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New words:
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Financial report summary
?Risks
- Our quality of care and CMS quality reporting requirements could adversely affect the Medicare reimbursement we receive.
- We face periodic and routine reviews, audits, and investigations under our contracts with federal and state government agencies and private payors, and these audits could have adverse findings that may negatively impact our business.
- Efforts to reduce payments to healthcare providers undertaken by third-party payors, conveners, and referral sources could adversely affect our revenues and profitability.
- The administration of billings and collections is complex, and our estimates of accounts receivable require us to exercise judgment. Delays in reimbursement due to administrative issues or inadequate reserve estimates may cause financial reporting issues or liquidity problems.
- Medicare reimbursement of hospice services is subject to caps, which may result in our having to reimburse Medicare for certain amounts previously paid to us.
- The ongoing evolution of the healthcare delivery system, including alternative payment models and value-based purchasing initiatives, may significantly affect our business and results of operations.
- Other legislative and regulatory initiatives and changes affecting the industry could adversely affect our business and results of operations.
- Compliance with the extensive laws and government regulations applicable to healthcare providers requires substantial time, effort, and expense, and if we fail to comply with them, we could suffer penalties or be required to make significant changes to our operations.
- Federal regulation may impair our ability to open new agencies or consummate acquisitions.
- The proper function, availability, and security of our information systems are critical to our business, and failure to maintain them or to protect our data against unauthorized access could have a material adverse effect on our business, financial position, results of operations, and cash flows.
- If we are unable to provide a consistently high quality of care, our business will be adversely impacted.
- We face intense competition for patients from other healthcare providers.
- If we are unable to maintain or develop relationships with patient referral sources, our growth and profitability could be adversely affected.
- Our business depends on the ability of our employees to travel via fleet vehicles or their personal vehicles, and our business operations may be impacted by rising costs of fuel and access to fleet vehicles.
- Competition for staffing, shortages of qualified personnel or other factors may increase our staffing costs and reduce profitability.
- We operate in a highly regulated industry in which healthcare providers are routinely subject to litigation, the outcome of which could have a material adverse effect on us.
- Although we are currently restricted under the terms of our credit agreement, we may incur additional indebtedness in the future, and that debt or the associated increased leverage may have negative consequences for our business. The restrictive covenants included in the terms of our indebtedness could affect our ability to execute aspects of our business plan successfully.
- A pandemic, public health catastrophe or other unforeseen event, including regional or global sociopolitical conflicts, war, terrorism, or other man-made or natural disasters, could materially impact our operations.
- If we fail to implement and maintain effective internal control over financial reporting, we may be unable to accurately or timely report our financial condition or results of operations, which may adversely affect our business, results of operations, financial condition, and stock price.
- The carrying value of our Goodwill or other Intangible assets, net is subject to impairment testing and may result in the incurrence of impairment charges and adversely impact our results of operations and financial condition.
- We may make investments or complete transactions that could expose us to unforeseen risks and liabilities. Further, we may not be able to successfully integrate acquisitions or realize the anticipated benefits of any acquisitions.
- Risks Related to Our Separation from Encompass.
- There can be no assurance that our review of strategic alternatives will result in our pursuing any strategic transaction or that we will successfully consummate any particular strategic transaction on attractive terms or at all, and there may be negative impacts on our business and stock price as a result of the process of exploring strategic alternatives.
- Consolidation in the healthcare industry and the actions of activist shareholders could materially affect our business, financial position, results of operations, and cash flows and our ability to operate as an independent entity.
Management Discussion
- Revenues and expenses are measured in accordance with the policies and procedures described in Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Form 10-K.
- Our Net service revenue decreased during the three months ended March 31, 2024 compared to the same period of 2023 due to the shift to more non-Medicare admissions in home health partially offset by improved pricing of Payor Innovation contracts. For a definition of Payor Innovation, see Item 1, “Business,” in the Form 10-K.
- Cost of service, excluding depreciation and amortization increased in terms of dollars and as a percentage of Net service revenue during the three months ended March 31, 2024 compared to the same period of 2023 primarily due to higher costs related to labor. See additional discussion in “—Segment Results of Operations.”