Community Health Systems, Inc.

Good day and welcome to the Community Health System's fourth quarter and full year 2024 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Anton Hai, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Chuck. Good morning everyone. Welcome to Community Health System's fourth quarter 2024 conference call. Joining me on today's call are Tim Hitchens, Chief Executive Officer, Kevin Hammond, President and Chief Financial Officer, and Dr. Miguel Bonet, President of Clinical Operations and Chief Medical Officer. Before we begin, I must remind everyone that this conference call may contain certain forward-looking statements, including all statements that do not relate solely to historical or current facts. These forward-looking statements are subject to a number of -on-risk, which are described in headings such as risk factors in our annual report on Form 10-K and other reports filed with or furnished to the SEC. Actual results may differ significantly from those expressed in any forward-looking statements in today's discussion. We do not intend to update any of these forward-looking statements. Yesterday afternoon, we issued a press release with our financial statements and definitions and calculations of adjusted EBITDA and adjusted EPS. We've also posted a supplemental slide presentation on our website. All calculations that we will discuss exclude gains from early extinguishment of debt, impairment gains or losses on the sale of businesses, expense from government and other legal matters and related costs, expense from business transformation costs, expense related to employee termination, benefits and other restructuring charges, and change in estimate for professional claims liability. With that said, I will turn the call over to Tim Hinchin, Chief Executive Officer.

Thank you, Anton, and thanks everyone for joining our fourth quarter earnings conference call. I want to highlight some key performance measures for the full year, and later Kevin will cover results for the quarter. I'll start today with the strong growth we are achieving across our CHF's affiliated health systems, resulting in record same store volume levels for the full year 2024. Versus prior year, same store admissions increased 3.2%, same store adjusted admissions increased 2.7%, and same store surgeries increased 1.3%. Growth like this is enabled by our capital investment, strong capacity management, and the pursuit of strategic value generating opportunities across our core portfolio. In 2024, that included significant expansion in outpatient access, such as primary care, specialty practices and urgent care centers. In addition to de novo projects, we acquired 10 urgent care clinics in Tucson, Arizona, broadening our geographic footprint and ability to care for more patients in this market. We opened two new freestanding emergency rooms in fast growing communities, bringing our current count to 19 freestanding EDs across the portfolio. We ended the year with a total of 47 ambulatory surgery centers. Within our markets, we are very well positioned for outpatient surgery, and as a result, same store ASC cases increased 14% last year. We also completed two major campus expansion projects, including new inpatient bed towers, emergency department and surgical services capacity. These projects have further improved our competitive position in our Knoxville, Tennessee, and Baldwin County, Alabama markets, and both continue to ramp up nicely. And we invested in procedural capacity, such as expanding and upgrading cardiac cath labs and other procedural spaces in several health systems last year. Same store net operating revenues for the year increased .5% and adjusted EBITDA for the year improved 6%, which includes the benefit from supplemental state directed payment programs in the fourth quarter, which Kevin will discuss in more detail later. We also saw improvements in both labor and supplies as a percentage of net revenue. Turning to our portfolio, in 2024, we completed divestitures in Cleveland, Tennessee, and Statesboro, North Carolina. We also plan to finalize other announced divestitures in the first quarter, Shorepoint Health in Florida, and Lake Norman Regional Medical Center in North Carolina. And we are in discussions which will likely result in additional strategic divestitures in 2025. We anticipate the sale of these assets will generate meaningful proceeds and deleveraging value. While 2024 was a very good year in many regards, it was not without challenges. On our last call, we mentioned the impact of downgrades and denials, which continue to be a troubling trend for healthcare providers. However, that situation has shown some stabilization since the third quarter. Our utilization management and physician advisor programs are performing as expected, as these clinicians advocate for our patients to receive the appropriate care in appropriate settings, and as we pursue payment for those services. Medical specialist fees and subsidies continue to be a pressure point, particularly in anesthesia services. To mitigate this trend, we have scaled our proven capabilities for managing in-source hospital-based services beyond hospitalists and emergency medicine into a growing number of anesthesia programs. In the fourth quarter, for instance, we rapidly in-sourced anesthesiology in one of our larger markets, a move which we are confident will lead to better, more integrated care and services in the most cost-effective manner. We anticipate further expansion of internally managed hospital-based provider services in 2025, which is leading to greater provider satisfaction and stability, positive quality outcomes for our patients, and the opportunity for cost savings. This is just one of many strategic initiatives highlighting how CHS is now a more agile organization, prepared and equipped to rapidly adjust to and overcome macro trends and industry headwinds as they arrive. Now I'd like to spend a minute on our clinical achievements in 2024. We are proud of our advancements across many measures, including reductions in risk-adjusted mortality rates and hospital-acquired infections, and further advancements in patient safety. By the end of 2024, we reached our best-ever reduction in the serious safety event rate, down 90% from our baseline in 2013. We also saw notable gains in our patient experience measures. These results are made possible by the skilled and compassionate teams working across our organization. Our work to recruit and retain a highly capable workforce continues to yield impressive results. In 2024, overall employee retention was particularly high, and we achieved our best retention rate for registered nurses in the past five years. I want to thank our frontline caregivers and support teams, our local leaders, and our corporate teams for all they do every day to ensure quality care for our patients. We are proud of our progress throughout 2024. We believe we accomplished what we said we would do and finished the year strong by building momentum that we can carry forward. We look forward to even more progress in 2025. Looking ahead, we expect our investments will continue to produce incremental growth. We are intensely focused on ensuring the availability of access and capacity for all of our services to help our patients get the care they need conveniently and without delay. Numerous initiatives in 2025 are designed to enhance appointment scheduling, care navigation, and to help facilitate needed follow-up services, all of which support our patients and can drive additional growth. With our enterprise resource planning platform now fully implemented, we have more insights and data than ever before. These tools can help drive efficiencies, streamline workflows, and reduce costs. And this year, we will continue to leverage partnerships and innovation to further advance patient care and support our workforce. As always, we remain dedicated to delivering high-quality healthcare services for the patients and communities who count on us every day. With that, let me turn the call over to Kevin Hammons, who will provide more context about our fourth quarter and 2024 results and guidance for the year ahead. Kevin? Thank you, Tim, and good

morning, everyone. We continue to see strong demand for care in our markets, leading to the best same-store revenue growth of the year, up .5% in the fourth quarter, on a .4% increase in inpatient admissions, and .1% growth in adjusted admissions. Same-store ED visits were up 1%, and surgeries were up 0.9%. In addition to the strong volumes, same-store revenue growth reflects a .3% increase in net revenue per adjusted admission. Driven by rate growth, including the Medicare inpatient rate update and incremental reimbursement under Medicaid supplemental payment programs, partly offset by lower acuity. Adjusted EBITDA for the fourth quarter was 428 million, compared with 386 million in the prior year period. Margin for the quarter was 13.1%, up from .1% in the prior year period. For the full year of 2024, adjusted EBITDA totaled 1,540 million, compared with 1,453 million in 2023, with margin of 12.2%, an improvement of 60 basis points from the prior year. During the quarter, we recognized an incremental net benefit of approximately 40 million from Medicaid supplemental payment programs versus prior guidance, primarily relating to the approval and recognition of the New Mexico program for the period July 1st through December 31st, 2024. As Tim noted, the impact of payer downgrades and denials has stabilized for us since calling it out in the third quarter, thanks to our ongoing utilization management efforts and physician advisor program. However, we will remain vigilant in our work and advocacy regarding this troubling trend that is affecting all healthcare providers. Turning to expense management, we were again pleased with our performance on labor costs, with average hourly rate of approximately .7% year over year in the fourth quarter, reflecting an increase in the number of employed physicians, and approximately 4% for the full year 2024 consistent with our expectations. Contract labor spend was 36 million in the fourth quarter, down another 5 million sequentially, and bringing the full year 2024 total to 170 million down an impressive 36% from full year 2023, reflecting our success with recruitment and retention. We also continue to see improvement on supplies expense, which declined 50 basis points year over year to .5% of net revenues in the fourth quarter, and for the full year 2024, declined 60 basis points to 15.4%. This reduction in supplies expenses, a percent of net revenue reflects some early wins in our management of supplies as a result of implementing our ERP, increased reimbursement from Medicaid supplemental programs, as well as the growth of admissions outpacing our surgical growth for the year. Offsetting these gains during the fourth quarter, we experienced a somewhat sharper increase in medical specialist fees versus expectations, and an acceleration from the previous three quarters. Specifically, medical specialist fees exceeded expectations, increasing approximately $20 million on a same store basis, or approximately 12% year over year to 170 million in the fourth quarter, and for the full year totaled 640 million, up .9% on a same store basis from 2023. As Tim noted, we rapidly brought anesthesia care in-house in one of our larger markets, and also took over operations when a regional contractor began experiencing severe financial distress, both of which we view as strategic investments that will lead to better results and visibility over the longer term, despite the upfront cost and short-term margin dilution. While we have made good progress with our insourcing initiatives, we anticipate further pressure in medical specialist fees over the near term. In 2025, we anticipate these costs to grow in excess of typical inflationary trends, but still well below the spikes that we saw in 2022 and 2023. Cash flows from operations were 216 million for the fourth quarter, up from 90 million in the fourth quarter of 2023, and 480 million for the full year of 2024, which was consistent with our guidance for 400 to 500 million, and up from the 210 million in 2023. This -over-year growth in cash flow primarily reflects higher adjusted EBITDA, a reduction in cash interest, and improvements in working capital, including the conversion of accounts receivable. For the full year of 2024, we deployed 360 million on capital expenditures in line with our guidance, and down from 460 million in 2023. Transitioning to divestitures during the fourth quarter, we completed one small divestiture of Davis Regional Medical Center in Statesville, North Carolina, and announced agreements to divest our other remaining North Carolina facility, Lake Norman Regional Medical Center, and Mooresville, as well as the ShorePoint Health System in Florida. We anticipate both of these transactions will close in the first quarter of 2025, providing nearly 550 million in gross proceeds. These transactions reflect attractive double-digit multiples on trailing EBITDA, leading to further deleveraging. In addition to these previously announced transactions, we continue to advance discussions on additional divestitures that we expect to announce in the near future, also at very attractive multiples. All told, these pending and expected transactions should generate more than one billion in total proceeds, which we expect to lead to meaningful deleveraging and increased shareholder value. At year-end, net debt to trailing adjusted EBITDA was 7.4 times, improved from 7.6 times in the prior quarter, and 7.9 times at the end of 2023. We continue to believe we have more than adequate liquidity to meet our needs going forward, with approximately 500 million of borrowing capacity under our ABL, along with available working capital and pending asset sale proceeds. We look forward to providing additional details on these transactions as they become available. Finishing up 2024, we completed the implementation of our new ARP and workflows under Project Empower as scheduled. The final phase, which involved transitioning onto new workforce management tools for HR, payroll, and timekeeping allows us to move beyond the investment and implementation phases and begin focusing on optimizing our use of the new tools and realizing tangible benefits throughout the remainder of 2025. We estimate that as a result of this work, we will save between 40 and $60 million this coming year. Moving on to our initial guidance for 2025, we anticipate net revenue of 12.2 to 12.6 billion, adjusted EBITDA of ,000,000 to ,000,000, cash flow from operations of 600 to 700 million, and capital expenditures of 350 to 400 million. Our guidance does not include directed payment program reimbursement for New Mexico or Tennessee, as those programs have not yet been approved by CMS for 2025. If those programs get approved for 2025, we believe it will add an incremental 100 to 125 million to our annual guided run rate of EBITDA. Likewise, we have not considered in our guidance any additional divestitures beyond those that have already been announced. If completed, any such transactions would reduce net revenues in EBITDA in 2025, the amount of which is dependent on timing of completion, but would also allow further reductions in our leverage and would therefore be accreted to our equity value. This concludes our prepared remarks, so at this time, we will turn the call back over to the operator for Q&A.

We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two, and at this time, we'll pause momentarily

to send our roster. And the first question will come from Brian

Tan-Pehlid with Jeffreese, please go ahead.

Hey, good morning guys, and congrats on the quarter. Maybe, Kevin, my first question for you, as I think about the guidance for 2025, maybe if you can just help us bridge 2024 to 2025. I know there's so many moving pieces here. And then if there are any specific call outs for one-timers that we need to consider, maybe for Q1.

Okay, so we have a question from Brian Tan-Pehlid. Sure, thanks, Brian, appreciate it. So, as I mentioned, the guidance does not include Tennessee and New Mexico DPP and only includes the announced divestitures. So maybe to do a high level bridge starting with EBITDA where we finished up 2024 to a billion 540, I think we could take out approximately 40 million of DPP funds that were recognized in 2024 in the fourth quarter. That was the New Mexico piece. Take out 50 to 60 million related to the announced divestitures as we go in. So roughly, call it 100 million reduction. Add in organic growth of 75 to 100 million in 2025. And that gets you back to midpoint of our guide of about a billion 525. So even without the DPP, at that midpoint, it would still be deleveraging given that we have about 550 million of proceeds coming in related to those divestitures. And then factoring in if or when Tennessee and New Mexico get approved, and we do fully expect them to get approved, that would add an additional 100 to 125 million to that annual run rate of EBITDA.

Gotcha, okay, that makes sense. And then maybe, Tim, as I think about some of the things that you've done in 2024, you're still looking to do some divestitures here, but you've also added some urgent care locations. Just curious how we should be thinking about where you stand today on the strategic moves that you still wanna do. And I know you mentioned that you've got a couple of deals here in the pipeline, but once we get past that, how should we be thinking about the moves that we should expect out of you guys?

Sure, thanks, Brian. I'm happy to shed some color on that. Obviously, we're pleased with our ability to invest in and grow the core portfolio. We've been speaking to our investable opportunities for the last several years, and it's always good to see that pull through in terms of the volume and earnings progression. I think we've called this out on a number of occasions, but it's a smaller portfolio generating roughly a similar amount of net revenue as three or four years ago, so we know that our investments are yielding the intended outcomes, caring for more patients, and driving that type of growth. Now, in terms of where we go next, we still have some runway left on, obviously, some past capital investments, particularly around our expansion projects. I call it out that they're ramping up nicely, that by any stretch of the imagination, we built them for further growth capabilities in the quarters ahead. Also, we've also talked extensively about where we're investing our capital dollars, and it goes beyond just inpatient capacity and procedural capacity on our campuses. They're really driving that access point strategy, so we have a pipeline of incremental AFC expansions or de novo projects underway. We also have more freestanding ED projects in flight, some of them going through certificate of need processes, so we still see a good portion of the portfolio still having investable opportunities for more organic growth. In terms of the post-acute and behavioral health side of the business, we think we've done a nice job of growing that side of the business. We believe there's also more expansion opportunities and growth opportunities in that regard. And then the last thing I'll put out there, again, speaking to where we have insights into the business, beyond just the ERP implementation, seeing where we can better manage the business, for the last, I'd say, seven or eight years, we've leveraged the Transfer Center rather extensively to always help us identify new opportunities for service line expansion. We continue to see in the majority of our Transfer Center markets, the ability to expand our service areas by taking in patients from further out as we add those specialties. So we don't believe we've reached the end of that road either. So again, a lot of growth opportunities on an organic basis.

Aiden, maybe if I might follow up, just as I think about your mid-teens, you had a margin guidance and you did %-ish coming out of Q4. So putting all this, the things that you mentioned together, and then maybe considering medical specialist fees, what's that line of sight like and what will it take for you to hit that mid-teens target number?

I'll let Kevin start with the answer, kind of where we peg that midterm guidance. I'll add a few things at the end, which I think tie back to my comments.

Sure, there's a couple things we've had. A little bit of drag with some medical specialist fees, which even though we do believe they're continuing to increase, we are getting some stabilization. Our work with ERP and getting that project completed, which has also been a little bit of a drag on us, but should turn into a tailwind. And with the functionality and the work invisibility we have and improving decision support, we think we can take out some material costs. We've made some, what we believe to be really good investments in capital growth projects. And then we continue to believe we can get some leverage on both acuity and payer mix as some of our markets grow.

Yeah, and I would layer onto that, opportunities for margin expansion, obviously over the next couple of years, hopefully with the moderation and inflation and continued strengthening in payer mix and rates on the commercial side of the business. Obviously there's some risk embedded with the governmental programs, but in general, targeting the payer mix through our access point strategy has worked out really well for us. We also see some opportunities, as I said, to ramp up these projects and improve our fixed cost leverage. So I think that will pull through in terms of hitting that midterm target as well. Maybe the

last point I'd make is, as we continue to delever and have opportunities for deleveraging, we are getting to positive free cash flow, able to get our debt down and lower our cash interest. Even if we aren't, it's those mid-teen margins, being positive on all those other things will generate sufficient cash flow and sufficient EBITDA to continue to progress and make the investments that we need.

Awesome, thank

you

guys.

Thank you.

The next question will come from Ben Hendricks with RBC Capital Markets. Please go ahead.

Great, thank you guys very much. Just wanted to follow up on some of your thoughts on DPP. First of all, in 4Q, the $40 million from New Mexico DPP that you recognized, just one, it seems to be about twice what you'd expected. Does that reflect just conservatism around this program initially versus your expectations, or was there something structurally that changed that drove that outperformance? And then just secondly, the exclusion of DPP and guidance suggests a more cautious stance than what we heard back in October. Clearly, just wanted to get your latest thoughts on your assessment of the risks of these programs and how you're thinking about them under the new administration. Thanks.

Sure, thanks, Ben. We did not include the New Mexico or Tennessee programs in our guidance in 2024. So although we've been working closely with the state and following very closely with that program, we weren't sure of the timing of approval. So we did not include it in the guidance. It was approved, I believe, in December. So we were able to recognize and we recognized the period from July 1st through December. So two quarters were recognized all in the fourth quarter. I think kind of at the end of the day, what we had provided on an outlook back after the third quarter was those two states combined, we believe should contribute about 100 to 125 million to an annual run rate of EBITDA. We still believe that that's the right number. So it's in line. New Mexico is really in line with our expectations around that, but we just did not have it in the guidance for 4Q because of timing and uncertainty around the approval process. Going forward, again, we do expect those programs to get approved. New Mexico, which is basically a renewal, and then Tennessee to get approved. Here right now, I understand there's a freeze in communications from CMS until we get confirmation of the secretary and leadership there, but that should be coming hopefully soon. And we don't see that there is probably going to be a big headwind. We believe these programs will continue relatively in their current form going forward. They've been successful programs. Many states, actually, there's been bipartisan support in both red states and blue states. And if I think about the current administration and where some of these programs are used to a high degree in states like Texas and Florida, and more recently, Mississippi, Tennessee also being a red state that has applied for one, I don't see that they will not be approved going forward.

Yeah, and then I'll add onto that. I think Kevin's spot on. Obviously, Medicaid has traditionally been an underfunded payer source for us, so these programs are critically important to sustaining the level of services to the Medicaid population. And irrespective of whether it's a red state or a blue state, giving people coverage and access to healthcare is such a critical issue for their well-being, but also just from, I guess I'll say, from a political agenda as well, making sure that we're not taking things away from people that are so important to them, especially as we transition to the new administration. I do think in terms of the programs, we're doing a lot of work around lobbying activities, obviously making sure that the reason why these programs are important is clearly understood by our elected officials. And as Kevin said, we've had broad support in our discussions with many of them to get these programs adjusted or modified to strengthen the access to healthcare in their communities. So we hope that bodes well for us going forward in terms of the durability of the supplemental programs.

Thank you very much. The next question will come from AJ Rice with UBS. Please go ahead.

Hi, everybody. Thanks for the question. On the organic growth of 75 to 100 million, is this part of the bridge you talked about earlier? You might just giving us some sense of what you're thinking of for same store revenues, same store volume, same store margins perhaps. I know you've had a slight upstick in the overall margin, but I don't think that teases out what the same store number is. I apologize if I've missed it, but just some metrics around what you think the underlying same store portfolio is doing.

Sure, thanks, AJ. So in terms of kind of volume, we're looking at 2% to 3% volume growth in 2025, similar in pricing. So you can think about net revenue growing, growing in the mid single digit area contributing. Margin wise, slight increase in same store margin is more of that organic growth we would expect to flow through to the bottom line. In terms of some inflationary trends, we're thinking about something in the neighborhood of .75% on salaries and wages. That's a little bit less than 2024, but still not back to where we had previously thought. Something probably in the 3% range on most other expenses from an inflationary trend with the exception of medical specialist fees, we're probably looking at, and we've budgeted for an increase in the 8% to 12% range on medical specialist fees. It was up 12% this year, or I'm sorry, .9% for the full year. And so we're kind of budgeting in that 8% to 12%. And then on ERP, to help offset some of those inflationary increases, we're looking at some offsetting savings as a result of our ERP work and now having that fully implemented in the 40 to $60 million range.

Okay, now that's helpful. And then just not to belabor the DPP program questions, but some of your peers felt like Tennessee got approved, at least for the six month stub in 24. It doesn't sound like you booked any of that either in 24 or in your guidance for 25. Can you comment on that? And then also, I know for some time, you're one that has some major states that have not yet adopted DPP programs or at least have not upgraded DPP programs to the extent that they might. And specifically, people typically call out Alabama, Indiana, and Arkansas. Any update on where those stand at this point?

Yes, I can give you an update on those. So Tennessee, in January, we did get word that the program in Tennessee was approved, at least the structure of the program. But the funding for Tennessee's DPP program has not yet been approved. So just being prudent and conservative in our guidance, without the funding being approved and the freeze on communications coming out of Washington or out of CMS, we decided not to put that in our guidance. But again, fully expect that that funding does get approved. Tennessee, the TennCare program was a block grant program. So I think there was an additional level of approval that was needed or a waiver for that going forward. And we're just waiting on that final step. In terms of additional states, we do have some pretty meaningful states, Indiana, Tennessee, and Arkansas, and Alaska, which do not have programs, do not have DPP programs, or at least not fully implemented. Indiana's probably the farthest along, although no certainty of where that ends up. We do know that the state legislature is considering it. They're in session right now, and there's a plan that's been presented for them for approval. So that is farthest along. We are in discussions in Alabama and Arkansas. I would say that they're a little farther behind, or maybe said differently, they're at the earlier stages of considering and developing plans in those states. But all of those states have certainly expressed interest in taking a look at these programs and looking for additional Medicaid funding through these. We view these programs really as just part of Medicaid funding. Overall, we typically consider Medicaid or delivery of Medicaid business at a loss. These programs help bridge that gap as part of the reimbursement for Medicaid. And I know the states are looking for some additional money. So we would expect some potential there, but Alabama and Arkansas probably not. Not in 2025, that's probably in 2026, it's the earliest.

Okay, thanks a lot.

The next question will come from Andrew Mock with Barclays, please go ahead.

Hi, good morning. It looks like you're forecasting operating cash flow to improve the 150 to $200 million in 2025 on a lower EBITDA base. So hoping you could flesh out the drivers of that better conversion. And then as a follow up, to the extent that there's an incremental $100 million plus from the state directed payment programs, would that all drop through to operating cash flow? Thanks.

Sure, Andrew, thanks for the question. So there are a couple moving parts on the cash flows. So the New Mexico DPP program that we did recognize in 2024, that was in the fourth quarter, that 40 million roughly would be paid in cash received in 2025. So that's a nice carry over and would contribute to the cash. Also, as we wrapped up our implementation of our ERP conversion, that has been a drag on cash flows for us. Although we've been backing out the income statement impact or at least a portion of the income statement impact of that program from adjusted EBITDA. We've not backed out the cash component of that from cash flows. So I think that also contributes to some improved cash flow generation in 2025. Another positive impact is we've gotten word that our tax refund is being processed by their IRS. This is the tax refund that we've been waiting on for a number of years. So we would expect roughly 70 to $75 million of cash coming in on that. Those will be offset. We will have higher cash interest payments in 2025, primarily related to the timing of cash interest payments, particularly around the refinancing, which we did refinance in debt this past year at a higher interest rate. But just the timing of payments will cause cash interest to increase about $40 million in 2025. So that'll be offsetting.

Got it, that's helpful. And then just to clarify a point on the state directed payments, I think you called that 100 to $125 million in incremental annual benefit from Tennessee and New Mexico. That doesn't include the retro Tennessee piece, is that correct?

That is correct. That does not include the retro Tennessee piece. So that would be an addition. And those programs will accrue to our cash flow. We'll flow through EBITDA and cash flow as well in 20 years. Great, thanks

for all the color.

The next question will come from Steven Baxter with Wells Fargo, please go ahead.

Hey, this is Mitchell on for Steve. I wanted to see if you could quantify the continued hurricane impacts in Q4 and do you expect volumes to fully recover in 2025? Thanks.

Sure, how are you today? We had, as we indicated in our guide for Q4, we expected about a $10 million impact from the hurricane. It was as expected and really didn't see any additional impact. We have one hospital that continues to be shut down as a result of that hurricane. It was shut down for the entire quarter into Q1. The assets that were impacted by the hurricane Shorepoint Health System are assets that we are being sold. Those were in that deal was announced and we expect that deal to close here in the first quarter. So we do not expect any ongoing impact since those assets will be gone.

Great, thank you. Again, if you have a question,

please press star then one. Our next question will come from Josh Raskin with Nefron Research, please

go ahead. Hi, thanks, good morning. It seems that

our questioner has disconnected. This leaves no questions in the question queue. I would like to turn the conference back over to Mr. Tim Hentchen for any closing remarks.

Great, thank you, Chuck. And thanks to all of you for joining our call today. As always, if you have additional questions, you can reach us at -465-7000. Thanks again and have a great day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.