Aveanna Healthcare Holdings Inc.

Q1 2021 Earnings Conference Call

5/26/2021

spk08: Good morning and welcome to the Aviana Healthcare Holdings First Quarter 2021 Earnings Conference Call. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Shannon Drake, Aviana's Chief Legal Officer and Corporate Secretary. Thank you. You may begin.
spk15: Thank you, Melissa. Good morning, everyone, and thank you for joining us today. Speaking on today's call are Rod Windley, Aviana's Executive Chairman, Tony Strange, Aviana's Chief Executive Officer and President, David Afshar, our Chief Financial Officer, and Jeff Shaner, Aviana's Chief Operating Officer. Before we begin, I have a few housekeeping matters. We issued our earnings press release and filed our 10-Q yesterday. These documents are available on the Investor Relations section of our website at www.aviana.com. Also, a replay of this call will be available until June 2, 2021. We want to remind anyone that may be listening to a replay of this call that all statements made are as of today, May 26, 2021, and these statements have not been nor will they be updated subsequent to today's call. Also, today's call may contain forward-looking statements which may be identified by words such as may, could, will, expect, intend, plan, and other similar words and expressions. All forward-looking statements made today are based on management's current expectations, assumptions, and beliefs about our business and the environment in which we operate. These statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on today's call. Listeners should not place undue reliance on forward-looking statements and are encouraged to review our SEC filings for a more complete discussion of factors that could impact our results, including, in particular, those risks disclosed under the risk factor headings of our filings. Except as required by federal securities laws, Aviana does not undertake to publicly update or revise any forward-looking statements subsequent to the date made as a result of new information future events, changing circumstances, or for any other reason. Also, we supplement our financial results reported in accordance with certain non-GAAP financial measures. When viewed together with our GAAP results, we believe that these measures can provide a more complete understanding of our business and operating results, but they should not be relied upon to the exclusion of our financial results reported in accordance with GAAP In addition, a reconciliation of any non-GAAP measure mentioned during our call to the most comparable GAAP measure will be available in our earnings press release and 10-Q, both of which are available on our website and on the SEC's website at www.sec.gov. Following today's prepared remarks, we will open the call to questions. Please limit your initial comments to one question and one follow-up so that we can accommodate as many callers as possible in the allotted time. With that, I will turn the call over to Aviana's Executive Chairman, Rod Windley. Rod?
spk12: Thank you, Shannon, and welcome to Aviana's first earnings call. I'd like to take a moment and thank everyone on the call today for your interest and commitment to Aviana as we move forward as a public company. In addition, I'd like to thank everyone, including our Board of Directors, our accountants, our lawyers, and most of all, our employees. Your hard work has culminated in the important milestone that brought Aviana to the NASDAQ exchange on April the 29th. We are extremely proud of our results for this quarter and our continued growth through acquisitions. As previously disclosed, our recent acquisition of Doctors' Choice further expands our footprint in the state of Florida, one of the fastest-growing geriatric markets in the country. Our pipeline of acquisitions remains robust, and we plan to continue to accelerate our growth through this process as we move forward. Finally, we are excited to announce that Dr. Erica Schwartz has been appointed to the Board of Directors of Aviana. Dr. Schwartz brings a wealth of knowledge and experience to the boardroom, having previously served as Deputy Surgeon General and Chief of Health Services for the U.S. Coast Guard. We are thrilled to have Dr. Schwartz join our team. And with that, let me turn it over to Tony and the team to discuss our Q1 results. Tony?
spk01: Thanks, Rod, and good morning, everyone. Thank you for joining Aviana's first quarter earnings call as well as Aviana's first call as a publicly traded company. We're excited to share our results and to have you participate in our Aviana story. On behalf of Rod and myself and the entire executive team, we'd like to thank all of our shareholders, our analysts, for your participation in our IPO, and we look forward to building shareholder value together. In addition, we'd like to thank all of the employees of Aviana, especially the caregivers in the home. Without you, none of these results are possible. As a reminder, Aviana is a diversified home care company providing services to children, adults, and seniors through a scale platform across 30 states. We deliver these services with a focus on providing the highest quality clinical outcomes and customer satisfaction in a consistent and compassionate manner. Today, the company engages over 42,000 caregivers to provide service to in excess of 60,000 patients. As noted in our mission statement, we do this one patient at a time. As outlined in our S-1, our 10-Q, and our press release, we provide these services through three business segments. Our largest segment, private duty services, provides hourly-based care in the patient's home. While we provide both skilled and unskilled services in the segment, the majority of our hours are skilled nursing care for medically fragile patients. Our newest and currently fastest growing segment is home health and hospice. It has always been our strategy to leverage our operating systems and experience management team across a broader home care platform. Having established Aviana as the leader in private duty services, the time had come for us to enter the home health and hospice arena. In October of 2020, we acquired Five Points, marking our entry into the geriatric home care market. The Five Points transaction provided not only desirable geographical footprint, but also a seasoned leadership team, most of whom have worked with us in the past, which will serve as our home health and hospice platform going forward. Subsequently, we have closed two additional acquisitions, Recover Health, which closed in late December, and Doctors' Choice, which closed in April of this year. Currently, we provide home health and hospice services through 65 locations across 13 states. Inclusive of doctor's choice, first quarter results would indicate that this segment is already in excess of $200 million of revenue on an annualized run rate. In the past six months, we believe that we have positioned Aviana to be a leading provider of home health services. While we provide both home health and hospice services in this segment, 95% of these revenues are derived through home health. We plan to focus our M&A efforts in this segment on traditional home health that may or may not contain hospice, but we believe the likelihood of us acquiring a standalone hospice at this time is somewhat low. As a result, when Jeff provides more details on our segment results, his comments and his metrics will be focused on our home health business. This brings us to our third segment, medical solutions. In this segment, we supply nutritional support to patients in the home. The primary service is the provision of internal nutrition as well as the equipment and supplies necessary for delivery. The growth in this division has been fueled by patients from private duty services, home health and hospice, as well as standalone referrals. As a result, our medical solution division has consistently delivered double-digit growth for Aviana. Given the diversity of our service mix over the three business segments, as well as the geographical mix across 30 states, Aviana benefits from a diverse yet stable reimbursement environment. Including doctor's choice, traditional Medicare makes up approximately 9% of our overall revenues. However, Given our appetite for growth, we expect this number to grow rapidly. We view this Medicare reimbursement environment as a stable and providing rates that are neutral to modestly positive over the next several years. The balance of our revenue is reimbursed primarily through Medicaid or Medicaid managed care, both of which have similar rates for private duty services. As a reminder, the reimbursement for private duty service is quite simple. We are paid by the hour, and we pay our caregivers by the hour. All services are provided through some type of prior authorization process. As a result, there's very little complexity or ambiguity related to payment. We operate under 36 different Medicaid payment systems and over 200 separate and distinct MCO contracts, with no single payment source in private duty services making up more than approximately 6% of our total revenues. We believe that this payer diversity benefits Aviana in two ways. One, it gives us downside protection from a significant change or reduction from a single payment source. And two, it has provided us with a DSO that runs from the high 30s to the low 40s, which is consistently lower than the industry comparables. Dave will provide more additional color on the DSOs in a few minutes. In short, we believe the diversity of our business model provides a significant competitive advantage for Aviana moving forward. Before I turn to our results, I wanted to spend a moment focused on our viewpoint as it relates to Aviana's growth. Our compounded aggregated revenue growth rate from 2018 to 2020 was approximately 17%, and our Q1 results are consistent with that trend. Our growth is driven by better-than-market organic growth rates in each of our three business segments. Our sales infrastructure, along with our investments in payer and government relations, provides us with the ability to win both on volume and rate growth. This, accompanied by our appetite for M&A, gives us confidence that we'll be able to maintain a mid- to high-team growth rate in the foreseeable future. Now turning to our results. Revenues for the quarter were approximately $417 million and adjusted EBITDA was approximately $44 million, which resulted in an adjusted EPS of $0.08 per fully diluted share. I'm proud to report these results are not only within but on the high side of the range that we provided in our Q1 flash reported in the S-1. The company has consistently performed despite the headwinds created by COVID-19 and the weather events in February. Our operating teams have done an exceptional job in adjusting for software volumes through disciplined expense management. These results, along with the resiliency of our business and our operators' abilities to execute, give us comfort in providing the market this morning with guidance for the full year of 2021. Last night, our press release contained guidance for revenues that meet or exceed 1.745 billion and adjusted EBITDA of at least 185 million. While we are confident in our M&A pipeline, our ability to continue to grow through acquisition, this guidance excludes any future M&A activity. Before I turn the call over to Jeff for further insights into our segment results, I once again wanted to say thank you to our business leaders for making these results a reality. With that, I'll pass the call over to Jeff. Jeff?
spk13: Thank you, Tony. It brings me great pleasure to share our Q1 2021 operating indicators and key metrics. I will focus my comments on our three operating segments, private duty services, home health and hospice, and medical solutions. We report each segment as a unique business unit with a full complement of operations, sales, recruitment, payer and government relations, clinical support and technology to support the delivery of our care. Each operating segment has a fully dedicated management team, established key indicators, and a strong commitment to the Aviano 5Cs, core values, and commitment to compliance. Now to introduce our private duty services segment results for Q1. Today, we are one of the nation's leading provider of private duty nursing services. And Private Duty Services remains the foundational platform for our overall business as we work to expand our service offerings. I'd like to cover a few key points about our Private Duty Services business. First, we are a scaled national provider with significant investments in recruitment, training, payer relations, clinical systems, and support. Second, as a large diversified segment, we have great comfort in our payer diversity state and geographic diversity, which creates a very stable rate environment. Third, our PDS patient profile is such that our relationship with our patient lasts a very long time. On average, our PDS length of stay is approximately five years. This relationship has created a stable revenue and gross margin profile for our PDS segment. Finally, our private duty services home care model is the lowest cost healthcare setting while also being patient preferred. Now on to our PDS segment indicators. During Q1, we produced $350.8 million of revenue, or 9.5% year-over-year growth. Revenue was driven by an impressive 9.9 million hours of care provided during the quarter, or 11.1% growth over Q1 2020. This growth rate is consistent with our strategy to grow private duty services with both organic and M&A activity. I am pleased with how 2020 PDS acquisitions are now fully integrated into our Aviana family. We expect to continue to see solid private duty services volume growth rates throughout 2021. Onto our revenue per hour of $35.40, which was down 55 cents from Q1 of 2020. This was primarily driven from a change in business mix between skilled and unskilled services, as the COVID pandemic continued to have a more significant impact on our skilled nursing businesses, primarily in schools and pediatric day health centers. We expect this trend to begin to normalize in the second half of 2021 with the expected return to schools in the fall. Turning to our cost of labor and gross margin metrics, We continued to experience stability in gross margin with $101.8 million in Q1, or 29% gross margins. This equates to a growth of 10% year-over-year in gross margin dollars. Gross margin improvement was driven by our PDS cost per hour of $25.13, down 44 cents an hour from Q1 2020. PDS cost per hour is benefiting from the unskilled business mix shift I mentioned above. Our spread per hour, an important metric balancing revenue and labor costs for the PDS segment, maintained its stability at $10.28 per hour. I expect PDS spread per hour to continue to be in the $10 to $10.50 range for the foreseeable future. Although weather events are a normal course of business at Aviana, Ice storm Uri caused a significant multi-day outage for our PDS segment within dense markets in the central United States. We lost approximately 72,000 PDS hours, or $3.5 million in revenue, and approximately $1.1 million in gross margin dollars. I am proud of the Aviana spirit and perseverance that our teams displayed through this storm and how we cared for our employees, patients, and referral sources. I continue to be impressed with how resilient our PDS business is and how our leadership teams rebounded from this weather event and returned to the business of providing high-tech nursing care. Moving on to our home health and hospice segment for Q1, where we experienced substantial growth. Home health and hospice is currently our fastest growing business segment, and this rapid and accelerated growth has been a point of emphasis for us as we work to expand our national home health presence. I want to highlight a couple of key points about our Triple H segment. Home health and hospice is a natural extension for our home care platform. We have a seasoned management team with decades of experience in this segment. We acquired Five Points Healthcare as our home health and hospice management platform, and we have been leveraging Aviana's infrastructure to accelerate its growth. Like our private duty services segment, we have a long-term commitment to clinical excellence, technology, and compliance. Our dedicated integration management office, our IMO, is committed to fully integrating companies into Aviana. On that note, both Five Points and Recover Health integrations are substantially complete. Both teams are now a part of the Aviana family, and the businesses are trending ahead of our expectations. Meanwhile, our doctor's choice integration is underway and progressing nicely. I expect Doctor's Choice to be one of the best transactions we've done at Aviana to date. Lastly, home health and hospice is the lowest cost and patient preferred setting for adult and geriatric patients. We are proud to be back in this business and will continue to expand our service and offerings throughout 2021 and beyond. Now to home health and hospice segment indicators for Q1 2021. As this is our first full quarter reporting home health and hospice metrics, therefore, We will not provide year-over-year comparisons until Q1 of 2022. However, we will report sequential quarterly growth throughout 2021. During the quarter, we produced $31.5 million in revenue. This was driven by 5,800 total admissions, approximately 66% being episodic admissions, and 5,700 total episodes of care. I am pleased with the organic growth rates of our home health business. The home health and hospice team have already built a growth-oriented culture even through the integration process. Lastly, revenue per episode for Q1 was $2,962 and in line with industry expectations under the PDGM reimbursement model. From a cost and margin perspective, gross margins were 45% for the quarter. We believe there is continued room for improvement in home health and hospice gross margins and expect the doctor's choice business to have a positive net impact along with continued focus on episodic payer mix. As our home health and hospice division hones the best practices from all three acquired businesses and completes the integration into Aviana, I have great confidence in our continued execution of this business and its overall growth impact on Aviana. Lastly, Our Aviana Medical Solutions segment results for Q1. Our Medical Solutions business provides internal nutrition and other medical supplies directly to our patients' homes. Some of its key attributes are the need for internal nutrition is complementary to our private duty and home health patient populations. Our payer and referral community value the continuity of care benefit Aviana has by providing medical solution services along with our PDS and HHA businesses. Medical Solutions patients often have a longer length of stay needs, approximately 2.5 years. This drives a solid reoccurring revenue stream, which is accompanied by very stable gross margins. And lastly, Medical Solutions has demonstrated strong growth trends driven by A, organic growth through a dedicated clinical sales team, and B, de novo growth in new states we currently do not serve. Again, Medical Solutions is a home care business that is patient preferred and provides interim nutritional care in the lowest cost setting, the home. Now to Medical Solutions segment indicators for Q1 2021. During Q1, we produced $34.8 million of revenue, or 15.2% year-over-year growth. Revenue was driven by 73,000 unique patients served, UPS, during the quarter, or 10.6% year-over-year growth. This double-digit growth is consistent with our strategy to grow Medical Solutions with both strong organic and de novo activities. We are currently serving over 26,000 patients per month in our Medical Solutions business with plenty of geography for continued growth. Our revenue per UPS of $476.92 was up 4.6% from Q1 2020, primarily driven by product mix shift. I expect both volume growth and revenue to continue to benefit from the growth of our PDS and home health and hospice segments. Turning to our cost of goods and gross margin metrics, we continue to experience great stability in gross margins with $15.7 million in Q1, or 45% gross margins percentage. This equates to a year-over-year growth of 100 basis points in gross margin percentage. Gross margin improvement was driven by product mix shift and overall efficiencies in our delivery model. I expect gross margins to remain in the 45% range. I am proud of our medical solutions team and their demonstrated ability to scale the entry in nutrition business on a national basis. In summary, all three Aviana business segments are off to a great start in 2021. I look forward to updating you again at the end of Q2 on our continued progress. With that, I'd like to turn the call over to David Ashfar, CFO. Dave.
spk09: Thank you, Jeff. Tony and Jeff have given us some great color on our quarter and the positive outlook that we have right now. I'll now provide some more details on the results of operations, adjusted EBITDA, liquidity, some recent events in Q2 that we're very proud of, and 2021 guidance. With respect to results of operations, revenue was $417.2 million for the first quarter of 2021, as compared to 355.2 million for the first quarter of 2020, an increase of 61.9 million, or 17.4%. This increase was driven by growth across our key segments, including a 30.3 million, or 9.5% increase in PDS revenue, a 27.0 million, or 604% increase in our home health and hospice revenue, and a 4.6 million, or 15.2% increase and medical solutions revenue. And Jeff mentioned it, but our PDS segment volume growth was a robust 11.1%, with both organic volume growth and new volumes contributed by the numerous acquisitions we completed in 2020. Our home health and hospice segment revenue growth of 27 million resulted from the incremental revenue generated by the two 2020 home health and hospice acquisitions that we closed in the fourth quarter, Five Points and Recover Health. And as I'll elaborate on later, We've continued our home health and hospice M&A in 2021 with the acquisition of Doctors' Choice in April. Our medical solution segment volume growth is 10.6 percent. On the rate side of things, while our PDS revenue decreased 1.6 percent overall due to the change in business mix that Jeff mentioned earlier, we view the PDS reimbursement rate environment as a tailwind, resulting from both permanent and temporary rate increases issued by various state Medicaid programs. and which is positively benefiting our PDS businesses. Revenue rate in our medical solutions business increased 4.6% from the year-ago quarter. Turning to gross margin, our gross margin was 131.7 million, or 31.6% of revenue, for the first quarter of 2021, as compared to 107.5 million, or 30.3% of revenue, for the first quarter of 2020. The 22.4% growth in our gross margin compares favor to our revenue growth of 17.4%. Our gross margin percentage increased 130 basis points in the current quarter as compared to the year-ago quarter. Operating income was $28.3 million for the first quarter of 2021, or 6.8% of revenue, as compared to $17.9 million, or 5% of revenue, for the first quarter of 2020, an increase of $10.4 million. Operating income for the first quarter of 2021 was positively impacted by an increase of $14.5 million or 30.2% in field contribution as compared to the first quarter of 2020. The $14.5 million increase in field contribution was delivered by a $61.9 million or 17.4% increase in consolidated revenue combined with 140 basis point improvement in our field contribution margin to 14.9 percent for the first quarter of 2021, an increase from 13.5 percent from the first quarter of 2020. Field contribution and field contribution margin are important metrics to us because it helps us assess and make decisions about the operating performance of our core field operations prior to corporate and other costs not directly related to our field operations. It helps guide us in determining whether a branch and regional administrative expenses are appropriately sized to support our caregivers and direct patient care operations. Moving on to net income, net income decreased 31.8 million for the first quarter of 2021 as compared to the first quarter of 2020. And while that looks like a significant decrease in net income, if you exclude the 50 million legal settlement we received in the first quarter of 2020, our net income actually increased by approximately 18.2 million in the current quarter as compared to the year-ago quarter, and that's primarily as a result of the $10.4 million increase in operating income I mentioned earlier, and an $8.3 million net decrease in valuation charges associated with our interest rate swaps and net settlements incurred with swap counterparties. Moving to adjusted EBITDA, adjusted EBITDA was $43.7 million for the first quarter of 2021, as compared to $29.8 million for the first quarter of 2020, an increase of $13.9 million, or 46.7%. We're very pleased to see expansion in our adjusted EBITDA margins from 8.4% in the first quarter of 2020 to 10.5% in the first quarter of 2021 as the quality of our adjusted EBITDA has improved, primarily due to the 180 basis point improvement in our operating income as a percentage of revenue. With respect to liquidity, we had strong liquidity at April 3rd, 2021, with cash on the balance sheet of $67 million and available borrowing capacity under a revolving credit facility of $55 million, resulting in total liquidity of $122 million at the end of the first quarter. And this is after returning in the first quarter $25.1 million of provider relief funds to the federal government and $4.3 million of stimulus funds to the state of Pennsylvania, both of which we received during 2020. With respect to our cash collections and DSO, We're pleased with how our revenue cycle teams continue to perform in a remote work environment. Our focus is integrating the collection operations of the companies we have acquired and normalizing our collections processes for the new electronic visit verification requirements. Proud of how collaborative our revenue cycle and operations teams work to drive excellence in cash collections, which is one of our five Cs. Our DSO is 40.2 days for the first quarter of 2021, as compared to 40.9 days for the first quarter of 2020. We expect our DSO to increase over time as we grow our home health and hospice business as those businesses generally have longer collection cycles. Our capital expenditures in the first fiscal quarter of 2021 were 0.6% of revenue as compared to 1.8% of revenue in the first quarter of 2020. We typically view our CapEx in a range of 1 to 1.2% of revenue. Our CapEx in the first quarter of 2021 was lower than normal due to timing of current year expenditures. I'd like to now cover a couple recent events in the second quarter of 2021. On April 16, 2021, we closed the acquisition of Doctors Choice for a purchase price of $115 million as we continued to execute our M&A plans. In a short period of time, we have grown our home health and hospice business to $200 million of annual revenue on a pro forma basis inclusive of Doctors' Choice based on first quarter results. We financed the Doctors' Choice acquisition in part with a $67 million incremental second lien term loan. This incremental second lien term loan was repaid with proceeds from our IPO, which I'll speak to next. On April 28th, we became a public registrant, and on May 3rd, we closed our initial public offering. What a milestone and a tribute to our caregivers and support staff, without whom this would not have been possible. including the green shoe that was recently partially exercised by our underwriters. We sold approximately 42 million of our common shares and raised approximately 507 million of gross proceeds from the offering in total. Net of bank fees, we received approximately 478 million. We used those funds primarily to repay debt and accrued interest, but also to pay for offering costs and related items. funding the remainder of the cash to the balance sheet for general corporate purposes and future M&A. Specifically, with respect to debt repayment, we used $307 million of IPO proceeds to fully repay and extinguish our $240 million original second lien credit facility, as well as the $67 million incremental second lien term loan borrowed in the second quarter of 2021 to finance our acquisition of Doctor's Choice. We used $100 million to make a principal payment against our first lien credit facility. Pro forma for these principal payments that we made with the IPO proceeds, we had $862 million of total credit facility debt as of the end of Q1-21. And lastly, we upsized our revolving credit facility in connection with the IPO, which further enhances our liquidity. We've now increased total capacity under the credit facility from $75 million to $200 million. As a result of our initial public offering and repayment of debt, the rating agencies have taken positive actions. On May 3rd, 2021, S&P upgraded our issuer and issue level credit ratings to B-minus from CCC Plus with a positive outlook. On May 4th, Moody's upgraded our corporate family rating to B-2 from B-3 and affirmed our B-2 rating on our senior secured first lien credit facility with a stable outlook. We were pleased with these ratings actions. In turning to our full year 2021 guidance, we anticipate our revenue to be at least 1.745 billion. We anticipate our adjusted EBITDA to be at least 185 million. And for the reasons outlined in the press release, we are not providing guidance at this time on net income. One other item, we also currently plan to provide guidance on adjusted net income per share in the future as we mature as a public company. In summary, We've entered 2021 from a position of strength with first quarter earnings that exceeded our expectations. Additionally, we're pleased to have returned $29.4 million of provider relief and stimulus funds in aggregate that we received during 2020 to the respective government agencies in the first quarter of 21. The proceeds we received from our IPO and the debt we retired as a result has reduced our leverage and related debt service costs in the second quarter. With our improved capital structure, as well as recent positive rating agency actions, we believe we're in an even better position to capitalize on the market opportunities before us. And with that, operator, we're ready to open up the call for questions.
spk08: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To allow for as many questions as possible, we ask that you please keep to one question and one follow-up each. Our first question comes from the line of Stephen Valliquette with Barclays. Please proceed with your question.
spk05: Great. Thanks. Good morning, everybody.
spk01: Good morning, Steve. How are you?
spk05: Doing all right. A couple questions here. First, just regarding the revenue rate in the PDS segment that was down a little bit year over year, you mentioned the change in the business mix between skilled versus unskilled services and how that should normalize, start to normalize in the back half of the year. I guess as we think about that recovery, I don't know how granular you can get on additional color around this, but should we assume that that revenue rate can move back up to the high 30s during that recovery this year, or should we still think of that more as like a mid-$30 type number change? during that recovery phase. And then a quick follow-up on the same subject is just any additional color you can provide just on the environment for collective state rate updates and how that is also impacting your outlook for that metric for the rest of the year. Thanks.
spk01: Well, first of all, Steve, that's a very insightful question, and I think we can give you some color. So I think the The change that Jeff talked about in the rate, I think it's probably most important to recognize what it's not. It's not a change in payment rate or payment methodology from a payer or from a state. So it is, as Jeff described, it's a change in the business mix between skilled and unskilled. And so as it relates to how we're thinking about it for the rest of the year, Jeff, why don't you talk a little bit about the seasonality piece and how we expect that to shift with schools?
spk13: Yeah. And so, Steve, as Tony said, and in our comments, really tied to the COVID pandemic, we've seen a slight downturn in our school business. And as much from the workforce side of it, as much from from our nurses who are staying at home with their children and unable to work. And so some of that skilled business that we would normally have. And then as Tony mentioned, we have a decent amount of school skilled nursing hours where our nurse actually goes to the school with our medically fragile child. And obviously with the sensitivity around our children in the COVID pandemic. You know, most of our kids have not attended school in person, both in Q4 of last year, Q3, Q4 of last year, as well as Q1 and now early Q2 of this year. We see good trends in how the vaccination process is working. We've talked to a lot of our parents, and they are intending on, you know, putting their kids back in school in the fall. And, you know, that really starts to move for us in August and certainly by Labor Day. September, our schools are back in full session. So I think as we said in our prepared remarks, we expect that to really normalize both from a volume standpoint on our skilled business, skilled nursing business, as well as our overall rate. And I think as Tony mentioned, we feel very good about that.
spk01: So Steve, the second half of your question was related to really the payer and state environment. I'll go all the way back to the beginning of COVID and many of our states put through rate increases during the first half or the middle of 2020, and some of those states put those rate increases through as temporary rate increases. However, since that time, a lot of those states have now moved those rate increases to permanent rate increases going forward. So in the second half of 2020 and the first quarter of 21, I will tell you that our overall rate environment has been positive, and we see that continuing. I'll give Jeff and his payer relations team some credit here. We made an investment back in the first part of 2020 in a government relations and a payer relations strategy. And these guys have done an outstanding job in not only keeping rate positive, but moving rate forward. And so we've got additional rate relief coming in 21, and we think for the foreseeable future, rate is going to be a positive story in our PDS segment.
spk05: Okay. That's helpful. Thanks.
spk01: Thanks, Steve. And thank you for your support, Pete.
spk08: Thank you. Our next question comes in line of Matt Borsch with BMO Capital Markets. Please proceed with your question.
spk16: Thank you, and congratulations on everything you've accomplished in the last two months. I wanted to ask about how you see the timeline to normal trends in You know, how much do you anticipate this is going to look like what the business looked like prior to COVID versus where do you see sustained impacts from the pandemic as you roll through the rest of this year?
spk01: Okay. Well, first of all, Matt, that was a compliment. Thank you. We don't get a lot of those. So anytime we do, we celebrate for a second. So I appreciate the kind words. As it relates to the kind of the normal timeline, you know, in your question about when do we get back to that? I'll tell you, I think we're back to that today. Matter of fact, in my opinion, I think we're for the most part back to there in Q1 of 21. Not because we are where we were prior to COVID, but I believe that the definition of normal has now changed. And I think that where we are today is is where we're going to continue to build from going forward. So we're not expected, Jeff, I'll ask you to jump in, but we're not expected that, you know, okay, well, in June, all of a sudden things are going to go and change in some way or another. We think we're living in what's going to be our normal world going forward. Any color you want to add, Jeff?
spk13: That's well said, Tony. I think our investments, Matt, in technology that we invested in 19 and 20 years infrastructure around recruitment, as Tony talked, parent-government relations, and systems, point-of-care systems for our business have really helped us benefit from an operating leverage standpoint. Dave talked about the improvement and what we call field contribution. You see the improvement in adjusted EBITDA, and I attribute that to, as Tony talked about, there's a new norm post-COVID, and we have found a way to operate the business more efficiently, and I don't think we don't plan on going back to the old way.
spk01: You know, I think, Matt, maybe I read a little bit more into your question. If you think back to prior to COVID, recruiting new caregivers and nurses for us was difficult. Post-COVID, recruiting nurses and caregivers is difficult. And I think that's just the world that we're all going to live in, and we can't solve that problem. But what we're going to do is make it better for us than anybody else. And so the investments that Jeff talked about into our recruiting structure are I believe is going to, you know, pay off for us in the long run. Now, granted, our country is struggling with getting people back to work. And, you know, while that's above my pay grade, as the unemployment benefits subside and people find the need to go back to work, I think it might make our jobs a little bit easier. But we're not waiting around and hanging our hat on that. We're operating as if this is the new normal for us. Fantastic.
spk13: Thank you. Thanks, Matt.
spk08: Thank you. Our next question comes from the line of Lisa Gill with J.P. Morgan. Please proceed with your question. Great.
spk07: Thanks very much and good morning. I just wanted to follow up on two things. One, can you just remind us the size of the pipeline of acquisitions that you have? And then secondly, I heard the comments that you don't have any acquisitions currently and the guidance that you gave us for 2021. But can you just remind us how long it would take to close a transaction? Is there the potential that you'd have that opportunity to close something here before the end of the calendar year?
spk01: So certainly, Lisa. And I'm going to take your question kind of in reverse. And I'm going to start with the guidance, and then Rod, I'll ask you to jump in and talk about our pipeline. So our guidance does not include any future M&As. So we closed doctors in April of this year, and that's the only transaction that we have closed in 2021. And so the $1.745 billion in revenue, the $185 million in EBITDA does not include any other acquisition other than the doctor's choice acquisition that we discussed earlier. With that, we do have a robust pipeline. You know, Rod's been managing that pipeline. Rod, why don't you give a couple of comments about the size of the pipeline and how long it takes from beginning to end?
spk12: Yeah, Lisa, our current pipeline today is roughly $300 million that we're working with on a daily basis. Those are acquisitions in the $20 million to $80 million range, as we have previously disclosed. You know, we normally kind of work an acquisition pipeline of around this much now. We're very disciplined. That doesn't mean that we've got candidates coming on and going off all the time. You know, we don't do every acquisition that comes our way. We look at a fair amount, but we don't close a lot. So we're very particular and disciplined with regard to our approach. I think that we have previously disclosed it takes us about 45 days from the date that we sign a transaction to closing it, and we fully integrate every acquisition within 12 months.
spk01: But I think, Lisa, the way that I would think about our acquisitions going forward is, you know, we don't have control over when some of these assets come up for sale or the timing of that. So it's a little bit hard to predict the timing of close, so that's why we don't include it in our guidance. However... You know, internally, we're going to continue to grow through acquisition, and somewhere between $150 and $200 million a year is a pretty good number for us. And we believe that we'll be able to achieve that not only in 21, but in 22 and the years following that. So we're going to continue to be very assertive as it relates to our growth through acquisition.
spk07: Just given the focus on home health, do you find that the competitive landscape has changed at all over the last 12 months for these assets as we think about acquisitions?
spk12: No, Lisa's right again. The competitive landscape really hasn't changed really at all other than the fact that it's not so much strategic buyers that are out there and the market is more private equity, and that's the only change I've seen.
spk01: But one of the things that... Yeah, one of the things that we've been successful at is that, as Rod talks about with the private equity competitors in these deals, is that when we identify a transaction that is a good strategic fit for Aviana, we're going to close that transaction. You know, our synergies have a lot of value, and we can exploit those values in our pricing. And so if it's a good asset and it's a good fit for Aviana, we're going after and we're going to close that transaction.
spk08: Okay, great. Thank you so much.
spk01: Sure.
spk08: Thank you. Our next question comes from the line of AJ Rice with Credit Suisse. Please proceed with your question.
spk10: Hi, everybody. Maybe just look at the cost side for a minute. You alluded to labor obviously being a relatively tight supply. Can you give us a little more flavor on the private duty side as well as the adult home care side, what you're seeing, how much of a constraint that is? I think there was a I mentioned that you've got some people that are at home with kids and other things that you expect to see schools reopen and all opening back up. How much of a constraint is that right now and how much of a swing could that be in the back half of the year? Can you just give us a little more granular discussion around your labor trends?
spk13: Yeah, Jay, this is Jeff. Thanks for the question. I'll tackle both sides of it. You know, one, I think, you know, from the cost side of it, we haven't seen really any leakage on margin or even it being a cost issue, which is nice. So I think as we think about our margins, as we think about the rate increases, the known rate increases and the ones we're still working on for the latter half of 2021 going into 2022 legislative cycle, I think we feel really good from the cost side of it. I think we've seen, you know, kind of on the back half of COVID, it's It's really not a nurse saying, I need another 50 cents an hour, a dollar an hour. It's just getting that nurse back into the workforce. Tony alluded to it, and I think we've heard some of our peers talk about it, the macro trends with unemployment. We ultimately do need unemployment checks to come down in the value, the dollar value over time. We're certainly not waiting on that. We're certainly not betting on that. But that macro trend will help our industry and certainly help us I think the biggest thing for us is really getting kids back to school. I mean, we talked about it. Getting kids back to school really helps us from a revenue growth strategy because our kids, our patients will go to school. But it's also to that nurse who may be a single mom who's got a couple kids, it doesn't matter if we pay her a dollar more an hour. if she's got two kids at home, she can't fill a shift. She's got to stay home. And so that macro trend moving back to both schools and also federal and state unemployment rates coming down a little bit I think will help us. But I think as you think of our growth rates that you saw in the first quarter, I think as we think of 2021, we don't see those materially changing. We think those growth rates and the ones we talked about on the road show are still very solid for our PDS segment, as well as our home health and hospice segment. We can always use, talking about AJ, we can always use more nurses, so it's not an issue if we have too many, but I think it's something that we just find the ability to fight through every day.
spk01: And AJ, Jeff gave a metric in his prepared comments, and he talked about the spread in private duty services. And that spread is a key metric and one that we deliberately put that out there for folks to follow. And I think in his comments, he framed that out and says that the spread is going to fluctuate between 10 and 10.50. And I think that answer is ultimately the answer to your question, is that we think that spread is going to continue to be in that 10 to 10.50 range. And if you ask us, well, what about it by the end of 21? Nothing that we can see on the horizon would change how we're thinking about that metric. So if I were in your shoes, that would be the piece of the private duty business that I would anchor to.
spk10: Okay, and maybe just further on the cost side, it looks like your branch and regional expense as well as your corporate expense in terms of the ratios relative to revenue were a little better than we were thinking they were going to be. Can you talk a little bit about the potential for leverage there as you grow the business and what are the implications for long-term margin enhancement opportunities as you get leverage on those lines?
spk09: Sure, AJ. As we've grown over the past year, we have already leveraged our branch and regional infrastructure as well as our corporate infrastructure. And so we're pleased with the results that we've turned in. And we think we have some leverage to gain in the future as well. So, you know, strong cost control, as, you know, Tony and Jeff mentioned it. Our operators have done an exceptional job of growing the business, but at the same time controlling costs. And so, you know, we think we've got leverage both in the field as well as in corporate.
spk01: And as a reference point, AJ, if you go back a couple of years ago – Our corporate expense, Dave put it in our press release last night, our adjusted corporate expense number is down to about 4.7% of revenue. We've picked up 200 basis points in the last couple of years just on corporate overhead. And so as we continue to grow, you know, in that mid to high teens year over year, we're going to continue to gain leverage against that corporate and regional SG&A. So we think we've got runway left. Okay, thanks a lot.
spk08: Thank you. Our next question comes from the line of Joanna Godrick with Bank of America. Please proceed with your question.
spk06: Good morning. Thank you for taking the question. So my first follow-up, the commentary around organic growth in each of your business lines, you expect to continue to outpace the market. So what was the organic growth, I guess, in your home health market, in your home health, sorry, segment?
spk01: So we didn't break out organic growth from acquisition growth. Primarily, in our Q1 numbers, there's no new acquisitions in that number. All of the acquisitions that were done that are in our Q1 numbers were done in 2020. And as Jeff alluded to, we get after integration very quickly through our integration management office. And this IMO team begins integration literally before we even close. And so because of that, when we have overlapping locations, we consolidate those locations, and those just become a part of our organic story. So we've not broken out our growth rates organically versus that through acquisition. With that said... Our businesses, we have talked publicly. Depending on who you read, the home health market is growing, you know, 4% to 7%, you know, year over year in home health. And our home health organic growth is outpacing that by, you know, a few hundred basis points. And we believe that trend will continue.
spk06: Okay, and that's Raji, just again, your market share when you come in into the market, when you acquire these assets, and you just kind of improve the operations and be able to grow fast into the market rate.
spk13: Yeah, and Joanna, this is Jeff. You know, I don't think as we identify assets, and I'll use doctor's choice as a great example. We're not looking to necessarily take Doctor's Choice and just grow it faster. We bought it because we think the growth story of Doctor's Choice is spot on. As Tony talked about, we are going to gain leverage in Doctor's Choice through back-end synergies and then making it part of the Aviano family. But we are extremely pleased with Doctor's Choice organic growth rate. It's outgrowing the Florida market. and most of its peers in the market. And that's part of why we bought it. We like that asset. It created density. But to Tony's point, we're about 30 days into the closure of that, and we're already in an integration. We're already off and running. The team's doing great. It's exceeding our expectations right out of the gate. So it's not as much about changing the growth story It's really about getting the synergies and then bringing it into our family. And most importantly, as we mentioned with both Recover Health and Five Points, is growing through the integration process. And I think we're really pleased this year to date, 2021, with how the home health business has grown through the integration process.
spk01: And Joanne, if it's helpful, I think we have made this comment already publicly. We expect our home health and hospice business to continue to grow in that high single digits approaching, you know, low double digit growth, you know, year over year. And we don't see, we don't see that slowing down at all.
spk06: Uh, great. That's, uh, that's what I was looking to hear. And then my question was on the thing, I guess on the home health, uh, side of things, uh, in terms of your, your targets, um, for acquisition. So you're talking about growing revenue in the middle, uh, high, um, in the middle, high teens going forward, including acquisition. So how should you think about, you know, kind of the amount of revenues you expect to acquire and then how will you be financing these transactions, you know, going forward?
spk01: Okay. Well, I think we made, I think we tried to put bookends on that a few minutes ago. On any given year, we think that we'll be acquiring $150 to $200 million of revenue on any given year. Now, I will caution you, that's not all in home health and hospice. You know, we are going to be opportunistic about continuing to grow our private duty services business as well. And when opportunities to acquire quality assets come up in that space, we'll take those on as well. But I think, you know, if you were to use a range of $150 to $200 million a year, that's probably a pretty good place to land. As it relates to paying for them, as Dave outlined, you know, we've got, you know, strong cash on the balance sheet. As we've discussed in the press release and in our queue, we've executed on additional shares through the SHU. That brings us probably to about $90 to $95 million available to do M&A with cash on our balance sheet. We'll continue to use leverage where it makes sense. You know, we were in trouble. planning on bringing our leverage ratio down to between 3.5 and 4. Our IPO was a little bit shorter than we had anticipated, so leverage ends up being between 4 and 4.5 gross leverage versus net leverage. We're certainly comfortable in there. We can continue to use our balance sheet to grow. Dave also mentioned we have access to another. We increased our revolver to $200 million. So we've got access to be in or out of the revolver to continue to grow. And then on top of that, we have our equity. We could execute on a secondary offering and raise capital that way. We have sponsors that are highly supportive of growing this business. And lastly, we could use our stock as a currency. Now, granted, that's not something we've talked about thus far, but We've got all of those tools in our bag. I don't think access to capital is going to constrain our growth through acquisition at all. Thanks, Joanna.
spk08: It's very helpful. Thank you. Thank you. Our next question comes from the line of Peter Chickering with Deutsche Bank. Please proceed with your question.
spk04: Good morning, guys. Thanks for taking my question. Sort of two clarifications here. Your margin this quarter, you know, very strong at 10.5%, and also generally in line with the guidance for 2021. You did reference continued room for gross margin improvements in home health and hospice, plus additional SG&A leverage. So I just wanted to see if you can walk us through the margin progression throughout 2021 and what would prevent you from getting to the 11-plus range by the fourth quarter.
spk01: Well, I think in terms of The outlook on 21, I think about all we're going to be able to say is that the guidance that we've given, $1.745 billion in revenue and not less than $185 million in EBITDA. With that, I do believe that there is, again, clear runway for us to continue to improve margins, and Jeff mentioned it in his remarks. Our home health margin today runs about in the mid-40s, As we are bringing on new acquisitions, those acquisitions are running at higher gross margins already because they've had a little bit more time under PDGM. And we think that as we grow that business, we will see that gross margin expand to the upper 40s or even low 50s. And we'll continue to make investments and enhancements in our business to get that. I think in our private duty services business, I think our margins are kind of where they're going to be. I don't, you know, again, it's not a very complex business. We get paid by the hour and we pay our caregiver by the hour, so gross margins are relatively fixed. And so, likewise, you know, Jeff said it earlier, I don't think there's a tremendous downside with wage pressures in the immediate future. But on the flip side of that, I don't think there's a tremendous upside because of wage pressure as well. So our gross margins are kind of B-flat there. And in the medical solutions business, while it's much smaller, our gross margins are going to run in the mid-40s. That's kind of somewhat of a commodity, and that's just kind of where that's going to be. Now, with all that said, I do believe there's additional margin expansion that can be had through the leverage of overheads. You know, Dave talked about it. I think AJ asked the question, and so did Lisa, that as we continue to grow, you know, you think about that mid- to high-teen growth. As we grow that revenue, we're not going to have to grow our corporate infrastructure. We have a very robust compliance program within our corporate infrastructure. We don't have to duplicate that because Rod brings us another $80 million of acquired revenue. And so we'll continue to gain that leverage going forward. And so I think that's going to afford us the opportunity for margin expansion.
spk04: Okay, great. And then a follow-up question on the PDS side, on the skilled versus unskilled. Any chance you can quantify the hour split between sort of those two businesses in the first quarter? And as you expect that to rebound back half a year, do you think that you can recruit to fill that demand? Historically, I believe that recruiting was a limitation of growth in PBS, so I want to make sure I can understand both the demand from kids going back to school and recruiting of nurses the back half of the year to fit that demand. Thanks so much.
spk01: So that's a great question, Pito, and Jeff and I will tag team that. Let me set the table with we're not going to disclose skilled versus unskilled because then we get into all sorts of other services within private duty services, whether it be through our pediatric day health centers or a therapy component or clinical component. The next thing you know, we're trying to parse that out into 17 different pieces. So we're not going to disclose further below our private duty services segment. With that said, though, we'll try to provide you with some color. Jeff, why don't you talk a little bit about the kind of patients that's skilled and unskilled and what causes them to go up and down.
spk13: Yeah. And, Peter, really the reason we've seen not only the consistency but even the growth through the unskilled side of the business is it's really a family member, a neighbor, a distant relative who's providing that unskilled service. And so, you know, through COVID, there's a higher level of trust between the family and the caregiver there. And it was, you know, to be honest, it was just easier to keep that group connected, you know, both a family member or a neighbor who's providing that unskilled care to the family. That business has just stayed much more connected and even honestly has grown through the COVID process. You know, our day health centers, going back a year ago, our day health centers back in April, I think, were fundamentally shut down for like 60 days. We didn't have a single patient. And then slowly, you know, Florida opened up, Pennsylvania, some of the states opened up and allowed day health centers for us to start bringing the kids back in. At this point, we've seen that business primarily rebound. There's still a little bit. Pennsylvania is still opening up from 75% capacity to 100% capacity at the end of this month, which allows us to kind of round out that business. And then, again, I just keep pointing back to schools and just the school business is a nice, it's all skilled services. So it's an RN or an LPN that meets the family at the home and rides the school bus with our medically-affected child, so it's a skilled service in nature, connecting that business. You brought up recruitment. It's an easier job for us to recruit for because it's primarily a 7.30 to a 4.30, five days a week. It's a good setting in a school setting, and so it's a much easier position for us to fill from a recruitment standpoint, and in some ways it almost fills itself, if you will, So just connecting that business, and as Tony said, it's not going to miraculously just show up on August 1st, but as it phases back in over the course of August, September, October, and really the end of the year, that will be a great signal to us that states are really starting to get back to a sense of normality post-COVID. I think that ultimately we see that as a great sign for our business and even the ability to enhance our growth rate.
spk04: Great. Thanks so much. Nice quarter, guys. Thank you.
spk08: Thank you. Ladies and gentlemen, to allow for as many other questions as possible, we ask that you each keep to one question at this time. Our next question comes from the line of Brian Tanklett with Jefferies. Please proceed with your question.
spk14: Hey, good morning, guys, and congrats, and nice to have you guys back in the public market. So since we're down to just one question, I just want to ask if we can level set, you know, post-IPO, the right share count for 2022, And then I guess the right debt levels to be thinking about for end of Q2, just for modeling purposes. Thanks.
spk09: Thanks, Brian. As far as the share count, today we've got 184 million of shares outstanding. When you think about the shares that may be outstanding at the end of the year or next year, there's still some mechanics we're working through with respect to the performance component of our options. And so I don't have a number for you on that right now, but it's something that we're still working through. And then as far as, you know, debt, you know, as Tony said, I think the way to think about it is, you know, we see ourselves in the four to four and a half, you know, terms of leverage range. You know, pro forma for the IPO, we were at $862 million in gross debt. And, you know, we see it as four to, you know, low to mid fours in terms of leverage going forward.
spk13: Awesome.
spk09: Thank you.
spk13: Thanks, Brian.
spk09: Appreciate you.
spk08: Thank you. Our next question comes from the line of Frank Morgan with RBC Capital Markets. Please proceed with your question.
spk11: Good morning. I actually wanted to ask about the home health care side of the business. I know that across the three units, whether it's Five Points, Recovery Health, or Doctors, where are they in the PDGM process? Do you think you've really maximized the rate opportunity there? I know you talked about a margin opportunity in home health. So is it more on the rate side from refining... PDGM or is it more of a cost mix side question?
spk01: Thanks. So let me start with the idea of getting back into the Medicare home health space. I think we spent the first half of 20 making sure that we understood PDGM and understood how it was going to separate winners from losers, and the kind of metrics and systems that you have to have in place to appropriately manage PDGM. I think ultimately we got extremely comfortable with doing that. I think the companies that we bought Five Points, Recover, as well as Doctors' Choice, I think have done an exceptional job clinically, and they provide great care. I'm going to change your wording because I don't think we don't have an initiative to maximize reimbursement. And what we look to do is to deliver the right level of care to each patient under the orders of physician. The reimbursement will sort itself out. And so I think one of the things that we're going to do over time is we're going to bring consistency through each of those businesses that you just described. We're going to bring those into one clinical operating system going forward, and we'll use technology to make sure that our clinicians are documenting appropriately and that we are following physicians' orders and that we're being compensated accordingly. And I think if we let that be our driving force, I think the outcome will be that we're going to be reimbursed appropriately for the services we're providing.
spk08: Thank you. Our next question comes from the line of John Ransom with Raymond James. Please proceed with your question.
spk03: Hey, guys. Just my one question. If we step back and look at what you're building here, you know, the market's not ever seen a pediatric company combined with an adult home care company. Other than just the normal back office compliance and accounting, is there a natural synergy between those two businesses, or should we think about it as this is a great platform, but it gives us just a chance to rebuild again a great home health company?
spk01: Well, I think, so I'm going to start with the way you asked the question, because I thought it was insightful. In terms of traditional synergy between the two, I think the answer is no. There's not a lot of overlap with staffing. There's not a lot of overlap with referral sources. There's not a lot of overlap with billing, the reimbursement piece. And to your point, there is a significant ability to leverage overhead across a much larger platform, and we'll continue to benefit from that. from being able to leverage our corporate expense across multiple platforms. However, I do believe that there is a pseudo synergy that exists because we really diversify the risk profile of our business. And granted, from where we sit today, the horizon looks pretty clear. And so for the foreseeable future, Rates look stable to positive. Growth looks stable to positive. Our acquisition pipeline looks stable. But somewhere out there, there's a storm on the horizon. And I think that having a diverse business platform that would allow us to take a hit here or there without it being devastating across the entire business, I do believe is a... a strategic advantage for us going forward. So if the waters were to get choppy in any one of those three business segments, the other two business segments gives us the ability to weather those kind of storms, and we think that is a competitive advantage. So hopefully somewhere in there I answered your question.
spk03: Thanks, Tony. Appreciate it.
spk01: Thanks, John. I'm not sure if the laugh was, no, you didn't answer.
spk08: Thank you. Our next question comes from the line of Scott Fidel with Stevens. Please proceed with your question.
spk02: Hi. Thanks. Good morning. I wanted to just ask a follow-up question just on getting the skilled mix back up to more normal in PDS and sounds like the school reopenings is a key lever to that. You know, just interested as you have your conversations with the parents and in terms of getting, you know, your kids back into school, because obviously they do have these more significant medical, complex medical situations. Are you getting any feedback in terms of is there, you know, more their parents looking more to get their kids vaccinated because of that? Or do you just think that in general, just, you know, as the vaccination rates more broadly for teachers and other staff have increased so much, there will just be more comfort with the parents in terms of putting, you know, their kids back into the schools.
spk13: Scott, that's a great question. And I'll tell you from the parents we've talked to, not unlike the parents that we are, they want their kids back in school. So they understand even though that their child's a medically fragile child and is It's a specialized environment. They ultimately want their child back in school. They want them back in a safe manner, which goes to your point on not only their vaccination, but the other kids in the school's vaccination, the teacher's vaccinations, which I think is the primary driver why they were out the majority of last year and still year to date. But no, when we talk to the parents, they know the socialization education that is gained for their kids is absolutely worth it, and they they are working with the school systems, you know, to build a path back in. These parents are very vocal. They're very motivated. They work hard on their children's behalf. And they're excited to get back into the school setting. And, you know, most of these parents receive at-home nursing services, too. So we're in their home, you know, in the off-school hours. You know, so we're there in the evenings and nights and certainly weekends. But the idea... of getting their children back to school is very important to them. So I think they're helping to solve the equation. They're helping the schools to solve the equation. And I think secondary in your question is really the vaccination rates. I think it's where we see both the national vaccination rates but also the vaccination rates within our own nursing pool at Aviana. We feel confident that 2021 is really going to crest, whether it's the herd immunity or the majority of people getting vaccinated, we feel like 2021 is the year where that happens. Tony, anything you'd add?
spk01: No, I think you said it well.
spk02: Okay, great. Well, I'm sure for those parents, it's probably tougher having those kids at school or at home than anyone else, so it certainly makes sense. Okay, thanks. Thanks, Scott.
spk08: Thank you. Ladies and gentlemen, that's the end of our question and answer session. I'll turn the floor back to Mr. Strange for any final comments.
spk01: Thank you, and we appreciate your help during our call. I'd too like to, in closing, like to welcome Dr. Schwartz to our board on behalf of the entire executive team. We're looking forward to working with you. Buckle up. I'd also like to thank all of our employees again. Without the work that you guys do every single day, none of these results are possible, and we really appreciate all of the effort. And then lastly, I'd like to thank the folks that took time out of their day to join our call. We appreciate your support. You guys have been great. during this process, and we look forward to many future calls and being able to share our success with you. Thanks a lot, Operator.
spk08: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Disclaimer

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