HCA Healthcare, Inc.

Welcome to the HCA Healthcare First Quarter 2021 Earnings Conference Call. Today's call has been recorded. At this time, for opening remarks and introductions, I would like to turn the call over to your Vice President of Investor Relations, Mr. Mark Kinbrough. Please go ahead, sir.

All right. Thank you, Kara. Good morning, and welcome to everyone on today's call. With me this morning is our CEO, Sam Hazen, and CFO, Bill Rutherford. Sam and Bill, We'll provide some prepared remarks, and then we'll take questions afterwards. Before I turn the call over to Sam and Bill, let me remind everyone that should today's call contain any forward-looking statements, they are based on management's current expectations. Numerous risks, uncertainties, and other factors may cause actual results to differ materially from those that might be expressed today. More information on forward-looking statements and these factors are listed in today's press release as well as in our various SEC filings. On this morning's call, we may reference measures such as adjusted EBITDA, which is a non-GAAP financial measure. A table providing supplemental information on adjusted EBITDA and reconciling to net income attributable to HCA Healthcare Inc. is included in today's release. This morning's call is being recorded, and a replay of the call will be available later today. With that, I'll now turn the call over to Sam.

All right, thank you, Mark. Good morning to everyone, and thank you for joining us. As the COVID-19 pandemic continued to surge, we started the year with strong financial results in the first quarter. The results were driven by better-than-expected revenue growth and improved operating margins. revenues grew over 1.1 billion, or 8.7%, as compared to the prior year. This growth was generated by highly acute inpatient volumes, better payer mix, and a rebound in surgical and outpatient volumes in March. Generally speaking, March trends are continuing into April. Inpatient revenues increased by 12%. The acuity within our inpatient business was higher as reflected in both case mix index which increased 7% and length of stay which grew by 6%. Additionally, commercial admits inside of our domestic operations represented 29% of total admits compared to 26.5% last year. Commercial payer mix has been consistently around this level for the past four quarters. These two factors combined explain the 17% increase in inpatient revenue per admission. Total admits were down 4.2% year over year. In comparison to 2019, admits were down approximately 3%, which was in line with our expectations. In the quarter, we treated almost 50,000 COVID-19 inpatients, which represented 10% of total admissions. Throughout the quarter, the percentage of COVID-19 admits to total admits declined. January was 17%, February was 8%, and March was down to almost 5%. Outpatient revenues increased 4.7% as compared to prior year. This result is better performance than the previous two quarters in which outpatient revenue was down approximately 5%. Outpatient revenues declined in January and February, consistent with that trend, but March, which had one additional weekday this year, increased by 30% as outpatient surgery and other procedures recovered strongly. Same facility outpatient surgery volumes grew 2.3% as compared to last year. As compared to 2019, they declined 3%. ER visits declined 18%. This decrease is generally consistent with the trends we experienced in the previous two quarters. ER visits were down 19% compared to 2019. Our teams continued to focus and deliver on our operating agenda. Adjusted EBITDA margin for the company grew on a year-over-year basis and was consistent on a sequential basis with the prior quarter. Diluted earnings per share, excluding losses and gains on sales, as well as losses on debt retirement, increased 78% to $4.14. During the quarter, we announced the definitive agreement to acquire a majority stake in the home health and hospice business of Brookdale Senior Living. This business provides us with a large platform that complements our local provider systems. It will expand the services we offer across our networks and provide us with more enterprise capabilities to coordinate care for our patients and improve their experiences. Additionally, we believe the home will become a more important setting for healthcare in the future with continuing growth in demand. We anticipate this transaction will close in the third quarter, and we look forward to our new partnership with Brookdale. Also during the quarter, we open two new hospitals, one in Denver and one in Orlando. Each of these hospitals will strengthen our system offerings in these communities. In the second quarter, we expect to close on the acquisitions of two small hospitals, both of which complement our networks in Nashville and Savannah. And lastly, we continue to invest broadly across our networks to improve convenience, access, and value for patients by developing more outpatient facilities. The pipeline for development and acquisition in this category remains strong. As we look to the rest of the year, we have increased our annual guidance to reflect the first quarter's performance and better perspective on important macro factors, mainly governmental reimbursement and economic outlooks for our markets, including uninsured assumptions. Bill will provide more details on our guidance in his comments. The first quarter is yet another period where the disciplined operating culture and strong execution by our teams were on display. I want to thank our 275,000 colleagues and 50,000 physicians for their tremendous work. We could not have performed at this level without their unwavering commitment to our patients and the communities we serve. As we continue to resource and execute on our strategic agenda, we will remain true to our mission of improving lives and delivering on the responsibilities we have to all our stakeholders. And now I'll turn the call over to Bill.

Good morning, everyone. Sam spoke to many of our operating metrics and results, so I will discuss our cash flow and capital allocation activity during the quarter, then review our updated 2021 guidance. As a result of the strong operating performance in the quarter, our cash flow from operations was $1.99 billion as compared to $1.375 billion in the first quarter of 2020. Capital spending for the quarter was $654 million, and we completed just over $1.5 billion of share repurchases during the quarter. We have approximately $7.3 billion remaining on our authorization, and consistent with our year-end discussion, We are planning on completing the majority of this in 2021, subject to market conditions. Our debt to adjusted EBITDA leverage was 2.85 times, and we had approximately 5.6 billion of available liquidity at the end of the quarter. As noted in our release this morning, we are updating our full year 2021 guidance as follows. We expect revenue to range between 54 billion and 55.5 billion. We expect full-year EBITDA to range between $10.85 billion and $11.35 billion. We expect full-year diluted earnings per share to range between $13.30 and $14.30. And our capital spending target remains at approximately $3.7 billion. Our revised guidance considers the strong results in the first quarter and also considers the extension of the public health emergency and the deferral of sequestration reductions through the end of the year. In summary, we recognize some uncertainties remain as we go through the balance of the year, but we are confident in the company's ability to manage through various business cycles, and we are well positioned to continue to invest capital to capture growth opportunities and execute on acquisition opportunities if they become available. So with that, I'll turn the call over to Mark and open up for Q&A. All right. Thank you, Bill. Thank you, Sam. Kara, we're going to open up for questions. Please remind everyone to limit their questions to one so that we may try and get as many in the queue as possible.

As a reminder, if you'd like to ask a question, you may do so by pressing star 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Pito Chigri with Delta Bank.

Peter, you're breaking up. I can't hear you. Now, Carol, let's try the next one. Peter, try calling back in.

Your next question comes from the line of Kevin Fitzpatch with Bank of America.

Great, thanks. I guess my question would be on guidance, I guess. First, a clarification. Your guidance, I assume, does not include the two deals you expect in Q2 or the Brookdale acquisition. But then more to the point as far as guidance, how do you think about the upside? It sounded like a lot of the raise is because of sequestration and the extension of the health emergency. How much of this outperformance in guidance rate do you think of as kind of one time versus things that we should be thinking about as you having a better visibility into future growth in 2022 and 2023?

All right. Thank you, Kevin. Kevin, let me answer that. First, you're right. The acquisitions for the balance review are not included in our expectations, but we don't expect that material contribution from those for this year. Relative to our increase in guidance, you know, largely due to the strong performance that we had in the first quarter is the driver of that. As Sam talked, you know, we have some insight into March and the read-through through April. And then we did consider the continuation of the deferral of sequestration through the balance of the year. And we know the public health emergency got extended at least through 90 days through July. So the majority of the guidance range is the result of our performance from the first quarter and considers the extension of the sequestration on there. So, you know, as we've talked about as our year-end call, there will still be variables out there, but the way we're reading the environment right now is generally positive. Thank you, Kevin. Kara, next question, please.

Your next question comes from a line of Frank Morgan with RBC Capital Market.

margins and obviously big expansion year over year and you sustain nice margins from the previous quarter. But can you just give us any more color around the dynamics of your ability to continue to manage costs this way? I mean, it really looked like it was across everything, labor, supplies, other. Is it more a function of just the top line growth or is there something structural on the cost side that's allowing you to take advantage of having flex labor? Just any color there would be appreciated. Thanks.

Yeah, Frank, this is Bill. I'll start. You know, I think the margin is primarily attributable to the top line with the revenue and the acuity and the payer mix that we have. But we continue to be focused on looking for efficiencies throughout the company, as we've talked about our resiliency plans in the past. And so those efforts continue, and many of them are well underway in almost every category. And so that is a part of the performance of the company. But the margins clearly are being, you know, helped by both the acuity and the payer mix and the revenue per adjusted emission that we're seeing. But as we've talked about multiple times, we are continuing to look for as much efficiency as we can as we go through different cycles. And many of those efforts continue to be underway.

Bill, if I can just add to that, our cost per adjusted patient day was in line with our expectations and actually slightly underneath that. And so we were only seeing, in the face of really a difficult labor market, 3% growth in cost per adjusted patient day. So I think it's a combination of both, but obviously with the mix, that helps, Frank. All right. Thank you, Frank. Thank you. Thank you.

Carol? Your next question comes from the line of A.J. Rice with Credit Suite.

Hey, A.J. Hi, everybody. Maybe just to ask a little bit more about the capital deployment opportunities. I know last quarterly call you guys had mentioned potentially looking at some post-acute care dynamics, and then obviously you've had the announcement about Brookdale. Perhaps that was what you were alluding to last quarter, but... maybe talk about your appetite there and whether you're seeing broader health systems. I know you've got two hospital deals, but maybe broader health systems. There was some thought that they might look to partner up coming out of the pandemic. Have you seen any uptick in activity there? And then finally on this capital employment spending around your CapEx, are you moving? I mean, you're still emphasizing access points, but I wondered, whether investments in ER, for example, might be diminished given what we've seen coming out of the pandemic and less ER activity, maybe you've diverted some of that money elsewhere. So just some promise on capital deployment opportunities.

Okay, AJ, this is Sam. I'll try to respond to those if I remember all the elements. On post-acute, let me speak to that. Obviously, the home care opportunity and hospice opportunity to us, we believe, is a significant expansion of the services we offer. And the opportunities for integrating those patients who are discharged, and we discharge about 250,000 patients a year into home care, creates an opportunity for us to coordinate care better, stay connected to the patient after they leave our facilities, and ultimately integrate them more effectively in the HCA healthcare system. So we see a nice, broad opportunity. We believe home care provides multiple channels of value for us, some of which are in the discharges that we talked about, some of it's in better case management and discharge planning, and some of it is staying connected to the patient when they repurchase healthcare. Also on post-acute, we've mentioned before because of the CON relaxation in Florida, we have made a large commitment to inpatient rehabilitation facilities in the state of Florida where we have the greatest opportunity to do the same thing with rehab. So we've invested somewhere between $250 and $300 million, or we are investing rather, in developing rehab services in the state of Florida, which will expand the offerings in those markets to our patients and support our systems. So we still see potential in both of those areas to expand into more significant relationships with Medicare Advantage payers potentially on post-acute. So it creates opportunities for us in multiple ways. As it relates to our capital spending, as we mentioned in our guidance for 2021, we are increasing our capital budget to somewhere around $3.7 billion. Much of that increase is related to growth projects where we are expanding at facilities where we need to expand. We're still running the company north of 70% inpatient occupancy. And many of our facilities are north of that. And so in order for us to capitalize on this differentiated portfolio we have, where we believe our markets have unique growth prospects because of great economies, population growth, and so forth, we need to create capacity both on the inpatient in certain circumstances and build out the networks additionally with outpatient facilities as we mentioned. With respect to ER specifically, we do see ample supply, generally speaking, with our ER beds today. We will have some continued investment in emergency room supply and capacity across certain markets because Number one, in some cases we need it. We continue to operate at high levels. Or two, we have freestanding emergency room opportunities, and we will invest in those, but they're not nearly as significant as they were five years ago when we were investing more heavily in that. Flexibility will allow us to invest in ambulatory surgery centers where we have a tremendously strong pipeline for new development. I think we have 10 or 12 new ambulatory surgery centers that are under development. We have a robust pipeline in that particular category as well. And then we will also invest in urgent care, recognizing that that continues to serve a role in building out the capabilities inside of our markets. As it pertains to M&A, I do think there are going to be opportunities, as we've mentioned in the past. They come when they come. It's hard for us to predict. We are fortunate to have a balance sheet that can take advantage of those opportunities as presented. We have an enterprise chassis, if you will, that is built to be bigger and to bolt on new opportunities and create synergies and value inside of those systems. And so we will continue to look for those as they develop and hopefully find opportunities that make sense for us. Thank you.

Great. Thanks.

Thanks, AJ.

Your next question comes from the line of Ito Chikrin with Deutsche Bank.

All right, let's give it one more try, Peter.

All righty. Can you guys hear me now? Yep, we can hear you. Take two. All right, so thanks for taking my questions. Can you give us the components of the 2021 guidance raise? How much is due to the strong first quarter?

How much is due to additional government funding and any changes to the back half of the year? And as you look at the margins of the back half of the year, you'll face tough comps from good pricing and mixed due to COVID-19.

Can you help us walk through the gives and takes around assumptions for margins, including the payer mix, circle trends, and labor costs?

Yeah, so this is Bill. Let me try to zero in on that. As I answered Kevin's number, the majority was due to the strong performance. We understand we beat our expectations, and depending on your number, anywhere from $300 to $400 million that we expected the first half of the year to be stronger than the second half, but it still outpaced our expectations. The sequestration extension for the end of the year is probably worth anywhere from $40 to $50 million a quarter. So that added, we originally did not anticipate that continuing past the first quarter. So that's an element of the raise too. So You know, if you look at the midpoint, our raise was $500 million. You could say it's probably $350 to $400 from our performance and then the balance through, you know, these government extensions if you want to have specifics on that. But we also have a range with, you know, variables that continue to play out. On the margin question, you're right. And, you know, when we gave our year-end guidance, we said we anticipate our margins to likely look a lot like the full year 2020. as we began to kind of see the second half of 2020 really with the strength of the payer mix in acuity. So we're very pleased with where we stand with that. We'll continue to evaluate as the year goes on. But I think the balance of our guidance, I'd reflect back to our discussion at the end of the year. So the raise really is a consideration of the strong performance in the first quarter plus the continuation of the government support.

And Bill, this is Sam. Let me add one thing to that. I mentioned just a second ago that I think we have a differentiated portfolio. And inside of that differentiation, we believe that the growth prospects for Austin, Texas, Dallas, Texas, Miami, Florida, places like that are much better than the national average. And so we continue to see job growth. The other thing I would point to is that the increase in enrollment through the exchanges is a very positive dynamic, and we see further opportunities for improvement in that particular dynamic as there's more money supporting navigation and other support for individuals who have lost their jobs. Our participation in exchange products has improved year over year and actually significantly improved over two, three, four years to where we have roughly 80% access to exchange lives across HCA markets today. which is quite different than what it was maybe three, four years ago. So as more people get enrolled there, we think the support, and this is one of the things we've talked about in the past, how does the Affordable Care Act provide support in a recessionary cycle, and it seems to be providing solid support. And as we look forward, that is an area that we find to be a positive dynamic as well. Okay, Cleo, thank you much.

Kara? You're next.

Your next question comes from the line of Ralph Giacobi with Citi.

All right. Hey, Ralph.

Hey, guys. So outpatient surgery of 2.3% stands out. You know, maybe just what's driving that category to kind of buck the negative volume trends. And then I think, Sam, you mentioned 30% on the outpatient side in March. Obviously, that's a pretty hefty number. So just hoping you can give more detail on the categories there and maybe the impact or the influence of I'm assuming some of that may be pulled forward from week or February, but any commentary on that would be helpful. Thanks.

All right. Thanks, Raoul. I think, obviously, the March this year had a favorable calendar. We had one more work day than we did last year. Last year, obviously, we shut down the company for the most part midway through the pandemic. the month. But when we look at March to 2019, we saw activity levels that were consistent on a per business day. So the outpatient surgery activity in March of 2019 per business day was pretty much identical to the outpatient surgical volume per business day in 2021. Yeah, it's probably a little bit of pull through from February storms, but for the most part, we were up and operational in a week in the state of Texas, which was a remarkable feat on the part of our teams. And so I don't know exactly how much of that was storm-related. It's hard to really pinpoint that. But we're seeing, obviously, a little migration from inpatient to outpatient, which is continued from from one year to the next, and that's influencing our outpatient statistics also. But when I look broadly across outpatient volumes, not just surgical, cardiac volume, very strong performance in electrophysiology on the cardiac side, recovery in endoscopic procedures on the outpatient side. So some of the diagnostic activity which we believed had been deferred, it showed itself a little bit in March in ways that we hadn't seen maybe in other months in the latter part of 2020. So we're encouraged by that. As I mentioned in my comments, we're seeing some pull through into April. That's very similar. And we'll continue to monitor this and report out on it and give you a better feel as we get further into the year.

Thank you, Ralph. Thank you. Thanks.

Your next question comes from the line of Lance Lutz with Bernstein.

Yeah, thanks a lot. So I just want to ask about two things as we're starting to move into a kind of post-COVID impacted period. I was interested in both what are you able to do from a capacity expansion standpoint kind of within facilities and within outpatient to accommodate more volumes, kind of the catch-up on deferred care maybe for the second half of the year to understand how that capacity could expand. And then just also interested in bad debt, how that's performed during this period and any activities you've taken as far as, you know, kind of collection or other sort of processes to deal with that and how that looks going forward?

Okay, let me take the first one. I'll kick the second one to Bill. I think with respect to capacity management, a couple of things. One, as I mentioned, we're investing to expand capacity where we believe appropriate, both inpatient, outpatient, emergency room, whatever the case may be. We have a very sophisticated analytical methodology to determining where do we have constraints and where do we have opportunities to relieve those constraints with investments and so forth. But the second thing I would say, and I think this is an important point, and it's a learning that we experienced during the COVID year, I'll call it 2020 and the first part of this year, the ability to manage our capacity in order to deal with the different surges that we experienced required us to hone our discharge planning process and case management functions at times to create flexibility with the capacity that we do have. So if we were to see spike in deferred care starting to show itself, I think the learnings operationally and from a capacity management standpoint that we experienced and gained during the COVID surges will help us in responding to that particular situation. So those are the two approaches that we're doing to deal with potential growth in demand, and we still continue to believe that long-term health care demand is there, and it will be there in the future, and our systems are durable and built for that as we continue to move through these different periods. Bill?

Yeah, on the bad debt and the uninsured, I think as we've reported in the past, we've continued to see declines in our uninsured volume as the COVID pandemic began to show itself all throughout the last three quarters of last year. And that continues into the first quarter. And those uninsured declines are greater than our total. So some of that is also due to we are receiving some HRSA payments for some reimbursement for uninsured COVID patients. So all of those have resulted that our uncompensated care levels are actually below where we were running prior year. And we don't see any material developing trends in that category. So we're very pleased with where we stand relative to the bad debts and the uncompensated care position. Thank you, Lance.

Your next question comes from the line of Scott Fidel with Stevens.

All right. Hey, Scott. All right, thanks. Good morning. I had a follow-up question actually just on the home health strategy.

I'm interested if you guys had mentioned the interesting statistic that you have around 250,000 patients to start annually directly into the home. I'm interested if you've been able to evaluate what percentage of those patients would be covered by the existing Brookdale home health footprint. And then if you think about markets where you don't have the overlap with Brookdale, whether you would look to scale up that asset or whether you would consider pursuing additional strategic relationships with other HH providers.

Thanks.

All right, thanks, Scott. Yeah, Scott, on the Brookdale, roughly 60% to 70% of their agencies have overlap in our market. So obviously that was an attractive strategic component of the acquisition. And as we work through the acquisition integration, we're going to, you know, explore that even further. Relative to, you know, agencies that reside in non-HCA markets, you know, we'll still evaluate what is the appropriate course of action, and if there are partnership opportunities, we may pursue those, but we'll still take that and consider that as we go through the completion of the transaction. Thanks, Scott.

Carol?

The question comes from the line of Brian Tangulet with Jefferies.

Hey, good morning, guys. Congratulations on a good quarter. I guess my question for you, Sam, as we start seeing this pace of recovery, how are you thinking about remaining pent-up demand in the market? And then as we talked about payer mix earlier, what can you share with us in terms of the mix of patients you're seeing both on the kinds of procedures we're seeing with the recovery in March and April and the payer mix buckets that we're seeing? Is it shifting back to more Medicare, more uninsured, more Medicaid. I just want to see if you can give us some color on what the recovery looks like right now. Thank you.

All right, Brian. Thanks.

Well, I think it's still early to land on exactly what the recovery is looking like. If you look at the two elements of our business where we saw significant drop-offs, pediatric activity on one side, and then obviously Medicare activity on the other. So the middle piece, if you want to call it that, is what had been most durable. Having said that, most of our outpatient business that was deferred is that middle piece. Some of the inpatient that we have lost is the outer shoulders, the pediatric and the Medicare side of the equation. So I don't really have a good sense of what's going to happen on the Medicare side. We're starting to see more pediatric activity in the month of March. It wasn't down as much as it was in previous periods, which reflects, I think, kids going back to school. In many communities, activity is starting to happen again with spring sports and such, and we're seeing a little bit more traffic in our emergency rooms related to pediatric volumes. But I think on the outpatient side, which is where most of the deferred care, we believe, was, that is largely a commercial book of business. Fifty-five percent of our revenues or so on the outpatient side is commercial related. And as that starts to develop, we think that will be probably what shows itself from the deferred care. But it's still early. Obviously, There's still uptake with vaccines. There's still, you know, concerns with COVID from one community to the other. And all of that could create some choppiness to it all. But we need a few more months to really judge exactly what that rebound is going to be. But we're encouraged, again, by March. We're encouraged by the early view into April. And we're hopeful that that sustains itself over the remainder of this year. All right.

Thanks, Brian.

Next question comes from the line of Justin Lake, Rook Research.

Thanks. Good morning.

Hey, Justin.

Hey. I'm going to try to squeeze in two quick numbers questions here, if that's okay. First, given the meaningful shift in 2021 numbers, obviously, to the positive, I wanted to ask about the right jumping off point going in 2022 in terms of moving parts. I mean, the obvious one I could think of is just, you know, sequestration is probably going to come back, maybe offset by some acquisition benefits, et cetera. So if you can run through that, that would be great. And then on the commercial mix shift, given how dramatic it's been, I was wondering if you have any ability to parse that out in terms of market share gains versus just the population shift and younger people moving south into your market and simply just less deferred care among commercial populations versus maybe Medicare. Thanks.

Right. Justin, I'll start with the first one. You know, it's early for us to be thinking about the variables going into 2022, as we were just talking about, you know, trying to, you know, get a read on how the recovery period, if you will, or how the business settles once COVID gets to a normalized level. So it's just a little early to think about the puts and takes of 2022. We don't have insight into government funding beyond this year at this stage. So You know, give us another quarter or two, and then, you know, as we near the completion of the year, we'll be able to talk to you about our view of the trends we're seeing currently as far as how they roll into 2022.

And, Justin, this is Sam. On the market share, you know, we are operating at an all-time high on market share based upon the most currently available data we have, which is the end of the third quarter. for 2020, and we're pushing the overall market share for the company across the 43 domestic markets into the low 27% zone, so very high watermark. On the commercial side of the equation, We have, in fact, gained market share on the commercial at an even faster pace. I don't know exactly how that's playing out in the fourth quarter and the first quarter, but we have seen trends that are more positive for our company on that particular front than our overall trends, and I think that's been part of our results. and we continue to evolve our physician strategy, our service line strategies, our outreach strategies, and so forth toward the commercial book of business, as you would expect, and we believe it's yielding positive results for the company. All right. Thank you, Justin.

And next question comes from the line of Josh Raskin with Nefron Research.

Hey, Josh.

Thanks for taking the question. Just had a quick one on CapEx. It looks like CapEx was actually down almost 200 million year over year in the first quarter, even though you are guiding to considerably higher CapEx for the full year. So I was just wondering what caused that decline this quarter. And I wanted to see what the thinking was on how CapEx would ramp through the balance of 2021. Thanks.

Yeah, this is Bill. We understand it was below, you know, some of that is the capital program starting. We're, you know, repopulating the pipeline with approvals. And so the spending of that you didn't see in the first quarter. We still believe that our capital spending will approximate this $3.7 billion. may be a little bit on either side of that. And so we do anticipate the capital, the actual spin to ramp as we go throughout the year, and we'll just have to continue to evaluate that. So ultimately, I think what you're seeing in the first quarter is as we slow down capital in 2020, as we began, you know, re-implementing some of our capital programs, just the spending didn't occur at that same level. But we still believe 3.7 is the right number. Yeah, just timing on how the capital gets spent. All right, thank you, Josh, even though I don't think you're Josh.

Your next question comes from the line of John Renson with Raymond James.

Hey, good morning, Steve. I have an exciting opportunity for you. I'm going to ask two questions, and you can either answer both or pick one. We'll catch up on the other offline, so dealer's choice. So my first question is, if we look at your assumptions for the back half of the year, my hypothesis is that Certainly Medicare will grow faster than commercial, but both buckets, if we measure by adjusted emissions, will grow, just commercial at a lower rate. Is that consistent with your assumptions? And my second question is, you know, what are your top two or three public policy priorities in D.C. given the new administration? I'll stop there. Thank you.

Yes. John, let me take the first one. Our assumptions throughout the year, just consistent with our year end, is that we do expect a recovery of our historical business to return. You know, as we see COVID settle to a level, as we hope, you know, broader populations get vaccinated, that we'll begin to see this return. So we do expect some growth. to occur from where we are now as we go through the year, and I think that is reflected in our full-year guidance. The exact timing and the pacing of that is unclear, but we do expect throughout the year there will be recovery and we'll return to some historical level of pattern for us, and that would likely occur through all payer classes and Medicare as well as the commercial, as we've talked about.

And we're going to play both of your cards. So the question around public health.

It's like a dream come true for me.

Just for you, John, just for you. You should have asked three questions. On the public policy front, I think obviously we're focused in on health policy, and it's our belief that the Affordable Care Act is providing the support for the country to that it was intended to do, and we're hopeful that we can maintain policies that provide that kind of protection for people so they have the coverage and access they need. And then the second area would be around tax policy. Obviously, we're a tax-paying health care system as compared to many of our competitors who aren't. And paying and focusing in on getting to the right tax policy is important to us, too. So those would be the two categories that we're focused on.

Thank you.

All right, John. Have fun at the golf course.

Not today. My course is closed.

Oh, God.

Your final question comes from the line of Jamie Purse with Goldman Sachs.

Hey, Jamie.

Hey. Hey, good morning. You mentioned the March trends and that continuing into April. I wanted to clarify, does that mean the volume levels were similar in March and heading into April or that the recovery curve is progressing into April? And then more forward-looking, just what leading indicators do you look at, whether it's primary care utilization or non-COVID diagnostic trends that might give us some color on where volumes might go from here?

I think for the comment around April is a general observation about our business as a whole. And some of the aspects of our March activity and results is carrying forward into April. That's really all I'm going to say at this particular point in time. What was the second question again about leading indicators? Okay, yeah. We use our physician practices as a source of leading indicators, if you will. And we're starting to see new patient activity grow. I want to say in the month of March, new patient activity, some of this is business day driven, was up 17% over the previous year. And that's a pretty significant indicator of future activity. That occurred across a variety of specialties we employ roughly 7,500 to 8,000 physicians. And so we're seeing activity within new patient rosters and new patient activity show up in our clinics. And as I mentioned also, our emergency room activity, it started to grow a little bit from where it was in the low points in 2020 and during the COVID periods. So those are two leading indicators that I would suggest are indicative of maybe more activity starting to percolate in the markets.

All right. Thank you, Jamie. Kara?

And then no more questions at this time.

All right. Well, listen, we want to thank everyone for joining the call today. As always, feel free to call if there are additional questions that you might have. But have a safe day. Thank you.