Healthcare Services Group Inc Q1 FY2020 Earnings Call

Ladies and gentlemen, thank you for joining us today for the HCSG Q1 Earnings Call. Today's discussion will cover forward-looking statements regarding the business outlook of Healthcare Services Group, Inc. as defined by the Private Securities Litigation Reform Act of 1995. These statements often include words like believes, expects, anticipates, plans, will, goal, may, intends, assumes, or similar expressions. They reflect management's current expectations as of today’s call and carry certain risks and uncertainties. The forward-looking statements are based on our assumptions derived from industry experience and our interpretation of historical trends, current conditions, anticipated future developments, and other relevant factors. As with any projection or forecast, they are inherently subject to uncertainty and changes in conditions. Actual results for Healthcare Services Group, Inc. may differ significantly from the anticipated results within these forward-looking statements due to various factors, which are outlined in our earnings press release prior to this call and in our SEC filings, including the ongoing SEC investigation. There is no guarantee that the SEC or any regulatory body will refrain from further inquiries or actions that could lead to significant costs, penalties, or management distractions. The ongoing SEC investigation and related litigation may negatively impact or create variability in our financial results. We have no obligation to update or change the forward-looking statements due to new information, events, or otherwise. Currently, all participants are in listen-only mode. After the presentations, there will be a question-and-answer session. Thank you. I would now like to turn the conference over to our speaker today, Ted Wahl, President and CEO. Please proceed.

Okay, thank you, Jacqueline, and good morning, everyone. Matt McKee and I appreciate all of you joining us for today's conference call. Yesterday, we released our first quarter results and plan on filing our 10-Q by the end of the week. COVID-19 quickly became the dominant theme during the quarter. The pace at which the virus presented and altered operational protocol for our customers was unlike anything we've experienced. The industry responded with innovation and resolve, even if predictively the worst outcomes or scenarios made the headlines, and there certainly have been some heart-wrenching stories. Overall, we've been extremely impressed and proud at the level of planning, preparation, and execution that we've seen and been part of sector-wide. The countless behind-the-scenes examples of customers and their employees going above and beyond during these times is certainly far underreported, if not underappreciated altogether. The vast majority of long-term and post-acute care operators are providing exceptional care. And we've been right there with them at our absolute best delivering in the most extraordinary way. Our subject matter expertise in infection control and supply chain management has been rivaled only by the incredible dedication and commitment of our employees at every level. But especially our heroes working in the facilities, their passion, perseverance, and courage in the face of great adversity is nothing short of inspirational. And although it doesn't come close to approaching the level of gratitude that's appropriate, I once again like to thank our dedicated field-based employees for all that they're doing and tirelessly supporting our customers, and most importantly, helping to preserve the well-being of America's most vulnerable. Our highest priority remains ensuring the health and overall well-being of those employees. To that end, since the outset of the virus, we implemented enhanced compliance protocols for PPE, training programs and in-services, and operational policy and procedure. Additionally, many of our customers have instituted wage premiums and attendance bonuses for facility staff, which we've strongly encouraged and endorsed. Nearly all of our customers have included our employees in these programs, as they are every bit as much on the frontlines as the direct patient care staff. I'd also like to acknowledge the team here at our home office, who seamlessly transitioned to a remote work environment. Our IT team did yeoman's work in getting every employee set up with hardware, software, and ongoing technical support. We're not a company that has historically had any of our home office departments working remotely, much less all of them. These employees continue to deliver best-in-class support and service to our customers and field-based operators, and for that, we are grateful. Looking ahead, we'll continue to closely monitor the impact of COVID-19 on the industry as we work with our customers in managing this unique challenge. It's important to recall that prior to this crisis, industry fundamentals were showing signs of improvement from the positive tailwinds of favorable occupancy trends to patient-driven payment models and a 2.4% Medicare increase. And while quite a bit of uncertainty remains as to the impact of this virus on the industry, we've been encouraged by both the pace and significance of the enacted and proposed federal and state relief measures, which are providing meaningful financial support to an industry committed to combating this crisis. And although more needs to be done, and we remain cautiously optimistic that more will get done, longer-term this crisis certainly shines a light on just how crucial long-term care and post-acute care is to the healthcare continuum, and how important adequate funding and responsible reimbursement programs are to the financial health of the industry. In the coming months, we will continue our intensive operational focus on mitigating the effects of COVID-19 and remain proactive in delivering the best possible outcomes on all fronts. Above all, we are deeply committed to supporting our customers in the care of their patients and residents, while simultaneously continuing to protect company resources, including our most valued resource, our employees. So with those introductory comments, I'll turn the call over to Matt for a more detailed discussion on the quarter.

Thanks, Ted, and good morning, everyone. Before I review the first quarter results, I wanted to emphasize that in addition to our intensive operational focus on COVID-19 that Ted spoke about; we have and will continue to prioritize our strategic priorities. To that end, we will remain vigilant in ensuring contract integrity between us and our customers whether it relates to increased labor and supply costs for spending that falls outside typical scope of services or timely payments for services rendered, our customers commitment to both the operational and financial aspects of the partnership is necessary for the sustainability of our business relationships. Further, we'll continue to prudently manage a strong balance sheet with no near-term maturities that appropriately complements our cash position. We believe these priorities not only best position the company for long-term growth but are more relevant than ever in a COVID-19 environment. As far as the first quarter results, revenue for the quarter was $449.2 million with Dining & Nutrition and Housekeeping & Laundry segment revenues of $224.9 million and $224.3 million respectively. Net income for the quarter came in at $20.2 million, and earnings per share was $0.27 per share. Direct cost of services was reported at $387.2 million, or 86.2%. The temporary cost increase primarily relates to approximately $2 million of payroll for account managers who have transitioned out of a facility that we are no longer servicing, as well as costs related to starting up new business during the quarter. We expect this cost impact to decrease as account managers continue to be assigned to new facilities at which they're budgeted and the new business additions operate on budget. Overall, our goal remains to manage direct costs at 86% by the end of the year, excluding any COVID-19 related costs, temporary investment in management capacity, or any new business startup inefficiencies that may occur. Dining & Nutrition and Housekeeping & Laundry segment margins were 6.4% and 10.7% respectively. SG&A was reported at $30 million, or 6.7%. But after adjusting for the $5.7 million decrease in deferred compensation, actual SG&A was $35.7 million or 8%. And we expect SG&A to remain at that level in the near-term as those costs are largely fixed, but continue to target SG&A at 7.5% excluding any COVID-19 or SEC-related costs with the primary pathway to leverage that existing in the top-line growth. Investment and other income for the quarter was reported as a $5.2 million expense again after adjusting for the $5.7 million change in deferred compensation, actual investment income was around $500,000. We reported an effective tax rate of 24.6% for the quarter and expect our tax rate for 2020 to be in the 24% to 26% range including WOTC. To the balance sheet, at the end of the first quarter, we had net cash of approximately $105 million and a current ratio of nearly 3:1. Cash flow from operations for the quarter was $12.7 million, inclusive of the $4.6 million decrease in accrued payroll. And because we previously had called out that the quarter-to-quarter impact of the 2020 payroll accruals, we wanted to confirm that the actual Q1 payroll accrual was eight days, not the 17 days that we previously anticipated. The reason for that was that due to some of the COVID-19 related uncertainty regarding potential delays in direct deposit processing and FedEx delivery times, we decided to pre-fund the payroll at the end of the quarter to mitigate any risk of paycheck disruption for our employees. So whereas we would have typically funded payroll on the Wednesday in the last pay period of March, we funded it on that Tuesday. For the rest of the year, we're expecting payroll accruals of 10 days in Q2, four days in Q3, and 12 days in Q4. But of course, the payroll accrual only relates to timing and the impact ultimately washes out through the full-year. DSO for the quarter was reported at 61 days consistent with the previous quarter after adjusting for the implementation of the current expected credit loss, CECL as required by the Financial Accounting Standards Board effective January 1 of 2020. The new accounting standard required a transition from an incurred loss methodology to an expected loss methodology when evaluating potential credit loss primarily relating to the company's accounts and notes receivable. The implementation of CECL resulted in an initial one-time increase of $42.2 million to the company's allowance for doubtful accounts through a reduction of stockholders equity. As announced yesterday, the Board of Directors approved an increase in the dividend to $0.2025 per share, payable on June 26, 2020. Cash flows and cash balances supported it and with the dividend tax rate in place for the foreseeable future, the cash dividend program continues to be the most tax efficient way to get free cash flow and ultimately maximize return to the shareholders. This will mark the 68th consecutive cash dividend payments since the program was instituted in 2003. We're proud that it's now the 67th consecutive quarter we've increased the dividend payment over the previous quarter, that's now a 17-year period that's included four 3-for-2 stock splits. We recognize this dividend is important to our shareholders, and we've increased it in line with our long track record. And with those opening remarks, we'd like to now open the call up for questions.

Your first question comes from Andrew Wittmann from Baird. Please go ahead.

Great. Good morning, guys. I guess the first question is just a technical question. Given that we just have partial balance sheet, it looks like something on the liability side is up. Did you guys draw on your revolver in the quarter like a lot of companies did? Can you just maybe talk about how you handle balance sheet?

Yes, we didn't specifically draw at quarter-end per se during any quarter, Andy, we're carrying some level of debt, just a short cover short-term working capital needs in light of the timing of what is our largest outflow payroll and the timing of cash collections from our customers at any point in time. This quarter, we ended with $50 million whereas the most recent quarter we ended with $10 million. So we did, for two reasons. One, as you suggested to have some additional liquidity in light of COVID-19 and some of the uncertainty around financial institutions and how it would impact the banking system, at least in the short-term. Also, what Matt alluded to in his opening comments, just as an additional to have some additional liquidity on hand to pre-fund payroll for the employees.

Ted, that's helpful. And then I just want to talk a little bit more about the numerous funding provisions that have been put in for the benefit of your customer. Even some things like the payroll tax holiday that will benefit you. Then could you just talk about a little about some of the things that maybe talked about how your customers are being compensated through this challenging time for them to keep the liquidity in place so that they can get paid and serve you to do your services? I think just understanding the myriad of things going on right now would be helpful for everybody to hear.

Yes, there's certainly a lot of moving parts here. I think it's worth noting and I tried to cover some of this at a high-level in my opening remarks that since the beginning, I think the administration has certainly asked operators to continue to prioritize providing care to the residents and every understanding we have is that the intention of both the federal and state governments is that operators will be kept whole, they're not whole in real time, the intention should be and will be, as we understand it, that they'll be made whole relative to any loss revenues or spend that they may incur as a result of COVID-19. So obviously, ordinary reimbursement and funding sources remain in place, but certainly to deal with COVID-19 related costs, there's been a number of programs as you suggested to mitigate the financial impact. I think from a short-term cash flow perspective, certainly the $30 billion in grants that was part of the CARES Act, which was the 6.2% prior year Medicare fee-for-service billings had a beneficial impact immediate impact to the industry and was tilted towards the heavier Medicare providers along with the Accelerated Payment Program and the ability to withhold payroll taxes, both of them are loans, not grants. But again, what the industry needs is more grants and less loans. I think for the remainder of 2020 and into 2021 grants like the 2% sequestration holiday, which begins in May, through the end of the year, is going to be impactful the 6.2% increase in the federal medical assistance percentage match. Now that's still 50:50 in terms of which states are or are not participating, but that could change at any given moment. And then I think the underreported benefit for the industry is the new payment rule which proposes a 2.3% increase and leaves PDPM in place, which I think has been a solid reimbursement or responsible reimbursement design for the industry. All of those are have been and are positive immediate steps more certainly needs to be done. I think the one that we're most interested in and anxiously awaiting is on the Medicaid side. And that as far as we can understand is going to be more in the second tranche of funding that's going to come out. And that'll leave that'll further fortify some of the providers that were maybe left out, some of the more Medicaid-centric providers that were left out of the first 6.2% Medicare CMS grant.

And Andy, just the final component of your question related to Healthcare Services Group and our ability to defer payroll taxes, we do have that opportunity and we will be taking advantage of that. So that'll result in a deferral of approximately $40 million in payroll taxes, so half of that would be repaid by the end of 2021 and the other half at the end of 2022. So that'll have a positive cash flow impact this year with the offsets in 2021 and 2022. And as we sit here, there are no other government programs that we anticipate participating in or benefiting from directly most relevant for us, as Ted said, will be the programs grants and opportunities that are made available to our clients.

Super helpful, I had just one last question that I wanted to ask. It has to do with the fact that usually your businesses are very steady and predictable on your contract is X and you do X, but certainly with operations being affected in so many ways, there's probably times where your customers are going to ask you to go outside of that contract, and Ted I know you alluded to some of this. Can you just talk about the processes you have in place in the relationship and how it works with your customers when you have to go outside the written contract and how you get kind of compensated and if you get compensated for those things?

Yes, overall, I guess in this environment but really in any environment overall, our expectation is that for any additional spending related to staffing, wages, supplies that fall outside typical scope of services. And again in this environment COVID-19 related or otherwise is tracked and communicated to the customer as part of our standard supplemental billing process. The internal acronym for that is our BCR, which is outlined in all of our service agreements and very familiar to our customers. So we would expect inside or outside the COVID-19 environment that process to be followed.

Your next question comes from Sean Dodge from RBC Capital Markets. Your line is open.

Good morning, thank you. Can you provide more details about what’s occurring at the facility level? Ted and Matt mentioned in their prepared remarks that workers are generally still present and fulfilling their roles. Have you noticed an increase in turnover for those positions? Are job applications on the rise, considering the higher unemployment rates, or are people possibly steering clear of SNFs due to risk concerns? Also, are managers needing to step in more to assist with operations at the facility level?

Yes, it's a great question, Sean, and obviously is specifically related to our ability to fully staff the facilities that was something that we were exceptionally mindful of and have been monitoring very closely. To-date, staffing thankfully has not been an issue. I think there's really a few reasons for that. First off, our people deal with communicable illnesses all the time, it's just a part of the job whether it's MERS, C-DIF, Influenza, Scabies, and that's not to minimize the impact of Coronavirus, but there's confidence among our employees in our training and how well prepared and protected they are. So that's definitely been a significant component in the education and the confidence that they bring to work each and every day. The reality is that there's likely a part of them that sees the unemployment data, and a lot of people out of work and appreciate the reality of the current labor market and environment. And this, a cynic may question the validity of this. But among many of our employees, there's a significant emotional commitment to the patients and residents that they see on a daily basis and they want to be there to provide care and to help in any way. So, thankfully staffing has not been an issue and I guess more specifically, Sean, is kind of to our operational protocol, the fortunate part from where we sit is that all of the recommendations whether from CDC or CMS as to preventing and containing the spread of Coronavirus fall within the guidelines related to Influenza. So from a true operational perspective, we're very well equipped. The only real additional requirement would be additional personal protective equipment requirements, which in coordination with our clients, we're obviously providing to our employees to make sure that they're fully not only educated but protected as well.

Got it. That's great. And then maybe a little more directly on how all the industry releases is flowing through to you. Can you talk a little more about from a cash collection standpoint, you've had a few weeks impact in March from this, I guess moving most everyone to a weekly payment basis. The timing on that, hopefully is working out really well. You've had several looks now on how cash collection payments have trended for at least 60% of your base thus far in April. Has there been any meaningful or noticeable change so far in April?

No, and that would be our expectation, Sean. Look we're working proactively with our customers to understand exactly where they're at financially. But our customers very much depend on the services we provide. And our expectation is that full payments will continue to flow to HCSG, especially in light of the fact that the vast majority of our costs that we're incurring are payroll and payroll related, critical to the care and continuity of the facility operations. So just like the final aspect of a business, any given business or in this case provider would not fund would be their payroll, and we have the same expectation as it relates to us. That's further aided by the fact that we have over 60% of our customers paying us on a weekly basis, we're at a frequency greater than monthly. So again, plenty of conversations ongoing related to payment terms, but our expectation is that we're going to continue to be paid for services in a normal course of business type way.

Your next question comes from Ryan Daniels from William Blair. Your line is open.

Hey guys, this is Nick Spiekhout in for Ryan. And I guess to start-off, if you can provide a little color on the sales outlook right now with some push, I might imagine on one hand, it's a little bit difficult given the less travel and SNFs kind of preoccupied, but on the other hand, it kind of seems like the need for the expertise is up a little bit?

You're right, Nick. We never hope for situations like this and we want to be careful in how we communicate. Regarding the services we offer, particularly in nursing homes, departments like Housekeeping, Laundry, and Dining Services are crucial and not directly involved in infection control. This presents us with an opportunity to stand out from competitors or in-house managed models, enhancing our reputation. However, we are not currently focused on selling or onboarding new business; we don’t want to overextend ourselves operationally. Our sales team is mainly supporting existing clients while also engaging with potential customers. This situation allows us to refine our pipeline for new business opportunities for when we are ready to grow again. We previously expected growth to resume in the latter half of the year, and that timeline still holds, though it’s unlikely we will prioritize new business in the second quarter. The hope is that by mid-year we will have better clarity on the effects of the transition to PDPM and a clearer view of the industry landscape and growth prospects, even though COVID-19 will still be a concern.

Great, thanks. That's really helpful. And then I guess turning to margins. They look pretty close to kind of where you guys have been targeting. I was just wondering if the managers have been deployed actively this quarter and kind of what to expect going forward?

Matt discussed some of the margin profiles earlier. From the perspective of direct service costs, we still have a bit of management capacity excess that we started the year with. We have made progress in placing some of these managers where they are allocated in our budget, and the circumstances created by COVID-19 allowed us to deploy additional managers more effectively. We are currently carrying about $2 million in management costs, and we are committed to investing in this area, as hiring and developing management is a significant challenge for us. This is often the main factor impacting our growth, particularly given the heightened demand for our services during this time. We will continue to invest in this area and aim for direct costs to be around 86%. We will strive to manage these costs effectively, especially in light of the pandemic. Regarding SG&A, as mentioned earlier, we expect it to be around 8% at current levels. Once we start increasing our top-line revenue, we anticipate seeing better leverage on SG&A, as most of those costs are fixed.

Your next question comes from A.J. Rice from Credit Suisse. Your line is open.

Hi, everybody. Thanks. Maybe just to drill in that margin question a little bit more specifically, I mean, your dining margins is 6.4% or up 230 basis points sequentially and your housekeeping is 10.7% was up 120 basis points sequentially, so decent, big improvements. Actually, I know it bounces around a little bit from quarter-to-quarter, but was there anything unusual in there? I don't remember seasonality. But was there seasonality in there or anything that is particularly helping?

Building on the previous response, we had some success last quarter in utilizing excess management capacity, amounting to about $1 million that is now allocated within a budget at a specific facility, which significantly supported our dining margins. This was certainly a contributing factor. As we entered this year, one of our strategic priorities was to manage the base business, which involves a continuous focus on implementing systems, ensuring customer satisfaction, maintaining compliance, and sticking to our budget. Taking care of our customers and operations within the existing client base has definitely led to some improved performance. You mentioned seasonality; we usually don't highlight that because there are variations in each quarter that tend to balance out. However, in Q4, we do experience increased food-related expenses, particularly for Thanksgiving and Christmas, and some of those additional billings may shift to the following quarter. While this amounts to hundreds of thousands of dollars rather than millions, I believe it’s the combination of these factors that contributed to the improvement in dining margins specifically.

Yes. Regarding the nursing home customer base, I understand there is pressure on occupancy due to some issues in certain facilities and a lack of patient throughput from hospitals following orthopedic surgeries and similar procedures. Is your message that government funding has been adequate to mitigate this issue, resulting in stable credit quality among your customer base? I've noticed reports of around a six percentage point decline in nursing home occupancy rates. Are you observing similar trends? If government funding is a concern, is that correct?

I wouldn't describe the government funding as sufficient or adequate. However, it did provide a temporary solution for most providers, although more action is needed. We’re observing a 3% to 6% impact on occupancy rates, which is more pronounced in the post-acute segment than among long-term care residents. Hospital elective procedures are down, leading to fewer discharges. Many of our clients have both long-term residents and short-term rehab patients, which varies by facility. We anticipate further occupancy challenges in the near term as hospital procedures remain low, and some facilities are halting new admissions due to confirmed COVID cases, creating ongoing uncertainty. We strongly believe more action is necessary, especially as occupancy pressures affect us and COVID-19 continues to impact costs. This virus poses significant challenges for the industry, particularly in long-term and post-acute care settings, unless a vaccine is developed. The situation is complex, as the virus is highly contagious and most residents have underlying conditions. We acknowledge that the government has made strides so far, but we feel much more needs to be done in the coming months.

I have a final question. I understand that if there is extra demand for additional cleanings, that cost will be passed on to the customer. However, what happens if your hourly employees contract COVID and need to stay home for 14 days? I'm also wondering if you are facing challenges with workers who are reluctant to come in due to fear of the virus. Are you experiencing these issues, and are the clients responsible for covering the additional labor costs incurred when replacing someone who is in quarantine?

Understood your question, A.J. There's couple things that I mentioned in previous comments that apply, thankfully, we've to-date not had trouble staffing the facilities. That's obviously always a primary area of focus for us and especially during this environment and times, but we have fortunately been able to continue staffing the facilities. The reality is that there has not been much of a need for additional staffing beyond what's typically required. As I mentioned earlier, really from October through April, each and every year, it's influenza season. And while that may not resonate as much in the general U.S. population, it's certainly very impactful within the skilled nursing environment. So all of the CMS and CDC recommendations for containing and controlling the spread of Coronavirus fall within the guidelines related to Influenza. So, fortunately from an operational and a staffing perspective, as I say, nearly all of what's required from a Coronavirus containment perspective is already in place each and every year as it relates to containing Influenza. And the other component is that it runs a bit counterintuitive on the surface, but we've actually seen record numbers of applicants fully recognize that that's largely to do with the overall labor environment and unemployment scenario for the U.S. population. But that's further enabled us to keep the facilities fully staffed. That's imperative. So whether it's dealing with employees who are afraid to come to work or whether they or someone in their household ultimately becomes infected or if somebody needs to be home with children because of schools being closed, we're required to staff the facilities and fortunately, thus far we've been able to manage that with the existing employee population. And as I said, record numbers of applicants at both the line staff levels and also into the management training program.

Your next question comes from Mitra Ramgopal from Sidoti. Your line is open.

Yes. Hi, good morning. Pretty much of my questions have been answered. I just wanted to follow-up again in terms of some longer-term business opportunities as a result of the pandemic, my note focus been on the nursing homes and I was just wondering, some audit areas like assisted living et cetera. If you were also seeing some heightened interest in terms of customers, potential customers looking for you to maybe help them on that end?

That's not as you call out, Mitra, been a primary area of focus for us. But this is a pandemic that is certainly influencing all components of the healthcare continuum and certainly, senior living falls within that as well. So in certain markets, we've had more advanced conversation with prospective clients in senior living, but that really, as you would recall only relates to the dining opportunity for us. So where there's cross ownership, we may lend additional temporary operational hand from a disinfection perspective or to educate the employees in a senior living facility. So our long-term view as it relates to that opportunity remains unchanged, very appealing dining opportunity, but really from a Housekeeping & Laundry perspective which would be more relevant as far as COVID containment not exactly applicable. Yes.

Your next question comes from Jason Plagman from Jefferies. Your line is open.

Hey, good morning. Just wondered if you could expand a little bit on your outlook for sequential revenue growth for the next few quarters, it sounded like you're thinking revenue is close to flat sequentially maybe for the next quarter or two, and then you might be more comfortable taking on new business towards the end of the year or into 2021. Is that a fair characterization? Or is how are you thinking about kind of the trajectory for the next two to four quarters?

I wouldn't describe it that way. I would say we are very focused on minimizing the impact of COVID-19, and we will continue to do so throughout the quarter. At the same time, we're concentrating on our strategic priorities that we outlined at the start of the year, which include managing our core business, placing our managers in new roles, and maintaining a disciplined approach to growth and credit decisions. I believe Matt mentioned this as well, and I want to emphasize that by the end of the second quarter, we expect to have clearer insights regarding our comfort level in either increasing growth or being more selective with the available opportunities. In short, we anticipate gaining more clarity in the next couple of months compared to our current situation, as the trajectory of COVID-19 both nationally and globally, particularly within our industry, still carries many uncertainties.

Okay, that makes sense. Regarding the vetting of your potential new clients, have there been any changes in your approach due to the disruptions caused by COVID, particularly concerning short-term impacts on occupancy, expenses for your clients, and their overall financial health?

It will continue to be a holistic evaluation of all the criteria you mentioned and obviously qualitatively, we would consider both. Quantitatively we would consider the impact of COVID-19 and then qualitatively we would impact the potential uncertainty in any given opportunity.

There are no further questions at this time. I will now turn the call back over to Ted Wahl, President and CEO.

Terrific. Thank you, Jacqueline. In the coming months, we will continue our efforts to mitigate the effects of COVID-19 while delivering the best possible outcomes for all of our stakeholders. We will continue to prioritize managing the base business, ensuring that our managers are assigned to exciting new opportunities and maintaining a disciplined view on growth and credit-related decisions. Above all, we're deeply committed to supporting our customers in the care of their patients and residents, while simultaneously prioritizing the health and safety of our employees and protecting company resources. So on behalf of all of us at HCSG, Matt and I would like to thank Jacqueline for hosting the call today. And thank you again, everyone for participating.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.