Ensign Group, Inc Q3 FY2024 Earnings Call

Greetings, and welcome to the Ensign Group, Inc. Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. I would like to turn the call over to Mr. Keetch.

Thank you, operator, and welcome, everyone. We filed our earnings press release yesterday, and it is available on the Investor Relations section of our website at ensigngroup.net. A replay of this call will also be available on our website until 5:00 p.m. Pacific on Friday, November 29, 2024. We want to remind anyone that may be listening to a replay of this call that all statements made are as of today, October 25, 2024, and these statements have not been or will be updated subsequent to today's call. Also, any forward-looking statements made today are based on management's current expectations, assumptions and beliefs about our business and the environment in which we operate. These statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on today's call. Listeners should not place undue reliance on forward-looking statements and are encouraged to review our SEC filings for a more complete discussion of factors that could impact our results. Except as required by federal securities laws, Ensign and its independent subsidiaries do not undertake to publicly update or revise any forward-looking statements where changes arise as a result of new information, future events, changing circumstances or for any other reason. In addition, the Ensign Group, Inc. is a holding company with no direct operating assets, employees or revenues. Certain of our independent subsidiaries, collectively referred to as the service center, provide accounting, payroll, human resources, information technology, legal, risk management and other services to the other independent subsidiaries through contractual relationships with such subsidiaries. In addition, our capital insurance subsidiary, which we refer to as the insurance captive, provides certain claims made coverage to our operating companies for general and professional liability as well as for workers' compensation insurance liabilities. Ensign also owns Standard Bearer Healthcare REIT, Inc., which is a captive real estate investment trust that invests in health care properties and enters into a lease arrangement with certain independent subsidiaries of Ensign as well as third-party tenants that are unaffiliated with the Ensign Group. The words Ensign, company, we, our and us, refer to The Ensign Group, Inc. and its consolidated subsidiaries. All of our independent subsidiaries, the Service Center, Standard Bearer Healthcare REIT and the Insurance Captive are operated by separate independent companies that have their own management, employees and assets. References herein to the consolidated company and its assets and activities as well as the use of the words, we, us, our and similar terms are not meant to imply nor should it be construed as meaning that The Ensign Group has direct operating assets, employees or revenue or that any of the subsidiaries are operated by the Ensign Group. Also, we supplement our GAAP reporting with non-GAAP metrics. When reviewed together with our GAAP results, we believe that these measures can provide a more complete understanding of our business, but they should not be relied upon at the exclusion of GAAP reports. A GAAP to non-GAAP reconciliation is available in yesterday's press release and is available on our Form 10-Q. And with that, I'll turn the call over to Barry Port, our CEO.

Thanks, Chad, and thank you, everyone, for joining us today. Our local leaders continue to consistently drive outstanding clinical and financial performance, and we are happy to report another record quarter. We're particularly impressed with these results given that we've added 53 new operations across several markets in our recently acquired bucket, and yet our leaders and resource teams have shown their strength by simultaneously integrating these new operations into their clusters while achieving outstanding results in their own operations. As those that have been following us for years know well, our modeling heavily relies on our local clusters and existing operations to take a lead on our decision-making around acquisitions as well as provide the transition support for these newly acquired operations. As we continue to perfect and improve our deal underwriting and transition process, our new acquisitions, almost all of which were distressed at the time we acquired them, are beginning to contribute earlier. This allows our leaders to return their focus to our transitioning and same-store operations, leading to strong performance across all our operational buckets. More specifically, during the quarter, we saw same-store occupancies grow to 81.7%, a 2.8% increase over the prior year quarter, establishing a new high watermark for same-store occupancy. This is especially noteworthy during a quarter where we historically have experienced seasonally softer occupancies. We also saw skilled days increase across all skilled payer sources in our same-store operations which increased by 6.1% over the prior year quarter, all of which translated to a 7.3% revenue growth for our same-store operations. We simultaneously grew our managed care census by 9.1% and 23.2% for our same-store and transitioning operations, respectively, over the prior year quarter. Managed care is a very important and growing part of our business, and the consistent occupancy increases point to the trust our leaders are continuing to gain by achieving high-quality outcomes. As we look ahead, we couldn't be more excited about the opportunities we have to unlock the enormous organic upside in our existing portfolio. One of the keys to our success over time has been to have multiple ways to achieve financial consistency that do not depend entirely on new acquisitions. In fact, even during a busy period of acquisitions, 46% of our increased revenue for the quarter was generated purely from organic growth. Also, if you look back over time, you will see a very steady growth rate in both revenue and EBITDA growth, even though our disciplined acquisition activity varies based on market conditions. This is made possible by our local CEOs and COOs who are relentlessly working to improve and adapt to the needs of their markets. As they do so, they continue to pull various levers to increase skilled mix and drive occupancies higher and closer to the occupancies achieved by dozens of our most mature same-store operations, most of which are well above our same-store average. At the same time, and as we demonstrated this quarter, we are prepared for and will continue to acquire lower occupancy operations at very attractive prices, which provides a significant long-term ramp with years of upside. Due to our solid skilled mix and occupancy growth in our existing operations as well as continued strength from our recent acquisitions, we are raising and narrowing our annual 2024 earnings guidance to between $5.46 to $5.52 per diluted share, up from $5.38 to $5.50 per diluted share. The new midpoint of our 2024 earnings guidance represents an increase of more than 15.1% of our 2023 results and is 32.6% higher than our 2022 results. We are also increasing our annual revenue guidance to between $4.25 billion and $4.26 billion, up from our previous guidance of $4.22 billion to account for our current quarter growth and acquisitions we anticipate closing by the end of the year. We're excited about the upcoming year and are confident that our partners will continue to manage and innovate while balancing the addition of newly acquired operations. Next, I'll ask Chad to add some additional insights regarding our recent growth.

Thank you, Barry. As we expected, we continue to grow our portfolio and are very excited about the 12 new operations and three real estate assets we added during the quarter and since, bringing the number of operations acquired during the year to 27. These new acquisitions include the following: nine in Colorado, one in Kansas, one in Iowa and one in Nebraska. In total, we added 1,279 new skilled nursing beds and 20 senior living units in four of our 14 states. Of these new operations, three of them included the real estate assets that were acquired by Standard Bearer at least to an Ensign affiliated operator. These additions were all carefully selected amongst the many opportunities available to us and were chosen because of the huge clinical and financial potential. We continue to see a very healthy pipeline of new acquisition opportunities and are making progress on several additions that we expect to close in the fourth quarter and into next year. We remain committed, especially in times when there are lots of opportunities in front of us, to remain disciplined and grow in a healthy way. Our scalable, decentralized growth model is not dependent on a few individuals in an office but is instead driven by local leadership and supported by a dedicated team of resources. In times like these, when deal opportunities are abundant, we rely on a proven set of deal criteria, including a deep local knowledge of their respective healthcare markets to ensure that those who are operationalizing the acquisitions have buy-in and specific plans to help them become facilities of choice in their markets. One of the foundational elements of our consistent performance has been to insist that the prices we pay are commensurate with the historical operational performance, which will result in a cost structure that allows us to achieve healthy returns over a long period of time. As we've shown again this quarter, we continue to prioritize growth in our established geographies as it allows our clusters to work together and with their acute care partners to provide comprehensive solutions to their health care needs. We are also excited to build clusters in new states or in markets where we have significant room to add more density and expect additional growth in some of our newer markets in the next several months. We have and will continue to grow when we see deals that will be accretive to shareholders in both the near and long term. We continue to provide additional disclosure on Standard Bearer, which is currently comprised of 117 owned properties. Of these assets, 88 are leased to Ensign affiliated operators and 30 are leased to third-party operators. All of these properties are subject to triple-net long-term leases and generated rental revenue of $24.4 million for the quarter, of which $20.2 million was derived from Ensign affiliated operations. Also, for the quarter, we reported $14.8 million in FFO. As of the end of the quarter, we had an EBITDAR to rent coverage ratio of 2.4x. And with that, I'll turn the call over to Spencer, our COO, to add more color on operations.

Thanks, Chad, and hello, everyone. As Chad mentioned, we've continued to welcome acquisitions throughout the year, with a large concentration of the growth occurring in Colorado and the Midwest. In fact, newly acquired facilities now account for over 14.4% of our total service revenue, up from 8.6% a year ago. Today, I'd like to give you some insights into the tremendous work and transformation that occurs during the first quarters following an acquisition. To do that, the first facility I've chosen to highlight today is a recent acquisition in the state of Colorado. Rehab and Nursing Center of the Rockies, RNCR, located in Fort Collins, Colorado, is a 98-bed skilled nursing facility that was acquired on August 1, 2023. Upon transition, Todd Truax, an experienced CEO, who is operating a successful Ensign affiliated building nearby, transferred to RNCR and became the licensed administrator. They joined a facility leadership team with many talented and compassionate professionals, including longtime Don Sarah Case. Sarah and her team were intelligent and committed but lacked the information and tools needed to manage some basic operating fundamentals. Following the transition, Todd, together with local cluster partners, including department leaders from nearby facilities, began to empower the RNCR team with increased education, data and transparent access to daily, weekly and monthly reporting. The team responded to the support beautifully. They went to work increasing occupancy and skilled mix while simultaneously rightsizing labor and controlling other variable expenses. The results have been remarkable. Occupancy, which sat at 63% on transition, is now at 90%. During that same period, managed care centers have increased by over 600% and major health plans have invited RNCR to join their narrow network. As occupancy and skilled mix have grown, the team has carefully managed expense growth. And as a result, EBIT margins have increased by nearly 180%, but the financial success is only a small part of the RNCR transition story. Clinically, the facility has embraced additional training and education, which in turn has led to RNCR recently having one of the best health inspection scores in the state and achieving overall five-star status from CMS. On the employee front, nursing turnover has plummeted since transition. Further, the facility recently opened its own CNA certification program, and graduates are not only strengthening the staffing situation at RNCR but are also helping improve staffing at the nearby facilities, which were recently acquired over the past few months. While transforming acquisitions is an exciting part of Ensign's story, equally important is the enormous potential that can be unlocked as mature teams continue to innovate and meet the heightened clinical needs of their communities. Our second highlight comes from one of our more mature operations in the Phoenix, Arizona Metro area. Peoria Post-Acute & Rehabilitation is a large 179 bed skilled nursing facility and subacute campus that was acquired back in 2018. Over the past six years, CEO, Mark Glazier, and COO, Katherine Eliser together with their team have consistently improved clinical and financial results and become their community's facility of choice. But despite the high bar already set, during the quarter, the team at Peoria grew revenues by 20% and EBIT by 29% compared to the prior year quarter. Their formula is simple to understand but hard to execute. This starts with finding, developing and retaining incredible talent. This, in turn, allows the multidisciplinary team to commit to and relentlessly pursue quality, which is evident in Peoria's five-star rating from CMS for health inspections, quality measures and overall excellence. The strong clinical foundation has allowed Peoria to climb the acuity ladder and meet the needs of community physicians, health plans and hospitals. In fact, in addition to traditional long-term and skilled care, today, Peoria provides subacute services for patients needing ventilator care, advanced wound care and bedside dialysis. This combination of high acuity and exceptional quality has made Peoria one of only a few facilities to attain preferred provider status with every major hospital system in Arizona. The result has been consistently strong demand for services, which is evidenced in skilled mix increases of 44% for Medicare days and 13% for managed care days from Q3 of last year. To address growing demand a few years ago, the facility expanded its license count by 51 beds and opened a completely remodeled subacute wing and dialysis center. That new wing is now completely full and the overall campus averaged 96% occupancy over the course of quarter three, up 12 percentage points from the prior year quarter. Today, there is a long waiting list for admission to Peoria. Facilities like Peoria demonstrate the enormous continued upside in same-store operations that is being covered and access through the hard work, discipline and vision of empowered local leaders and the support and commitment of service center resource partners. And with that, I'll turn the time over to Suzanne Snapper, our CFO, for more detail on our financial results.

Thank you, Spencer, and good morning, everyone. Detailed financials for the quarter are contained in our 10-Q and press release filed yesterday. Some additional highlights for the quarter compared to the prior year quarter includes diluted earnings per share was $1.34, an increase of 20.7%. Adjusted diluted earnings per share was $1.39, an increase of 15.8%. Consolidated GAAP revenue and adjusted revenues were both $1.1 billion, an increase of 15%. GAAP net income was $78.4 million, an increase of 22.8%. Adjusted net income was $81.1 million, an increase of 17.7%. Other key metrics as of September 30, 2024, include cash and cash equivalents of $532.1 million and cash flow from operations of $246.7 million. The Company paid a quarterly cash dividend of $0.06 per share. We have a long history of paying dividends and have increased the annual dividend for 21 consecutive years. We also continued to delever our portfolio, achieving a record low lease adjusted net debt-to-EBITDA ratio of 1.88x. Our ability to delever even in periods of significant growth is particularly noteworthy and demonstrates our commitment to disciplined growth as well as our belief that we can continue to achieve sustainable growth in the long run. In addition, we currently have approximately $572 million of availability under our line of credit, which, when combined with cash on our balance sheet, gives us over $1 billion in dry powder for future investments. We also own 122 assets out with 117 are held by Standard Bearer and 98 of which are owned completely debt-free and are gaining significant value over time, adding even more liquidity to help with our future growth. As Barry mentioned, we are increasing and narrowing our annual 2024 earnings guidance to between $5.46 to $5.52 per diluted share. We are also raising our annual revenue guidance to between $4.25 billion to $4.26 billion. We have evaluated multiple scenarios and based upon the strength in our performance, the positive momentum we have seen in occupancy and skilled mix as well as the continued progress on agency management and other operational initiatives, we feel confident that we can achieve these results. Our updated 2024 guidance is based on diluted weighted average common shares outstanding of approximately $58.5 million, a tax rate of 25%, the inclusion of acquisitions closed and expected to close in 2024, the inclusion of management's expectations for Medicare and Medicaid reimbursement rates, net of provider tax and with the biggest exclusion coming from stock-based compensation. Additionally, other factors that could impact quarterly performance include variations in reimbursement systems, delays and changes in state budgets, seasonality in occupancy and skilled mix, the influence of the general economy and census and staffing, the short-term impact of acquisition activities, variations in insurance accruals and other factors. And with that, I'll turn it back over to Barry.

Thanks, Suzanne. As we wrap up, we'll end as we normally do by reiterating how incredibly honored and grateful we are to work alongside our facility leaders, field resources, clinical partners and service center team that are behind these record-setting results. We're in awe of their incredible industry-leading leadership as they focus on supporting our collective mission to dignify post-acute care in new and innovative ways for many generations to come. This commitment has blessed the lives of so many people, including our own. We're excited about our future and the opportunity to build an enduring legacy in the industry because of these amazing partners. We work alongside people who truly care about one another first, which is why we have the confidence that our model has staying power and will have a long-term impact for good. We have complete faith in them and the culture they have collectively built and continued to improve. And now, we'll turn it over to the Q&A portion of our call. Ellie, can you please instruct the listeners on the Q&A procedure?

Our first question comes from Tao Qiu from Macquarie. You may now ask your question.

So, the same-store occupancy is already above pre-pandemic levels. I think historically, the high point in terms of same-store occupancy was about 84%. Would you be able to, number one, give us an idea of the distribution and occupancy across the same-store portfolio? And second, could you quantify for us the potential upside from here given the strong demographic trend, your initiative to increase the high acuity patient base and the managed care momentum you alluded to earlier?

Yes, our highest occupancy level before COVID was 80.1%, and we are currently above that. We are very optimistic about our current occupancy, even though it is higher than we've experienced in the past. There is significant potential for growth. In our same-store portfolio, particularly in more mature operations, some have reached occupancy levels well into the 90% range over many years. We continue to see improvements in our established operations, which we highlight as examples. Regarding the skilled mix potential, there is substantial opportunity to increase acuity. This is fundamental to our model, as we aim to cater to our acute care partners by treating more complex patients. We are observing this trend as we transition into what appears to be a stable state with increasing acuity. Our local leaders remain closely connected to our hospital and managed care partners to understand their needs. As Spencer noted with the Peoria example, they adapt by introducing services like subacute care and bedside dialysis to meet these evolving demands. This alignment will persist. Furthermore, over the past several quarters since COVID, our skilled mix has been gradually increasing.

Got it. And Suzanne, could you give us an update on the timing and the demand expected from some of the state supplemental payments, quality payments, you're expecting in the next few months or quarters? And any information you could share in terms of the early discussions among your states on 2026 Medicaid rates?

Sure. I think one of the things to note for us is how we look at supplemental payments. As you guys know, we recognized the supplemental payment in our Medicaid rate. So, every quarter, we have supplemental payments embedded within the rates that we're disclosing. For every state that we're in, we actually estimate the amount of supplemental payment that we anticipate receiving for that particular quarter based upon the days and the programs and the quality of the performance of the programs that we have. And so, every quarter, every day, we actually have supplemental rates embedded in the Medicaid rate that we're disclosing. As you kind of look through changes in supplemental rates, and as we talked about last year, a lot of the FNAC dollars went away, a lot of those were replaced by a combination of raise in base rates as well as supplemental rates. For the most part, all of those supplemental programs went into effect with the last one really being cash, probably January of this year with California. And now it's just a matter of building through the normal course and the normal program. So, most states update their supplemental program consistent with our base rate program year. So, for example, in the current quarter, we had Texas; their program year is September 1st. That rate just updated, and so that went into effect in September. And yes, really good overall performance in all of those. No real surprises. I think sometimes the timing of those true-ups of the estimate of the accrual changes and when it changes, then we can take that in the current quarter.

Your next question comes from Ben Hendrix from RBC Capital Markets. Your line is now open.

I have a couple of questions related to mergers and acquisitions. It seems like the pace of small acquisitions has picked up a bit. First, can you share if there are any structural factors driving this acceleration? Is there a shift in sentiment among sellers? Is there anything, like minimum staffing or other factors, that's encouraging more transaction activity in the market? Any thoughts you can share on this?

Yes, I agree with all of that. This is Chad. I believe those points are accurate. Especially for smaller operators, it is increasingly challenging to adapt to the ongoing changes in the industry. One thing we can count on is that there will always be constant change. We are quite confident that minimum staffing won’t be an issue. However, we do hear from sellers expressing a sense of fatigue regarding the persistent challenges they face. Additionally, in a post-COVID environment, many are feeling that conditions have stabilized, and this might be an opportune time for them. Some may have planned to sell before the pandemic but postponed their decision, and now they feel ready to explore their options. We are witnessing a lot of this activity. It’s important to note that aggressive real estate deals have created a significant number of distressed opportunities, where some have overpaid and are now struggling to meet their rent obligations and seeking replacements. So, we are encountering a combination of these factors. As for our acquisition pace, we rely on our local teams in 30 markets across 14 states, allowing us to grow comfortably. As we scale, our growth capacity increases accordingly. While our growth percentage has remained steady, I anticipate that our ability to grow will expand as we continue to grow.

Got you. And just a follow-up on that. Is the profile of the acquisitions you're targeting changing at all? I know that you bought an LTAC a couple of quarters ago. And then you mentioned dialysis capabilities in Peoria, which we typically associate with higher-level care like LTAC. Also, you're expanding in markets where you already have a strong cluster presence. So, I'm wondering if maybe you're broadening the scope into higher acuity in terms of some of these opportunities?

That's a great question. I wouldn't say that we're targeting a different type of acquisition opportunity. The LTAC situation was a unique set of circumstances, and it's going well so far. In the future, if we determine that model is effective, it might be something to consider. For now, our targets remain similar to what they've been, with most efforts to move up the acuity chain occurring post-acquisition. Our first preference is to grow in the states where we currently operate, as that provides the easiest opportunities, and there's still plenty of room for that. However, we also see potential in many new markets. As I mentioned earlier, you can expect growth soon in newer markets where we've only been for a short time, as well as the addition of new states. Expanding our geographical footprint is definitely part of the deals we are considering.

Your next question comes from David MacDonald from Truist. Your line is now open.

A couple of questions. Just want to follow up on Ben's question a little deeper on M&A. And just ask with regards to Colorado specifically, obviously, a fair amount of activity there. Is there anything specific to the state that you guys would call out? Or is that just kind of how those fell? And then, I guess to follow up on the last answer that you gave, could you just provide an update on kind of Tennessee and how that's been going? Just any high-level thoughts there.

Yes. Our priority is always to grow in markets we are familiar with, and we have a strong track record, with Colorado being a prime example. We've been operating there for a while, supported by an excellent team of leaders, both in clinical roles and beyond. Recently, as we've expanded, we've split the market into two, which has given our leadership more capacity. This structural change has been vital for accommodating growth and reflects our typical approach in places like California, Texas, and Arizona. We leverage our team's strengths and reputation to seize opportunistic deal opportunities. We are now ready to pursue larger acquisitions in Colorado. There's nothing particularly unique about Colorado; it's simply a state we value that has presented some great opportunities. Regarding Tennessee, we are still relatively new there with three buildings, working to lay the groundwork for future growth. Tennessee is definitely one of the states we plan to expand in soon, although we haven't announced anything yet. We are excited about the progress we are making in Tennessee, with our leadership team being top-notch. Having three buildings is just the beginning, and as we continue to grow, we will be able to allocate more resources and strengthen our presence in that market, as well as in South Carolina and other nearby regions we are enthusiastic about.

And one thing I'd add to that, David, is we have a new market leader program that effectively prepares experienced leaders with a good track record in leading in other states that have an interest in expanding. We spent time with these leaders to prepare for entering new geographies that align with their interests and those of the organization. Combined with over 60 AITs in the pipeline, we are ready for growth in other states. While we won't jump in rapidly, we take a methodical approach, so don't be surprised if we enter some new geographies next year.

Okay. I understand you haven't shared anything for 2025 yet, but I’m curious if you could provide any early insights on the growth opportunities you foresee, as well as any potential challenges or advantages for 2025 that you might highlight. Any initial thoughts on 2025 would be appreciated.

I think my last comment addresses that. We are certainly excited about growth and acquisition opportunities. So much so that we have made sure that both from a support perspective at the service center and in building our leadership talent in the field, we are well-prepared to handle what we see as an attractive growth environment. That said, we cannot emphasize enough how pleased we are with the progress in almost every market across our portfolio, both in transitioning and same-store operations. There are strong growth fundamentals in all three of our segments, and our same-store operations continue to improve nicely. This demonstrates our ability to balance growth with solid organic opportunities, which are now working hand in hand. So, we feel good about our path for 2025. We do not want to be overly confident, as there are always areas for improvement, but we are excited about the future.

Question comes from Scott Fidel from Stephens. Your line is now open.

First question, just as we sort of round out the rest of the year. Just interested in any call-outs you want to make just around from modeling considerations for the fourth quarter, either from the P&L perspective. Obviously, you updated the new Medicare rate coming in for FY '25, but any other callouts? And then also from the cash flow perspective, any seasonal dynamics that you just want to highlight what model cash flows?

Yes. Great question, Scott. As you mentioned, we had that Medicare rate come in October 1, we will be slightly above what the net market basket rate increases due to the states that we're in. When we kind of look at the Medicaid rates, I think that we're pretty in a pretty steady state there based upon where we ended up with the Q3 rate going into Q4 just because not a lot of changes happening in Q4 and some of the supplementals that I talked to a little bit of supplemental payments, the ebbs and flows are about even between Q3 and Q4. So, that's a pretty steady state there. With regards to kind of margins and other things, we're looking really consistent as we model into Q4 as well. Obviously, we have a little bit of seasonality coming into it with higher skilled mix usually and continued growth in occupancy is usually in there as well. And then just running out the quarter, we had a lot of acquisitions at the end of Q3. So, those 12 acquisitions coming in for a full quarter in Q4. And then flipping to the cash flow, just a reminder that we do have a large payment going out for the settlement that we did earlier in the year. We anticipate that going out towards the beginning of Q4. And then everything else is pretty steady state.

Okay. Great. And then just my follow-up question. Interested if you wanted to provide your thoughts on some of the discussion that's out in the marketplace just around the trends around levels of insurer claims denials, both in sort of commercial managed care and in Medicare Advantage? Most of the commentary has been from the acute hospital side, and then the managed care companies have sort of been trading some barbs against the hospitals. So definitely would be interested just from your perspective, more on the post-acute and the skilled nursing side, how those trends have been in terms of engaging with the health insurers and sort of what you've been seeing in terms of prior authorization and claims denial type of interactions with them?

Yes. Look, I think the commentary you're hearing and the congressional reporting on this topic is fairly indicative of what the provider community at large generally deals with in that relationship and not to say it's all entirely negative. There's a healthy back and forth when you're working with managed care providers on coding and length of stay and rate levels and authorizations. Really, frankly, there's nothing new there, at least as far as how we work with our managed care partners. Our approach really has been to have a healthy embrace of that process and to make sure that we try to seek to understand what it is that they're looking for and how we kind of work within that structure and build trust so that when we are seeking changes to authorizations and levels and things like that, there's a trust that's built mostly with a foundation based in outcomes. I will tell you, sometimes it's really difficult to have those discussions because what they want and what we want for the patient are sometimes conflicting. That said, I think the spotlight that's kind of put on this lately is probably healthy. There probably isn't quite as much accountability for the managed care providers as there are for us as providers. It tends to be somewhat of a one-sided conversation sometimes, and that shouldn't always be the case. I think, look, the dialogue around this is healthy and helpful. I think accountability in the space is always healthy and helpful.

Thank you. That concludes our Q&A session. Thank you so much for attending today's call. You may now disconnect. Have a wonderful day.