Addus HomeCare Corporation (ADUS) on Q4 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by. And welcome to the Addus HomeCare Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session . I would now like to hand the conference over to your speaker today, Dru Anderson. You may begin.
Dru Anderson: Thank you. Good morning and welcome to the Addus HomeCare Corporation fourth quarter and year-end 2021 earnings conference call. Today's call is being recorded. To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP by going to the company's Web site and reviewing yesterday's news release. This conference call may also contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Addus' expected quarterly and annual financial performance for 2022 or beyond. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing discussions of forecasts, estimates, targets, plans, beliefs, expectations and the like are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by important factors, among others, set forth in Addus' filings with the Securities and Exchange Commission and in its fourth quarter and year end 2021 news release. Consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to turn the call over to the company's Chairman and Chief Executive Officer, Mr. Dirk Allison. Please go ahead, sir.
Dirk Allison: Thank you, Dru. Good morning, and welcome to our 2021 fourth quarter earnings call. With me today are Brian Poff, our Chief Financial Officer; and Brad Bickham, our President and Chief Operating Officer. As we do on each of our earning call, I will begin with a few overall comments and then Brian will discuss the fourth quarter results in more detail. Following our comments, the three of us would be happy to respond to your questions. Yesterday, we announced our financial results for of fourth quarter and full-year 2021, and we are extremely proud of our operating performance. Our team was able to produce record results for the quarter despite the pressures from both a tight labor environment as well as increasing employee quarantines due to the Omicron variant of COVID, which I will discuss in more detail in a few minutes. Our revenue for the fourth quarter of 2021 was $224.6 million as compared to $196 million for the fourth quarter of 2020, an increase of 14.6%. Adjusted earnings per diluted share for the fourth quarter of 2021 were $0.97 as compared to $0.82 for the fourth quarter of 2020, an increase of 18.3%. Our adjusted EBITDA for the fourth quarter of 2021 was $26.7 million as compared to $20.9 million for the fourth quarter of 2020, an increase of 27.5%. For the full-year of 2021, our revenue was $864.5 million with an adjusted EBITDA of $97.7 million or 11.3%. This along with our strong operating cash flow during the year resulted in a cash balance of approximately $169 million at December 31, 2021. As has been discussed over the past few months by several companies in our industry, one of the most challenging issues we face today is labor pressure. This not only includes dealing with the challenge of hiring enough employees to care for our consumers and patients, but also with the reality of increasing wages due to in the current labor market. During our fourth quarter, we saw continued pressure in both of these areas. Let me give you some information relating to the labor dynamics for Addus. Our personal care hires per business day during our fourth quarter of 2021 were up 3.2% over the fourth quarter of last year, but were down 5.7% sequentially from our third quarter of 2021. During our fourth quarter, we started to see the effects of the Omicron surge, which began in December and began to decline at the end of January. While today we are not yet back to our expected level of hiring for personal care, we have started to see an increase in our hires per business day in February, and they are currently running above the level of hires per day we saw in the third quarter of 2021. We are also seeing wage pressures in certain markets of our personal care segment. However, the majority of our personal care labor force have already received meaningful wage increases over the past few years, as we have experienced states increasing their minimum wage. This has helped to keep the current wage issues in personal care to a more manageable level and primarily in our smaller markets. Clinical care is where we have seen the biggest impact of recent wage increases. In our home health and hospice segments, market pressures resulted in wage increases of approximately 4% to 5% depending on clinical specialists. We have experienced an increase in turnover in these segments as the demand for a limited number of clinicians increases across various healthcare settings. To help us meet these challenges we have added additional resources to reduce the time it takes to fill open positions while also accelerating our standard annual wage increases to meet these market challenges. We are confident these investments will help with our labor issues. One item which mentally affected our fourth quarter revenue was the increase in the number of our caregivers who were in quarantine due to the surge in COVID infections resulting from the Omicron variant. This variant has caused us to the largest increase to date in the number of our employees entering quarantine after having been either exposed to or tested positive for the virus. We began to see this increase in the last few weeks of December. By January 2022, approximately 4% of our caregivers in our personal care segment were in quarantine at the January peak. This level of quarantine was 3x higher than what we saw with the Delta wave and almost 2x higher than our previous high point, which we saw in the fourth quarter of 2020. With this many caregivers quarantine for up to two weeks, we have seen a reduction in hours served of around 6% for January 2022. The good news is we have started to see a rapid decline in these quarantines with our February numbers back down to the level we saw with the Delta variant. Remember, in personal care, since we've built body hours served, our revenues are immediately impacted by quarantine, but can quickly recover as our caregivers are able to return to service. We are encouraged to see the reduction in quarantines accelerate and expect this improvement will continue as the number of cases decline across the country. Now let me discuss our same store revenue growth for the fourth quarter of 2021. Our same store revenue growth for our personal care segment exclusive of the New York CDPAP program was 8% when compared to the fourth quarter of 2020. This growth includes the Illinois rate increase we received starting November 1, 2021. However, as I previously mentioned, our same store growth in personal care hours was impacted by our quarantine levels, as well as to an increase in the turnover we saw with our market level service coordinators. These are the team members who help to schedule hours to be served as well as help to onboard new caregivers. This turnover for this position has increased over the past several months, as we have experienced issues with both the Delta and Omicron variant of COVID as well as the general labor market challenges. We are optimistic that hours returns to normal levels of growth as current wave of virus continues to decrease and to our service coordinator turnover returns to our historical levels. Turning to our Clinical Care operations. Our Home Health segment continued its strong performance. During our fourth quarter of 2021, our same-store revenue growth was 7.1% as we continue to see strong volume growth in this segment. Although we did see an Omicron related impact on volumes late in December and into January, as some acute care facilities limited elective procedures. However, since the beginning of 2021, our Home Health admissions have increased steadily and with our overall favorable trend continuing through most of the fourth quarter. As we have been saying over the past year, we are excited about our home health operation, and we will continue to focus our efforts on expanding these services. As we have anticipated, our Hospice same-store revenue increased 1.3% over a strong fourth quarter in 2020, the first year-over-year revenue growth in our Hospice segment, since mid-2020. As we saw in the third quarter of this year, our same-store admissions continue to improve over the prior year, growing 1.4% over the fourth quarter of 2020. Although, we did see a decline sequentially due primarily to expect this seasonality during the holiday season and to a less extent the onset of Omicron in December. We continue to make progress with our median length of stay, improving to 22 days in the fourth quarter of '21, as compared to 15 days in January, 2021. Overall, our Hospice ADC increased to 2,635 for fourth quarter of 2021 as compared to an ADC of 2,492 for the fourth quarter of 2020 inclusive of our City acquisition completed during the fourth quarter of 2020. Let me update you on the status of our vaccine progress. As many of you know, the Federal Government has passed a mandate that all healthcare employees whose businesses operate under a condition of participation with Medicare or Medicaid must be vaccinated. This vaccination mandate covers our Home Health and Hospice Hospice segments. In addition, New York, Delaware and the City of Philadelphia have mandated that all healthcare companies, including Personal Care must ensure that their employees in those markets are vaccinated. Although most have exempted nonclinical caregivers, from their state mandates. These various city, state and federal mandates make it imperative that we continue to focus on getting as many of our employees vaccinated as possible. While Addus has not mandated vaccine for our employees, we have continued to take steps to encourage and incentivise our employees to get the back COVID vaccine, and we are pleased with the progress we are seeing. Overall, our confirmed vaccination percentages including employees with approved exemptions are 99% vaccinated in Home Health, 99% vaccinated in hospice and 72% vaccinated for personal care with the compliance rate between 95% and 100% in personal care markets with a currently applicable mandate. We will continue our efforts to encourage our employees to get vaccinated so that we will be well session to adhere to any future mandate implementations as they may occur. As we have discussed on our last few calls, we continue to await a decision on any additional awards or responses to our appeal in the New York CDPAP program. Based on the uncertainty associated with this RFD process, we have stopped accepting most new referrals for this New York program. Both as a result of the COVID impact and our intentional approach to reducing New York CDPAP admissions, over the past 12 months, we have seen our run rate revenue in this low margin program decrease from an annualized run rate of approximately $52 million as of the fourth quarter of 2020 to approximately $42 million as of the end of our fourth quarter 2021. We expect our revenues from New York City CDPAP to continue planning in the absence of new developments or information as we continue to limit new referrals. However, we are pleased that the governor of New York has included in her budget proposal for the coming fiscal year a rollback in the 1.5% Medicaid reduction we saw last year. In addition, she has proposed increasing Medicare rates by an additional 1%. If passed into law, these rate increases will strengthen the risk of our New York business. We that during the fourth quarter, we closed on our acquisition of Summit Home Health, a Medicare certified home health provider in Illinois, which allows us to provide skilled home health service is in the state with our largest personal care operation. In December, we announced our agreement to acquire JourneyCare hospice, a not for profit hospice with an excellent clinical reputation, and one of the largest hospice service operations in the Chicago Metro area. With this acquisition, we will provide all three service lines in our Illinois market. This transaction closed on February 1, 2022. Currently, we are in the early stages of the integration of JourneyCare into Addus, and we are pleased with our progress. We are excited to have both the Summit Home Health and JourneyCare as part of our Addus family, and I want to again, welcome both teams to Addus. Both Summit Home Health and JourneyCare are examples of acquisitions, which align with our goal of creating markets where we provide all three levels of home care. We will continue to look at opportunities in all three segments with a focus on acquiring clinical services capabilities in markets where we currently have strong personal care coverage, furthering our strategy of developing states with coverage of all three levels of home care. The COVID pandemic has affirmed the value of taking care of elderly and disabled consumers and patients in their homes. Home is not only one of the safest and most cost effective places for them to receive care, but is also the place where most elderly individuals prefer to be. Over the past two years, we have continued to invest in planning, preparation and materials to assist us in safely and effectively fulfilling our role as an important caregiver, allowing these consumers and patients their wish to stay at home. We believe that this heightened awareness of our value of home based care is favorable for our industry and will continue to be a growth opportunity for our company. We also understand and appreciate that our operations and growth are dependent on our dedicated caregivers who work so hard providing outstanding care and support to our consumers, patients, and their families. I am thankful for each of our team members and I’m proud of the job they have done in the past, and continue to do each day. It is important that we all focus on achieving our mission by putting our patients first. With that, let me turn the call over to Brian.
Brian Poff: Thank you, Dirk, and good morning everyone. Addus had a solid financial performance for the fourth quarter, continuing our record of delivering consistent profitable growth for 2021. Our results reflect positive trends in all three segments and the benefit of the advanced Illinois rate increase for personal care. We are encouraged by the continuing improvement in hospice care with a return to positive same store revenues and continued sequential improvement in average daily census median length of stay and patient days. While our media length of stay for hospice segment has not fully returned to pre pandemic levels, we were optimistic this trend will continue to improve in 2022. with the impact of the recent Omicron wave that peaked January, we anticipate our quarter revenues to be negatively impacted by employee quarantine, but believe our track record of managing through the pandemic reflects our ability to adapt to the ever-changing environment. And we expect to continue to produce strong offering results in 2022. As Dirk noted, total net services for the fourth quarter were $224.6 million, an increase sequentially from $216.7 million in the third quarter. Full year 2021 revenues were $864.5 million, up from $764.8 million in the prior year. The revenue breakdown for the fourth quarter is as follows. Personal care revenues were $175.1 million or 78% of revenue, which benefited both from the November 1, 2021 statewide rate increase in Illinois, as well as a retroactive rate increase for Illinois managed care organizations related to the January to March, 2021 timeframe. We have previously received a rate increase for this period for all programs reimbursed directly by the state. Hospice care revenues were $40.2 million or 17.9% of revenue. These results include the addition of City hospice, which closed at the end of 2020, and the hospice division of Armada, which closed on August 1, 2021. Home health revenues were $9.4 million or 4.2% of revenue. These results include the operations of two acquisitions, the home health division of Armada and Summit Home Health which closed October 1st 2021. In addition to our strong growth, we added approximately $30 million in acquired revenues in 2021 and another $55 million so far in 2022 from our recently closed JourneyCare acquisition. We look forward to seeing the incremental contribution to both revenue and earnings as we integrate JourneyCare into our operations over the next several months, and we'll continue to evaluate and pursue other acquisition opportunities that meet our strategic criteria. Other financial results for the fourth quarter of 2021 include the following. Our gross margin percentage was 32.4%, an increase from 30.2% for the fourth quarter last year and up sequentially from 30.9% in the third quarter. The year-over-year increase is largely attributable to our higher mix of clinical services, and we benefited sequentially from the Illinois rate increase to offset the previous minimum wage increase in Chicago. As we have seen traditionally, we expect our first quarter gross margin to be impacted negatively by approximately 100 basis points as our unemploymenttax base resets within a year. G&A expense was 22.1% of revenue, slightly lower than 22.6% of revenue a year ago, with lower acquisition related expenses. Adjusted G&A expense was 20.1% of revenue, up slightly from 19.5% of revenue in the fourth quarter of 2020, primarily due to our higher mix of clinical services with a higher G&A profile. With the addition of JourneyCare's operations in the first quarter, we expect to see our G&A percentage of revenue increase slightly over historical levels as our clinical business continues to grow. The company's adjusted EBITDA increased to $26.7 million for the fourth quarter of 2021 compared to $20.9 million from the same period in the prior year, and was $97.7 million for the full year 2021, which was an increase from $76.9 million in the prior year. Adjusted EBITDA margin in the fourth quarter of $11.9 was an increase from 10.7% in the fourth of 2020, and an increase sequentially from 11.5% in the third quarter. For the full year 2021, our adjusted EBITDA margin was 11.3%, up from 10.1% for the full year 2020. Adjusted net income per diluted share for the fourth quarter was $0.97. The adjusted per share results for the fourth quarter of 2021 exclude the followings. The favorable impact of the retroactive Illinois MCO rate increase of $0.05, acquisition de novo expenses of $0.09, restructure and other non-recurring costs of $0.01 and stock-based compensation expense of $0.11. The adjusted per share results for the fourth quarter of 2020 excluded the following. COVID-19 expense of $0.01, acquisition de novo expenses of $0.15, restructure and other non-recurring costs of $0.03 and non-cash stock-based compensation of $0.1. Our tax rate for the fourth quarter of 2020 was 26.7%. For calendar 2022, we expect our tax rates to remain in the 25% to 27% range, slightly higher than in prior years. DSOs were 53.9 days at the end of the fourth quarter of 2021, fairly consistent with 52.9 days at the end of the third quarter. We continue to see strong collections from majority of our payers and expect this trend to continue as a majority of states, where we operate currently have budget surplus. We continue to see very strong cash flow trends with our fourth quarter net cash provided by operations totaling $25.2 million. Exclusive of payments utilizing previously received government stimulus funds and the partial repayment of our payroll taxes, our net cash provided by operations would have been $28.7 million for the fourth quarter and $67.4 million for the full year 2021. As of December 31, 2021, the company had cash on hand of $168.9 million, $224.9 million in bank debt and capacity and availability of $376.6 million and $143.6 million respectively, under our revolver. As you can see, we remained well-capitalized and focused on maintaining a strong financial position in order to pursue our acquisition strategy as we enter the new year. This concludes our prepared comments this morning. I want to thank you for being with us. I'll now ask the operator, please open the line for your questions.
Operator: Your first question comes from Scott Fidel with Stephens. Scott Fidel, your line is open. You may ask your question.
Scott Fidel : First question, just understanding that you don't provide formal guidance and appreciate some of the qualitative commentary that you did give. But just give a few of the different moving pieces that you talked about in the first quarter. And then it's the second quarter with the impacts from Omicron clearly being more weighted to January, but having a significant impact, but then also having the JourneyCare acquisition coming on the line as well. Maybe if you can just talk to either directionally or to the level of detail you're willing to give us thinking about how those revenue trends overall could evolve in the first quarter relative to the fourth quarter, and then maybe thinking about it appropriate run rate maybe as we get to the second quarter where the impacts from Omicron will obviously be much less significant.
Brian Poff: I think our expectation, just looking at Q4 going into Q1 and the impacts of Omicron that we've seen to date again, not having full visibility yet into February and March, obviously, but I think our expectation with the impact we've seen from quarantines and those pressures early year is outside of the JourneyCare acquisition. I think our expectation is we should see revenue sequentially probably see 2.5% to 3% reduction from Q4 into Q1 is probably a pretty good proxy for our expectation and, I think, JourneyCare coming on board February 1st will be additive to that. I think as you recall from our conversations, so JourneyCare is about $55 million of annualized revenue, we're going to be spending probably six to nine months really integrating that and keep in mind that was a not for profit organization. So we'll be making some adjustments there. So our expectation is really not to see any real meaningful earnings for the first six to nine months. So, let's see some revenue impact in Q1 but not really much of the way earnings until we get those integration processes well underway.
Scott Fidel: And then maybe similarly, just on the personal care dynamics obviously, you had a strong print there in the 4Q for the same-store with the benefit of our rate increase. Any sort of framing that that you'd want to give us in terms of how you're thinking about same-store growth for personal care? Obviously you did give us that detail on from the impact of the hours in January from the caregiver quarantines. But as we think out more over the full-year how you're thinking about same-store growth for personal care against the long-term 3% to 5% target?
Brian Poff : I still think at least that we've benefited the last couple years from nice rate increases that have kept us above that 3% to 5%. I don't think our expectation we got this rate increase Illinois that will bake in for the first part of ‘22. But I think, outside of back from any kind of additional COVID waves or volume pressures from that regard, our expectation is still 3% to 5% organic and personal care. So I think, volume's going to be a key for us this year. I think we got several things we're doing in tight labor market, but we've made some adjustments to how we're onboarding employees, et cetera. So if we can get the right amount of focus coming on board with us, and we mentioned in his script, our hiring numbers are looking pretty good into February. We still think 3% to 5% is the right way to think about long-term organic growth in personal care.
Scott Fidel: And then just one last quick one for me. Brian, you have thoughts on operating cash flow expectations for 2022 relative to 2021?
Brian Poff : Yes. I think 2021 was a good proxy. If you look at our net cash flow provided kind of compared to EBITDA, we run right at 69% close to 70% conversion. I think with the way we've seen our payment trends from our payers over the last couple years of been pretty steady far expect will be a similar profile in 2022.
Operator: And your next question comes to the line of Brian Tanquilut from Jefferies.
Brian Tanquilut: Just a few quick questions for me. I guess, Dirk, as I think about the inflationary environment that we live in today, we're talking a lot about labor. But how are you guys thinking of or what are you hearing from your clients in terms of the ability of the states or willingness of the states to rates to match broader inflation right now?
Dirk Allison: This is probably interesting enough. One of the strongest markets we have with our states, I think with all the help they've received from the federal government, we're seeing a number of states either consider raising rates and allow us to pass that through somewhat to our caregivers, so that we can help with recruiting or to cover costs that we previously incurred as we tried to keep people employed and meet the markets that are out there. So I'd say we're very comfortable, and competent in our market states today. With this 10% money that's out there a lot of them are looking at new ways to use that money over the next year or two. And so we're excited to see those programs come about over the next few months. So we're pretty comfortable right now with where we sit.
Brian Tanquilut: And then just to follow up, the M&A environment. What are you seeing out there in terms of competition for deals or anything you can share with us in terms of the pipeline of acquisition opportunities that you're looking at today?
Brad Bickham: Brian, I don't think we've seen any increased competition per se. I think what we are hearing is maybe there are some folks with Omicron pressure wanting to kind of hold off and then come out on the other side of that. But no real change from our perspective. I think from a multiple standpoint, we think there could be some compression with the current environment, but otherwise we're pretty focused strategically on still looking for things that are good fits for us either in additive to personal care, adding clinical services in our key markets. I think that'll be a consistent focus for us this year.
Brian Tanquilut: And then Brian, one last question for me, just modeling. Any comment you can make on the tax rate and any other callouts you want us to think about as we model for 2022 and ‘23?
Brian Poff: Yes, I think on tax rate, I think our expectation is we'll be probably in that 25% to 27% range. I think in prior years we've seen it be a little bit lower, part of that is the benefit is our stock prices appreciated. We get some benefit from that. We don't really where we are trading today, not expecting to see that probably continues. So I would expect to see us in 25% to 27% range for this year.
Operator: Your next question comes from the line of Matt Larew from William Blair.
Matt Larew: A couple of things on labor. One I was curious if you tracked any metrics in personal care, like the time from interview to first paycheck and how that has trended and maybe how you've been working to improve that. And then you alluded to some turnover, I think, more on the administrative side. So I was curious if you could quantify that at all and maybe indicate how that stabilized since Omicron out?
Brad Bickham: With respect to tracking the metrics, from basically application to hire, we do track that. Now there are some things that kind of way into that, that are state specific regarding, kind of background checks and timing there. So I will say, when you have a virus surge, you have a little bit of a delays in hiring, just because kind of folks on the other side that we rely on to kind of push through background checks and that sort of thing, they struggle a little bit. But that is an area, I will say that, we are getting even more focused on. We are actually looking to add some additional IT resources to better track those metrics. So there’s certainly an emphasis for us. With respect to service coordinators, as we mentioned, as Dirk mentioned in his comments, we did see a tick up in turnover with service coordinators. I think we have taken some steps, recently. We have got rate increases that are going out that should help stabilize some of that workforce. We have added additional recruiting resources, primarily on the clinical side but also some on the kind of admin side, if you will. And I think a lot of that, on the service coordinator turnover, some of it is tight labor market, they have options out there. I think some of it was just kind of COVID with some of those individuals. We've asked a lot of them over this past year and I think it's kind of caught up with some of them. But, I'm seeing light at the end of the tunnel that we are making some progress filling those positions. We certainly have some initiatives out there to work on getting that turnover rate back down to where it was that kind pre-COVID.
Matthew Larew: And then just thinking about, again sort of that target growth range moving forward. I think the last two years, organic billable hours have actually been down, I think for the first time, at least, since I've been fond to the company and I'm sure, mostly related to the COVID surge we have had limited capacity, but obviously that's been aided by strong reimbursement. So, I guess as we think about '22, '23 moving forward, are there any items to call out from a reimbursement perspective that you haven't already discussed maybe on a state specific level, and should we be assuming that, that organic billable hour metric starts to flip back positive moving forward?
Brad Bickham: Yes, I think, when you look at some of the potential tailwinds on the reimbursement front, we've mentioned that we got the Illinois rate increase that will be built into 2022. But we also have, as Dirk mentioned, with some of the additional 10% FMAP, the ARPA funding that will provide some tailwinds for. So, we are waiting, frankly on seeing more details around those plans at the various states that are looking to provide us with some rate enhancements, a lot of it'll be in fashion of increased reimbursement, that will be passed on to caregivers to help with the recruitment and retention. So that should help actually drive just the hours volume.
Operator: Your next question questions comes from the line of Mitra Ramgopal from Sidoti.
Mitra Ramgopal: First, I'm just curious if tight labor environment. Do you see that affecting your growth strategy, at least in near-term in terms of how aggressive you'd like to be?
Dirk Allison: Mitra you talking about as far as M&A?
Mitra Ramgopal: Yes.
Dirk Allison: No, the environment doesn't affect what we want to do as far as growth. One thing we would constantly said and we will continue to be is, is that we tend to be somewhat disciplined buyers. So we are in the market looking for opportunities today. But if multiples remain higher than we feel justified, the return we'll get for our shareholders. And we're not opposed to stepping back and waiting for something such as JourneyCare. JourneyCare was something we found, great operation, great people not for profit environment, which needed us to come in and gave us the opportunity to come in and make some changes in the expense structure. While we acquired that at a reasonable certainly a fair and reasonable price, and so those are the type things we'll be looking for, but we are not slowing down our opportunities that we're going to look at.
Brian Poff: Mitra, just to add a real quick. With that said, I think obviously when we're looking at potential deals, we are -- part of our diligence processes to be cognizant of the trends in the labor market on the local and state level. So that is definitely something that we evaluate as we're looking at deals consideration, but I think it -- the labor market today is not kind of put us back seat as far as our strategy overall.
Mitra Ramgopal: And then when I look the peer mix I think managed care is probably at the end of this last quarter the highest you've seen. Just curious in terms of if you're having increased conversations with managed care now given the environment and how do you expect that to turn over the next few years?
Dirk Allison: I think one of the great things about our strategy is it allows us to develop size and geographic coverage in certain markets. A lot of these markets we have great relationships with managed care providers. The fact that we're able to provide services across a geographic area, which maybe some of our competitors in the market cannot do, allows us to sit across the table from these MCOs and develop pricing, which we're comfortable with. So at this time, we have a team that that's all they do. They've done a great job of maintaining and increasing pricing as we need. So we're very comfortable with our relationships with our MCO and the pricing environment.
Operator: Your next question comes from the line of Ben Hendrix from RBC Capital Market.
Ben Hendrix: Quick question about with JourneyCare and Summit now, now in the portfolio and having all three levels of care in that key Illinois market. can you give us an idea of kind of the sources and magnitude of upside that you can expect when you get all three levels of care to market, whether it’d be revenue synergies or margin synergies kind of once you have those wrapped up and in place?
Brian Poff: When you look at having three levels of care, we can look at a little bit towards to what we've accomplished in the New Mexico market with our home health, hospice and personal care. There's certainly significant opportunity where you have clients or patients that are actually receiving multiple levels. They could be receiving home health and personal care or hospice and personal care. We also generate a pretty steady stream of referrals from home health to hospice. We have implemented metalogics in New Mexico, and New Mexico will be implementing that in Illinois as well. That will help identify individuals that are on home health that have probably in a position that they should transition into hospice. So you can start having those conversations with the family. So we're very excited about having those opportunities. And then when you see our personal care that's kind of the untapped piece, and you look at the Illinois market, I mean, that's our largest single personal care market out there. And the opportunities to one to cross market, cross referral is a significant I think there's a lot of work we need to do in order to really maximize that. And that's one of the reasons why we've reached out to home care, home base work with them to develop a system that would allow us to have utilize home care home base for personal care so that we'd have all those records in one system, and then also opportunities to do some data mining there similar to what we do on the home health hospice with metalogics.
Operator: There are no more phone questions. Mr. Allison, back to you.
Dirk Allison: Thank you very much operator. I want to thank everyone for your interest in Addus and for being part of our earnings call today. Hope you have a good weekend. Thank you very much.
Operator: This concludes today's conference call you. You may now disconnect.
