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EHC Encompass Health

Participants
Mark Tarr President, Chief Executive Officer
Doug Coltharp Chief Financial Officer
Barb Jacobsmeyer President, Inpatient Rehabilitation Hospitals
Patrick Darby General Counsel, Corporate Secretary
Andy Price Chief Accounting Officer
Ed Fay Treasurer
Julie Duck Senior Vice President of Financial Operations
April Anthony Chief Executive Officer of Home Health and Hospice Segment
Crissy Carlisle Chief Investor Relations Officer
Matt Larew William Blair
Matthew Gillmor Baird
Frank Morgan RBC Capital Markets
Sarah James Piper Jaffray
Kevin Fischbeck Bank of America
Kevin Ellich Craig-Hallum
A.J. Rice Credit Suisse
Call transcript
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Operator

Good morning, everyone, and welcome to Encompass Health’s, Third Quarter 2018 Earnings Conference Call. At this time I would like to inform all participants that their lines will be in a listen-only mode. After the speakers remarks there will be a question-and-answer period. [Operator Instructions]. Today’s conference call is being recorded.

objections, disconnect any this have you you at may time. If over now Officer. Carlisle, turn would to the Relations I Investor call Crissy Chief Encompass Health’s

Crissy Carlisle

Ed you, Andy Patrick April and on and Barb Fay, Rehabilitation participating the Darby, for in Thank Financial phone. of Birmingham via Officer; quarter morning, Officer; Counsel and Mark and Jacobsmeyer, Chief Officer; call General is earnings Encompass Hospitals; President Tarr, Anthony, Operations. Doug are President segment, today’s Chief XXXX Health me Health’s Inpatient third Executive Thank you Hospice Officer With Treasurer; call. Secretary; Duck, Financial Price, Vice Corporate Executive Senior today operator, Our Julie Home Chief call good in also Accounting and President, joining of Chief everyone. Coltharp,

we you Before information On related SEC find the also Safe at our have of third information a on the you X-K website earnings page already set are release. filed are copy, statements, not the and the the release, Harbor greater supplemental with two the detail of in supplemental on last Form if earnings quarter forth which will do available page begin, encompasshealth.com.

expectations, XX-Q quarter March the September XX, results We December to subject actual XXXX, will Form to for XX, forward-looking we June encourage that Certain ended differ XX-K when discussed earnings control. the call, which XXXX them. from the the XX, are During release the are our in filings, cause and statements, ended materially to filed. projections, and which Form make the XXXX uncertainties, are the including risks Form beyond related of read company’s XXXX, uncertainties and and X-K and the you estimates XX, many risks could SEC our and year and for

to future reliance are place events projections, on current on cautioned the presented or which guidance estimates do are statements. only today. not these as based forward-looking of other undue a information forward-looking not We estimates, update and duty to speak You and undertake

and supplemental certain discussion include will financial information call Our measures. on this non-GAAP

measures, the release, For GAAP the at our Form the comparable to measure related end information, end are the with is as at which of the X-K on of directly part of supplemental available the press such all available yesterday and filed SEC, website. the of reconciliation most

a it question one to Before to adhere and Mark, to would everyone question allow the I over I rule like follow-up remind that we question. one to submit to turn everyone will

feel With to free If to yourself turn put the the back additional you questions, please queue. over in have that, I’ll Mark. call

Mark Tarr

and today's you, Crissy good to call. morning everyone joining Thank

the EPS financial The quarter adjusted recoveries EBITDA first insurance and $X.X for XX.X% per an third million X.X%, to quarter quarter to and business and revenue to interruption Revenue included in the $X.X we another also experienced third diluted per increasing operational the property XXXX of the additional third The million related year trends XXXX included the of continued and quarter adjusted for million related XXXX insurance recoveries Encompass increasing consolidated adjusted Health. with adjusted consolidated was $XXX.X EBITDA strong to and share increasing half in X.X% earnings $X.XX the hurricanes. share. of hurricanes

our is professionals service the patients provide industry our company the home level oriented the professionals employ highest Our fortunate who of extremely and clinicians in support leading to offices. with to care

the when impacted Florida demonstrated and to hurricane employees their Panhandle. Florence our of the Michael impacted and care Carolinas hurricane commitment safety Our again the patients

Carolina days before just received the patients September property hurricane compassion The patients had and at are we XX, to certification begin of under ahead being six this of South employees from mandatory the to Within hospital these [inaudible] numerous, selfless account most path and impacted each of by XXXX. not up other around storm. with their time Our exhibited by in and which commission accreditation the the or admiration on for That South hospital clock significant and joint seven and our patients stepped the time the this hospitals. September our to, express at the were rehabilitation in There segment, orders XXXX of and opened evacuated was its leadership inpatient appreciation the need, was storm Florence, employees XX, our again Medicare of its from who our hurricane of or in Governor care operations themselves. can't Carolina accepting for began no of on impact of those in working the hospitals the other. of care put

Home Health the Hospice Health Home and segments impacted eight hurricane Our locations operate by in areas Florence.

a our XX. impacted to care it were short While segments as visits October a givers for areas of Michael unable on patient result hurricane storm. of in this the in hospitals the of when was conduct landfall path no Three operations significant the impact on there made were time,

Dothan damage. Florida the buildings storm Alabama endured their and Our hospitals in with Tallahassee suffering minimal

this XX Tallahassee City all is as news local in a officials this Florida our our evacuate At Panama teams direct Dothan. you've XX in City, hospital and time took this to hospital incurred hospitals damage. our hit the hospital in patients substantial However, On our to worked not operable. city in in and seen October with Panama

building capacity and will reduced We be critical at of most operational its our November. repairs a have the completed end by hopeful are

However repairs to for hospital be months. could ongoing this

Panhandle the that impacted location. impact Panama in our City Our Home directly to greatest Michael Health and three applications with Hospice segments were hurricane by Florida operate home the

locations there due patients impacted outages in to Home two closures, locations were the lesser a addition extent other that patient conduct unable displacement Health to power from XX Florida were their and/or visits In Hospice Caregivers the states. road in of to and homes. were

to In the company's to the visits conditions hurricane worked in and other Health The locations. safe. Michael Health affected staff continued have faced coverage to hardships. and when evacuated Home within by in Health areas care receive Our Home were storm and areas face continue communities patients Home alternative continue tremendous will impacted to instances, in the those make some

catastrophic communities, residents knowing hospitals the be able these devastation return the when be able Given or will when resume will way no operations physicians of their to destroyed area or local homes to care to we to normal destructions were whose acute buildings. the to given the have

left profit will period negatively will we contribution our area of impacted property, in extensive and families this to the the and damage estimate be employees we on everything. $X their this our XXX to adjusted million. During will City $X more million The Panama power we of their from know losing EBITDA incur what uninhabitable storm homes, forego by Based market. fourth quarter expected expenses with than and today, many the loss

Rico Rico hurricane to to in Maria that operations. Michael Irma hurricane you example in in in island. Fund. this Puerto like Thus to update devastated disaster. across and your beds hospital During strategic to Encompass existing Health October. received perseverance. first hospitals, I Porter Florida rehabilitation Last and just we employees all an the to have see and compassion, It growth time for gave Healthcare many, financial our four our contributed venture initiatives our of Panhandle. opened this of loss on providing was I hardship when compassion our fund created portfolio. who opened another of this far money for fund country the employees Carolina, our back fund turn a now caring touching around number from It’s employees Encompass our when employees inpatient state of professionalism to in that the in and year thank XXXX North help was many This so our also joint we new XX We've the added the cover including their Winston-Salem, during employees to hit have.

has Home acquisition net May majority Home and XX Camellia through Hospices Care locations Health of year. the Hospice segment Health locations Our new which XX portfolio, the of to and came Health its in of this added

our of growth, clinical we collaboration addition between In progress great in continue making terms segments. to

year collaboration work’s This the first rate the efficacy further of provides of increase collaboration XXXX. have for experienced XXX we the clinical initiative. over points increase was third clinic consistent the XX.X%, the team our half of proof an in and Our of prior quarter basis with

rebranding the agencies with approximately time, completed Our we our to and wave wave third X next January to our X. name new October this and change brand go transitioning the to well. On our scheduled of assets brand. hospitals have transitioned At our continues XX% for new of

Post-Acute of across advanced to continued Center enhance predictive a and reduce also and Innovation work episode outcomes our models with analytics We care. to cost of care the clinical broader develop

as Texas CHRISTUS using part Mother pilot the care Trinity tools management are Frances. hospitals actively our hip at Tyler, in fracture with of We

patient institutions. our Rehabilitation our Epic have Home and Homebase. the from care We IRF continuum of completed diverse Medical Health sets and System Specific longitudinal Electronic data serve of data our Records Combined, our onboarding as Homecare patients data data from patient a these record our across the from System, across healthcare

also comparative patients post-acute day post-acute to of was We prediction production statistical readmission developed in are our analysis all learning model. XX settings. at machine across for identify readmission and risk advanced with The model

readmission. reduce likely We acute interventions patients have the high and/or awareness to further are need instituted risk multiple advance of monitoring to provide that algorithms care to of potential risk

risk readmission more continue care of the at will We piloting management encompass model hospitals tools year. and of by our end the the health

of on key of reimbursement were fiscal expressed established for system A the will In for rule on Home to rule was based independence patient proposed When our of tool, assessment for tool. Turning the see year from XXXX two was a been Medicare added. fiscal XXXX. released being mixed On the fiscal has in assessment its the and proposed the the this case system year pleased in the care being of CMS proposed mix patient assessment July based rule functional fiscal it XXXX subject X to the estimate published year requirements data assessment measure They data. year payment rates years will year groups implement data. additional CMS the assessment be now and to facilities. The over with final stay additional inpatient changes regulatory data or to Health. running that proposed year final was the concurrently were or approximately that XXXX concerns XXXX. on for XXXX will by with length X.X% that will rehabilitation rules new final CMS July were FIM collected in be hospitals change issued the XXXX The waits of one change, CMGs, values rule this one and also increase the We front. which period year two-year based case rehabilitation

this see prior mix mix we by market patient remains Based part rates most redistributing X.X% a to we the our way X.X%, reimbursement recent nearly are a a estimate result The the increase as in but update proposed rule in XXXX payments based rate As basket for upon rule payment years, Home were coming first would on of a in our XXXX. Health pleased in decade changes group. incorporates in rule proposed Medicare it case increase our current our reimbursement resources our that net XXXX in includes business.

or patient Act, addition the to Bipartisan directive a CMS system driven home XXXX, budget new current PDGM the and as replace Consistent Budget XXXX model payment Bipartisan intended by of system for called neutral. proposing is the In be XX-day the payment Act to to of groupings with update periods with prospective required the the includes health payment PDGM. and Budget is

behavioral assumed that will only X.X% be changes provisions. if make current provides been in neutrality achieved budget have the However, the anticipated

away patients We support from mechanisms based the acuity. to those payment to continue need and movement volume-based on

and that Medicare However, to not for access and concerned between related beneficiaries’ HHGM care. all of as such to could elements consequences the result exception, initial in in with is to it, PDGM one unintended care periods intensity relative similar full and respects subsequent accounting very remain we XX-day

as which via assess provide order hopeful and CMS’s and related Much is then. CMS trade the details between constructive and rule, additional in As the It in to XXXX. once our opposed assumptions our approach X.X% specificity potential we business impact early change by implementation will are looper in the industry the in now implemented we've the to of our to on behavioral the neutral business only payment PDGM of in to of our which will process. panel expert feedback be mix a we reduction coding past, too likely TEP to technical reconvening classifications, and the PDGM. associations continue achieve totaling the patient to will individually see done approximately input, and CMS perhaps or in budget remains to met to work

for behavioral We these will changes. ourselves resumed prepare

data, big an assumptions to and to transpire, our the In to incremental assuming health rule, our business approach impact which mix, addition based on our all our X.X% very and changes patient XXXX and is estimated no the are business unlikely to all reduction. the home

both rule-making the still We to have and repeatedly in to at subsequent for the are months we we past, any current the payment adapting. demonstrated and system, XX approximately prepare have resulting processes in changes

final We be to the rule soon. expect issued

to range our nine billion, guidance EBITDA $X.X in $X.X billion. guidance; full-year to from strong Doug. $XXX ranges range to range to to to our $X.XX a moving $X.XX share share. operating range from to a to per and of to are million $XXX turn Net $X.XX a share Now that, billion With raising of of the it first performance range million a $X.XXX over $XXX follows. billion as we result per a as Adjusted adjusted range $X.XX per from to of of of months XXXX, million to I’ll million $XXX a of earnings $X.XX of a revenues

Doug Coltharp

Mark morning everyone. Thanks and good

As company we revenue exhibited and segments our expense. another QX as business Mark quarter and was both growth solid leveraged earnings G&A for corporate our highlighted, strong

of reiterating Let results. me begin by our financial Mark’s summary

-- $X.X $X.X recoveries EPS $ X.X% adjusted to the diluted insurance Our favorable recoveries increased insurance accounts free adjusted year. million remains months XX.X% business related $XXX.X EBITDA share. included of driven hurricanes. X.X%, property hurricanes QX an share per adjusted million, of additional QX nine for and included those changes, primarily interruption and of QX, to of per to working $XX was increased diluted million consolidated for and XXXX collection adjusted EBITDA strong also million revenues receivable. growth prior X.XX XX.X% of EPS by in an increase EBITDA capital adjusted Revenue in relating XXXX increased related by first Cash cash to flow the improved flow $XXX.X the Adjusted over generation and

sheet remains times no our quarter credit $XXX until ratio end revolving and at X.X our was the XXXX. $XX positioned, We Our significant faced million well facility leverage balance maturities million. on was balance debt

business X.X% $X.X aforementioned and to results, and segment outpatient IRF included volume segment of growth. interruption in driven pricing is recoveries segment increased other line the on by Moving IRF The revenue million in revenues.

as related reserve was of to a revenue I'll to claims year. of MAC Cahaba we the the in relating see denials, which to debt attributed contract that and to bad the QX year Palmetto. reduction you Our we in TPE to began for QX X.X% of pre-payment last remind X.X% significant implementation first compared was prior the from when

As lower supplemental at can claims be XX seen QX. the low on denials remained of level page slides, new in

prepayment or year-to-date bad over do still sustainability we several assess have with experience denials, pleased As Palmetto enough calls, our TPE claims are the past prior of to on realized not experience said have debt our levels we with on quarters. the we but

bed Improvements was million including in hurricane employees is expenses from SWB expenses, non-controlling $X.X XXXX. employee were a due and for did EBITDA $X.X continuing last included impact one Adjusted of in of related QX on the QX as basis. and see associated or to of of as QX hospital reasonable related recoveries adjusted patient a September on last approved patients in in group new awaiting up We trend interruption this adjusted QX all discharge in for criteria. our X% five payers per is impact of with our same-store year. included this NCI for to likely from and stores. another Additionally increased an JV in guidance. last well interest expenses. X.XX EPOB insurance X.X% to will in little included segment rates mix continue reflected made revenue from come debt, to has be we Revenue do our been The for million. progress within substantial the of many X.X%, also necessary and ramping conversion $X.X claims hospital, in X.X% these guidance note from joint NCI business of reserved years, for the of bed as increase RAC IRF with QX with by program QX X.XX in in Labor adjudication no medical may expectation level. the previously Group the by XXXX. growth. IRG JV a of on QX final JV CMS venture the million at per and year. bad in increased QX extent the ALJ approximately XXXX but labor claims, based productivity on to increased to RAC activity non-Medicare hospitals, our years excess business. and by medical net $XXX.X increased not due into audits, in is productivity medical essentially to of wholly our coming or EBITDA revised X% the Discharge improved both year owned for to group bad which primarily old, and both resolving increased backlog for QX caution this audits offset in in now partnerships. debt. by with Removing measured our hurricanes has know to of million our addition year This QX will reimbursement We what prevail medically activity QX to subject flat occurred occupied revised EBITDA increased discussed

to is estimate believe FTE we cost of approximately medical per in is inflation. expenses estimates XXXX, to X% healthcare generally for group preliminary which consistent increase with X% Our

Moving of on including episodes XX.X%, same-store basis, which XX% increased increased X. Home impact QX basis closed revenue Hospice X.X%. driven now X.X%, as growth, to our the Camellia X.X% segment revenue same-store XX.X% May on Health declined on volume Health revenue increased per and X.X% the admissions by rose Home and episode

with mentioned QX million. increased rate points by primarily reimbursement of in decline for QX The Health to clinical our points, basis of including $XX.X percent Home and XXXX. adjusted Mark between support new our from development same primarily and due basis year Hospice increase for costs agencies at by within remain and with the We business new will XX.X%. pleased the segment opening mix. our XXXX pipelines impact we increases revenue last of XXX revenue and on acquisitions to percent and XX IRFs of XX.X% overhead operating Camellia revenue patient delevering improved As range Health the driven target basis increased increased for collaboration due segments. XX.X%, of another Home anticipated four of leverage by the to least a store services growth. be a XX.X%. revenue XX our against EBITDA and four as resulting segment Conversely, Hospice hospitals both increased merit as points, the over Cost to

owned CON Our per our venture XXXX, below remains of largely target approximately XX between XXX balanced Novos issues states. portfolio is and to It’s we pipeline and project approximately add beds expect opportunities and on timing De non-CON to our between year. joint wholly

to XXX more added add XXX XXXX bed we we and than expansions via in beds reminder a XXXX. expect As in

X with closing on continue of home augment and with and and health bolt-on $XXX portfolio the in bogey annual to Camellia home our locations acquisitions. acquisitions smaller to annual exceeded $XX hospice hospice, For May million health million our we of of

what this up nicely We not results attractive be are our standing a opportunities and disciplined a of to to diligence. number in due appeared acquirers

the by substantial populated overlap cash leverage regional pipeline commitment unfunded Strong now with of development both business the in we’ll intermediate free opportunities capacity our includes actionable questions. may Our operators, line consistent to with for pursued opportunities to revolving And which provides and markets low additional relatively our and be companies, the create flow and near remains number open and credit financial a facility of together segments. generated growth in term. our

Operator

[Operator first Instructions] Larew And with Blair. your Matt comes from question William

Mark Tarr

Good morning Matt.

Matt Larew

ask in here through quarter first sense several IRF both dynamics a Hi, years. some just of guys run, good had the the walk to what coming thank quarter you’ve you some to us same and last growth in now forward? Obviously wanted nice might for the at X% give this growth and relative moving dynamics of question. maybe the the sustainable strongest growth. I about and store the off same full be and store the of morning Could growths to quarters for

Mark Tarr

Yeah man, so this is Mark.

which the and the years. color of stroke for of carried we our pleased built of then relative did the this last a the store X% slowly that growth the year month that is have occurred discharge throw September than we on total it by previous additional than in week to in half timing. was the was the and we're a so markets that in Day but following one September other very to we of balance and and October higher end Labor we back second that continuing that specifically our the quarter fact this back business of our the day little That's on we to What year, discharge into is patients in build lowest majority over growth the outlook the compounded saw month the develop is and month, substantially terms sustain to that in more know in the top share, house market ADC weekend what had relates of Sunday, very which experienced growth You piece in taking forward. the programs, of continue moving of with help vast the we same of on that minerals believe of will we around

the little because of up and a we're of had (a) show fourth the the that It (b) hurricane. the So quarter impact comp quarter see because that some third impact harder on against, that maybe of in numbers, to up quarter volume. third

Matt Larew

just a and be and that XXX Obviously as that up just then And we’ll that in this the activities, thanks. follow ’XX. behind mentioned about longer year, term De be but know generation beds for expansion XXX IRF to six cash year a you four Okay, year-to-date. Novos the new strong the target expansion above may those of Can and your help free the us neuro, free strong environment flow per think of is in flow you about context cash generation. targets growth

see different the is You any a know at chance future. targets there upside revisions we or some in point here

Mark Tarr

we’re an our the the is favoring That that business of community beds definitely between of the investment boomers treat last That cohort a you this the XX year. lot X% and average static XX in is and decade been next of something patients internally. the XX to evaluating. the and over demographic the that baby anticipated of We in The CAGR yet birth X vanguard segments. to the age is and age tailwind is beds X% static. that the our U.S. reminds or we between supply inpatient both speak turned facilities over XX It has XX years birth to relatively the

speaks quickly. opportunity add to potentially All capacity us the about of more that to

something hard. It’s change unlikely it’s beginning but we’re is for that think XXXX. I evaluating it XXXX, in to

Operator

Matthew with question next Gillmor Baird. comes from your And

Mark Tarr

Matt. Hello

Matthew Gillmor

let Hey, start everyone. morning good Hey, with the guidance. me

in assumption you'd the medical confirm, hurricane you some sort fourth out other that, but explains your to in and wanted bad quarter rate of or know call maintaining cost to to just year-to-date difference implying I help of a for and quarter the growth assumption there are versus another You of lower the the things growth fourth kind us understand debt the rate. the are

Mark Tarr

be those expect two joint in but as only that would on beyond related venture both hospitals our the that NCI assumptions into also well. We then increase are we composition to into quarter not top Those QX, likely mean they reverting saw the we primary perpetuate, to the the carry that drivers the Matt. that is and that fourth of of should

Matthew Gillmor

I Medicare wanted the a as about the to follow-up, IRF on mix then And ask segment. advantage

a know sort the prior external the like this of lot keeps you factors progress can in year M&A or terms some us internal that climbing. tell of are revenues is seems that You It drivers made penetration. from so in M&A you contributing or to years, more than what of that's just attributing more

Mark Tarr

Yeah, thanks Mark.

for it of of One is the of drivers tied when primary them has payers comes the that proposition get Medicare we unfold the that started value patients a patients. benefits and believe seen the the that to XX% advantage get versus Medicare stroke a nursing IRF stroke particularly we the to volume setting program the advantage, is really strong Almost in and is we to patients to skilled having outcomes facility sending they have in particularly.

Doug Coltharp

case advantage. rate percentage diem on stroke more and and contracts on And Medicare of our advantage being basis Matt, the getting of increasing an patients combination per close gap payment average on pay per a per higher a the more patients acuity the on continues Medicare between the with to our service plans, discharge together

on Medicare XX% pay QX us and a advantage year. to example up received revenue XX% specific a on in year, As QX service in this was of per discharge of from that what per we average last of paid

of would I fee-for-service trends operate was U.S. throw on higher out the there track advantage may bit of all contrary that little thing the that enrollment in basis we to other a in is quarterly seem The Medicare counties the in the a which than enrollment we some IRF, counties quarter, it third and In was new the in fee-for-service. which Medicare new we advantage and the in operate advantage. enrollment in the the enrollment in Medicare

Mark Tarr

we’ll excited terms our going Barb with the ask we’re elaborate just it. to stroke co-marketing program on America – and more that to on I’m program, is in that building of efforts Association, so doing one Now Jacobsmeyer Strokes be thing a next The our year

Barb Jacobsmeyer

should three we’re on as kicking the Stroke patients stroke a on next off other educating professional, well the American Heart where so of as physicians The co-brand year / the commitment year, with The and stroke Yeah, care. consumers, what January their rehabilitation clinicians both in and receive American Association to

out clinicians patients. just the we need for level care information continue think the we the and that's So of to IRF referral give us to to support sources going to stroke

Operator

Morgan your comes Capital Frank question next with Markets. from RBC And

Mark Tarr

Hey Frank, good morning Frank.

Frank Morgan

cause the Good go and and are guess capital questions morning. that around until be deployment like of Hey, a ‘XX direction, deployment you I about confidence. is does just through I mean like any would your thing I wanted of but unchanged, back which really with healthcare, that's capital sounds opposite you asked deployment proposed the it I I the giving – slowing rule home strategy that's sound earlier one capital to to your IRF And will getting the with down question the even sign resolved. maybe even guess does that this the regard to uncertainty maybe

these proposed system Your case mix driven new not the about previous that you that answer the or patient grouper are rules worried model. new IRF for

Doug Coltharp

the worried technical provider I treat through the the kind that getting of conditions types in be the horizon increase increase mean best would those the that of points think be U.S. growth We we to we lines new spite that long the we to segments address that capacity demand is rules in. in we're that say bumpy on our one implementation. changes who business not the nothing each three There our to for and demand anything on and parties. two that of going on we both never of segments of the about any they're and isn't obsolescence anticipate for population in older. be and that substantial add prepare because efforts very and to those they're and be But them, for business segments term side each going of should we to got operate about somebody's our to service view there business

So about that capacity. and is very we continue demographic anticipation remain optimistic tailwind the yes, our it to we’ll add

slack XXXX, a We to XXXX may payment two balance therefore any can new create prudent in we is we to the that move to extent for either one it that extra with progress as in also acquisition and business there segments us additional into sheet. believe in the opportunities model the these of little bumpiness find revisions

Mark Tarr

complex, Doug nature. Frank non-discretionary therefore what our just you, patients we spite the IRFs setting in-patient remind lays and the on outlook to this positive the need going said, of to level out, are are intense in are reimbursement be care treated They medically rehabilitation scenario need in of very patient the they these and forward. very in

Frank Morgan

Got the it, demand a demand still get is that’s the bumps And change with – was the you, I the and and maybe not maybe that is good answer. that system, in changing absolutely there. just but on

rebase us offset kind examples of of and that to give through could kind comp would In through terms way a of from you you you what would Thanks. that it. this standpoint? couple a the could maybe Kind mitigation of until you of of just normal off what do your pull the bumpiness, be levers of

Mark Tarr

further in go Frank, a little at marking we least the IRF staff on first ask on that thing tool. Barb doing sure educated is the on bit depth side to are just Jacobsmeyer I’ll that. our care is

Barb Jacobsmeyer

thought on for tool our we on how base focus within things have prepare for within from this variability that clinicians and clinicians of so this is of Right, is initial that is what lot that some there now sure clarification now making consistency did being among we'll that the right so just our and our bored, the a how we’ve new on October. next of just our data on the company, care of poured that's industry done are really on we so now see, educating the received we us of CMS was some so being come right ways that set tool when care the

Mark Tarr

to some from least come provides and clarifying terms itself some of another. CMS to us, in the the led had side to we on that some with august, tool in information at of one Q&A had how application out apply questions to Back some and that differences care

to have So comment and PDGM some you and want the April, going of questions forward. clarified the about those it been on feel focus? do we better

April Anthony

Sure.

side tied a Health, costs. the much have personnel per eye cost our mean up cost On We direct I always for is the obviously our mitigation to of on Home close into so keep continued a our in and the of therapist, the a focus that of PTA's era. good make versus be certainly visit, RNs LPN, utilization sure job will that physical PDGM we're so verses balancing doing

for have use a episodes. providing utilization these control that to tools actually set really the of practice a at think we other working based we a utilization make really thing and best is we’ll during more on to to are number that visits look I implement approach that of can data we're science of sure

high have exactly expected have that of those so our come and at I X.X%, wrong and are going what going that change better And implement thing execute utilization and don't controls say we I do. we’re understand in side of do expectations us we'll the think on can around to expectations behavior they is to the then how to job on the we then given successfully strategies look level So expected what we're would there. a to to Medicare's third

PDGM they'll as be others would have and major more those three clarity for the get three be final those closer big now. on would rule, be we So evolve efforts with that ones but the and will

Operator

your next Rice And with from comes question Suisse. Credit A.J.

Mark Tarr

Good morning A.J.

Doug Coltharp

Good morning A.J.

Operator

your on mute. maybe is open, line you A.J.

Mark Tarr

come to will back We A.J.

Operator

And James Sarah question from your Piper Jaffray. with comes next

Mark Tarr

Sarah. morning Good

Sarah James

wanted comments the to morning. you. have clarity today. these you some Good just that Thank on call I made of

rate. you and between XX aspects So the the clarification could is when more further comfortable with of over on care from total you course control, that or you utilization days second about that of the some the talk more feel that of timing treatment CMS first made about and got you specific the be treatment

Mark Tarr

April. first start We’ll with

April Anthony

side I be Home total the control would So would over on referencing episode. the be utilization more the Health

very so or interaction possible for each much interactions that as as doing value through and to two some across the that we out look be XX outcomes with care I to patient I that adding quality really think there or truly it's anyway but value cut in at our diminishing deliver without on we is to going opportunities sure one the we be single patient. really the making the every primary drive best days, the way think that distributed have will that encounter be with the may – we're that focus the we potentially can

Mark Tarr

then on the And rule, rehab Barb.

Barb Jacobsmeyer

did On there on on this the support the around, care were same you a was patient. care and customary. there always it mean timeframe around that the by There you of the for did questions tool confusion rule and IRF and what that what was usual burden the on the of was lot tool patient based

clarification time patient you know the until us our so to initiated, patients at and how look initially. clarification on care on that really So we some give good to got frames evaluate the help you to direction therapy was of burden least staff to some at

Sarah James

clarification Got rates. on it, that’s last And helpful. here

think how what of to do days trying I XX and So right, treatment think about average are you to when about how change costs treatment XX the is the split. total trend, set of XX on days the happening get percent so the mix can pace the given first tell what they you CMSs or like in for view, to your encompass days far that and how from up varying industry of

Barb Jacobsmeyer

XX think that at industry, we on us to me. Yeah, exact in looked the average first the it have than we of led anything my XX proportion I the second I date saw believe that materially to don't as of across fingertips. split don’t care globally I at the the but looked different we in the between for data days have don’t specific front

Operator

next Fischbeck Bank from with your question of America. comes Kevin And

Mark Tarr

morning, Good Kevin.

Kevin Fischbeck

the Good question. morning, taking for thanks

mentioned MA that trending and So if but of back things, give Can the for rates towards whether of MA where I you on before you the IRF your of can side view about maybe grow continues things. they're on about think similar there fee health service? talk side a a kind home to you little are

Mark Tarr

to to weight going April Kevin. on that ask I’m

April Anthony

we Yes, was Medicare QX remains a about to rates when markets, see our intensive particular. population more so from ‘XX little and we were our slight at pretty that weighting locations, in that X.X%, Medicare X.X% ‘XX static advantage in down which less of advantage Camellia Mississippi to of part think QX the look patient we total really in

So haven't in changes we dramatic seen that.

toward push continuing Medicare that work I us. of relationships is within category successfully for think have to types what can we the that seen advantage really

that And so the the side the with driven is the just mentioned what relationships improve. to we've percentage can is that we up we've of revenue individual and relationships drive those we’ve on some I puts then continues flat, although value think Doug from relationships as our and takes IRF done relatively actually and those had relative

opportunities just in evolution more a say would You for are more to the see But advantage Medicare know that relationships slow overall it's world. to we I and acceptable continuing segment.

Kevin Fischbeck

know interested just plans, talk I So types the always that rehab maybe it a money MA starting Is are if on you increased patients might out you lot that, changer model know patients same it non to I rehab, treating driving what’s about treat open it’s know actually building of still more relationships And and capabilities you reimbursement seems I with in just the more the they within guess chronic MA really wonder whether of taking you we're looking control services? dialogue. are of. about, to up that the this or you the obviously it when new some or will, to things really a here, rehab at get want if they other that and into putting of like

Mark Tarr

absolutely Stroke it are clinical the just on we the results and I term the and side. had think that we have on think we story its Mark IRF the basis. used the fantastic about value proposition producing a with where that's to we that case Again, consistent tell what started expertise a seeing

discharge care whom acute facility higher acuity patient's bypass length terms in other those complexities around of altogether, the for where no managing Now post-acute patients it's expanding cost inpatient the dialogue stay the the as aggressively the the post-acute setting better really that consequences of the have there's from on a of outcome reasonable neurological both opportunity to do negative time, in stay has and payer that patients for really in produced period in of plans well. and clearly inpatient

a believe are but IRF phone a of side, top in it much on daily willing acquit have to the not on at is So us us dialogue with end spectrum have case to way that and more the basis. manage we appropriate the the find patient and the on engage we particularly manager the

Barb Jacobsmeyer

care they homes the can on frequent the care that the support, kind solve home are skilled stay of the that nursing directly Medicare what from cost with are giver has and looking the so think acute lower right really being to payers are and that they making our hospitals, health Home the and that finding home those you patients not patient intermediary support issues. the we're are side know at right the and accomplish home we're we’re as chronic if flyers to morbid hospitals seeing I those that Health saying that seeing recognizing patients facility much sent is, to that a with sniffs the accomplished much outcome same the home health plans more nursing advantage

Operator

comes question next [Operator from with Kevin Ellich Instructions]. And your Craig-Hallum.

Mark Tarr

Kevin. morning, Good

Doug Coltharp

Good morning, Kevin.

Kevin Ellich

changes. talking reimbursement you for going I mitigation to the guess Craig Thanks I a the just asked or Good know morning about potential back guys. questions. question might have think

I of perspective from you benefit some home do? there in from more hospitals. upon admissions the sort seeing You for maybe is can Could to think PDGM, April topline expand health know kind you going what that? of

April Anthony

acquit higher with that LTCH as have that a also that we inpatient more see levels those not sniff patient, higher We also That out patients and is revenue are post-acute of only coming are mix do shift discharge even opportunities. there care patients but correct. rehab, to associated facilities, some

to coordinator out transition part home patients to previously, beginning the but change is Mark that of program and by as impact momentum hospital you of place we uncomfortable that bringing lot some home. as a that we're of our and program opportunity a business gain Doug mentioned hospitals of see mix committing So put it about seeing with believe to changes working We significant and think an we as the transitions bring do this actually year of reason patients care really with be to know ago, be really facilities driven was XXXX there'll the relates that in directly are care are I coordinator we to the effectiveness sooner. will our is that in growth and

Kevin Ellich

like and got April know versus the and going different you can with been health about what right versus guess Wondering past I and comment past time in this you’ve it's past. then since happen looks time in reimbursement DC now through this changes. you in Great it's legislation seen home this support – you you how the the the if think the

April Anthony

a have particular say this of just boy! secondary way than expectation You been for early you years; reasonable why not that and read number, difficult encouraged That of that is to Senate that down got for the last changes get that their level that idea example more floating the to over coding there It’s expectation has might know that's then any I that actual change a and by not reimbursement a model? some X.X% when very those a that XXX% diagnoses. is, seen bills, we that to still the valuable look the of in a Medicare with this you think higher have feel behavior time on unusual further which be had, what exponentially we we would hey, said at XX change, House obviously. than outcome support Medicare has primary is support bipartisan is alter are been to going varying around you drill It's diagnoses the the the when the course is but you a the behavior they X.X% to say progress and bills addressed presume that to that at could patient

when but your we we're for presume this are as that, how happy it's to be And of to details when at you subject to particularly say look does rally case. it's where to an as an approach what presumptions are so that the unfair theirs Medicare to to in change,” our got “Hey aggressive support do hard not adjustment will behavior really just

support believe presumed behind support the and So be have we pretty I on not because rally effect to good that the bills, will changes it that would these those difficult of found dramatic think that industry.

Operator

And comes Suisse. your with next question A.J. Rice from Credit

Mark Tarr

Welcome back.

A.J. Rice

next of this you're your you about done comment for capital dry out power know lines to do if overall Two the quick everybody. that the in deployment. context but that just haven't bought repurchases thinking potentially have share wonder all things, any it of rollover along saving something in any you’ll Encompass I capital what deployment, early and first may shares I year there? on I of the Hi thinking comment know with get year, the

Doug Coltharp

A.J. A couple of things there,

and third all, the of view share in acquisition repurchase. of hospice shareholders subsidiaries or September part of that, in the management of us the shares to in that do year were our of we health put the as a First home beginning yes, from form

to to in Second is, we you is, back hospice three going to or scale. the in opportunities that July in in million level. and about us be third noted IRF that are build board the health But side, home we are lines, want $XXX the on really stock to growth continue where authorization business replenished to specific the repurchase presented up optimistic

to the to again term in lines rule regard on away. going changes of the segments demand want providers and the there XXXX We be those all to long is we be regarding a growth these to that three of not in new all because trepidation capitalize business with and the beyond, in flexibility against are very able capital, to about grow the optimistic three businesses opportunity deploy our presence in will some cross

A.J. Rice

I you to and midpoint QX. of that's this QX year at versus sort bad Okay, seeing EBITDA that’s anyway, your to the implied to year so far if I’m guidance to great is slightly bounce the and the the But underline flattish historic medical of down expanse, very $XXX sort anyway around specific at that’s million, obviously takes this on assumption. negative or something its $X flattish, the don’t back Camellia recognizing what of to I puts from just lead are $X but I are million million the in to from guess understand $X assumption back But year-to-year that the even goes to know sort impact impact I whether some highlighted benefit to you negative hurricane. your you year. contribution assuming $X what debts these that alternatively have you trying acquisition. still around know the and of million million you’ve changed hurricane, from look

Mark Tarr

and experience to within And again anticipation line back IRF that are where beds seeing items, three segment which result both third and those venture that significant the Its increase in the are also approved. historic increases. pretty medical the the and portion and levels relationships all more we be that here joint within debt quarters and it’s of our the as would owned composition wholly we of just the EBITDA between substantial a then NCI increase of is last it’s the of could few to and levels group bad revert not

Operator

to like over Crissy I turn back now would call for the you. any closing Thank to remarks. Carlisle

Crissy Carlisle

Thank you. If again me joining anyone has call Thank please today’s additional for at you XXX-XXX-XXXX. questions, call.

Operator

conclude thank does This And you. call. today’s conference

You now lines. disconnect your may