Good day and thank you for standing by. Welcome to the UHS 2025 Conference Call here. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would like to now hand the conference over today's speaker, Steve Filton, Executive Vice President and Chief Financial Officer. Please go ahead.

Good morning. Thank you. Marc Miller is also joining us this morning. We both welcome you to this review of Universal Health Services results for the first quarter ended March 31, 2025. During the conference call, we'll be using words such as believes, expects, anticipates, estimates and similar words that represent forecasts, projections and forward-looking statements. For anyone not familiar with the risks and uncertainties inherent in these forward-looking statements, I recommend the careful reading of the section on Risk Factors and forward-looking statements and risk factors in our Form 10-K for the year ended December 31, 2024. We would like to highlight just a couple of developments and business trends before opening the call up to questions. As discussed in our press release last night, the company reported net income attributable to UHS per diluted share of $4.80 for the first quarter of 2025. After adjusting for the impact of the items reflected on the supplemental schedule, as included with the press release, our adjusted net income attributable to UHS per diluted share was $4.84 for the quarter ended March 31, 2025. During the first quarter of 2025, on a same facility basis, adjusted admissions to our acute care hospitals increased 2.4% over the first quarter of the prior year. Same facility net revenues in our acute care hospital segment increased by 5.0% during the first quarter of 2025 as compared to last year's first quarter after excluding the impact of our insurance subsidiary. Meanwhile, operating expenses continued to be well managed. Other operating expenses on a same facility basis increased by 2.6% over last year's first quarter after excluding the impact of our insurance subsidiary. For the first quarter of 2025, our solid acute care revenues, combined with effective expense controls, resulted in a 21% increase in EBITDA after excluding the impact of Medicaid supplemental payments. During the first quarter of 2025, same-facility net revenues at our behavioral health hospitals increased by 5.5%, driven by a 5.8% increase in revenue per adjusted day. Adjusted patient days were relatively flat compared to the prior year quarter. The year-over-year patient day growth comparison was negatively impacted by the extra leap day in 2024 and challenging winter weather conditions experienced this year, early in the first quarter in certain markets. We did experience a reacceleration of patient day growth in March. Our cash generated from operating activities decreased from $396 million during the first quarter of 2024 to $360 million this year due in part to delays in receipt of funds in connection with certain Medicaid supplemental payments in various states. We did receive $82 million of payments related to the Nevada supplemental program in April that were related to revenues recorded in the first quarter. In the first quarter of 2025, we spent $239 million on capital expenditures and acquired 1 million of our own shares at a cost of approximately $181 million. Since January 2019, we have repurchased approximately 30.3 million shares, representing 33% of our shares outstanding as of that date. As of March 31, 2025, we had $1.02 billion of aggregate available borrowing capacity pursuant to our $1.3 billion revolving credit facility. I will now turn the call over to Marc Miller, President and CEO, for closing comments.

Thank you, Steve. We are pleased with our first quarter operating results which on a consolidated basis exceeded our internal expectations. We were particularly encouraged by the control of our operating expenses in both business segments. Our first quarter operating results exclude any supplemental Medicaid revenues in Tennessee and the District of Columbia, pending CMS approval of these new programs. For programs that were originally approved in previous years, we have continued to record those revenues under the assumption that programs will be reapproved. As these programs have been a recent focal point, I believe it is worth reminding people that these are federally authorized and state-approved programs in place for many years and they are designed to allow providers who have been historically underpaid by Medicaid to provide quality care to over 70 million Medicaid recipients nationally. Even where these programs exist, our net Medicaid reimbursement generally remains below both average commercial and Medicare reimbursement. West Henderson Hospital in Las Vegas opened in late 2024 and posted a modestly positive EBITDA in the first quarter. Cedar Hill Regional Medical Center in Washington, D.C. opened recently and has experienced strong demand for its emergency room services from the outset. While we acknowledge a great deal of uncertainty in our external operating environment, we feel confident in our underlying businesses and based on current reimbursement and operating cost levels reiterate our full year earnings guidance. We're pleased to answer questions at this time.

Our first question comes from the line of Justin Lake of Wolfe Research.

I wanted to focus on the behavioral side, Steve. I know you talked about leap year; you talked about weather, especially earlier in the year. Maybe you could give us an idea of what you saw in March, given weather would have been past you, and the leap year impact would have been past you. So how did March volume, maybe even early April volume look? And any update on the full year guidance in terms of your thoughts around behavioral volume we should be assuming for the year?

Our full year guidance presented in late February anticipated a behavioral patient day revenue growth of 2.5% to 3%. We still consider this a reasonable target and it remains our goal for the guidance. We improved from the flat or potentially negative levels we experienced in January and February. While I didn't reach the 2.5% to 3% target in March, I believe it reflected how weather impacted our volumes during January and February. It's difficult to assess April due to Easter and Spring break, but recent volumes give us confidence that achieving the 2.5% to 3% growth for the full year is still possible.

Got it. And then maybe, Marc, you could just touch on the DPP side; it was good to hear that things kind of started up again in Nevada. Any other states that you're kind of focused on in terms of where you're expecting to hear soon and any kind of updates beyond Nevada?

Yes, I just think it's Washington, D.C. and Tennessee.

In both instances, Tennessee and Washington, D.C. are communicating to their hospital communities that they still anticipate approval. This is the feedback they are receiving from CMS. While the timing remains uncertain, we are encouraged that, after what appeared to be a complete halt on new approvals under the previous administration, several programs have been reapproved, and there have even been a couple of new approvals, none of which impact us directly. It seems that the approval process has been revived, which we see as a positive development. Most importantly for us, the Nevada program was reapproved, and as I mentioned earlier, we received payment for the first quarter revenues in April.

Our next question comes from the line of Sarah James of Cantor Fitzgerald.

I just wanted to follow-up on Justin's question a little bit. So if you're still at 2.5% to 3% on behavioral volumes for the year, I think that implies a step up for the rest of the year that is above the guide range or above the high end of the guide range? Is it the right way to think about it?

Yes. Mathematically, I think that's correct, Sarah.

Okay, got it. And then the Nevada DPP that came in from the quarter, how many months was that related to? Because I think it was approved in April. So should we think about that as four months? And if so, are you running a little bit ahead on your DPP guide for the year?

Yes. So no, that was just the first quarter payment; that $82 million, I will remind people is the gross payment that we get from the state. It's not net of our provider taxes. We've continued to pay the taxes on a regular basis. So we paid our taxes in Nevada in the first quarter. That growth amount that we received, the $82 million is in April related to the first quarter. But I think to your confusion, as you're thinking, if you annualize that $82 million, it's a lot more than the net benefit that we described and it's because it doesn't include the provider tax element.

Our next question comes from the line of Andrew Mok of Barclays.

Question on Tariff. Can you help us understand what actions you're taking now to prepare for potential tariffs? And what your GPO has communicated to you thus far?

Yes. To begin with, one of our peers mentioned that they estimate around 60% of their supply chain purchases are sourced from the U.S., Canada, and Mexico, which are currently not facing tariffs. An additional 15% pertains to pharmaceuticals, also not subject to tariffs at this time. Based on our estimates, we believe our percentages are similar, with approximately 75% of our supply chain purchases shielded from tariffs. We are addressing this situation by observing that some vendors with fixed contracts have started adding fees or other charges on their invoices, which we have been disregarding as they don't align with our contracts. We are keeping an eye on vendors who indicate any potential contract cancellations or issues in product availability, although we haven’t received any such feedback yet. We are preparing for alternative sourcing and pricing strategies if necessary, but presently, we don’t perceive significant pressure because a substantial portion of our supplies remains unaffected by tariffs.

Got it. And maybe just a follow-up on the behavioral side. Maybe weather aside, are you seeing any changes in your behavioral referral patterns or willingness of JV partners to work with UHS?

No, I don't think so. I know you said weather aside but I would just make the comment about weather. And we talked about this, I think, on the year-end earnings call, the weather that we're talking about winter weather was in places that I think don't normally experience winter weather and more in the central part of the country, Virginia, Kentucky, Tennessee, Arkansas and the challenge, I think, is twofold for us from a winter weather perspective in those places. Number one, schools are closed. And I think I remember that, I believe in February in a number of our Virginia facilities, schools were supposed to be open, I think, for 19 days that month and we're only open for 11. And so that has a big impact on our child and adolescent population and admissions in our child and adolescent population. And the other thing that the weather impacts is our outpatient programs. Obviously, from an inpatient perspective, we may lose admissions over a two to three or four-day period if the weather is bad but we obviously continue to treat the patients that we have. But our outpatient program is pretty much closed down during those days where it's difficult for people to travel and they can't clear the roads, etcetera. So we really see an outsized impact on our outpatient and our child and adolescent business when we experience those winter conditions. Other than that, no. Regarding your question about are we seeing really any sort of structural changes in our referral patterns or willingness of referral sources to send those patients? The answer to that is no, which is really why I think ultimately, we remain confident that we should be able to reach that 2.5%, 3% target that we set originally.

So our next question comes from the line of Ben Hendrix of RBC Capital Markets.

Following up on the previous question about rate growth, which is strong at 7.2%, I'm curious if there are dynamics related to payer mix with redetermination. I'd also like to hear your observations on changes in payer mix or developments in case mix within the behavioral sector that might be contributing to this rate growth. Additionally, when do you anticipate this rate growth will stabilize to a longer-term steady-state rate?

Our revenue per adjusted day on a same-store basis was 5.8%. Our guidance for the year was in the 4% to 5% range, indicating a moderation of the rates we've experienced in recent years. This moderation isn't primarily due to payer mix changes or redetermination impacts, but rather stems from generally better contractual pricing from our managed Medicaid payers. While this pricing has been stabilizing over the years, it has become less impactful as we start to anniversary these prices. Additionally, as capacity in the behavioral industry increases, our leverage over payers diminishes, particularly in inpatient settings, where capacity is scarce. We have noted a trend of strong behavioral pricing for some time, and while it has moderated, this decline is happening more gradually than anticipated in our guidance. We expect this trend to continue. As volumes recover throughout the year, we hope that if we fall short of the 2.5% to 3% target for any period, our pricing will compensate for that shortfall.

Our next question comes from the line of Stephen Baxter of Wells Fargo.

Just wanted to ask more of a philosophical question on the Medicaid supplemental payment programs. Obviously, we don't know what the ultimate outcome is going to be from a legislative regulatory point of view here but it does seem like we could be living in a world where there's like a significant restriction at a minimum in your ability to grow this economic earnings stream going forward. I know that this has only served to kind of improve your Medicaid reimbursement to maybe more sustainable levels versus actually make money. But as we think about your P&L leverage to supplemental programs, I mean, how should we think about a world where maybe that is a more fixed stream going forward, your ability as a company to still kind of deliver the type of same-store revenue and adjusted EBITDA growth rates that you've targeted historically?

Yes, I believe we are already operating in that environment. In our 10-K, we provide detailed information on Medicaid supplemental payments. Our projected Medicaid supplemental payments for 2025 are expected to remain relatively flat compared to 2024. Therefore, we are not relying on growth in those programs. It is also possible that we will experience some decline in those supplemental payments or in other Medicaid reimbursements. This suggests that the way we will grow our behavioral business in the medium to long term will be through increased volume. That's why we recognize the importance of achieving our target of 2.5% to 3% in patient day growth, as we anticipate that our Medicaid rates will likely be affected by legislative changes.

Our next question comes from the line of Benjamin Rossi of JPMorgan.

So how would you describe, I guess, patient utilization activity during 1Q across acute. And then when parsing those volumes up by payer, how do you frame growth between maybe your traditional managed care book versus your ACA exchange-related volumes? Just curious if you've seen any variation at the regional level for states where enrollment has been faster like Texas or Florida versus the state like Nevada, where it might be less pronounced?

Yes, regarding your question about exchange utilization, one of our peers mentioned that their exchange volumes grew by about 20% in the first quarter compared to the same period last year. We experienced a similar increase. Although these numbers are small on an absolute basis, for us, patients with exchange coverage account for approximately 6% of our adjusted admissions in the acute care space, which is a slight uptick from previous figures. If there is any shift in utilization, it seems that Medicaid growth is not keeping pace, potentially driving the increase in exchange coverage. Overall, I don't believe that the patient mix is substantially impacting our pricing or profitability.

Got it. And then just as a clarification. On the Medicaid taxes, you said you received the payments in April. Did your 1Q other operating expenses contain those related to Nevada Medicaid taxes? Or is that a 2Q item?

No. The point that I was trying to make to Sarah before was we continue to pay the provider taxes on a regular basis. So our first quarter provider taxes were in our numbers even though, again, the revenue was in there as well. It's just that the cash was not.

So our next question comes from the line of Joshua Raskin of Nephron Research.

Just back on the behavior. I'm curious on demand trends outside of weather and some of these other temporal effects. Are you seeing any differences in demand by acuity sort of demand for specific services? And then just a quick follow-up on West Henderson. I know it's very early there but I'm just curious how you're seeing competitive dynamics impacted in the market and maybe just a comment on your other facilities there as well.

I'll address the West Henderson question first and then revisit behavioral aspects. We are very pleased with the results from West Henderson, especially since it has only completed its first full quarter and already achieved positive EBITDA, which is remarkable. There is some minor cannibalization from our existing hospitals, which we discussed during our year-end call. This has slightly affected our same-store adjusted admission metrics and profitability, though not by a large margin. Overall, we are satisfied. The reason we invested in West Henderson is our belief that it is in a growing part of the Las Vegas market, and the demand has been evident. We expect West Henderson to continue to grow quickly, and we are encouraged by its initial results. Regarding your questions about behavioral health and whether demand has changed, the answer is no. We have consistently stated that demand, as measured by industry-wide data across various diagnoses and services, remains strong. Our own internal data, including call volumes and online inquiries, also shows significant ongoing interest. The challenges we face include whether we have the physical capacity and workforce to meet this demand. While these conditions have improved in recent years, they can still be tough in some areas. We recognize increased competition in certain markets, but I believe that due to sustained demand and a more stabilized labor market, we can still achieve our target of 2.5% to 3% patient day growth.

So our next question comes from the line of Craig Hettenbach from Morgan Stanley.

On the acute business, can you talk about any trends that set out just from an acuity perspective? And then outside of volume growth, any levers there that you're looking to potentially pull to continue to improve margins in that segment?

Yes. So from an acuity perspective, I would say acuity was muted a little bit in Q1 by the busier flu season. So we had on a sort of a relative percentage basis, more medical patients than surgical or procedural patients in Q1 because of the busy flu season. I think that will normalize as the year goes on. But our acuity as measured by our CMI actually was still relatively strong in Q1 which I think suggests that the procedural business that we did have was still pretty solid and relatively high acuity business. And obviously, I think after the first quarter, even in March, we saw flu volumes declined dramatically as you would expect. And so I think as the year goes on, it's fair to expect acuity will grow a little bit.

Got it. And then just as a follow-up on just capital deployment, updated thoughts on just kind of CapEx plans for this year versus buybacks and how you're approaching that?

Yes. I mean, our original guidance was for $800 million to $1 billion of CapEx. We had $240 million in Q1, a little bit high in Q1 because we still had some costs flowing over from West Henderson. We still have some other whole hospital projects ongoing. So yes, I think we're on track to be in that range as we suggested. I think our share repurchase guidance for the year was in the $600 million range. We had $180 million in the first quarter. So we're tracking a little bit above that; we'll see. But I think as long as there continues to be some level of uncertainty and softness in the market and our share price, I suspect we'll continue to be an active acquirer of our shares.

Our next question comes from the line of Matthew Gillmor of KeyBanc Capital Markets.

I wanted to ask about the expense management topic. Any areas of particular outperformance to call out and sort of how you're feeling about the sustainability of that? And I was particularly interested in the premium labor costs. I think they've been running $60 million per quarter. Just kind of curious whether that's running through the early part of '25?

Yes. So as to premium pay, premium pay in the quarter was, I think, $63 million which I think as you suggest Matthew, is we've been running in the low 60s. So pretty consistent. Yes, I think the operating expense controls which really have been present now for several quarters are really a reflection of a few different things. I think as the labor markets have settled out, obviously, premium pay, use of temporary labor has declined and reached kind of a steadier level. I think wage inflation has certainly decelerated from the heights that it had reached during the pandemic. That's certainly helpful. It limits the amount of sign-on bonuses and recruitment bonuses and things that we have to pay in order to attract talent. I also think and we've talked about this on previous calls, we've been more actively managing productivity and appropriate staffing levels, etcetera, post-pandemic because there isn't nearly as much competition for labor. It's still a pretty tight labor market but not nearly as tight as it was at the height of the pandemic. So it's allowed us to go back to some of the blocking and tackling mechanisms that I think we paused during the pandemic because there was such a lack of staff. So I think again, our operating expenses in both business segments really look positive. And I think they should remain so. Obviously, we've talked about some of these exogenous pressures, mainly tariffs and obviously, that's difficult for us to predict. But I think in terms of the things we can control, we think that these expense levels and expense controls are certainly sustainable.

And then, Steve, a quick follow-up on the Medicaid supplementals. We all appreciate the level of disclosure you provide. In terms of the expectation for 2025, are you still expecting $997 million from the last disclosure? Or is that number changed at all?

Yes. So we're still compiling that for our first quarter 10-Q but I would suggest that, that number has not changed in any material way.

So our next question comes from the line of Michael Ha of Baird.

I just want to follow-up on Sarah's question on behavioral health volume cadence for the rest of the year. It is a pretty big implied step up. So I was wondering if you could elaborate more on cadence, quarterly cadence. Are we talking an immediate large step-up in 2Q or is something more modest and then larger step-ups in 3Q, 4Q? And maybe specifically as it relates to the three big headwinds that impacted volumes last year, how much of that is still redeterminations, labor constraints, those handful of sites. What's the latest update on those? I presume maybe labor is still ongoing but have we now fully stepped over the other two headwinds. Trying to get a better sense on just falling recovery over the balance of the year.

Yes, Michael, I believe you've already addressed your own question. Among the three issues we've discussed historically, labor is the only one that continues to be a challenge. Although labor shortages have improved since the peak of the pandemic, the job market remains tight. We're still competing for various staffing levels, such as nurses, therapists, and mental health technicians, which can be problematic in certain regions. This issue does place some limits on our volumes, but I don't think it's getting worse; we are making progress. I also want to point out that a significant factor affecting Q1 is the leap day comparison, which has an impact of just over 100 basis points. This effect will lessen throughout the year. We anticipate that our original guidance of 2.5% to 3% for the entire year accounts for the leap day. As time goes on, this comparison should ease. While I won't predict where we might end up in Q2, I want to reiterate that we believe we can achieve our initial guidance of 2.5% to 3% for the year, acknowledging that this will require stronger performance than what we experienced in Q1.

And just one more question about California and Florida proposal. I think they already submitted filed the CMS to raise the DPP payments to average commercial rates. Just any update there? I know historically, I think about six months for approval but there might have been a bit of a moratorium just given the new administration. But also, Steve, you mentioned a lot of DPP programs that were paused are now being resurrected. So curious on those two. And also maybe more broadly, given this administration's focus on budget, Medicaid, provider taxes, whether you think future proposals to raise DPP to average commercial rates might have maybe less likelihood of being passed over the next few years.

Yes. So it feels, Michael, like this is really kind of a two-track process at the moment in that there are new programs being submitted. There are new programs that have been submitted in our case, Tennessee, or in Tennessee and D.C. that are being considered by CMS. And the impression that we have, again, as your question alluded to, is that there was sort of a pause as the administration changed and the policymakers and CMS changed. But it feels like the administrative process of reviewing and approving these programs has sort of been restarted. And again, forget about what we're saying, I think what the states who have submitted these programs are saying is that they expect that they're going to go through the normal process, be approved in the normal course, etcetera. That's separate and apart from any legislative action that the House and Senate may take to limit these programs in the future, etcetera. So again, I think we're viewing this separately. We think the Tennessee and D.C. programs based on the feedback we get from those respective governments are likely to be approved at some point. I think it's difficult to predict. California and Florida have just been submitted. I think it's even more difficult to predict what the timing of that would be. But that, I think, is separate and part then from whatever legislative action may impact those supplemental programs going forward.

So our next question comes from the line of Pito Chickering of Deutsche Bank.

I guess the first one here is can you guys sort of talk about the settlement of the Pavilion case and remind us how much commercial insurance you have for the lawsuits and what is the timing of the Cumberland case?

Yes. As we mentioned in the press release, we have a tentative settlement in the Pavilion case, which is subject to confidentiality and requires court approval, likely coming next month. Once we receive that approval in our next filing, we'll reveal the remaining insurance amount. At this point, I can say there will still be substantial commercial insurance remaining for 2020 if this settlement is approved, which is significant since the Cumberland cases you mentioned are also from 2020. We'll provide those details once the court approves the settlement. Regarding the timing of the Cumberland cases, three of them have been adjudicated, but they are progressing slowly. We haven't received rulings on the post-trial motions yet, and none of the other cases have been tried, so the process is moving quite slowly.

All right. Great. And then, a follow-up here. The acute hospital segment saw 110 basis point improvement in supply costs. How much of that leverage is due to just the flu and lower surgical volumes? How much is just actually due to better supply management? And how should we be thinking about supply leverage in 2025 as surgical volumes come back?

Yes. I mean, I think our original guidance for the year presumed a relatively modest inflation rate for supply expense increases in the sort of 2.5%, 3%, 3.5% range. We did obviously better than that in Q1. I think some of that, as your question suggests, is that mix of patients, more medical, more respiratory, less procedural. So that by its nature, medical cases tend to have less of a supply component than procedural cases. I would think for the year, again, something in that sort of modest inflationary expense is the way that I would think about supply expense growth, although to be fair to both our operators and our supply chain professionals. I think we're doing a good job from a contractual pricing standpoint and product replacements to cheaper products, etcetera. So, some of that positive supply results are from active management on our part.

So our next question comes from the line of Ryan Langston of TD Cowen.

Can you tell us how physician fee expense growth ended up in the first quarter, both from a year-over-year perspective and versus your internal expectations?

So we said in our original guidance that professional fees broadly and then the physician expenses that you're talking about will simply increase by, again, an expected inflation rate, 5%, something like that. And that is certainly the way that we're tracking. We see some amount of pressure, meaning requests from physicians for either accelerated or increased or new fees. But I think we're dealing with that and our general expectation is that we should be able to control those professional fees and physician expense to or limit it to just some overall inflationary increase.

Got it. And then just lastly, I'm sorry if I missed it but can you parse out the impact from the higher flu and respiratory season we saw in the first quarter?

Yes, we estimate that the incremental profits from the excess flu cases this year compared to last year were probably around $7 million to $8 million. However, it's difficult to quantify any crowd-out effects. Procedural cases seemed to be slightly softer, similar to observations from our peers, but it's challenging to determine if this was directly related to the flu season. Historically, we maintain that the flu has a relatively minor impact on our results, whether it's a busy season or not, and this quarter was no exception. Additionally, while flu activity was generally much higher nationwide, Nevada experienced a light flu season, so we didn't see much impact in our largest acute care market.

Our next question comes from the line of Joanna Gajuk of Bank of America Securities.

So maybe just switching gears a little bit to pricing. So first, can you talk about commercial rate updates you're seeing, I guess, this year for future, have you noticed any change in managed care contracting terms? And maybe any change from plans in terms of just how aggressive they are or how willing they are to respond to your request given they see higher costs?

Yes. So first of all, again, I'll just remind everybody that our overall guidance for our Acute Care segment this year was 5% to 6% same-store revenue growth split pretty evenly between price and volume, so 2.5% to 3% price, 2.5% to 3% volume. That 2.5% to 3% price assumption includes a commercial price assumption, probably the 4% to 5% range. Again, I think we're tracking those numbers. I would describe the relationship with the managed care companies as always difficult and a slog, whether that's contractual pricing negotiations or the day-to-day processing of claims and then denials and denials, appeals, etcetera. We're very focused on that. I think we've improved the number of our own internal revenue cycle functions to deal with some of the more aggressive behavior on the part of payers. But again, I think our first quarter results would suggest that we're not seeing any meaningful impact from any more aggressive behavior on the part of the payers.

And if I may, in your psych segment, can we talk about pricing there too? So you alluded to the idea that you do think there could be some changes to Medicaid stock funding coming from Congress. So with that uncertainty, are states behaving differently when it comes to their budgeting process when it comes to rates for psych?

I don't think so. The reality is that providers, payers, and government entities are all navigating an uncertain environment. Most of us are acting based on the best information we have, whether it's regarding contract negotiations or the rates set by states. If that information changes, so might our behavior. However, it's challenging for anyone in this field to predict the exact changes and respond to them at this point. We are mainly dealing with the information currently available, and if it changes, we will adjust our behavior accordingly.

If I may squeeze a very last one, sorry if I missed it. Just to confirm, in your guidance, you still do not assume Tennessee and D.C. DPP approvals, correct?

Right. So our guidance did not assume anything for Tennessee or D.C. and our results do not include anything for D.C. or Tennessee.

Our next question comes from the line of A.J. Rice of UBS.

I know you've been asked a lot about supplemental payments. Recently, a peer mentioned that some states might be adjusting payment rates under the traditional Medicaid formula because they have supplemental payment programs that are balancing things out, and overall, the industry feels stable. Are you noticing any states where you're operating making changes to the base payment rate? This could support the industry's perspective that it's important to consider the overall situation. I'm curious if you've observed any of these changes.

Yes, A.J., I don't know that we've seen that in any sort of material way. It certainly could be on the horizon but we have not seen that in any really impactful way.

I appreciate your earlier insights regarding the potential impact of losing the enhanced subsidies on the exchange, which you estimated at $40 million to $50 million. I assume there are no updates on that since there hasn't been any new information. However, there's considerable discussion about the supplemental payments and the possibility of reducing the provider tax limit from 6% to 5%. Have you considered this? What are your thoughts on the implications of such a change?

Yes, we certainly have looked at it, A.J. I don't know that any of the companies as far as I know have really estimated that impact because in part, it's a very detailed calculation. The states are not always forthcoming in terms of all the data that we would need to make the calculation. So again, I think everybody is kind of reserving estimates until we see what the actual move might be. But yes, I mean we're certainly going through those calculations and doing our best to try and understand what the impacts could be. So, I have just one quick housekeeping item. We omitted our gross revenue disclosure in the press release last night; I think we were under the impression that nobody was really using that metric. I have been disabused of that notion over the last 12 hours, a number of people have asked for it. So we filed an 8-K this morning as we normally do. Normally, it would just be a duplicate of the press release but we've included in that the gross revenue information. So people who are seeking that gross revenue data can find it in the 8-K that we filed today. Other than that, we'd just like to thank everybody for their time and look forward to speaking to everybody next quarter.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.