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EHC Encompass Health

Participants
Mark Miller Senior Vice President of Investor Relations & Strategic Planning
Mark Tarr President, Chief Executive Officer & Director
Douglas Coltharp Executive Vice President & Chief Financial Officer
Barbara Jacobsmeyer Chief Executive Officer of Home Health & Hospice
Kevin Fischbeck Bank of America
Brian Tanquilut Jefferies
Matthew Larew William Blair & Company
Albert Rice Crédit Suisse
Andrew Mok UBS
Philip Chickering Deutsche Bank
Frank Morgan RBC Capital
John Ransom Raymond James & Associates
Scott Fidel Stephens
Ann Hynes Mizuho Securities
Steven Valiquette Barclays
Call transcript
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Operator

Good morning, everyone and welcome to the Encompass Health's Third Quarter 2021 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded.

If you have any objections, you may disconnect at this time. I will now turn the call over to Mark Miller, Encompass Health's Chief Investor Relations Officer.

Mark Miller

Thank you, operator, and good morning, everyone. Encompass Quarter joining Earnings for you Health's XXXX Third Call. Thank Jacobsmeyer, are on Coltharp, President Barb General of Counsel the Patrick me Secretary. Hospice; Mark Health Chief Executive and Home call Officer; and Doug With Darby, Officer; today Tarr, and Officer Executive and Financial Corporate Chief Chief

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

to our them. projections, many December and the XX-Q differ which could on stockholder X-K, to when its During results well our XXXX, the call, our Certain XX, we and control. our that will and and for XX, Form and We actual quarters XXXX, Form make September impact of the like and subject year ongoing the are earnings of estimates filings, XXXX, and filed. risks from expectations those release related in beyond are forward-looking you the for impact to COVID-XX business ended March cause XX-K company's XX, materially read and XXXX, are SEC as ended discussed including and risks uncertainties, statements the review to Form June relating the XX, encourage magnitude as strategic uncertainties, value which

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

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

available as comparable end most part I'll reconciliation the earnings measures, such the at and the Instructions] available release SEC, to over [Operator X-K With with all our filed of call supplemental Mark yesterday the is which information website. GAAP the to that, directly on Tarr. of are the measure the For at turn of

Mark Tarr

and have and passed challenges. have we Good the COVID earnings it in transient with creating late we would became will these the favorable pointed mitigate continue home health Thank and we segments this that Based increasingly for our in time across that year. largely disproportionately to first in everyone. and half both performance impact last July, XXXX to remain believe second August, that challenges, in QX time continue these guidance to taken the Nonetheless, and impacting our challenges degree Mark. us We was morning, and headwinds second this was to evident and that are through particularly year, of spoke When the the conjunction take for with report accelerating you we organization to near operating term. expectation Southeast at through increased the some actions business. which the you, our momentum we surge, hospice peak our the business Texas trends these strong that half of on our In year. the expectation

the long-term our growing operate for our to dampen to revised accordingly, the so actions for competitive to we speak enthusiasm and and only operating more businesses I'd of underscore update home to anything moment. provide a And on in services these review our But related hospice industry. trends the the the I'm paramount have taking we contrary, importance in down. the prospects are current first, prevailing producing for and of does these position business. you cost-effective manner. high-quality we demand a our the in and like the patient health we headwinds XXXX outcomes guidance circumstances the To about strategic Nothing going alternatives for

separation As the we carve-out home company stated full affect business our an spin-off and health IPO, in our hospice public into press split-off. release of we independent expect last or via evening, partial a or to

transaction We the fourth such announce with of first a are the more expect a half and the our transaction precise of targeting release. earnings quarter in XXXX to form and timing connection separation in

health have further assurance significant necessary to While on year. or confidence. that the of We've of this this home progress readiness be various business a place be we in the a will state team a we to and no now complete separation which supreme our and transaction we also can hospice there of have will transitioned made over and nature have our balance consummated, in tasks leadership new specific transaction,

As of will we business the hospice home we previously a believe stated, enhance or partial business. success full and separation health and value the the of long-term

affecting of that within period other patience believe efficiency investment separation focus, the the review duration common We and believe and for and of growth value-creating superior process. alternatives of and strategic and transaction is tax a array appropriate shareholders. this interest thorough other Among the a independent public company the best of have considered. risk is and your We alternatives strongly that this appreciate our future based belief understand broad transaction. is formation there anticipated evaluated private such the thoroughly community the transactions public from in an opportunities, to considerations, via execution a is further fatigue of exploration We the resulting some regarding on

segment of consolidated and for to give were the aforementioned detail operating And continuing the remind spite this and process results go preparations. will Doug have we the In solid. the undertaken analysis during and separation global vulnerable pandemic. you, internal challenges, I amidst address Doug that, while deployed of metrics his continuing remarks. to turn our needs back of of to a on have We resources, will the of into going alternatives a to QX to patient population substantial aforementioned the I'm trends. With - our external COVID-related quarter greater key financial challenges

X.X% the IRF period year, The consolidated choice in positioning facilities of with QX payers. providers health issues EBITDA and in same for inpatient patients, growth, pronounced grew revenue X.X%. and the compared All to rehabilitation X.X% our our home trusted as The the more QX grew in immune. last and same-store underscoring those not the X.X% hospice discharge volumes further staffing business. business As increased was hospitals were adjusted

costs meet by improved QX, IRF our sign-on bonuses of increased partially productivity. demand labor, and order bonuses higher During services. were our utilized offset levels in we pressures on to labor the for contract shift These

existing added expand demand We We new IRF to for capacity our by hospitals adding XX-bed County, meet the opening QX. facility to in also are of Georgia. business beds X continuing XX-bed to rehabilitation We've existing a the in and this services beds inpatient facilities. earlier week, And we hospitals XXXX, opened Henry facilities. rising new for to our opened hospital XX eighth

pipeline with Our the occur next an XX openings very de anticipated to XX to in X strong novo remains years. each of

to home health Turning and hospice. now

labor services in settings. proposition in due intact, preference COVID increasing providing are health other the and primarily drivers pressures. care While and population and industry-wide care The challenging cost currently strong home home the a care home care rather we increased of to home, patient underlying the unchanged, of of environment, the due tailwinds operating surge long-term value advantages demographic than in to to aging in for remain the remains

due reversed In surge procedures to on to the restrictions senior and qualified levels to hospitals UnitedHealthcare. reduction receiving the health had reduction the with this restrictions a continued constraints access to The acute governments XXXX. admissions local admissions of episodic primarily abruptly significant QX the episodic in growth total that This historic from our was health QX, offset and occupancy levels. away reduced care procedures us admissions during in third due procedures, XXXX new returned our home COVID patients systems. that non-episodic the limitations caused and the XXXX, and same growth Our in placed care decrease trend on decreased with second admissions facilities of from state primary largely resulted by staffing in period turn X.X% elective quarter in compared these contract in elective to In admissions were quarter referrals. living

As our the increasing by sign-on has admissions to and year, XXX episodic down to are were we labor including from hospitals use In Episodic other from care the shortages. bonuses. strong. Demand estimate existing remained constraints that employees acute declined home staffing to in same due to and approximately the responding patients care wages facilities QX for We, exposures quarantined period admissions approximately senior of to admissions X,XXX and higher last QX, with X,XXX procedures constraints. living patients COVID compared prior year. compared are lost salaries combination in receiving admissions. players, we elective residing resulting higher-cost of industry hires, due new staffing staff paying and to industry-wide constraints staffing from along contract The the approximately

and our of with rates rehabilitation the a meaningful to vaccinations get and health making partially inpatient pleased vaccinated. hospice company-wide employee our employees encouraged fully hospital-based and have constraints. of Currently, home over addressing COVID or months. in in employees seen also we're several XX% progress the vaccination staffing We increase employees past XX% location-based are our We're

to staffing with limitations number full-time also XXXX the of low locations a decreased quarter third with XX%. have XX hiring of a of the closed. locations During of XXXX, XXX an of the hired from quarter health of making of Currently, third increase staffing of high pleased nurses health XXXX, home limitations. to XX nurses. XX XXX to third regards we home with as our We in the in we're We're the quarter in quarter compared the progress

XX a labor in term, progress, the full-time On average, to before to near expected abate it in in productivity historic return While to levels results It we're onboard before making operating it need productivity. time visit is per we these at decrease days takes we take higher where expected point staff. are takes a due and pressures given clinician a staff. new quarters may several which onboard and cost our to reach productivity recruit levels to not

Finally, signs in thus QX. are we some seeing far encouraging

home health to September admissions has average from in XX Our field up of employees are in quarantined and dropped XXX the XXX per October. day number

outline underlying our quarter to the guidance more I'll turn to revised and on it key Now, to assumptions. the over provide Doug and detail

Douglas Coltharp

Mark, I Encompass call good be from heard Health, who Thanks, first his if of outset Miller, the morning, you didn't at Mark remiss to welcome call. and everyone. this earnings for I'd

to you our us of company. comes with about long-standing us many ago, months As a he and know, X Mark relationship joined with

now quarter. details the the of Turning to

period same quarter a the year-to-date XXXX, grew XXXX months On XX.X% EBITDA X.X%. revenues comparable increased As in XXXX, XX.X% net over consolidated X.X% operating the of period basis compared XXXX. increased third X to in adjusted consolidated through and first and the over revenues

year-to-date increased Our adjusted XXXX XXXX. over consolidated EBITDA XX% X.X% over and

X QX approximately flow prospects to significant hospital We Much Adjusted year, is period this acquisitions, first year free to extending million, we cash reach utilized continue $XXX long-term expansions cash free for expand cash underscoring months bed year. Through confidence up of XX% businesses. was free this our over deployed of and and towards construction, the businesses million generate last the this flow. flow of new same of of each. our $XXX our in the the

XXXX. these cash our common down $XX.X at Even dividends from with our distributed X.Xx the also We net million QX X.Xx, declined leverage ratio on to stock. via shareholders end to our of outlays,

to segment now results. Turning

and pricing. same-store XX.X% Total discharge higher to Our volume per X.X%. X.X% X.X% increased The revenue EBITDA 'XX, grew QX rates the and volumes same-store QX, inpatient from Net in X.X%. increase increased rehabilitation revenue including primarily acuity. increased Compared QX by increased of revenues in continuation discharges and of both resulting increased driven QX, reimbursement adjusted was growth XX.X%.

by mix The a as was revenue early pandemic quarter due This due occur quarter, cost episode segment market. cover labor impact acuity the periods hospice due and The in We and our contract to basis increased to QX higher in increased segment the with flows costs a same-store of health the decreased as offset to increases bed the of increased on health Hospice QX also service-related a eventually QX associated levels in use total of adjusted mix contract back XXXX as based by tight hires. XX EBITDA challenges. Under health to patient partially to in an primarily the and lower and level and largely labor in in per the QX resulting admissions percent below trend non-episodic partially Home the was in as as normalize year LUPA. X.X% late SWB increase and in in midst to shift in the in to per Home volumes. the $XX was offset to care in admissions employees X.XX% X.X% QX with X.X% QX episodic when of bonuses increased during to of higher X.X% health decrease of only towards a of This to in home Frontier per of service cost admissions, we our productivity use acquisition. patient revenue ascribed X.X% the in compared of recent early decrease PDGM, points XX.X% by within offset system. tends compared in a throughout per are between admissions to declined higher increase episode form the declined market admissions. care. labor hospice associated periods declining. $XX X.XX% as volume intensity was as expect due start late additional 'XX occupied and of are lower nurses, decreased visit than well shift staffing recedes health ramp-up ratio the new 'XX. primarily meet and for visit payment XX.X% QX increased preopening periods as prior. expenses Cost payments the expectation, episodic items increase labor Home incurred with productivity the hospitals. clinician revenue These were payment declined sign-on improved

results Mark our QX we've current XXXX expectations and for revised As to reflect guidance QX. discussed,

giving remain of enumeration ongoing IRF the An staffing due our underlying home growth costs assumptions revised strong assumes guidance Elevated be will of revised $X.XX on $X.XX. to considerations, of to found to we'll these year. QX are of may to challenging questions. Page EBITDA volume persist $X.XX EPS include for And effect health to constraints. segments XX billion balance for have of billion, to segment of our revenues the in Our operating both supplemental will and $X.XXX remain open with net in hospice and labor to guidance guidance expected slides. XXXX we billion line After $X.XX the adjusted and billion adjusted that, our key volumes $X.XX

Operator

Bank of first we question from Fischbeck Kevin [Operator will Instructions] our And take America. with

Mark Tarr

Kevin. morning, Good

Kevin Fischbeck

health temp Do business? next I way And next guess market characterize of on Good margins like morning. of pressures. your for how have around a update kind a bonuses how quarter for in the pressure question as those might labor things the things much a about I break a year home the on Is rate the guess wage reset to COVID declines or think that there margins do labor impact and out when decline versus were you you, which decline all wages, longer-term logically signing as those at into create year? think, updates? those might mind I normalized in

Mark Tarr

making has role. I'm Barb a into to let new Jacobsmeyer She this. her priority going this her moving been since on comment Kevin,

Barbara Jacobsmeyer

Right.

I mentioned So and think short think about it, when we term. we kind the you think, term of the long Kevin, like

that the Doug are bit. also we to the impact quarantine. the mentioned whether So we're big productivity Short The impact from of be is little premium. And a more this little premium come the in bonuses out the market have sign-on make term, then quarantine bonuses, a continuing extra that perspective, the there's paying long our because visit contract contract obviously we're a cost. labor competitive quarantine it's making or of adjustments would does markets. us a large into when future higher a that the term at to folks paying bit labor, we cover

into don't work experience an impact number up on Our they determined are below role. to well employees their costs, to employee those days the tend less the have orientation. ultimately, to been are not because over And monitor of ramping X adjusting that on branch be for ramp-up ramped weeks turnover. that how by up how as After orientation expectations. We and many general move caseload are is that about to want X operations well We but we they XX engagement past and period, we've as time. of too and the this focused staff quickly, employees productivity more hard probably the even for on and our

us not less to of full or in So quarter in that quarter three for example, have give XX an year. had been That employees with had last to compared that we hit productivity. days three, XXX XXX

which all is productivity good have really bad little visit. The hiring, and The is does a in news that's per news, we cost bad there. have news. why that news good that folks the we is the So impact

Kevin Fischbeck

today and transient? But point? of I margins longer-term how some views view think kind do do at think potentially impact? all is recaptured you versus is - about you your some Do this pressure Or guess much of there you permanent margins it's long-term on maybe impacting

Barbara Jacobsmeyer

will term. The market adjustments the remain for long

is the in orientation, short-term of based markets wage is that The term, short contract doing the hired the and get we're labor, So markets. quarantine. pressures on of impact in productivity increase out the impact more the as costs people those and the we that

Mark Tarr

reimbursement is costs program. of their updates the annual how the ought scheme. determine that's significant of to it's industry time, labor us the stay of reinstatement because XXXX mind, in for an costs an with and exception way CMS you're supposed a to bit of elevated anticipated to I the a and to reimbursement have higher labor the mean sequester. in extended find Bear into the of going The period little component

reimbursement the margin costs resulting to sequester, So higher pressure of ought by more suggest for permanent would labor the be that offset of rates. reinstatement some that absent

Kevin Fischbeck

Great, thanks.

Operator

Jefferies. Tanquilut next to move with Brian can we And

open. Your line

Douglas Coltharp

Brain. morning, Good

Brian Tanquilut

Yes. morning. Good

adds So about I'll we first like do side kind of should nonsame-store in was the I'd that pipeline, the how you've look been how quarter, IRF discharge performance like overall X%, IRF pretty what's at bed you doing COVID Same-store - good. X.X%, the business? at of the growth to the in mean thinking So given the I first, question ask the but your third exit for all we be So as right? the and about trajectory obviously right?

Douglas Coltharp

those in revision this beginning here X his But year. it's guidance. issued consistent we targets that suggested I XXXX. with ahead to for guidance to made had today's at downward where think as the that Mark after a And with sitting day, long-term landing of We're obviously, XXXX we the was we're to of about targets. revision, we've board comments, a board. of we've even positive previous the excited in increases to in is were of that contribution been XXXX. where going have that we long-term the the come on here, be on We Many XXXX we stores coming limited. more feel X their adding, those issued when very contribution new about got XX so recently And

to at again, the of expense, in of degree, because years the IRF it But the mute be to some tailwind to move you're positive that contribution for going going bearing is some X very you the those as year's effect the vintage. we XXXX into look cumulative going XXXX, a segment. Now outer in as preopening be is this opened

Mark Tarr

our to reputation that on the how acuity to also and the from patients, in that relationships quality referral well over us of the we and past year last specifically then and outcomes I for higher acclimated in come having light heard these with to very They've we XXXX sources the have show higher this into Brian, acuity. and last remained taking loyal remain opportunities year. about think comment year you've us

growth have and traction and to I contributes ongoing we profile gained think really that there. our out opportunities has that the

Douglas Coltharp

Bear it the an quarter. And QX we're we represented excited only that over 'XX. about But growth same-store experienced increase almost in we that also not mind, that had in same-store the X% increase. X.X% was

of contribution new the from getting we're to well. addition results our in very out getting plan stores, So we're as existing nice

Operator

can Matt we to William next with Blair. move And Larew

open. line Your

Mark Tarr

morning, Matt. Good

Matthew Larew

contract in levels? you historical Is see quantify [indiscernible] of you the do maybe good quarter pressure the and to Or mostly nurses is? insertion subcategories number trend morning. the Could where relative the well? them as utilization labor hired. in RN a you other mentioned Hi, you [indiscernible] this

Mark Tarr

lot background a Matt, we're picking up noise. of

the think the health, we I contract and was quarter the the part quantified between other Didn't of can you the to for one of of types hear do home give some that on hires was new questions labor of that. nurses. second kind the and for breakdown

Matthew Larew

correct. I'm one. in airport. I'll I this after an That's off jump apologize.

Mark Tarr

we the third Okay. at X. And back your those Mark. free question, please least part if feel We'll miss to hit circle of with

Barbara Jacobsmeyer

year. seen by contract visits our a nurses, last is an about labor. contract those are of productive bulk When nursing. from in of learning in they're $XXX,XXX a visits kind about The nurse contract three labor a the less compares premium. of quarter-over-quarter, X.X% tend you systems. break about comes labor the look we've They total So quite of this that visit, increase X.X% our we at perspective, all in quarter to the also because When be year, of it's And been cost is conducted to per higher. at down that of that that to

number were we - we When those RNs contract labor. we've need about hires a premium mentioned the we the visit time, of LNs. the and full-time when LN. we and that those been XXX per you use XXX so successful, when XXX $XX And all are full were of pay at RN that look

really LNs our of that for the And think I covered RNs a hires. So good breakdown three and question. quarter

Operator

to A.J. Credit Rice move we Suisse. will with And next

is line open. Your

Douglas Coltharp

Hello, A.J.

Albert Rice

everybody. Hi,

options and key in are way out the the still variables Just pros for of any strategies to evaluate yet. start, put mind? your you understand sort question reviewing home your the makes an the cons there business? it process made IPO. You But spin, you What you're the - the in haven't in that open the trying is or different talk health to maybe mind and still split, to decision I about - a the of have the of

Douglas Coltharp

Yes.

of enumerated Mark think in his considerations I comments. So many the

Our this businesses long-term creation from the position Board of objective means evaluate is beginning thoroughly value to has all done to the a time moreover, to it's reasonable resources. instructed end. be And And devoted to have our and to being right, environment. us our not process is this in optimize static both extensive conducted And that requires achieve and we a both.

terms conditions X have getting In the continue to evolve prevailing the chosen I'd is specific to and public that are well not in to company and things. the why structure least we create is we suggest that to transaction we a that option One at positioned fit of affecting we the conditions second And time not prepared very now, order will we're a to don't choose need go. best to. ready at We're feel now. the

that businesses, both going look long-term to We're ability to businesses, businesses to we to at pro the suggested positioned the create the both capital things just forma pursue strategic And structure and of long-term both tax everything to that their so to set the efficiency, on up capitalize we're shareholders. are before. sure plans Mark value for going growth look from opportunities, making they that so to

Albert Rice

the have on nurses. that's labor a there business. tightness And in and of your clarification cost business Okay. that. you portion mostly big of IRF was assuming a characterize sense the didn't nurse labor sure comments I is? tightness I much of on supply want side, of Maybe make - the that can the as the about just IRF how physical your to the a therapy how but just I'm

Mark Tarr

Mark. Yes. It's

The were biggest very correct. labor You're challenges specific almost nursing. to

it difficulty in We've majority any became vast that year, therapists. the finding We the throughout have some staff support had nurses. tied challenging is to but of not also

So RNs all RNs on as of reducing dependency. been well recruiting contract specifically labor of our focus and has and retaining

Albert Rice

thanks. Okay,

Operator

Andrew UBS. And - we to with next move can Mok Q

Your open. line is

Mark Tarr

Andrew. morning, Good

Andrew Mok

driver specifically you of Hi, also most pressure it's the seeing and that's in trends in good to same-store saw Thanks. health the Thanks sounds there? staffing that demand the hospice constraints, me to to hospice of attributable admissions drivers home question. which XX%. of the not down you're morning. It volume is pressure the Can for clear like business, speak underlying but

Barbara Jacobsmeyer

Sure.

is that - our because Today, less markets we're XX We're locations what referral it challenge to home admissions the the been priority that staffing. sources, a stations. of we able on need our our we constraints. referrals. main need. of reliance bit that have which considering our the also are So to I not little about to staffing patients diversify take hospice our health would health XX% home say we're own of working represents has

the volume And the when for down, health potential home is so our obviously, of that impacts referrals hospice.

So we're holes sources. obviously also working to fill working referral those diversify but to the staffing

Mark Tarr

to brief any facing a were of of to days But hospice Andrew, coming length to ADC as staffing I know patients types stay you're patients there seeing the of within if were COVID any increased. other we implication thing expiring admissions within were the vaccine, has you staffing and of our our frankly, with have of is who and new actually a take that a period has QX to When there's And a to fairly of we prior our do the you because would sugarcoat an on ability we're limited. your the patient lot to point in longer shorter-term if seeing up. is that of constraints for lot has compare this time. year don't way that QX year, stay, length last rollout

Andrew Mok

for just helpful. Barbara. That's it. a follow-up Got And

team health quarter completed of you of speak CEO as you hospice, home depth your and light some the in of to recent continuity can Now that departures? first and business the of Thanks. the

Barbara Jacobsmeyer

Absolutely.

team home X of sales that with first X really for know to our is over to our management hospice health our been actually members important health - the note X and have XX I with hospice been and members, So of important and operations is what's our EVP these think over of EVP years. company XX our Probably years. for executive and home team over

company. the the obviously new Christie and to new are So team, I to but not

team team. structure would about I field operations the say some is that, Resource promotions And focused after to main responsibilities. signed increased took We and what all on currently based other the those, in some our member I of So agreement. noncompete, really Chief over with management. really Officer. on the sales the I is executive feel our than management group the working nonsolicit But did leaders That's the of senior that's role, leadership. recruit Human the we shortly our that good we're these the But

of They we fully And so I'm some the team already committed, I done group about they're they've seeing the is place. we've a have the great in will but are feeling that think in I way mentality. tell talented at you and recruitment already about kind prior that had our philosophies now excited changing always not very we're that really implemented of efforts. we've confident who some ideas only And

I'm the really we excited So about in have place. team

Mark Tarr

add, this Mark. I will is have to

We've to While has response organization been style or a done years. for her Barb impressed not we're her this has certainly with XX time, leadership segment. what transferable rather seen surprised. Barb there and respond retaining we're and her short she for their those with in to recruiting and talented to the very skill work knack are staff. from health management hospital's People has for like segment sets home a people team and from Barb

So I'm has team the around Barb. how all not rallied surprised with at

Andrew Mok

color. the thanks Great, for all

Operator

next Bank. to Deutsche And with move we Chickering Pito can

Your line is open.

Mark Tarr

Philip. morning, Good

Philip Chickering

guys. morning, good Hey,

transaction? you this replace Home contracts for have like so lost now velocity And you you to executives plans departed? Care health is filed, X that the of to Barb. the executives Do Per for I days as have with have on ago, home head Just into a you that or remaining executives hiring X this hire any has - follow-up guess, do one, Holdings.

Barbara Jacobsmeyer

promotions, said, have, and call So we internal would through we've what entire management place. actually, executive I in like I the team senior

for the So position, we we pipeline, a great recruit and have actually needing is in only position. that's and are Chief some position to still our actually Resource Officer Human new the candidates

senior level. we restricted about place. best, I So with I agreements locked feel folks mentioned, did not in have - the as good the And we covenant we've have. We we it feel

are those in all now. place so And

And team we so I going a have forward. good think stable management

Philip Chickering

then the topic And staffing Great. on of wages. back Okay.

inflation full-time you when the the employees, quantify go were at costs normalize that how versus labor you're just Thanks much pre-COVID? what XQ premium so seeing COVID pressures during to surge can XQ and labor today, away? much. And is out Looking wage XQ

Douglas Coltharp

second on little increase had, it's about So home answer the on terms of the bit side, into in tell we from difficult you $XX sign-on think, labor million the you QX to shift in Barb the I will IRF QX. and question. a bonuses, a health increase the part side. contract of I gave

first not it's your end. remind part that on Can you the of So insignificant me question?

Philip Chickering

Yes, you bet.

inflation staffing you for sort what seeing as are percent just or employees, for full-time those at what today increasing XXXX are Looking of of just wages those employees wage sort you're pre-COVID? So today? of versus wages curious your renewing those you

Douglas Coltharp

would I per of on it health. we it, home be say, So call fourth through that's had, do has a generally basis, how of FTE the assumptions. up FTE per to kind and Trying to that was saw get about - speaking, is this quarter, difficult. CPV measure third X% in as X.X% the factor SWB our guidance it's versus, we point We to X%. would the within that's much the About, which to assumption in you a quarter time, that normalized stickiness X% FTEE had they think prevalent the if in going determine at equivalent And the be portion in on range.

too into it's might move to think early to I as of start XXXX. how we that much dissipate suggest

Philip Chickering

Great, thanks so much.

Operator

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

is line Your open.

Douglas Coltharp

Frank. Hey,

Frank Morgan

- I moving and now you if health Good going? are then nurses and of susceptible maybe question nurses are topic. to? less operating being first ask on back home staying question they are Or color indicators? care labor exited morning. little they where in is one thought would they the little give I about type all my always where of more Thanks. quarter segments, just go here probably rehab how talk guess Hey, could around. more us about a they of these different between is, to retiring? guess What of can setting here are going be I question some a That I'll of But those your just my the a little And either question. key or kind you more second is

Mark Tarr

going question to acute home setting. our in the I'll about choose Frank, of nurses, nursing this to care IRF, don't the Barb ask they Mark. the is hospital your the talk rehab, take our to if certainly, within response typical back IRF and they're then inpatient health. But preference typically - the

And they on we percentage nurses heard the rehab a So higher having you've get about talk our that what to tire care less a try. where those an ICU come And that patient far but them see of in environment their to nurses hospitals, duration an to so, more stay get from number a certified accreditation. certainly setting. hospitals nursing not want acute see if acute we rehab have encourage in atypical I if start care a care of particularly our we us down or and level and as over early we can want being time past setting, we'll in to situation do it's for get often of see of then in a turnover length IRF they they well in to out career, the going nurses will hospital is CRRNs away that

I'll Barb versus that's hospital, between and So IRF acute health. the differences major let care of about the kind talk home the

Barbara Jacobsmeyer

Yes.

some that why group stepped and it's a not well and leave which working to both to days to back, trying agencies. come while through be health for traveling away would portion home we're ones I them that It kids to hard week a a so re-recruit and kind things. X that important that as because just in interested being be for home. thing. really wanted that top juggle did home school, hospice working we X So think say, as at offer competing That's days during to week, we on they of of the group we're we is to a for flexibilities may some to was while, may though, lost be to hospice, bring the really are of sort still COVID, health the workload manage of willing a them back, and

really trying just time, re-recruit health and we hospice the just so We're larger they're those hospitals doing because, coming care can frankly, those seeing create we're the staff first some exhausted. a increase to from acute members. also flexibility So of interested home for folks

that do They bit flexibility. allows to little little And different, a a look something something coming. more so they're

So some health on really we're we're some losing and to new while I recruiting creative competing home from. where think we're hospice, being folks

Mark Tarr

travel left. require nurses XXXX. these will experienced come up tell of back the to of nurses think those took back surge they I that the to quickly how that it's traveler to highly marketplace on They Frank, that for a number in engagements initially typically a to profitable transition the markets from little seen the come XXXX, here early we then as surge half And that will But markets. the that the were nurses second we've also these them we nurses. saw to in

Douglas Coltharp

considerations to the our QX QX your Frank, question in for trajectory coming businesses for then included is XXXX. guidance And out of both on

the things and home that. just to a decreased per of with with And strong third are some Mark XX, of only volumes we home are health health, XX field low employees enter number quarter IRF XXX And currently, to XX. October the starting continued XX to that have volumes see closed. the and health expect XXX then We encouraging It's October And we into then to as and supportive staffing in regard as we to the quarter, locations our business in of of is in XX in script, highlighted month QX up October some only limitations. reiterate to term, a by during health for of staffing had with from relative quarantined high locations of number home home the more a the the from signs admissions October. average September limitations with dropped regard in has his day

Operator

James. move And to next John Ransom can Raymond we with

Your is line open.

Douglas Coltharp

Hey, John.

John Ransom

morning. good Hi,

from assume separate could home Just what's the figure about we think And of to be do to trying to health would Are what of the execution? would a the us Just once trigger. with year-end to this, decide any once outside you decide it company, that? to think understand frame end going back hospice, you I help about a from should how a you cost the also, help there us audit? like Is SEC and multi-month let's decision out, additional to result get pull costs, public sort of sort mean, have the trap, process? that you time additional

Douglas Coltharp

of particularly very third the have our health else, There depends analysis of None including the a specific be time disclosed cost the that, the onerous. X-year carve-out done not our hospice separate it beginning the as with substantial previously to look lead additional or the business progress given to there. particularly company. form referenced as quarter some steps, we've by as will be preparatory SEC to to said anybody times, fact With With establish home have the since lead we other made regard the and transaction. having on should we of a report, work We've yet. parties, but thorough including embedded regard that second the that financials, back the already that's been repeatedly of viewed done audited date, We've prepared. we've

to easy suggests readiness certain to we it's reflect progress had relatively So update The this. of filed additional state as confidentially, a through well. S-X quarters been those as which

our the for We'll we trends the gone are into business to degree the very market to readiness a invest in of that backdrop continue and we balance consistently, year, very readiness have of said, this underlying state pursue high preparation we has So in kind degree transaction the of of as has substantial. been are a again, but of believe appropriate. the when

John Ransom

I'm so decision. to of to mean part I - just mean make a clarify, doesn't I take year Doug, assuming the it a So

So part of is thinking challenges given your right the the it's time in best maybe not the operations. now, just

hearing I - backdrop am waiting Is that of that part launch fundamentals? So maybe it right? for a if you were more of to separately, favorable

Douglas Coltharp

You're decision. harm on us there's it, a right, to - didn't stop doesn't guess, to year it a it no I but take make

the the separate We're to sense taking and most it further that saying, our that foreclose we on form sense. So step business, we based transaction. into the review a we didn't that the determined separating public point, now public believe independent a end separate - makes company at we stated to of and July, the today did of make that on it

point your how view of the our So you to terms fatigue there, the reference? way. I time that's these And are what's an the of the analysis guess, on of in that transactions mean done done. in analog I have of you make all is referenced some decisions determine Mark many of I have of those important out and his your process along particularly John, understand frame, lengthy? comments, to

John Ransom

I got your point.

to ask the question, thanks. Sorry

Operator

we Scott move to And Inc. next Fidel will with Stephens

Your line is open.

Douglas Coltharp

Scott. Hello,

Scott Fidel

Hi, thanks, good morning.

see the in some interested October on just that home pickup did on question, - you health the First admissions. of

staggered on seen across it markets? relatively is still flavor trending of different little pickup? a us markets and the give across those the just bit a can the Has you've Or terms you If been consistent in it geographies. how more

Barbara Jacobsmeyer

about where referral, frankly, the been quarantines the down. there. I areas bit a mean really the come we've has It's seen

has starting caseloads. their So to it to really quarantines dropping, out the getting come up folks of orientation, build

now take the about these constrained branches really is staffing able more of limitations growth away of this being referrals. seeing being we're because where to from moving So to

where And seen really so been the we've progress. that's

Scott Fidel

over limitations forward with terms you you see opportunities next that? HH just follow-up, will just interested the of, you plant then for capital separation talk as are or H are deployment plan thinking Got the on the in and it. about all growth could about And us my without is X, any of those? if period arise example, towards interim to here? go M&A addressing itself, to you in it there move I'm how quarter And systems Or Thanks.

Douglas Coltharp

June. to we've way I that to health $XXX hospice. we Frontier was the an think end very And we're that at in M&A move which forward million deal demonstrated in home of on was continuing closed tangible a and capitalize opportunities transaction, approximately growth the that

separation. activity with to in the to form continue of be to growth impact be novo forward. attractive. up And going both remain in frankly, any going on in of both the via growth hospice might we that and home We're be active we We terms Obviously, of our will our flexibility pipeline past, and But health cognizant that effective that's regard our M&A de on believe do health featured pipeline. our those well development hospice. we it in of ramping also and something story that, capitalized home for remains haven't more in have

like the IRF Within we bed the that openings the hospital and new out really we're the returns expansion. towards segment, capital seeing of deploying

so on with XX targeted And albeit level, that, new it's to be an going XXXX. rinse-repeat at accelerated openings for

Operator

And we Hynes can move next with Mizuho. to Ann

open. line Your is

Douglas Coltharp

Ann. morning, Good

Ann Hynes

Good morning.

health vaccinated. consider home wanting But home talked add-on this And be don't the of anything just attractive. through do that's it's out the of while margin XX% know some in think there margin system? going I question, the guess is about And the how the in for employees house? not home change impacted should I revenue structural for health maybe families think health you how and health. in But your to lot we're confidence reason we really an underlying rate Do there not or of one around on we over maybe about I profile side. mean, Do finalize COVID works asking you the haven't since finalizing the time has me my lower presentation talking really hospice have meaning be, for and them opposite in So modeling XXXX challenges XXXX, expressed a want growth XXXX. a think labor view only do parent that And to admissions the asked, side business. guess, want nobody home the I business a while elderly to demand I models, mean, an And to is equation, demand and would in vaccinated? with long-term impediment that's for question aides I you aid film of there's home XXXX? that a think negatively revenue on term, the spent you stood all and that is But the to structural we going that us kind second as really the that you thing health impacted the your you I'm and be call are is is our we intermediate

Mark Tarr

was a bit, quite Ann. Well, that

to try will We it. to get

use good of You one your and question follow-up. one make very

first strong good on are start So a demand the that, Barb's why got things don't that to because some supportive some from perspective data of we demand? of

Barbara Jacobsmeyer

think, I all, So patients the yes, care home. want in continuing of to are first the

minimum a in we quarter. we mentioned, As this admissions we away X,XXX know at turned

So The skilled. the lot home care the is patients a are of is there. the have of don't there. wanting in We aid. referrals Most ours

skilled protective and nursing therapy into go found because they patient's home. skilled have So when we what the our wear staff a full equipment

the not wearing knowing the are our seen teams that have We into the of having come home, all reluctance equipment. protective individuals the

impacted in home. that's don't skilled that or for impact care volume or the the we need So feel patient's the the will

Mark Tarr

do to Referral want hit referrals Barb, you sources? too?

Barbara Jacobsmeyer

of offices continue physicians, wanting need direct goal referrals. So I patients from really we've The get from mean, a - referrals that to to we and that acute lot referral the they a standpoint, - physicians' of our care. is helping grown before our sources give the level really with

getting And of offices. those referrals more and I more so feel why that's we're from physicians' directly like

And So from an some pre-acute. ALS electives the historically getting seen because centers. have facilities surgery to some they increase centers sources and surgery with you're nursing we've of in and moved the certainly come that seen of that declined, the that ILS. as kind from then referral continuing them the skilled has also of referrals We've

focus continue referral we sources So we to on go diversifying to. that the

Mark Tarr

being volume establish going we there's there that - volume referral our out objectives. to we Ann, by our that view need forward, about drive think our no is So the growth imposed have as we volume demand limitation on sources that to and

good do on to need to on Barb that questions of those, there. her able for and the we've - substantial we're some made of programs to comments, on into through be get And limitations. side progress very described like that based sales the we is going make And we in but capitalize that on focus clinical work QX additional some that progress of area all Did XXXX. the have progressive the all the staffing feel to We you?

Ann Hynes

Okay, got really XXXX, consider ordinary? is you for anything anything that just of there And it. Yes. want then we should the out

Mark Tarr

The sequesters going are back in.

of So business, which you're us pricing is substantial. Medicare basically to for no increase very your deal you going book know on with

Ann Hynes

All right, thanks.

Operator

take Steven from Barclays. Valiquette can with final question we And our

Your is line open.

Mark Tarr

Steve. Hi,

Steven Valiquette

Good morning, everybody.

health of you any referrals operations asked the in X precedent you XXXX and intact with patient of separation can health basis, operational how that also and post-acute X in these particularly if entities the the just in hospice because markets the the showed a some in next first form separate discuss home other guess So obviously and transaction, year, was structure back from some preliminary kind your of potentially synergies home the half I of of likely forth, that place from curious of company. I'm the areas. transaction there for announcement similar stay back but of a - care a can synergies importance on keeping between I operational between spin-off view public in and in facility-based

from there's you learnings may the that So any guide president as clinical wondering Thanks. help transaction useful I'm also if well?

Mark Miller

I'll in of collaboration clinical view in discharge, is a our health our collaborated process remain is of the that. collaboration IRFs priority the a to our to home having patients the That the locations. referred will we've the for Mark. was is efforts and take What This priority from in of coordination our care patients. the quality past standardized overall

don't what have learned home of we that our agencies refer what markets presence. replicate process of we've health markets where that can many those from we a we've in I think nonowned overlap with seen is to we facets also as that

to the a priority transaction health from focus remain transition our year. home next that from after even on will IRFs So patients the

Barbara Jacobsmeyer

many add have of that the pathology. so that one many services don't important of The that patients full things is home number that because need in other of neurological of would so thing I of speech that of agencies Those IRF have occupational there's were to phases physical, complement our are is a the and types that patients. the initial we fair collaboration clinical health the

home. and And the to patients, so knowing we take patient them X important those that able after really first we day goes lower within for Those staffed the rates IRFs can are care because have it's the be are the readmission that our or to take what better factors provide satisfaction. and helps patient them

providing that change. of level to going not So is care

also And so the of need that care won't for change. level

So that by impacted significantly being a mentioned, we as separation. Mark don't see

Mark Tarr

collaboration. to a reminder, lead the brings Steve, you that clinic side the Barb just was she role as from IRF unique the because of perspective a

the she's Now to home side health going that. of

equation she affect sides to of unique the So and that. a it from both position knows in is

Douglas Coltharp

key separation. of we so X to there to bring post that stickiness will together, are Steve, this And lead the that factors all think the that

markets The have first established. is overlap we XX

the kind same any together. X have in of been we've to have the you increasing since coexist to have clinical in companies about So overlap deliberate market very collaboration, the order and we market

X best the been that and years and almost consistent is protocols now through approaches refined have collaboration frame. procedures for that second the in place practices over governing The clinical time

mentioned, a agencies resources, clinical home discharged to of results. patients The we being IRF. positive for have on types the our are track stacked predominantly proven the serve is from third, Barb health therapy And we who with the is a have side producing the record fourth as

Steven Valiquette

That's ahead. really go Okay, helpful.

Operator

does our back our the for question-and-answer any this remarks. conclude And turn over program I'll closing presenters to session.

Mark Miller

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

Operator

program. your does Thank participation. conclude This you for today's

may at any time. disconnect You