Addus HomeCare Corporation

Good morning and welcome to the Addis HomeCare Corporation first quarter 2020 earnings conference call. Today's call is being recorded. To the extent any non-GAAP financial measure is directly 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 website 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 Addis' expected quarterly and annual financial performance for 2020 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 ADIS filings with the Securities and Exchange Commission and in its first quarter 2020 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. As a reminder, ADIS has not yet filed its 2019 Form 10-K and will file its Form 10-Q for the first quarter when it finalizes the Form 10-K. As a result, all financial results discussed on this call today are preliminary. I would like to now turn the call over to the company's President and Chief Executive Officer, Mr. Dirk Allison. Please go ahead, sir.

Dirk Allison Thank you, Drew. Good morning, everyone, and thank you for joining us for our 2020 first quarter earnings call. With me today is Brian Poff, our Chief Financial Officer, and Brad Bickham, our Chief Operating Officer. As usual, I will begin with some overall comments and then Brian will discuss the first quarter results that we issued yesterday afternoon. Following our comments, we would be happy to respond to any questions. As you saw with the preliminary financial results we announced yesterday, we had another very solid operating performance in the first quarter of 2020. Our revenue for the first quarter was $190.2 million. adjusted earnings per diluted share for the first quarter of 2020 increased to 77 cents, and our adjusted EBITDA for the first quarter of 2020 was $17.7 million. We did start to experience a reduction in our revenues beginning in the last two weeks of March due to the coronavirus, which I will discuss in a few minutes. As we previously announced, On January 1 of this year, we received a rate increase from the state of Illinois. This rate increase is to cover the minimum wage increase which occurred in Chicago and Cook County on July 1, 2019. This increase also allowed us to correspondingly increase the wages of our Illinois team located outside of the Chicago area. We appreciate that the leadership of the state of Illinois recognized the need to make adjustments to cover the costs associated with the higher minimum wages. As for additional minimum wage increases in Illinois, the city of Chicago has passed an ordinance which will raise the city's minimum wage on July 1st by $1 to $14 per hour. This accelerates the move to a $15 per hour minimum wage ahead of what the state of Illinois had already passed. Our team has been working with the state leadership to secure funding to offset this accelerated wage increase. A rate adjustment to cover this Chicago minimum wage increase was included in the governor's budget, which was presented in February of this year. However, this rate increase is dependent on the passing of a graduated tax proposal, which will be on the ballot during the upcoming November elections. We continue to advocate for increases in our rates to cover these Chicago mandated wage increases. We believe that any approved increase will benefit both our local workers and the customers that we serve in Illinois. I also want to discuss some New York budget developments that have arisen over the past few months. Effective January 1st Almost all Medicaid providers in the state of New York received a rate reduction of 1% for the services they provide. For ATIS, we estimated that this would be a reduction to our earnings of approximately $1 million per year. This reduction was in response to an anticipated state budget shortfall of approximately $6 billion. At that time, the governor of New York also appointed a committee to recommend actions for further Medicaid cost reductions to help close this budget shortfall. Per this committee's recommendations, an additional rate reduction of 0.5% was implemented for Medicaid providers effective April 1st, 2020. Without any mitigation, this would reduce our earnings by approximately $500,000. We continue to work with our New York State Associations to try and mitigate these rate reductions. Although the impact of COVID-19 on New York tax revenue is unknown at this time, it could further negatively impact the budget and increase pressure to implement further rate reductions unless advocacy to get federal relief direct to states is successful. For the first quarter of 2020, our personal care same store growth was 15%, driven largely by our rate increase in Illinois, which was effective January 1 of this year. We should continue to see solid same store growth in our personal care segment over the next few quarters, driven primarily by the Illinois rate increase. For the first quarter of 2020, our hospice same store growth was 12.1%, as our New Mexico hospice programs had solid organic growth. In addition, our Hospice Partners of America programs that we acquired at the beginning of the fourth quarter of 2019 experienced solid growth as well. Our home health same-store growth was 19.5% as we continue to see the momentum with our New Mexico home health services. Let me discuss our operations during the COVID-19 shutdown and attempt to provide some perspective on what we are seeing in the early part of the second quarter of 2020. When states first started to contemplate requiring nonessential businesses to close, the Federal Department of Homeland Security issued their definition of essential businesses. Included in that definition was home health, hospice, and personal care services. Based on this definition, all of our business segments were deemed essential as we expected. As we have now seen, each of the states that have required businesses to shut down have used some form of the federal definition, allowing us to continue to function as normally as possible. But like many others, we have been impacted by these shutdowns. Most of the schools across the country have closed, meaning many of our employees' children are now at home. This can cause issues for those of us, such as our caregivers, who must leave their homes to perform their jobs. Because of this, some of these individuals have had to stop seeing patients until schools reopen or until they are able to obtain some sort of childcare. Additionally, our personal care operation has a large presence in New York City and Long Island, New York, Chicago, Illinois, Detroit, Michigan, and the state of Washington. All of these areas have been hotspot areas for this particular virus. In these markets, especially New York City, Long Island, and Chicago, we have seen a number of patient call-offs. This is where a patient or their family decides to skip their normal personal care service visit due to their concern of having someone, even a caregiver, in their home. We have seen caregiver call-offs for similar reasons, but these type of cancellations have been less than we had anticipated. We have also seen some health care facilities, such as skilled nursing facilities, assisted living facilities, and independent living facilities, limit our staff's physical access to provide hospice services in an effort to minimize the facility's exposure to the virus. These and other issues have led to reduction in our overall revenues. For April, our revenue reduction appears to be around 10%. We anticipate that we will continue to experience some revenue reduction during the second quarter. As part of our plan to deal with COVID-19, Addis rapidly went to a remote working environment where possible and implemented social distancing everywhere else for the safety of our team. We also started the process of sourcing personal protective equipment for our team of caregivers. PPE procurement has been particularly challenging in our non-clinical segment as compared to our hospice and home health, since historically it is not a service in which widespread PPE usage is customary. However, we understood the need to start providing masks and gloves to our personal care team in order to help protect them and our patients from the spread of this virus and to provide our patients and their families an added layer of comfort with allowing our team into their homes for service. We also needed to secure the proper PPE for our clinical operations to handle their patients, including any COVID-19 patients that may need clinical services. To obtain this PPE, our senior leaders created a rapid procurement team whose primary focus for the past several weeks has been to quickly source, acquire and distribute the appropriate personal protective equipment for our caregivers. We have navigated the additional challenges of others including state governments and the federal COVID-19 task force attempting to purchase the same PPE. I am proud to say that our team has done a great job with this project. As of today, we believe we have sufficient PPE to help provide the appropriate level of protection for our caregivers. While PPE alone does not guarantee that our team will not contract the coronavirus, it does help to provide additional safety measures for our caregivers and patients while we are performing the services that our patients need. Now that we have been able to acquire the additional PPE for our team, we have started providing services to COVID positive and presumed positive patients. Our COVID-19 patient volume is low at this time, although we anticipate and have prepared for a number of COVID patients to continue to increase in the near term. Our current case volume is equally split between our home health and personal care service lines. As part of our operations planning concerning this virus, we have identified our offices around the country that are best suited to care for COVID patients. We have provided those offices with the necessary training materials and PPE required to safely treat patients with COVID-19 virus. As we ramped up our response to this virus, we have experienced an increase in our cost to provide protective equipment to our team. We have seen certain items, such as masks, increasing costs materially above their normal price. As I mentioned, we are now providing surgical masks to all our non-clinical caregivers as well as to our personal care patients in order to make We are also seeing increased costs for PPE for our clinical care segments. So like a lot of providers, we are seeing lower revenues during this event while costs are increasing. Notably however, Addis remains a financially strong company. While our profits will be impacted during the pandemic, We as a senior leadership team made the decision over four years ago that we would operate our company in a manner that would provide us financial flexibility in times of economic challenges. While none of us expected to see a worldwide pandemic that has caused such personal and financial hardships, our decision to maintain a conservative financial position is now proving to be a great asset. While our revenues will be down and expenses up, we continue to have the ability to operate as we normally would or at least as normal as possible in these times. We continue to have substantial cash balance with very little debt. We also have the ability to borrow money under a credit facility if the need arise. And we are fortunate that we are in an industry that is needed to fight this virus, keeping our business open. Before I turn this call over to Brian for a more detailed review of the first quarter financial performance, let me thank all the employees about us. I'm extremely proud of all your efforts and know each employee works hard to live our values while serving our patients. Our patients want to be in their homes now more than ever and we are a vital part of allowing that to occur. All of us have a very important responsibility to the thousands of patients and their families who trust us with their care and I'm very appreciative for the ongoing efforts of our team. With that, let me turn the call over to Brian.

Thank you, Dirk, and good morning everyone. Please note that the financial results discussed on this call and in our press release are preliminary and will not be finalized until the 2019 Form 10-K financial statements are completed and filed. In coordination with our current auditors, PWC, we currently anticipate the timing to completion and filing to be in advance of our standard second quarter filing deadline. ADDIS had a solid financial performance for the first quarter, marking a strong start to 2020. For the quarter, we had favorable demand trends across all of our service segments and also realized the impact of the additional scheduled rate increase in Illinois on January 1, 2020. As Dirk noted, total net service revenues for the first quarter were $190.2 million. The revenue breakdown is as follows. Personal care revenues were $160.7 million, or 84.5% of revenue. Hospice care revenues were $25.2 million, or 13.2% of revenue. and Home Health revenues were 4.3 million or 2.3% of revenues. Our first quarter results demonstrate we are continuing to execute on our organic growth strategy with favorable results prior to the impact of COVID, which impacted the last few weeks of the quarter and will be more impactful in the second quarter, as Dirk mentioned. While we are facing a challenging environment, we have a strong business model in place and believe we are well positioned to continue to support our clients and payers through the pandemic. We are also continuing to realize the incremental benefits of the four acquisitions we completed in 2019 with total annualized revenue of approximately $130 million. We continue to evaluate and pursue other acquisition opportunities and have a robust pipeline of potential transactions. However, we are approaching acquisition activity with all appropriate caution and diligence, which temporarily could lead to a delay in the near term. Other preliminary financial results for the first quarter of 2020 include the following. Our gross margin percentage was 29.4% G&A expense was 22.2% of revenue with adjusted G&A expense at 20% of revenue The company's adjusted EBITDA increased to $17.7 million or 9.3% of revenue and adjusted and income per diluted share increased to $0.77 The adjusted per share results for the first quarter of 2020 exclude the following COVID-19 direct expenses of $0.01 primarily related to additional PPE costs M&A transaction expenses of $0.09, severance and other non-recurring costs of $0.05, and non-cash stock-based compensation of $0.08. Our effective tax rate for the first quarter of 2020 was 14.2%, primarily as a result of an excess tax benefit related to equity vesting during the quarter. For the full year 2020, we continue to expect a tax rate of 23% to 25%. DSOs were 67.5 days at the end of the first quarter of 2020, and we have continued to see consistent cash flows from our payers with increased payments from the Illinois Department of Aging in particular. During the fourth quarter of 2019, the state of Illinois also authorized a one-time retroactive bonus payment related to the July 1, 2019 rate increase to be paid in 2020. While we have yet to receive, we continue to expect this payment of over $6.5 million to be paid in the second quarter. As a result of our strong earnings and collections, our first quarter net cash provided by operations totaled $20.4 million, and on March 31, 2020, the company had cash of $130.5 million, with only $60.1 million of bank debt and $218.5 million available and fully accessible under our revolver, leaving us well capitalized during the current situation. This concludes our prepared comments this morning. I want to thank you all for being with us. I'll now ask the operator to please open the line for your questions.

Ladies and gentlemen, if you have a question at this time, please press the star and the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question is from the line of Matthew Borsch with BMO Capital Markets. Please go ahead, sir.

Yes, maybe if I could just start on the, I don't know if you're prepared to say anything else about the delay filing. If I could just ask a simplistic question, and I'm sure you've gotten this before, but it just seems from an outsider's perspective odd that this has been delayed for so long over something that is so immaterial to your results. Can you just comment on that, if you don't mind?

Yeah, Matthew, this is Dirk. Yeah, it is frustrating. I know it is to us. I assume it is to you guys, too, that something that is immaterial for a company our size as this has kept us from being able to file financials. I think the good thing is this. Once we were able to work through the fact that our two auditing companies firms were not going to be able to make a decision together to allow us to file. We had a plan to follow up behind that to make sure we could take care of it as quickly as possible. That plan, which required our current auditor, PwC, to come in and audit our 2017 and 2018 financials that had been previously audited by Arsene Young, has begun and is on track and is progressing as we have expected. while I think Brian mentioned in his comments that we expect this to be completed by the time we file our second quarter earnings release. So we're hopeful that the first quarter release is the last time we'll talk to you about preliminary.

Oh, okay. All right. Well, great. And if I could just add one more question on a completely different topic. As you look at the current volume environment, I think I heard you say April down 10% for revenue and I'm assuming that's year over year and that you expect the second quarter as a whole to be down. I'm not asking for guidance, of course, but are you seeing any stabilization or the volume trends worsening as you end April into May or is it too early to say?

Yeah, and let me say it's not 10% year over year. not at all. It is just, it's 10%, right around 10% lower than we were running prior to the virus starting to affect the company. So we're still left with all the growth we've had. Make sure you understand that. Let me talk about what we're seeing briefly. You know, this is new to us. Our operations team, we've been trying to gather data as quickly as possible. We do still have some caregivers that are on written paper timesheets, which takes a little bit longer to get in. But what we're seeing as we flow through the last three or four weeks, the real impact has been focused around New York, Illinois, mainly Chicago area, and a little bit of Detroit. That's really where we've seen the biggest reduction. We've seen a little bit in Washington State, as I mentioned earlier. But if you really want to say where is it affecting you, it's New York, Long Island, and the Chicago area. We saw a gradual rise in call-offs which reduced our referrals starting in probably the third week of March and continuing on that point. They started out small. I would say about the first or second week of April we saw them get up in New York particularly much higher. as you probably know, the New York pinnacle of this virus. I will tell you that what we have seen, and again, this is not necessarily a trend, but this last week we started to see it top out and start to come back where the percent of call-offs was starting to be lower than the week before. So we believe in all of our markets, or the majority of our markets, particularly the Chicago, and the New York and Long Island markets, we have seen the pinnacle and we're starting to come down. If that continues, then what we'd be talking about is that the 10% reduction would be in April and then May and June, the rest of the quarter might be somewhat below that. But again, let me just caution you, we're still looking at this date and it's just starting to turn. So we got to see if it continues. But so far we would say, We're comfortable with the 10%. We could see it starting to come back a little.

All right. Thank you, gentlemen, and congratulations on your quarter. Thank you.

And your next question is from the line of Frank Morgan with RBC Capital Markets. Please go ahead.

Good morning. I appreciate the color about the rate environment out there. I'm curious if – How much of a factor do you think these health payments under the CARES Act could potentially help personal care? And then you're curious about any other grant monies or Medicare money you may have gotten in your home health care business. Any proceeds you received there?

Yeah, we did receive some funds, just under $7 million from the CARE Act as it relates to our Medicare business. and we've you know we've taken that money and set it aside and we're looking at the expenses related around the virus that that would be appropriate for it so we'll see how that works out as time goes. Really other than that we did not apply obviously at our size for any of the loans that were out there for small business that was not us so we the only other item I think we have Brian you can talk about is the maybe they're just the deferral of the

Yeah, I think from a cash flow perspective, Frank, that's another thing that we've really materially, you know, we've taken advantage of is the delay in the payroll tax submissions. But under the CARES Act, I think it's still kind of to be determined primarily for Medicaid providers, you know, what relief is out there. That's something I think everyone is working through currently. But we haven't seen anything on that side as of yet.

And then on the income out, do you feel like you've got a shot at maybe getting some of those dollars and maybe offsetting these cuts you're talking about?

I'm sorry, Frank, can you repeat that? You were a little garbled in the first part.

Okay, no, the FMAP, the Federal Matching Assists, it's on the Medicaid side. Any sense that personal care may get some of those proceeds?

Yeah, that's definitely going to be helpful to us. I think we're still waiting to see exactly how that will flow through. I think we haven't seen a lot of adjustments at this point. I think the states are going to have to utilize those as they see best. We're working with them to see how that might benefit us down the road.

This is Brad Pickham. We have seen some states give some additional payments on a temporary basis just recently. Most of those are for the caregivers to pass through. We are seeing some relief there. Hard to quantify whether it's material or not, but a lot of those funds will be passed through to the caregivers.

Gotcha. And then you mentioned about a more cautious view on the deal pipeline. Just curious, are you seeing a pickup? I mean, are people reaching out to you now with all that's happened over the past two months? Any characterizations on that? And then finally, just any other cost levers that you might have in terms of managing this drop in revenue? Thanks.

Yeah. You know, realistically, let's talk first about the – The acquisitions. We're not seeing people necessarily reach out more at this time. We are still seeing some companies come through that are interested in selling. So I would say our activity is maybe slightly down from what it was before the virus, but it certainly picked up a little bit. We expect that will continue. And for us, you know, we took the first 60 days. of this virus, just really focused inward, making sure that we had everything done to continue to operate, see our patients, pay our caregivers. We're to a point now where we feel like that's stabilized a bit. So if we can determine ways to do the appropriate due diligence in today's environment, we will start back to trying to get these things done in a manner that makes sense for us as far as We fully anticipate to continue with our acquisition program. As it relates to additional cost levers, let me be clear. The only real additional cost we're seeing with this virus is the protective equipment we're now providing to our non-clinical staff. Our clinical staff always had PPE. Now maybe we're giving them a little more because we are taking care of some COVID positive or presumptive positive patients. But other than that, that's pretty much the same as we've always done. So it's the additional expense of the PPE for the clinical services. The revenue reduction for us, while we mentioned it could be up to 10%, that's not something that's going to affect our company where we need, at this point as we see it, that we need to make any drastic changes. We think it will be temporary. whether that's one month, three months. But we believe we're financially strong enough to continue to operate as we have been and feel that's the best way to do it to make sure that we're a very strong company as we come through this virus.

Thank you very much.

And your next question is from the line of Matt LaRue with William Blair. Please go ahead.

Hi, good morning. First wanted to ask about sort of the hiring environment obviously it's been a tough sort of last several weeks to months for folks who are hourly workers and potentially that could open up some opportunities for you to hire but I also know it may be challenging to do so given some of the restrictions placed because of COVID so just want to get a sense for what that's looking like and then sort of dovetailing on that have you noticed a change in at all in terms of and the desire for family members to be the primary caregiver as a result of COVID.

Yeah, this is Brad Pickham. On the hiring front, we have seen a, you know, a pickup on the hiring recently. When the COVID virus first impacted us, we actually pulled back just to, you know, put hiring on a hold to get a better handle on how are we going to do that in a safe manner. Fortunately, states have provided some temporary regulatory relief that has allowed us to continue or start hiring back up. We'll have to make some of that training time up, but that certainly has helped and that benefit is on the hiring front. Your question related to family caregivers, what we have done in those states where it allows us to have a family caregiver, there are people that are now out of work that when they've decided, well, I'd rather not have somebody in the home. We've been able to identify somebody, a family member who's in the home now that is unemployed and bring them on as a family caregiver. So, you know, whether that continues post the impact of the COVID virus, you know, remains to be seen, but it certainly has helped benefit us in the near term.

Okay, thanks. And then, obviously, Dirk, you alluded to patient call-offs or patient fear driving some of the volume softness. Have you had any issues with sort of new patient generation? Have state agencies had to slow down their in-home assessments? Or is it really just the one thing you can point to here is call-offs?

Yeah, so, you know, when the virus first impacted it, you know, the call-offs were a factor. We did see a slowdown in new admissions on the personal care side because there was a delay. Some of the care coordination units in the Illinois market, for instance, were struggling to work from home and how you handle those assessments remotely. We have seen that kind of pick up. I mean, I've been pleasantly surprised that we didn't really see new admits just shut off. so you know that you know certainly has started to come back up recently and I think that's contributing to some of the improvement that we're seeing in some of our numbers as we head into May.

Okay and the final just a clarification question, Dirk, you said not 10% year-over-year but 10% pre-virus and I want to understand are you referring to patient census overall being about 10% lower than pre-virus and then census building through May and June, or are you referring to sort of a revenue number? So just so you can clarify that and then I'll jump off, thanks.

Well, we were referring to the personal care, the visits, the number of visits that we do, which is really the way that our revenue is calculated as opposed to ADC. So what we were running in February, which was on track with what we had expected, that is what we're comparing it to, our high point in February is where we're saying that we've been at that 10% level. So certainly not year over year.

Okay, thank you.

And your next question is from the line of Brian Tulliquid with Jefferies. Please go ahead.

Hey, it's Jason Flagman for Brian.

Most of the questions have been already been asked, but just wondered if any of the state agencies have discussed

maybe adjusting reimbursement to cover the incremental cost of PPE that you're now bearing since that wasn't traditionally a major component of the cost of delivering personal care services.

Yeah, Jason, I can take that and recognize some color if you'd like, but we have seen a few states that have stepped up to try to help cover the cost of PPE. Illinois specifically has made some, not material payments, but some payments to kind of help Businesses like ours cover some of those costs, and as he mentioned earlier, a couple of the states have given us some pass-through dollars as well as part of their funding. So we are seeing some of that.

Yeah, and those are actually fairly recent. I would really invite that last week that we've seen some of those payments come through, for instance, from Illinois on the PPE, also with some of the states adjusting rates on a temporary basis to help offset some additional costs on the caregiver side.

Great. That's it for me. Thanks. Thanks, Jason.

And your next question is from the line of Scott Fidel with Stevens. Please go ahead.

Hi. Thanks. Good morning, everyone. I actually just wanted to first just follow up on that question around the PPE costs and obviously without trying to ask for guidance, just interested if you can give us some insight into what type of incremental costs you're seeing from PPE, whether You know, maybe just the amount of additional costs that you saw in April or even, you know, how you're thinking about that just for the second quarter in terms of incremental PPE costs.

Yeah, we spent, I think, Brian said about a little over $200,000 in the first quarter. As you would expect, we were trying to ramp up around the middle of March, and it took a while for us to actually get supplies to be in. I think we've spent a total of about 1.5 million to this point. That is, you know, obviously that's not going to be used immediately. That has some inventory in it for future usage. The question remains going forward, what happens with the PPE for personal care? because really from a clinical service, the only real additional cost with PPE is the fact that because of the virus has come and because of the fact so many people are ordering, the cost of that equipment has gone up. If that comes back and stabilizes, then it'll have no impact on our clinical services because that's what we've been buying before. The question is, will we continue as a company to provide masks, gloves, for our personal caregivers going forth. And that's something we're talking about as a company. We'll certainly be talking with the states about that because that would be a new cost associated with taking care of the clients in the state. So it's something still to be determined. But I'd say right now, while $1.5 million is not immaterial, that's kind of the magnitude of what we're talking.

Got it. That's helpful. Thanks. And then just a second question, I guess, clarification or just some more insight just on that $6.5 million retroactive payment from Illinois that you mentioned you're expecting to get in the second quarter. Have you accrued anything for that yet in revenues or would that be all incremental to the income statement in the second quarter? Then I would also assume that that should just be – that should flow through just on cash flows, right, for the second quarter?

Yes, Scott, that would be just a cash flow impact for us in the quarter. The revenue has already been recognized in the period that it was related to, which was in, was it 2019, and the related costs as well. So no P&L impact on that. It'll be a cash flow event for us in Q2 when that comes in.

Understood. And then just last question for me, just interested in any additional insights you can give us into just transitioning some of the operations into to reflect the changing dynamics post-COVID, and in particular, just interested in how things are going in terms of shifting some of your training programs for new caregivers over to more remote applications as compared. I know you guys traditionally were doing a lot of that in person, and there were plans to start transitioning that to more online, et cetera, given the changing environment.

Yes, this is Brad. We are really experimenting with or piloting the remote learning applications. What has benefited us in this current environment is the fact that states have waived, in many cases, the upfront training requirements. Now, we're going to have to make those up. We're looking at ways to do that on an online basis. Part of the challenge there is all states are generally different and unique with respect to what training is required, what flexibility you have with respect to in-person versus online training, but we're certainly accelerating the look at that and have a vendor that we're working with currently to help facilitate that going forward. Okay. Thank you.

And again, ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad. Again, that's star 1 to ask a question. And your next question is from the line of Mitra Rangopal with Sidori. Please go ahead.

Yes, hi. Good morning. Thanks for taking the question. Brian, I know you mentioned the acquisition pipeline remains Thank you very much.

Yeah I think just I mean overall feature I think it's strategy you know we haven't really you know had a different shift I think we believe our business model is still sound having you know kind of the three elements especially in markets that overlap we think makes still makes a lot of sense for us I think that's proven out as we kind of move through the COVID situation so I think you know largely our focus is still aligned with where we were obviously market to market is something that we're always cognizant of we're always watching any dynamics changing, state budgets, etc. So that's something that we are always keenly aware of as well as we look at potential targets and acquisitions. So we're hopeful as this progresses we can kind of get back to business as usual. So we're doing everything we can behind the scenes but still being very cautious. As you guys know, it's a different element right now to try to get out and do diligence, things like that. So looking forward to getting back to that in the future.

Thanks. And then also just curious in the sense that obviously some industries are being impacted a lot more than others and clearly your business is an essential service, but do you get the sense that at the end there will still be some shakeout in the industry as it relates to maybe some operators not being as financially strong as yourself, et cetera, being unable to withstand the reduced volume in some markets, et cetera, and ultimately leading the long-term opportunity for you.

Yeah, I do think, you know, clearly this industry, especially if we talk about the personal care side of our business, there are a lot of small mom and pop providers of this service spread throughout the country. And, you know, obviously this virus is difficult as you go through it just from an operating standpoint. How do you operate remotely? What about the Is there any added expense with PPE? What about the cash flow impact? So from our belief going forward, this could give us an opportunity to continue to consolidate the personal care space once we get through this virus and see if some of those mom and pops are ready to maybe talk to us about coming on board.

Okay.

Thanks again for taking the questions.

and I am showing no further questions at this time. I will now turn the call back to Dirk Allison for closing remarks.

Thank you, operator. I want to thank everyone today for their interest in Addis and for being part of our earnings call. Have a great week.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and have a wonderful day. You may all disconnect.