos also We targeted de novo initial currently with to novos six of our our year. the of de for have have operating the additional seven success projections. And ahead four we remainder

we look Home Hospice, continuing by Personal buy to as expand looks our coverage to to their In build in in Health, stay We’re PDGM people to like, opportunistically homes. to innovate build allow Care more as and once see and well what networks

down second approximately turnover XX.X% rate. to XX%, total we to quarter, Now September, drove This voluntary for XX% best people, our the the and achieved month turnover ever. is a of in from we

XX% from This our by up our Let’s operational XX%, continue LPNs of XX% by of talk PTAs had of to during will by efficiency. last XX% and respectively improvement. QX end third and the of visits visits help drive year. the about completed margin We completed quarter,

centers had while XX% care achieved stars. to stars, to our X were of patient of we And X at quality over centers star and X.XX of over care score quality, QPC now our we of a care XX%

national is once measurement top outperformed all again categories players. at the the in national business average the Hospice of Our and

of one their and our providing homes. to his clinical, will these over patients from EBITDA our all thank care you None for the allowed our employees’ guidance such operational Our to with performance which details remarks. million outstanding $XXX this and culture increase us deliver to possible in would caregiving Scott cover it XX,XXX results. our patients of without to our range to million $XXX be financial begins million, of has million want to Again, to commitment helping of $XXX results quarter unwavering every in $XXX puts I strong which first. to them

you all earnings implemented. this to As last know, call is prior the being PDGM

As and discuss preparedness challenging the such, focus. our our and regulatory scene, constantly XXXX and let’s evolving legislative PDGM of areas

Health the it we wise Let’s be to not And start by speculate see front. be would actual XXXX useful from any possible final proposed and CMS in regulatory rule. The the review day until the final on should rule, released now. Home the or about strategies rule language

make to we for Senate continue co-sponsors our up On House legislative and the great progress, signing front, bills.

this As rate adjustments assumptions prohibit in for of for behavior. evidence and you based observed on allow based would legislation behavioral only change CMS adjustments making recall, a will on provider

of Committee announce this members. the third a of call, Senate Finance influential am As pleased and have for we bipartisan third a co-sponsors I the of to representing bill Senate XX the Senate total

almost partisan third half Ways and Means the representing House, the XXX prestigious a have over of the we members. In House and of co-sponsors, Committee

see we for for growing steps to from this Congressional Budget score a Democrats Office on continue legislation we fully support expect push and for and As the continued next or to bill. CBO Republicans, while

prepare a pending payment the for drilling Since CMS for with finalized best seeking landscape we’ve since of we when new our rule we Internally when had but colleagues industry business November As over aggressive, know, We is model. many you policy flexible we then, as daily been XX of our the of in ever-changing functional with changes. must all making PDGM discussed Washington team solutions. XXXX practicing these and and you, both. XXXX, have and have cross of remain an remain to our working

utilization care performing assumptions, expectations. function, we’ve and changes have and and our will be most dissected practice have in plans, we test as the We’ve analytics of Thus LPN functions our far, into begun XX up mode, November, behavioral the required. management. care of us dug pay well seen centers PDGM centralized as better patient-specific allow care, As exceeded around to individualized trained results will have the coding Medalogix PTA out our implemented to optimizing utilization better that roll so that will optimize

It truly the legislative entire the to or preparation, and strategies around I to of manifests resources to and new it has our the expertise inspiring position the our see scale, been want impact financial operational again And to intense payment transition clinical organization PDGM. of emphasize however, itself outcome. regardless address to model, successfully regulatory us rally

is and surprisingly, operational have of remainder on and Not be initiative year. will PDGM our XXXX. through in that few of initiatives the next we That waters working other the a we navigating biggest said, successfully of all the year strategic

and ahead and modeling build exceeded that and ClearCare expectations, projections out XXXX. Thus actualization. look CCH of staying integration integration the we optimization has trend entering of continue CCH and to far, our internal

cause you in require the acquired and will the when business as laid initial synergies. recall, initial growth asset, we out we that would As improvement harvest investment a disruption we margin plan some and

Through profile legacy XXXX centers as year thoughtful continued of anticipated growth optimization, business be negative the CCH ramping of focus mitigate and the a the impact. we to that the planning, we’ve been some able further development margin on Amedisys will to care CCH and make Hospice business. margin work mirror within of staff

industry’s ClearCare, representing Finally, we innovative software last platform, leading partnership Care Personal Care Personal with an the difficulty]. X,XXX agencies quarter, announced [technical

Operator

by. Ladies and gentlemen, stand please

and difficulties. is your Nick, by, please we’re facing Nick, difficulties. line technical Ladies stand stand technical and your go Please Please gentlemen, ladies gentlemen, open. ahead. experiencing live. is We’re by. line

I’m top. just to the – going at Finally start

Care across Finally software in last quarter, agencies platform, ClearCare, X,XXX representing partnership we Care the industry’s with Personal innovative leading an announced the Personal US.

agencies Our agreement an to creates partnership in the coordinate Personal to platform patient with Care care. a establish Amedisys ClearCare order using and opportunity better ClearCare between

a Long-term of needed Care Care very plans and to we Health, be and and offer Medicare technology a continuum Home infrastructure and care will is the and a by part with focus, every agencies, nationwide lot the state early XXXX days services extraordinary, Hospice It’s nationwide. in, us of this numerous participate partnership Personal there others Thus true agencies presents to our combining of Personal far, Care building Advantage very having early XXX partnership Amedisys. already in operate work about partnership But signed Personal have up the representing do. opportunities XX,XXX results we with with. to been caregivers in of we’re excited

another see, have XXXX. great performance to Amedisys’ quarter, the drive Again, all employees you had this success. and in continued thank for we to done our outstanding you As can you’ve all

to no You patients our matter circumstances, prove continue the on focusing what that outstanding results. drives

it quarter. Scott? to With detailed performance Scott, that, over a who I’ll review the through for turn our take of more us financial will

Scott Ginn

report driven excellent by Thanks, performance on our again once Bob. across of three of very was all happy to which another results, quarter I’m financial segments. impressive

in per net or to revenue, diluted XXXX on a of $XX basis, quarter of on of $XXX increase $X.XX million third increase the XX% income an of $X.XX share we For an compared XXXX. million delivered GAAP

our non-core temporary quarter, are results provides as adjustment GAAP or impacts. expense or nature. of items in impacted income line Slide XX in these characterized details one-time items the For Slides our we Supplemental regarding statement income items by each have the that

EBITDA revenue our million increased EBITDA quarter as or of $XXX to or million, $X.XX percentage follows. increased $XX basis, an million. XX% XX% on EPS For per XX% $X.XX a $XX grew adjusted the as share. and basis are results points, to XX of increased Revenue million or $XX

our like with results. couple there positively were that I’d pleased that to very QX our a We’re items performance, impact of highlight

typically with QX. XX% Our the XX% for to experiences QX increase was sequentially, to flat health insurance in expense quarter

As such, million health our expectations. our internal expense $X approximately below was

reserves by approximately in the Additionally, workers’ compensation reductions quarter million. benefit $X

to up driven million, increase basis, total by our In total up volumes. were performance. $XXX revenue same-store to up X% third were was a segment quarter admissions admissions Home same-store year, compared a On or Turning and prior X% were $XX X%. admissions episodic X%, Medicare million adjusted up in X% Health,

to prior X%. X% XXX further was lower total up per year by on $X.XX Medicare cost year and increased compared clinician was an revenue $X.XX our concessions. year in driven up to revenue a visit episode impacted compared in impacted salary per mostly increases. per X% Visiting XX.X%, Medicare planned prior of was cost recertification by than rate basis Overall, visit Medicare price up a visits. prior increase increase by points

gross points a increases improvement well XXX in as all was as improvement margin rate X.X% the volume basis by of payers across Our driven utilization. and

quarter. clinical planned our in Additionally, $XXX,XXX shift for reduction revenue the resulted cost mix in of and a

margin raises as X.X% results the XXXX. staffing a million, a model By basis $XX XX segment our was EBITDA Health up for basis points G&A revenue million were items impacting XX of representing with shifting approximately per and the third percentage up adjusted and increase. the our is XXX point was improvement. an XX.X% $X quarter, Other XX.X% basis include; EBITDA non-Medicare which revenue increased of Segment a visit drove compared Home of to points quarter

acquisitions. RoseRock and CCH our include which results, segment Hospice our to turning Now

over For revenue EBITDA quarter, the revenue $XX $XX year, was per year. year, XX%. Same-store was and of prior increase day increase was admissions same-store day million from service per up an over million, up cost an XX%. $X.XX daily $XX is prior X%. of of X% third average Net were $XXX census $X.XX million Segment million, up up and prior was up up

Our CCH margin were acquisition EBITDA the third in our impacted the metrics operating of and segment results. inclusion by XXXX quarter

the EBITDA our from impact CCH year. margin was of prior the Excluding up segment Hospice acquisition,

For the Hospice $X added and in acquisition million in in $XX EBITDA segment. the million revenue quarter, CCH our

consolidated $X.X million has added in net Year-to-date, million $XXX added CCH revenue a of $X.X consolidated in acquisition which $XX.X EBITDA corporate the EBITDA. and The million resulted million costs, contribution. acquisition in

and to-date We’re margin. ability confident performance very pleased grow with to and in our expand line are top our

generated Our and has in grew driven revenue the Personal approximately quarter difficulties limited Hiring strong $XX million X%. by the billable economy third segment growth. in by hours our Care

prior the as acquisitions. inclusive all are year with comparable are results they Our

of We’re points improved our our EBITDA basis over progress as prior pleased with continued XXX year. margin the segment

XX.X% compared our $XXX and Turning basis was total On general G&A sequentially. Total a of percentage basis, revenue expenses. points was or an of to total G&A prior to as adjusted up revenue. XX total administrative million and

our in CCH $XX $X.X includes the acquisition, corporate is segments. total $XX.X in G&A the expense quarter related approximately comprised to million Our of Hospice and which million million for

the to change our a basis raises. expense in Finally, Health related Home XX G&A and is over point half of total increase staffing in model

growth for to PDGM, resources detailed, we business and expanded we practice, employees for de the pay add continued made business, D&A in process. lines As investments model all redesign and and innovations XXXX support of staffing purposeful in added novo pilot our including sales changes, to prepare

flow from cash million puts We million generated which at in quarter, $XX for $XXX the year-to-date. operations us

It prior for days was We’re impacted days on from deliver the XX.X the range to year XXXX. $XXX approximately X track DSO X.X year in days, of days up the X.X million acquisition. by and sequentially. by was full CCH approximately

completion centers, CCH the conversion HomeCare We of anticipate care of the HomeBase. the increasing upon DSO

our which from DSO was prior XX accessed ratio end $XXX CCH over the acquisition, the approximately of liquidity. times year. is days of our At we’ve Excluding and million was the leverage quarter, third flat one

de have operating of center currently are to-date On very additional X end opening novo are X the we front, pleased targeting the to and we novos year. our the progress care with an by de X

XX of you Supplemental deck, $X.XX on as page ranges million of of million as EBITDA increasing our can see and follows. our Finally, we’re XXXX to Adjusted Slide $X.XX. to EPS adjusted guidance $XXX $XXX

costs. QX mentioned, as million I workers’ benefited from lower and $X a As of health compensation approximately result

our combined year approximately $X expect However, total to we QX. have the shift health QX and seasonality costs not with in increase results reduced shift costs of for million expectations in the in sequential a timing in our The normal costs. health

cost ranges Our this updated guidance shift. include

fourth strong admission our focus growth Hospice to we’ll that our follows. performance as the for growth, impact ongoing and our performance PDGM. areas continue quarter, ADC CCH trends, ensure related the disruption managing volume preparation Continue are of we Entering Medicaid minimizing

of Basket as the is X.X%, Amedisys’ approximately PDGM our episodic mitigating view that the we’ll costs mix mix final with Market we remainder and we specific impact We’ll of the year the of modeling X.X%. update optimizing Update negative of levers continue refine and to remainder Of XXXX modeling, Related behavioral including impact our and our to analysis to including on the the that offset changes, the reassess utilization. PDGM, via a release view via clinical current data, is can XX% throughout continue XXXX the rule. while of

please the Operator, This questions. will remarks. for conclude prepared open line our

Operator

line you. we’ll question. our Thank Jefferies. your And be first the question-and-answer Tanquilut with time, Please of with comes this conducting from question Brian Thank session. a Instructions] you. proceed At [Operator

Brian Tanquilut

guys. Hey, good morning

Paul Kusserow

just Hey, Brian, sorry about that, joke. a making

Brian Tanquilut

on X%? admissions admissions got would are delta moving We’ve My you on X% first what that the as a want question of organic. I view in the organic obviously revenue that. growth your the terms is of how think between Medicare But strong, lot and comments really know, of into on about I questions investors translating growth parts to revenue your think see really And growth. look

Scott Ginn

certainly that. that’s about admin at look the great question. Thanks, XXXX, and question. Yeah so growth on just Brian. we’re if we’re I’ll got very and there. excited that the line approximating I Medicare, think And to take appreciate you a pleased It’s top the since with numbers, X% our best

So that’s our certainly helping growth.

revenue see also in roughly as about increase prior of episode somewhat move We we think slightly. PDGM, roughly We that X.X% down running we’re did in per X.X%, through that’s quarters.

helping those us are the side. on So things good that are

driven related my That a XXX recert see rate, down by know we’ve comments, timing that year-over-year. year, so $X in points which really us, about was but that’s as has concessions the throughout said in is the basis you roughly offset in some an certainly somewhat we a I increase did experienced rest of price helped year-over-year million, decline

you’re don’t So there? want those if pull down some kind of some of volume more know I seeing clarity you numbers. to add that Chris,

Chris Gerard

Hey, it’s Brian, Yeah. Chris.

recert It’s admits, raw decline but So was episodes the a Medicare it versus in total recert net on we Medicare the year-over-year first, we in down mentioned, issue. of last of total year. numbers admits, growth down had recert on a quarter, QX was as volume QX volume up on X.X% so roughly new rates strictly our volume. XXX, look were That’s a for only side. XXXX X,XXX admits some our at our Scott the the If

year year, real XX% in strong each of so year recert recert our rate What last year-over-year of far year, year we last so versus year, quarters is, the this noticed lower we this last was been XX.X% this into a we three QX had noticed going year. have our

in recerts up. So in a effect QX that is of is were QX getting into light accumulation carry we’re revenue QX recognized that and bit of also the catching little

around what good a It’s year news preparation. know, staffing redesign, agencies this and internal, it nothing been PDGM our we The pay practice changes, focus that it’s of clinician model lot it. more that is external, in know at it’s you driving going it’s terms is, capacity

chipping call on then we’re top think you some this the focused back reflective And that as more We quarter. it, we get away. revenue think We’re to well. volume where, we’ll the of side is we’ll total know, of

Paul Kusserow

of of idea results, haven’t my to the on is any produce from fix We just think Brian, growth top been just can XXXX since line day able extraordinary. produce whole the take year. admission with and we to are then recert And I’ll the which issue being the able I perspective,

a I recerts it does you from issue think it the resources seesaw very of drive down effect is the admissions admissions often utilization and of when strong what there’s is, your have slightly. pushes

balance think we more sides. modulated – push growth be both I have able as out, So to on this we’ll

Brian Tanquilut

how know talked that one And the to then are remarks Chris, shifting exactly of ask guys Now, the doing kind it’s I about pilot coming of prep you said you Obviously, ground. your what yesterday. rule you thinking guess guess, know in that. to I already prepared for the of PDGM. then impact their soon. in you guess And starting programs strategize, is I doing I I been on terms have are to that work? may don’t I And you about hard know, thanks competitors the but for related rate, out if Scott,

we hear wanted just about on proposed? rate rule current based your should and be the perspective thinking how the to Thanks. So as

Scott Ginn

Chris preparation let and dive start work. into I’ll the more rate Yeah, with our

the my is us roughly is at net the assumptions of for X.X% you Basket, made, which said starting our guide is our on which inclusive we’re comments, rate, behavioral CMS I – know, and is we’re good of the X.X%. getting as Market prepared where that point has So all-in

a negative impact. So X.X% that’s

$X,XXX it per about a revenue roughly on average $XXX. think You episode, you’re

how that’s of starting So there. we’re kind

You or a about well about X.X% comments we offset know and can through as behavioral the said think of as loop. as as comorbidity changes, well, that we I half coding, combination of is our in which

that overcome. us you PTA quarter very cost get a feel that And So and then episode and we able the X.X% were that around RN have another still focus that leaves we proud that we visit confident saw and and on are this LPN moving. levers numbers that we’re really around took we visit out, per in half to in conversions, those

think I well development for bodes that future around our So that.

So I us opportunity. think it leaves good

If visit just about wait of could move, LPN talking in one each move kind And and you one $XX of that you think and if true kind right, each. talking down you’re from there. what’s roughly you’re and $XX that’s PTA about about if wherever RN then

the on that I side of you $XXX of that a of you So top tune so kind get of of can the we coming know, to where then give you cost $XXX a with the behavioral. another if that’s know, in expect combination think you we from. out side, half And offset view got, of and you’ve coverage would a

Chris Gerard

last a through an this. of and working November on the professionals again, so operational constantly meeting add, group this I’ll had we’ve been in of organization And working XX from perspective, about year, are that we’ve since

started our to coding for at specifically fully is, initially, coding know, done able and and we been as the have side of What reconfigure we’re of episodes episodes that you process, you looking identifying that tackling off you kind our opportunity we’ve then know an kind that. you on so really know know coding done by we’ve well

the collecting comorbidity The fully information there. side we’re

as of kind of working this And there’s to there we’ll well. through laid not by of So loop we’re you the know, work be done management, that, then you that and have much out on really fully the end year. know,

tomorrow’ we’ve and in those encounters are we’re episodes looking you focus the environment off last be able X.X% in that We that. then of now basically piece don’t been environment, that would episodes to today’s And grouping for. on that on episodes questionable still our have XXXX around know home home a XX% we’ve down initially are for our got to start with of a which

lot progress a a we So there. made we’ve of lot done there,

and can And of then see, we’re mix in are and of and our cost a Scott mentioned our as closer the professionals already RNs moving half visits episode and you PTs XX:XX per our two visit one down LPNs mix. levers. PTAs year-over-year QX to

you get specifically of of of are know there. middle practice will rest You we’re in pay what’s end be at us able today, on the we XX:XX the that mix. the a the for year lot will far better more this change know, happening that to we be to to And that the focus think talked is scheduling done about that runway that unlock to drive

Paul Kusserow

the think XX% Brian is lot PDGM, the world. our be doing it of this year in our living PDGM of I a will – And piece, XX% important that’s the about by other of the will be of like end centers they’re care

think I centers doing to, up be we're in – up we’ve are that to going about XX this. So care

good working. feel we that’s So how about

doing a we’ve And lot, since amount May. we’ve a of these fair learned been

down a hiring we’ve beneficial drive in well the been learned utilization lot been to how LPNs also we’ve this we’ve our a PTAs from on as cost looked particularly coding. as has done of and work been a – the have area, on to refine the that able process, of perspective. But So in lot

in to going rigorously it. us about so we’ve really with getting world early of deliver good us So as the actually while we good putting our we people we case at. paces and enough worst thank we, so feel know, I can’t feel our you we’re able there so through results, the again, effectively business good where these XX already been to feel running that And we’re XX% PDGM for

Brian Tanquilut

upside. we think ability kind about that you results, for Hospice how out your of and I to question of Is performance that And continue Paul, me, mostly Hospice? business, delivering last CCH the CCH? as be driving And should good know, Hospice thinking about delivering is

Paul Kusserow

think, think is plan. CCH know, you I on I

we’re of the I about. good sticking – on to feel we we’re So mean, plan synergies. still ahead

if $XX.X delivered basically for projections I it. end year we in – the we third the saw, beat we so million quarter, the our we’re about CCH, you I think of feel at, with think so overall our at already good on results,

the in. good that’s synergy about harvest coming feel We

the $XX $XX million we next to about. of very million So year, good feel

So we just want Hospice. more

we’re are So from away of pipeline, we to a deals, really growing had novos still well. the we’ve – a very de walk big couple nice but have

So Chris around, to continue we we do you feel in we that that, we’re know, particularly novos Texas, like seating de space. play to where used

feel very So that. about we good

not And not our good I to – just is rate. $XX at million It’s feel that we it’s that synergized. think growth remember our margin, million basically $XX at

So significant in got add together, XXXX. you’ve there when all growth got you’ve you you a that know,

Scott Ginn

Yeah, that admit certainly Hospice X% down, to it’s have slow you just say want on seen would on to quick roughly we know growth. guide real continue I performance. we little a we –

segments performing knew a tough that’s you We were within well little margin segment. know, at still comps slower. lines, legacy But some see exceptionally You there. our our the

you roughly in EBITDA XX revenue, it million, of $XX.X the $X.X I at contribution. – about million, delivers at you CCH but talked delivering $X.X which know, they’re on segment about really about million level, XX.X% know

great, perspective, EBITDA legacy So margin. it from our when you that did blend gross margin actually you both and can at increased see look

performance. the on with but piece it, pleased with certainly growth – we’re our happy side, we’re from So a of the know working you cost

Brian Tanquilut

Right. guys. Thank you,

Paul Kusserow

it. Appreciate Brian. Thanks,

Operator

Matthew the Larew your of at William next Blair. ahead is with Please from you. question Thank line go question. The

Paul Kusserow

Matt, doing? you Hey, how’re

Matthew Larew

wanted Medicare Hi, Chris, follow-up good admit to a morning. little bit stream. the on I

know, what’s looks seeing like up or If you it particular could there just us pockets sources? a you you’re You that, referral know still know was you revenue regions for give strength of, sense geographical non-Medicare driving is XX%.

So a expense appear elsewhere. it in admit of at growth to come didn’t the

go bit Just can into a more that? wondering if you

Chris Gerard

Thanks, Matt. yeah. Yeah,

the that the So had getting underperformers feet kind some focused growth locations. you regionally, working time you adding as know, historically, know, of piling to and you know, on quite on know, the overshadow you street, Medicare strategy you operational we’ve performers about to our that growth. of we’ve real on we issues organic you been our some, the some the I’m pretty know, reps accounts, know, trained, any know obviously right also and out some structured you way could side frequency proud total at on clear for over there in some right, of get our through say we’ve have outshine our we’re us or that, our,

Today, seeing all we’re seeing growth – organization. across the regions we’re in really our of

you I selling straight quarters us at the organic to committed it’s think to us us we’re at which great So you seven don’t being you product reps other looking on out of and I the is really looking anything are know, it’s for our for sure there side. just particular strategy, on have selling than know, growth best some seven we service gain think starting traction quality, know, service our so Medicare have we now making fee that know, – we a you

and that you for that. push know, So to to about we’re we really continue excited want

Matthew Larew

contribute Paul follow-up just the I sense see potentially a the to ClearCare expect statistics level know, of might this the some of top then give and to you terms of Care partnership influence high and kind in gave the contributing Personal you on timeline signups actually how for for signups, line agency to And could is us for Okay. us the to you you? want business what but we

Paul Kusserow

give – let you to top going over on line him. going that. I’ll the reporting I’ll turn to – I’m I’m think I it into to And then Yeah, Chris, it’s because

this. our hope to what roll have piece out and for we’re what initial is I think testing we we the piece still out, test of

so So and our these utilizing philosophy there towards. simple signing way to what we’re think approach a sort to I migrate network is, of businesses people be that’s the best trying still is we’re up. in And

that Care ability idea, course, and day actually back Health, Personal Hospice. and to that The what And between move that. do is of we – we forth Care to and want establish and we Personal desire Home is to see every a

And So in sides. think can see care already was cross initially we’ll referrals for seen so patients. provide we that our start referrals. to on both We’ve continuous we that where

we’re early that. So encouraged small But by amounts. days, by we’re encouraged very it, very

The for full ability built other thing we obviously table we’ve are care been and the encouraged by in very for have has to haven’t is the the managed tool integration come hopefully continuum, care, integrated, an interested us that. to

that’s full plans. we build what that continuous on our we out one HomeBase ClearCare in can view that so we’re care to now So link have data and how HomeCare of working have, with this

what we’re on. focused So that’s

that, it in I the caregiving a to think be position lowest once the at optimize we to very with we’ll outcome. and cost take risk do do and best unique start

So of care seems add? lot anything thus interested to be don’t to more conversations. that. know a want very We’ve far some Chris much if and in I calls have managed had made interested

Chris Gerard

Right, and I think out well. you laid it

us the our thing these seeing markets you kind patient are agencies local I and the near-term ClearCare outcome. should be to with what is all connecting in important how improve from from in we the hearing really think us is of

with discharging in home. that smooth. Hospice some we’re services, from versa, we life where the and have a need. And and sort have you patients know, make patients it of transition where of these need a Care have they Health needs who Home skill preferred And or functional relationship And really down Personal can still very we comes or us our to to end vice has some they limitations services

patients and to turn know, having between again, of same But got outcome to them system. us already good and us, is haven’t and the plans we’re even being us into step referrals the we and better that’s happen, automated then still us are audience one patient to It’s really same markets down on you a get seeing we you which seeing the goals, now the you virtue know, and traction them process. the to the the of manual utilize know, on that the with with as going from the moving the in us kind in a data that’s aligned by just We cross well road.

process. automated manual process from really an a it’s Near-term, getting to

now. right that on working We’re

We to of a rollout haven’t formal locations. our all done

we based actually the this So organically what markets of them. signed we’re by getting with that just and up overlap everybody up trained on of rolled in the but have out where have happening today we year kind will end excitement, is

Paul Kusserow

won’t is, everything perspective, interesting services to to to ageing an strategic potentially going able going partner, we’re to if bigger not we’re buy we we place really be to Matt, and a just from and in own But us be to bring to what’s be going think need to need want able own. to fundamentally company, we’re there. that I out

trying to in moves again to towards as we’re as ageing can, as age people to we’re the will – the again, that build with contract types in so want that own. staying there networks we in and infrastructure need that not So home, to world to and place have potentially going and place build in bring is and services necessarily of in around

Matthew Larew

Great, thank you.

Paul Kusserow

Appreciate it.

Operator

questions. Please Justin with next question proceed line the Deutsche Our Bank. comes your from with Bowers of

Paul Kusserow

Justin. Hey,

Justin Bowers

everyone. don’t morning, need that. of Good second team. I that after and I coffee Paul music, appreciate cup the Hey, pre-call

So, thanks.

Paul Kusserow

[indiscernible].

Justin Bowers

you and comp XX% this guys same-store had I at So know, at time year, you mean, Medicare record last on tough admissions you’re revenue, levels. a are

it a to kind same-store we’ve maybe it terms next of quarters you of of So, volume will what growth say fair in bit? of trajectory of season couple as know, in pulls the as of, seems like is you maybe recerts pick lows kind comp the hit with know, little terms fair just to through? in Is up

revenue? more, trough Medicare terms of do a rate up the picking about little should couple the in we appreciate if in hit we I rate maybe wondering should and matter if the about same-store recert next bit, And over know, And you PGM – be of recert but that as is just especially thinking be thinking admissions should quarters? how know, the that? kicks kind of know how the you We’ve then you we

Chris Gerard

Chris. it’s Justin hey, Yeah.

clinicians the recertification we and a in that admissions episodes a for of of You up the completed we’re know, was looking QX. with recerts in we’ve you thanks a for it capacity making the the we on identify as sure dip that kind at tough in comments. as our our focusing QX, we have percentage as a Yeah, tick But know, been saw comp. is what

total kind what of that being additional an kind of normalized total back we’ll anticipate get our volume state up will in QX, I We growth, to pick think of know be Medicare when that PDGM reflective prior be reflect range impact QX being – that in to X% – to volume revenue of at QX, and X% any should in I look year. you next

impact or PDGM positively. don’t to negatively anticipate rates We recertification our

that we yes. back I of was revenue know, the is of trough our see think our say, to of reflective growth where you as is, line top kind volume So I would kind coming total and should QX question your

Justin Bowers

it Scott on improvement, looking Okay, one kind prepared the that point your disclosure of of quick mix follow-up. the like you XXXX. data in a just that’s just are additional appreciate like I got older my seeing which kind it sounded that fair really – effect current guys versus net am looks correctly? your comments understanding that XXX Is that basis at then and I

Scott Ginn

I the think first first they know, came modeling, that’s were fair. out using I around mean, you you data know, XXXX the when data.

you through, coming had to with through have reimbursement rule, XXXX episodes rule. new the the final So final changes coming you other XXXX continually

that’s we’re seeing what there. So

for you has small year modeling it’s, in this from early pretty pretty some of been the but kind and been think it’s our know, movements, stable to us. close I

Justin Bowers

Okay, quarter. and this thank you execution great

Scott Ginn

you. Thank

Paul Kusserow

appreciate Justin, Thanks, it.

Operator

you. line from Please with questions. next of is Thank Bank your proceed The the question Joanna America. of with Gajuk

Joanna Gajuk

morning. Thank you. Good

a So – couple just

Paul Kusserow

doing? you How’re Joanna. Hey,

Joanna Gajuk

you? are how Hi,

Paul Kusserow

Good.

Joanna Gajuk

of couple So just a follow-ups.

just So first I PDGM. guess the

envision So I did you different pieces. the offsetting commentary a of how appreciate

XXX% how this and to quarter think you’re to quickly start when going on go sounds the by just so essentially like it place you So live end how going know, the once PDGM, in everything XXX% or about you under you the as PDGM. I year, live, that goes it’s I of reporting effective? should You we guess, know, know, guess are have

of there’s and you a things maybe then just know know, some so up mid-year, still know or for how commentary this in kind of see up not know, is you anticipating everything of that you’re QX, any by ramp on So say out we ramp right the there? of kind you more away place, you place, should plays kind fully in

Paul Kusserow

I the half have optimal visit our really getting an under excellent migration But coders I’m RN under going the Chris ratios of this I control. the think been let way you’re been think join. PTA, the the place. LPN, the I is, full to and to piece and details, visit thinking go to and it got PT Chris coding but you’ve out think into getting control. from think possibly, be getting a will largely has I then

So be savings we’re probably two pull out first to care able all those quarters. centers will the

Chris Gerard

I think you’re right.

So I the same at think is all adjustments, again One adjustments levers related the lever, I’d two are behavioral assumptions changes with will. coding, that management, kind is CMS of done revenue which break looking into it if our buckets. of behavioral that, so that’s loop and of comorbidities our you’re your for be the into PDGM, we to that’s laid any will you with out, that material if X/X/XX of going kind

half about strategy. of that’s So mitigation our

our to and The that until to August. full ramp don’t earlier failed mention episode XX% that driving be is our rolling you on of plan part I the be around what’s locations which year, into have is will is per business actually We other on launch. January. throughout care mentioned care two is a will our management Medalogix rollout the know, of Medalogix Paul going of

going it’s throughout So the ramp to year.

less the way in one the to visit year, probably in looks half at exiting that through one reduction. it So to the reduction in when you one, episode XXXX, the one at next to is, per middle year best half look of one close and like getting at a first for at and and the year look and than the you whole year one one of know, a

– our now. which to be be and we year next be LPNs weighted that That our we it happening closer us moving this when biggest lever, and it year, XX:XX is clean barriers should that’ll to of and of and July one to to moved by cost January and ratio other year, know in right the for you RNs needle, is practices even LPNs pay goes exit PTAs significant of PTs. next is done heavily should acceleration and more Same

cost well ahead to get one that, day we mid-year next of exit adjustments behavioral our levers, goal on you we know yeah. So with year,

Joanna Gajuk

Alright, payment cash then on going guess how QX? to that flow CMS I front, impact finalizes the is reduction, and in if your that

Scott Ginn

Hi, roughly a We impact. this XX-day believe that’s is Scott. Joanna,

a So adjust we’re you’re will so million talking in roughly range again revenue, on $XX Medicare permanently that there.

view of is as our So right now. of that’s it kind where of

Paul Kusserow

up We RAP debate. anything we at means the And under is haven’t strong felt heard very when push we that this back CMS. brought that’s –

will phase be part would RAP anticipate I the PDGM. So the of of out

Joanna Gajuk

along just comes what Okay, these changes with it to wrap and with that I PDGM. guess with up, so all

quickly plays and the see in So because Health. are how you we before mentioned industry out you you under Home PDGM, rest of firing you other know, wait should whether acquire know, assets or you this buy going how, the want decide to see is how to you

So you through? think show know, how expect to you kind you quickly of, this

Paul Kusserow

some think much and understand of to initially think to access estimates try portion the size have trying with financing at were of and how I two not when do players. RAP waves we expect of does and to of We you some the high the at we’re industry access we there as looking it’s to actually look financing, very industry has average the these to

to go through two talk So this you been I’ll think about we know, years let And phases. probably because into I ago. Chris XX think going before, it’s it, he’s

Chris Gerard

an the you XX,XXX Yeah, able into you a kind payrolls early of a couple payroll, to that industry, to I the and smaller make be just on you know, billion be half. the PDGM. reserves average going there’s think know, don’t $XX if roughly cash there, is And, about of a was think rough agency size there’s agencies agencies million you have, out math, to know,

opportunities to business to unfortunately there it’s and you know, go be, just of going they’re where out us but will exist, for to they’re are You going going that process to going bucket. going know, fall lot have you’re into is going work an that. going to through know, It’s that just you acquisition of, we to more a be be – be to to some

up, really, with of opportunities probably start likely just on, upside we’ll the just, of smaller And see some you organization we know, through they you PDGM, those players year then are actually long-term know, as look regional navigate of the the that think come kind I that some can at. see goes and able there you’ll transforming to seeing out but that don’t

also early in would I And XXXX. reimbursement XX-year anticipate a you saw under hospital-based have working know, We really this that program. been systems,

through a Some just to of have you them new, intestinal whole fortitude the really not work well. of may as kind transition know,

buying So the opportunities for road. some down that could create us maybe

Operator

Instructions] Thank line go question Please with questions. Ransom from with [Operator the James. your you. Raymond of John Our ahead comes next

Paul Kusserow

John. Hey,

John Ransom

Hey, good morning.

– the time, If you and hearing you if by take revenue then know, that. get and let’s XQ your point, you’re you that ’XX, we offset to say you I’m that $XXX revenue a to get cost half of So starting a you as reduction,

$XXX you your So to episode the time am cost visit know, missing be am to I would something? per that say, so revenue hearing per I you Is right – down, Or that but you down, $XXX, be XQ? by $XXX fair? could get

Scott Ginn

cost visit potentially, maybe out, visit let’s because the we’re a going going visit slightly, looking reduction episode. because is per may the metric. our Redskins total kind with one average $XX each, there looking to go visit you cost one to the I’m perspective, we’re fixed less say, doing a costs was my less – at know, from of of a and per think a movement come shift but costs an the I are down, will little see that you Actually, impact one bit on within move from

Chris Gerard

the the math math. get we that rate through once staffing in that like go And

Scott Ginn

the for every differential you $XX shift $XX, the staff so what see. Yeah, the was adds

Chris Gerard

Right.

Operator

you. Thank

Please from Hallum. proceed of is with Craig question. the with Ellich line question next your Our Kevin

Kevin Ellich

Paul Hey, thanks.

Paul Kusserow

Kevin. Hey,

Kevin Ellich

already. lot DSO of you XXXX? payment. kind shifting know, to a especially into pieces what they’re a can to recertifications XX-day about receivables you side, just more know kind couple request questions it to the thinking PDGM for PDGM. under know in you know, But, to some moving going how some you’re of talked with changing on financial the of anticipated going the I just that’s do matter how have affect go since And you as that’s on about you So more episodes, guys your Scott and more detail

Scott Ginn

that Sure, to it’s impact think talked so so we as XX-day a the roughly about know you we’ve DSO.

think know, kind will we $XX that’s So probably hit of, our disrupt cash flow. you that there million

running So million a cash running, $XX.X close basically, if with to you in think we’re a we’re $XX – about XX where quarter, flow. last million

and flow confident much But about those to on working permanent build ready pretty know, reset. So Health disruption Home you that to in day. just our back numbers of we’re cash ones own But, one be get is be it’ll that’ll, a down. for you’re a side a million talking the $X roughly of know, the from equivalent itself you which kind the of business, is our quarter moderate plans after will be

Chris Gerard

thought are recerts that we Yeah, great. and the

Paul Kusserow

Yeah. Hey, Kevin.

what’s So know, episodes terms of periods with XX-day billing to the I and we’re periods. in going episodes, just the change to you have mean, XX-day have patients to wouldn’t still I going XX-day equate billing

in that’s change only admitting. the the going – be so any that And would a of patients rate or recert change type should significantly should to thing we’re

kind We materially. around, any you of that have don’t really plans know, changing

consistent so as if year, So patient recertification that admitting kind stays year we’re you then rates reimbursement. be should these of that admitting this not should we’re know, types driving we patients same the as next obviously you characteristics know, of see well

Operator

– John next Ransom next The Thank coming the question from you. with James. line is our question Raymond of

John Ransom

take to just I one sorry want more. Hey,

Paul Kusserow

you’re Hey, back.

John Ransom

you episode, And you two $XXX visits know, out. would PTA substitution, cost so yeah. – LPN if get roughly of and then come the per that Yeah so reduce yeah, that’s So, you

Chris Gerard

$XX. other The

John Ransom

Yeah, if you do all that.

But talking something million $XXX revenue trouble I going that got is visit episode, that. I I be that’s excuse an like of say – $X.X we’re would So heard is you a to time. that me, gross what really that half why the last think

a I missing $XXX am said mean, reduction something $XXX the it’s maybe done, time there? I So reduction episode, costs. and per revenue all by am in but I in thinking –

Scott Ginn

think that, math. depending so you’re if with the dead math right, I on is your Yeah, on

an let’s basis, to kind that’s just that so on through of this. recap easier because think So episode to

hit that $XXX. certainly $X.X the roughly If that so to half, $XXX. the So right, a episode we’re of cut it’s at million you’re original that is so that in within offset

that. So the net of

then $XXX. And that plus, in costs previous $XX about you one shift for on talked you example, gets if I another think you my each for taking $XX visit, know, about to the

cost. imply that were we able move cost. those is anyway the a I reduction certainly then would out, math higher visits up coming mean, that visit right yeah, to in episode your So that

Operator

Thank The – next you.

Chris Gerard

ahead. Go

Operator

I going to just was announce.

with from is Our Baird. next question Robert Gillmor Matthew

Matthew Gillmor

just I had quick thanks. Hey, one clarification.

just commentary talking called these of know, that the potential natural one your about be confirm I when SWB enough wanted year? PGDM. out in potential SWB peers So, to you the that the issue all initiatives, offset of of you’re And as for I to some growth or some de-levering appreciate and about will should modeling some be thinking a next we be to on

Scott Ginn

that costs without you a taking have business this know, this about, that. of those we grow increase and kind having fixed cost to X% think do we’re know, could staffing significant you could know, certainly which we to, know, plan about basically out you increase total or you revenue cost perspective, out people of you So back still raise thinking to But levels, X%. from you

where mild LPN abilities is for that cost of there, kind inflation side some number. of shift have on and adjust are what but about we today kind RN. what into and So you the some it kind of modeling expect of would I of Kind then with thinking

Operator

Thank you.

is state Benchmark question from line question. next with the coming Company. Please Our Bill Sutherland of your

Paul Kusserow

Bill. Hey,

Bill Sutherland

quick Hey, one here Hospice. guys on real

here nice to now? growth, think CCH do from growth within about ADC this two-year know, what never – but you year, I about, what be – know, know think And for should said trending a single-digit there’s see we think you’re potentially you’ve growth how pace. ADC however legacy you not your you quarters? many you Is the should going at business next we mean then Your accretion model, – mid that blended I how next

Chris Gerard

take this Chris, hey one. Bill Yeah, that is I’ll

we same-store, an before, mentioned I we’re legacy approaching legacy know, same this we So bring XX of it’s really we’ve gone ADC had four for when in a up to ago about XX, of – about and locations years that I’ve on markets, those deep and ADC XXX. average when we the you years, the pretty side, had several average

we getting know, continue that’s harder But X%, taking kind expansion, us is sustainable mid-single for to market X%, pace. and from at really to you to think us it’s So X%, here of on deeper obviously, bit a out, of quick a penetration, the digits, little the grow the share.

are so line to their care you line going total know, more coming drive online. around Those as X getting four to is this get a CCH some growth a going of plus know, So XXX us as in be be year, us to and think growth say from growth also, de big going our be rates with that and going division seen, X historically strategy, is you right, obviously, we’ve a will locations de what to to new for you to in a you’re X%-plus, you rate we bringing smaller with and the those novo know, contributor. centers their novos kind in know, to ours opportunities let’s more

and think digit’s digit becoming to mid-single you we but growth can, know, you thinking about should is just because have to we is had is those, growth. way and for double-digit the But, know, X% I of then you take quarters on our new going several legacy we’re you be this and tougher tougher business, we've mid-single share know you market do avenues X%, what But know, we’ve,

Operator

the with Ellich questions. your with of Craig is Our next Hallum. question Please Kevin proceed from line

Kevin Ellich

– Paul

Paul Kusserow

Kevin. Hey,

Kevin Ellich

to in. sneak more Had one

– So

Paul Kusserow

Okay.

Kevin Ellich

your know, can Medicare you over, for it rather – do you rather the and for PDGM, and would you company, best years you in, I that? the how you industry would impact all it out what’s once legislatively, at Or how know, potential couple spread what’s guess then from think mean, I have would – in the know, changes kind a see preference? phased know, know, about XXXX? what’s we you given the there we you have you best of have or

Paul Kusserow

others. question. mean, going decision I think Appreciate academic is but a Yeah, it, to I final on the be by great that’s PDGM made

CMS be So and it’s Congress. to going

for fork fine. as what So it, I before, you either in see a take is know, said I think, way the you I and road, think – when us we’re

therefore, we would we industry, phase preference rest think of because to larger a Our be be opportunity RAP the is But think we for prefer very think it’s the still it’ll provide the we the do going for in, some players, – for damaging. M&A.

But, it’s getting hits you here. really know, five you’re

the you X%, you’re down you’re code you’re you’re and RAP real getting elimination, the fix have to double getting to You’re elimination, getting billing, getting getting add-on questionable encounters that the that. it

a a not a really two five just it’s deal. So deal. Whammy It’s Whammy

all And our is you we’ve just, together, this. for to it’s going And know, that you when be prepped we’re belief we that devastating. add –

much we it the of we it’s the all but the is of contend part the about for they better, for of that’s think to storm, good still to health, chaos really other going be people’s and have feel the industry perfect we rest phasing So PDGM. because in, hurt sort think that’ll if things the all with

Operator

Thank you.

Paul Kusserow

Appreciate it.

Operator

have the Ransom We with is question additional James. from Raymond line one John time today which of coming for

Paul Kusserow

Hey, John.

John Ransom

back me record getting want replaced. I a to queue, one so think for the just know. I cannot star in This my buttons is be

kind segment can a us avoid cost modeling know you this about seasonal but versus the bit I are So some in in little EBITDA Hospice, for today in what happened quarter, segment how just had you XQ, thinking help to EBITDA XQ? with XQ you of

Paul Kusserow

joining Scott. for that, upon us Thanks

Scott Ginn

deal as you we to give about down million as know, through of I energy you normal that – over segment that line. the haven’t breaking guidance Health the a goes about of around in health, think $X you XX% think the about I done think talked seasonality of earlier Home increase with. Yeah, got kind we performance normal what probably the from still lot the

So see you’ll of some of kind than it. of normal other outset pressures the $X that kind that’s there shifted million on

with similar piece that see comp. you’ll workers’ So

that see We little go growth you well recert kind generally in those for a see along moves think I the will will the stabilize to higher us. of segment. bode do QX rates, So

we that of You know, kind as would see which get a QX a you a see from view so our it I kind a – typical QX of then about going to similar $X.X-ish think of QX. flattish facing kind with is type plan, but that’ll as hit us full quarter other raises, and issues we’ll million just additional cost in the probably in

like our look of kind patterning. you normal So know,

look If we’re at our of on you that back, the kind normal charts dead progression. in

Operator

over time, just this now Paul the I’ll At for you. back turn Kusserow closing Thank to remarks. call

Paul Kusserow

thank on technologically Thanks, us Thank call for challenged again, all I that. good incredibly today. you like Rob. who And people everybody thank of would who our our I want to delivered to results. joined also

on to on we and wonderful us and call doing. Happy you most. everyone doing a our Halloween evolving a you, care. next We year. Thank the need updating forward quarterly keep So road our early next day And purposeful that look you’re everybody. the what Take tomorrow. Keep taking has progress who during hope care of work the people earnings ever

Operator

conference. Thank today’s you, everyone. This conclude

lines disconnect and thank You your at may time your this you for participation.

Amedisys (AMED) 30 Oct 192019 Q3 Earnings call transcript